Micro-environmental factors affecting Tata Nano Business

1. The launch of Tata Nano was directed towards the achievement of the goal of being a car for the middle class people, who often travelled in two wheelers with their families (Kumar 2014). However, even after months of the launch of the Tata Nano, the sale of the car was sluggish as compared to Maruti 800, which was launched 26 years ago as well as the most recently launched people’s car, Ford Figo (Aschmoneit and Janevska, 2013). Various micro-environmental factors as well as the macro-environmental factors that are likely to affect the business case of Nano.     

The micro environmental factors include the controllable factors such as the marketing mix and the company policies, along with the partially controllable factors such as the threats and opportunities, strengths and weaknesses. The strength of Tata Nano is the price and portability of the car (Chakravarti 2016). Tata Nano has been recorded to b the cheapest car in the world. This micro environmental factor has a key significance in the business of Tata Nano. Being the cheapest car, it is easily affordable by the various middle class people, with limited affordability (Charan and Dahiya 2015). The magical 100000 price tag was the greatest strength for the business case mentioned. Another micro-environmental factor is the competitors (Botti 2016). Tata Nano faced a strong competitive threat from various other cars. It faced direct competition from the affordable cars such as Maruti 800 and Maruti Suzuki Alto as well as Reva. It faced indirect competition from second hand cars that were much more affordable than the Tata Nano (Aschmoneit and Janevska  2013). The threat of substitutes such as two wheelers as well as metro railway and roadways are also strong in case of Tata Nano.

Along with the micro-environmental factors, the macro-environmental factors are also strong in case of Tata Nano. The key macro-environmental factors that affect the business of the Tata Nano are the economic factors, the demographic factors, the political factors, the technological factors as well as the social conditions (Hollensen 2015).  The technical challenges that the car faced was a major factor that affected the business of Tata Nano (Chakravarti 2016). In the urge of building the world’s cheapest car, the technical complexities of the car was neglected, that affecting the popularity of the car (Shafiulla 2014). However, the economic factor was favourable in case of Tata Nano (Charan and Dahiya 2015). The economic stability along with the small size of the car, reduced the amount of road tax that had to be paid to the by the buyers of Tata Nano, thus, keeping the price in range of the middle-class people (Botti 2016). The production of the Tata Nano dropped abruptly as the availability of the cars in the showrooms reduced thus deflecting the potential customers. Moreover, the lack celebrity endorsement also affected the sale of the products adversely.   

 2.

