Customer Satisfaction of TATA NANO Customers

Project on advanced marketing research

Submitted by:

Kushan kumar (08dm018)

Rahul vatsyayan (08dm031)

Vibhakar jha (08dm059)

Executive Summary

Tata Nano is the cheapest car in the world. It is sold in home country India around Rs 1 lakh i.e. approximately USD 2000. It is manufactured by Tata Motor Limited, the largest to automobile company in India. It’s Chairman, Mr Ratan Tata envisions that Tata Nano become a “People’s car” which is affordable by almost everybody. Tata Nano was first launched in India on 1 st April 2009 and expected to be in Indian market by July 2009. Since launching, it has created a huge buzz all over India. Within the first two days of lunching, it has received 5500 booking. The figures keep increasing every day since the launching.What makes Tata Nano so cheap? Basically, by making things smaller, lighter, do away with superficial parts and change the materials wherever possible without compromising the safety and environmental compliance. It is said that Tata Nano has better mileage than Toyota Prius and same gas emission as a scooterTata Nano will be imported to Malaysia by Tata Industries in parts. It will be assembled in its two factories i.e in Shah Alam, Selangor and Pasir Gudang, Johor Bahru. There are four distribution centres in Peninsular Malaysia i.e. in Kuala Lumpur, Penang, Johor Bahru and Kuantan. All Tata Nano cars will be distributed through these distribution centres only. Order can. be made vide these distribution centres or its web site.There are three types of Tata Nano car available i.e. Tata Nano, Tata Nano CX and Tata Nano LX. However, due to hot weather in Malaysia, only Nano CX will be brought to Malaysia and will be sold here. The selling price of Nano CX in Malaysia is RM 13,704 per unit. It is estimated that gross profit for the first year would yield xxx, second year xxx and third year xxx Estimated monthly instalment payment is xxx for seven years period. With this price, the target market is very wide which includes those with income RM 2000 per month, students female workers and scooters’ riders.

Introduction:

India is an emerging country with huge potential. The domestic economy is now growing at around 9-10% per annum and India’s importance in global terms is being reinforced by rapidly rising exports and domestic consumption. At a time when numbers of a slowdown and overheating in the Indian economy have started gaining momentum, the Indian rupee sprang a surprise by pushing the GDP figure past the trillion-dollar (42,00,000 crore) mark.The automotive industry is at the center of India’s new global dynamic. The domestic market expanding rapidly as incomes rise and consumer credit becomes more widely available. Manufacturer’s product lines are being continually expanded, as is the local automotive manufacturing base. Expectation are high that India can develop as a global hub for vehicle manufacturers and as an outsourcing center that offers the global automotive industry solution high up the automotive value chain.India eyes 25 million automotive jobs.India's GDP is set to doubleover the next decadeIn percentage terms, the automotive industry's contribution should also double.In dollar terms, the sector's contribution is set to quadruple to some $145bn.The automobile industry in India accounts for a business volume of $45 billion and has the potential to grow much faster both through Indian as well as international manufacturers who have established huge facilities in the country With the world’s second largest and fastest-growing population, there is no denying India’s potential in both economic and population terms and the effect it will have on the auto industry in the years to come. The country is already off to a good start, with a well-developed components industry and a production level of 1 million four-wheeled vehicles a year, plus a further 5 million two- and three-wheelers. The implications, market drivers and scope of a future massive Indian vehicle market are covered in the India Strategic Market Profile, a brand-new forecast of Indian automotive and related activity to 2020. Based on Max Pemberton's unique relational long-term forecasting model, it forecasts car and CV sales, demographics, materials usage, auto industry employment, and explains their inter- year of healthy growth in auto industry.

Market overview:

The passenger vehicle market, which constitutes around 80% of automobile sales, has immense growth potential as passenger car stock stood at around 11 per 1,000 people in 2008. Anticipating the future market potential, the production of passenger vehicle is forecasted to grow at a CAGR of around 11% from 2009-10 to 2012-13.

The recent launch of Tata Nano has brought about a new revolution in the country’s small car segment. Seeing the good initial response from consumers, many other players in the industry are chalking out their plans to launch cars in this segment in the next few years. Our research foresees a CAGR growth of around 12% in domestic volume sales of passenger vehicles during the forecast period. Other segments, such as two-wheelers, multi-purpose vehicle and light commercial vehicle, are also expected to witness fast growth in coming years.

The report covers various aspects of the Indian automobile market and gives detailed analysis of its various segments such as passenger vehicle, commercial vehicle, utility vehicles, multi-purpose, two wheelers and three wheelers. Each section succinctly explains the current and future market trends, and developments in the Indian automobile market. There are immense opportunities for various industry players including automobile manufacturers and players of automobile components.

Besides, we have also comprehensively analyzed the auto component industry and its future outlook. The study has evaluated growth avenues available for the automobile market, which include automotive design market, non-conventional vehicle market, domestic tyre industry, India as global manufacturing hub, green car market etc.

Literature review

1.CONSUMER RESEARCH IN DIFFERENT DISCIPLINES:

A considerable body of literature in a range of different discip lines exists on consumption,consumer behaviour, and consumer decision-making process. Research in economics,business, marketing, psychology and sociology domains studies consumer behaviour fromdifferent theoretical premises: “for economists, consumption is used to produce utility; forsociologists, it is a means of stratification; for anthropologists – a matter of ritual and symbol; for psychologists – the means to satisfy or express physiological and emotional needs; and forbusiness, it is a way of making money”(Fine 1997).

