Title:Consumer Behaviour -TATA NANO

Subject: BMPS

Level/Semester: MBA-III SEM

Programme PGDBL

Subject tutor: MS. ANUPAMA GHOSHAL

Name of Student: Mandeep Singh

Student’s Registration Number: PGD-B/JUNE-10/14

Date of Submission: April 11, 2011

Word count: 2005 WORDS

Word Limit: 2000 WORDS

Student Name Mandeep Singh

Date for Submission of the Assignment 11th April, 2011

Is the cover page in the correct format as indicated in the “Guidelines to Writing Assignments”?

Yes

Have I done a complete spell-check of the Assignment? Yes

Have I done a complete word count for the Assignment? Yes

Does the Table of Contents include numbers? Yes

Are the pages numbered correctly? Yes

Are the figures numbered correctly Yes

Are the tables/charts numbered correctly? Yes

Are the captions for the tables and charts proper? Yes

Are the references/bibliography listed in the Assignment? Yes

Are the references cited adequately in the text? No

All reference material has been cited from books & the University of Wales online library. Any other internet source quoted is with the permission of the module tutor.

Yes

Are the references in the text in the proper format as indicated in the “Guidelines to Writing Assignments”

Yes

Has a soft copy of the Assignment been enclosed? Yes

Declaration:

All material written in this assignment is my own and I have not used any material, content or information of others claiming them to be mine. Wherever materials have been used, proper citation has been done in the text. I am fully aware of the rules and regulations governing plagiarism. Should at any point of time my work be suspected/investigated and established to have been plagiarized, I am aware of the consequences. I have read the Student’s Handbook in detail.

Mandeep SinghSignature of the Student Date: _11/4/2011

TATA NANO: THE PEOPLES’ CAR

Introduction:

One of the greatest strengths of NANO is its tiny price tag. The starting price is Rs.1,00,000 which is cheaper than Maruti 800, the next cheapest car in Indian market priced at Rs.1,84,641. Even after the road tax, service tax and the other registration fees, NANO base model will work out to be just Rs. 1,30,000. Even its advanced versions like NANO LX will at most cost around 1,79,000. Segmentation for NANO market is done based on geography, rural and urban, and on demography, family size and income. NANO is targeted at two-wheeler segments, second-hand car segments, auto rickshaw segments, middle and lower income segments. TATA positioned NANO in peoples’ mind as “THE PEOPLES’ CAR”, “ONE LAKH CAR that drives ONE BILLION DREAMS” and “The World’s cheapest car” without compromising on quality, safety and eco-friendliness.

Consumer Decision making process in buying TATA Nano.

Even though Tata Nano is the least price 4 seater car in India, it falls in the category of complex buying behaviour.

Complex buying

behaviour

Variety seeking Buying

Behaviour

Dissonance reducing buying

behaviour

Habitual buying

behaviour

SIGNIFICANT DIFFERENCE

FEW DIFFERANCES

HIGH involvement LOW involvement

FIG 1: Buying behaviour

To substantiate the above statement, in survey 70% people have respondent that buying TATA NANO is as difficult as buying other cars.

Analysis of stages in complex buying behaviour.

Need Recognition Information search Evolution of alternative Purchase decision Post purchase evaluation.

Need Recognition.

Need for Tata Nano can be driven either by internal stimuli (Desire/attitude/perception) or external stimuli advertising etc.An attempt is made to understand the need recognition process based on Maslow’s theory.

safetyNeedEsteem8%

24%

68%

Fig2: Classification of consumer need.

Thus it is clear from the Fig 1- 68% people buy the car driven by safety need. 24% buy a car driven by esteem need. 8% people buy a car driven by basic need.

To arouse the need for Tata Nano Company should look to aim at 76% people who look for car for safety and basic need knowing the fact that company will not be able to drag the people who want to satisfy esteem need.

Information Search

In this stage customer wants to find out the information about the Product, Place, Price and point of purchase. While buying a product like car people seek information from different sources like.

A) Personal Sources- Family, friend and neighbours.B) Commercial sources: Advertising, sales people, dealers, display.C) Public Sources: Mass media and consumer rating agenciesD) Experiential sources: Demonstration, examining the product.

The research shows that majority of people depend on reference group for information while buying TATA NANO.

Since buying Tata Nano is complex buying behaviour people seek lots of information and clarification. Company should aim on minimizing the customer cost while seeking these information. The company should focus more on customer testimonials and word of mouth communication.

Evaluation of alternative:

After collecting the information, consumers arrive at some conclusion about the product. In this stage consumers are comparing different brands based on set parameters which he or she thinks required in the product. This process differs from consumer to consumer and with respect to Tata Nano some have given importance to the price and for few durability and safety is important.

Since it is clear from the above data that majority of the people are buying the car driven by safety need. People are considering Chevrolet spark and Maruti Alto as the alternative car.Even though the price of both the cars is high compare to the NANO people are considering SPARK and ALTO as alternative of TATA Nano.An attempt is made to understand the evaluation of alternative “Chevrolet spark and Maruti Alto”.

Fig 3: Preference of channel of information

Since people are motivated by safety need and Chevrolet safety positioning and 3 years free servicing warranty is able to draw the customer attention.

Point of difference between Maruti Alto, Chevrolet Spark and Tata Nano.