1. The Tata Nano is one of the most awaited products of Tata. The target market for this product is the middle class people, whose affordability is limited to be able to buy two wheelers (Kumar 2014). However, with the affordable price of the Tata Nano, the potential buyers of two-wheelers engaged in buying the four-wheeler car Tata Nano (Charan and Dahiya 2015). The product has been categorised by Tata Motors, to be sold at a very low price of 100000 that could be compared to the prices of two-wheelers.  Thus, the segmentation has a key role to play in enhancing the sale of the products.
2. The market segmentation for Tata Nano includes the segmentation according to the geographical locations, demographic factors, size of the family, as well as the affordability of the middle-class people (Shafiulla 2014). The geographical region that is targeted by the Tata Nano product of Tata is the people of the rural areas and the semi-urban areas, where people mostly use two-wheelers. The target market also includes the people from the small towns all over India. However, the people from the large cities are also considered as target customers of Tata Nano (Shafiulla 2014). The demographic segmentation includes the people living in the rural areas, with limited affordability as well as people with small family. Since the capacity of the car is 5 seater, including the driver, hence people having large families are not the target customers (Tybout and Tybout 2017). The Tata Nano also targeted the students and people in diverse professions, with limited affordability (Charan and Dahiya 2015). The psychographic segmentation includes the lifestyle of the target market as well as the personality. The lifestyle includes the cultural orientation of the people buying it (Chakravarti and Thomas 2015). The behavioural segmentation includes the occasions in which the car could be used. The buyers target the Tata Nano to be of regular use (Singh and Shalender 2014). The benefits incorporated by the car such as quality of service, less fuel consumption, and the good mileage made it attractive to the customers (Tybout and Tybout 2017). The car also targeted the first time drivers as well as the regular users. The user-friendly nature of this car made it easy to handle by the first time users (Shafiulla 2014). The user rate as highlighted was heavy and the customer loyalty was very strong and in some cases, absolute (Tybout, Fahey and Bridgette 2017). Thus, the market segmentation done by Tata Nano is effective in enhancing the business of Tata Nano.   
3.    The positioning of any business has a key role to play in determining the success of the business. In order to be successful in the positioning strategy, the 3Cs of positioning have to be successfully followed by the business organizations (Rothlin and McCann 2016). In case of Tata Nano, the 3 C’s have been partially fulfilled. The three Cs include the customers, competition as well as the channel of distribution (Chakravarti and Thomas 2015). The customers of Tata Nano have been targeted well by the company. The targeted customers have enhanced the sale of the product. However, the positioning failure includes the failure to produce the adequate number of cars in time (Hollensen 2015). Moreover, the lack of availability of the adequate number of cars in the showroom also deflected the potential customers of Tata Nano (Rothlin and McCann 2016). The product attributes were not successful enough and did not match the requirements of many of the customers using the Maruti Suzuki Alto or Reva (Charan and Dahiya 2015). Thus, along with the positioning, the product attributes also contributed to the failure of the product Tata Nano.
4. The marketing mix presents the key elements that are essential for a product or service. The extended marketing mix has 7 key elements. These include the price, place, promotion, product, physical evidences, people and process (Tybout, Fahey and Bridgette 2017). In case of Tata Nano, some of the key elements of marketing mix have been fulfilled successfully; however, some of the elements could have been managed better (Singh and Shalender 2014). The price mix of the Tata Nano has been used efficiently. The low price of the Tata Nano car was an attractive factor to the customers (Charan and Dahiya 2015). Being the cheapest car in the world, the price was the most attractive feature for the potential buyers. Most of the potential buyers were two-wheeler user (Tybout, Fahey and Bridgette 2017). Thus, getting a four-wheeler at a two wheeler’s price was the main marketing strategy for the Tata Nano. The promotions of Tata Nano have been done effectively, using the tag line “The people’s car” (Hollensen 2015). However, it has been observed that most of the customers are attracted it the brands are endorsed by famous personalities and celebrities (Tybout and Tybout 2017). However, the lack of celebrity endorsement resulted in the lack of effective promotion. The people element was effective in the marketing mix. The car was launched with the motive of being the people’s car, where the customers had a key role to play (Chakravarti and Thomas 2015). Thus, the people were an integral part of the business of Tata Nano, since its launch.  One of the elements that could have been enhanced is the place element. The lack of sufficient production of the Tata Nano cars resulted in the deflection of the potential customers as the production delay made the customers choose some other car brands (Singh and Shalender 2014). Thus, the place element could have been enhanced such that the failure of the product and innovation could have been avoided. The positioning strategies could have been enhanced if the timely production could have been promoted (Charan and Dahiya 2015). The marketing mix and its effcteive use has a key role to play in the enhancement of any business organization, product or services. Thus, among the various marketing mix strategies, some of the elements could have been improved in order to improve the over business of Tata Nano . These enhancements could have been effective in preventing the failure of the most awaited product of Tata Motors, Tata Nano.            

References:

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Botti, S., 2016. Book review: why people (don’t) buy: the GO and STOP signals by Amitav Chakravarti and Manoj Thomas. LSE Review of Books.

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Chakravarti, A. and Thomas, M., 2015. Tata Nano, the world’s cheapest car. In Why People (Don’t) BUY (pp. 63-72). Palgrave Macmillan UK.

Charan, A. and Dahiya, R., 2015. Digital Marketing and Consumer Behaviour: An Empirical Study in Indian Car Market with Special Reference to Delhi and NCR. Cluster Analysis of Young Online Consumers in Indian Context, p.60.

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

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Rothlin, S. and McCann, D., 2016. The Social Environment: Philanthropy. In International Business Ethics (pp. 365-389). Springer Berlin Heidelberg.

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Singh, N. and Shalender, K., 2014. Success of Tata Nano through marketing flexibility: A SAP–LAP matrices and linkages approach. Global Journal of Flexible Systems Management, 2(15), pp.145-160.

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Tybout, A.M. and Tybout, A.M., 2017. Trend Micro (A): Responding to a Service Failure. Kellogg School of Management Cases, pp.1-2.

Tybout, A.M., Fahey, N., and Bridgette, B., 2017. Marketing the Nissan Micra and Tata Nano Using Social Media. Kellogg School of Management Cases, pp.1-12.