TATA NANO SPARK ALTOPrice (Ex-Showroom)

Rs. 1,23,361 Rs. 3,23,458 Rs. 2,29,148

Rs. 3,184 (for 36 month loan)

Rs. 8,350 (for 36 month loan)

Rs. 5,915 (for 36 month loan)

ImmobilizerOverall Length 3099 mm 3495 mm 3495 mmMileage (Highway) 24 km/litre 16 km/litre 18.3 km/litre Seating Capacity 4 Person 5 Person 5 Person Maximum Speed 105 Km/Hour 161Km/Hour 137 Km/HourFront BrakesRear Brakes

180 mm dia. drum b180 mm dia. drum brake

Ventilated discs Self-Adjusting Drum

Disc Drum

We can see that Tata Nano does not have immobiliser. “An immobiliser or immobilizer is an electronic device fitted to an automobile which prevents the engine from running unless the correct key (or other token) is present. This prevents the car from being "hot wired" after entry has been achieved”.The above table shows that there is a difference in the features and consumer has to pay 2915/month extra to get additional features offered by Maruti Alto, which he considers as value for money.

Purchase decision.

In this stage consumer buy the most preferred brand. The decision of making the particular brand is made after consumer conviction over the alternative product.

Since research has revealed that people do not postpone the purchase of Tata Nano because it is difficult to make the payment. Price is not the factor which is postponing the purchase decision of the consumers. There are two factors which are making people to postpone the purchase of Tata Nano.

Lack of information:

People have complete awareness about the price and 100% people have claimed that they are aware of the price of Tata Nano. When it comes to the features like engine capacity, mileage, safety people have mixed response and it reveals that company has not paid attention in communicating the features.

Company is promoting the price tagline and that is not enough to motivate the consumers who are derived by complex buying behaviour.

Diffusion Process:

Majority of people (70% people) adopt the innovative product when it is 1 to 2 year old in the market. People are still waiting to watch out this car and they are postponing the decision of buying this car.

Company should have patience in launching the marketing programme because it is just 19 months since Tata Nano is launched.

Post purchase evaluation:

After purchasing the product consumer will experience some level of satisfaction and dissatisfaction.

An attempt is made to measure the satisfaction level of TATA NANO users after the purchase and the security concerns which is raised by many prospective users of TATA Nano.

Satisfaction:

80% of the users are satisfied with the car and they feel that they have got what was promised by the company and they are happy to refer this car to others. Company should make use of these happy users in word of mouth advertisement.

20% people are dissatisfied and they are dissatisfied due to interior of the car, finishing of the car, delivery time and front view.

Safety: Safety is still the concern with the existing users and 80% of the people feel that they feel Average safe while driving Tata Nano as big cars.20% of people feel that it is equally safe as big cars.

The above data shows that company has to clearly work on safety point of view and has to come up with the innovative safety measures to increase the satisfaction level.

8o% Satisfied 20% Dissatisfied

8o% Average Safe 20% Equally

Role of impulse purchase in decision making process.

An impulse purchase or impulse buy is an unplanned decision to buy a product or service, made just before a purchase .One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer. Research findings suggest that emotions and feelings play a decisive role in purchasing, triggered by seeing the product or upon exposure to a well crafted promotional message.

The research has shown that buying a Tata Nano falls under complex buying behaviour despite the low price. The research has also shown that people wait for 1 to 2 year before buying the product like Tata Nano. Consumers do not take the decision of buying a car immediately and follows the pattern of decision making process very religiously thus impulse purchase is not relevant in buying Tata Nano, however it can play an Important role in choosing the accessories of the car. Marketer can influence the consumer in choosing the colour and accessories..

Target Audience.

Who will buy the Tata Nano? If online polls are an indication, target audience of TATA Nano "hum-do-hamare-do families," who were the main inspiration behind the Nano. If online polls at social networking sites are some indication, a bulk of the potential buyers for the Nano is predominantly male. And, they will be less than 25 years. In one online poll, 39% of the respondents felt that the average Nano buyer will be under 25 years of age while 81% agreed that the Nano buyer will be less than 40 years.

The research has shown that company should craft and execute different strategy towards target audience and the positioning of the car should be changed.

Research has shown that people prefer Tata Nano as the second car, despite of their ability to pay for the costly cars. People are postponing the purchase of Tata Nano waiting for the first car. The target audience of the company are the people who belong to lower middle class and lower class. Lower middle class and lower class people still purchase the car based on esteem need to improve their social status.

First Car Second Car0

102030405060708090

100

Series1

80% of the lower middle class and lower class people do not know driving and thus they are comfortable riding the bike. Company should launch a marketing programme to teach driving to the target audience. Once the target audience know the driving it will be easier for the company to identifies anticipates and satisfies customer requirements profitably.

Research has shown that most of the Target audience has bike and it is not easy for them to abandon the bike which costs half of the price of Tata nano. Company should give them the exchange offer and offer them good resell price of bike.

Research has shown that company has not communicated the features, safety and the benefit to target audience and focused hugely on the price. Company should keep in the mind the fact that apart from price consumers are looking for many other aspects while buying a car.

Research has shown that most of the Target audience likes the advertisement which is informative followed by which shows the safety. Currently the company has the advertisement which brings pride which is chosen least by the consumers. Company should design the advertisement which combines the information and safety

.

Fig 4.consumer preference of Tata Nano

Informative Interesting Pride appeal Safety0

5

10

15

20

25

30

35

Series1

The company should look beyond the current target audience and should focus on including females in their target audience, since most of the female feel that it is compatible and easy to drive.

Research also revealed that there is difference in attitude between the prospects and the current users. Current users are satisfied with the car while prospect users have many uncertainties in mind. Company should try to minimize this gap by including the marketing programme which focuses on the word of mouth.

Conclusion:

The strategy should not be to sell maximum cars to target audience, however to sell maximum car to maximum people.Even though Nano comes with the tiny price tags it follows a complex buying behaviour process.Company has to work on the positioning of the car and provide more features which eliminates the doubt of safety from the prospects, thus making decision making process much simpler for the consumers. Company has to offer test drives to shorten the decision making process of the consumers. Company has to provide the enough information to the consumers, which is the key of decision making process.

Fig5: Advertisement preference by consumers.