For more than a decade now, a range of studies that address environmentally sound consumerbehaviour, e.g. car use, waste sorting, minimisation and recycling practices, have beenconducted. However, few studies evaluated consumer acceptance of the PSS concept – aconsumption based on non-ownership of physical products, see, for example, studies on carsharing schemes (Schrader 1999; Meijkamp 2000), ski rental and washing services (Hirschl,Konrad et al. 2001).

One reason explaining the lack of studies in the area could be that, there are still not manyPSS schemes in place to serve as test grounds. Another reason could be uniformity ofresearch focus. Most of consumer research focused on adopter categories, habits, attitudesand intentions, rather than on actually measuring the satisfaction level with the service. Thereason is probably that PSS ideas have been promoted by researchers from the environmentalmanagement, marketing, design, and engineering fields, and to a lesser extent by sociologists, who hold the banner of research in customer satisfaction.

2. CONSUMER SATISFACTION PROCESS :

The paramount goal of marketing is to understand the consumer and to influence buyingbehaviour. One of the main perspectives of the consume r behaviour research analyses buyingbehaviour from the so-called “information processing perspective" (Holbrook and Hirschman1982). According to the model, customer decision-making process comprises a needsatisfyingbehaviour and a wide range of motivating and influencing factors. The process canbe depicted in the following steps (Engel, Blackwell et al. 1995):

Need recognition – realisation of the difference between desired situation and the current situation that serves as a trigger for the entire consumption process.

Search for information - search for data relevant for the purchasing decision, both frominternal sources (one's memory) and/or external sources.

Pre-purchase alternative evaluation - assessment of available choices that can fulfil therealised need by evaluating benefits they may deliver and reduction of the number of options to the one (or several) preferred.

Purchase - acquirement of the chosen option of product or service.

Consumption - utilisation of the procured option.

Post-purchase alternative re-evaluation - assessment of whether or not and to what degree the consumption of the alternative produced satisfaction.

Divestment - disposal of the unconsumed product or its remnants. Besides the information processing perspective, marketing analyses consumer behaviour by employing a psychologically grounded concept of attitudes (Balderjahn 1988; Ronis, Yates et al. 1989; Luzar and Cosse 1998). It is consumer attitudes that are usually named as the major factor in shaping consumer behaviour and a wealth of studies is available on the topic of how attitudes can predict behaviour.

3. WHY CUSTOMER SATISFACTION IS SO IMPORTANT : It seems self evident that companies should try to satisfy their customers. Satisfied customers usually return and buy more, they tell other people about their experiences, and they may well pay a premium for the privilege of doing business with a supplier they trust. Statistics are bandied around that suggest that the cost of keeping a customer is only one tenth of winning a new one. Therefore, when we win a customer, we should hang on to them.

Why is it that we can think of more examples of companies failing to satisfy us rather than when we have been satisfied? There could be a number of reasons for this. When we buy a product or service, we expect it to be right. We don’t jump up and down with glee saying “isn’t it wonderful, it actually worked”. That is what we paid our money for. Add to this our world of ever exacting standards. We now have products available to us that would astound our great grandparents and yet we quickly become used to them. The bar is getting higher and higher. At the same time our lives are ever more complicated with higher stress levels. Delighting customers and achieving high customer satisfaction scores in this environment is ever more difficult. And even if your customers are completely satisfied with your product or service, significant chunks of them could leave you and start doing business with your competition.

A market trader has a continuous finger on the pulse of customer satisfaction. Direct contact with customers indicates what he is doing right or where he is going wrong. Such informal feedback is valuable in any company but hard to formalise and control in anything much larger

than a corner shop. For this reason surveys are necessary to measure and track customer satisfaction.

Developing a customer satisfaction programme is not just about carrying out a survey. Surveys provide the reading that shows where attention is required but in many respects, this is the easy part. Very often, major long lasting improvements need a fundamental transformation in the company, probably involving training of the staff, possibly involving cultural change. The result should be financially beneficial with less customer churn, higher market shares, premium prices, stronger brands and reputation, and happier staff. However, there is a price to pay for these improvements. Costs will be incurred in the market research survey. Time will be spent working out an action plan. Training may well be required to improve the customer service. The implications of customer satisfaction surveys go far beyond the survey itself and will only be successful if fully supported by the echelons of senior management.

Introduction to the tata nano

The Tata Nano is a proposed city car debuted by India's Tata Motors at the 9th annual Auto Expo on January 10, 2008 at Pragati Maidan in New Delhi, India. Called the people’s car in Tata's promotional material, it was projected to be the least expensive production car in the world. The standard version of the Nano is projected to sell for Rs. 100,000 (approximately US $2500, GBP 1277, or € 1700) , not including fees or delivery. Newsweek identifies the Nano as a part of a "new breed of 21st-century cars" that embody "a contrarian philosophy of smaller, lighter, cheaper" and portend a new era in inexpensive personal transportation —and potentially, "global gridlock". The Wall Street Journal confirms a global trend toward small cars, led by the Nano.The prefix "Nano" derives from the Greek root 'nanos', meaning dwarf — as with nanometer. "Nano" also means "small" in Gujarati, the native language of the Tata family, founders of the Tata Group.

History and conception

The project to create a 1 lakh (1 lakh = 100000 rupees) car began in 2003, under the Chairman of Tata Motors, Ratan Tata. The strategy behind the project was the awareness of the number of Indian families who had two wheeled transport, but couldn't afford a four wheel car, and was based on the company's success in producing the low cost 4 wheeled Ace truck in May 2005. The Nano was unveiled at the 2008 New Delhi AutoExpo. Industry convention was that a reliable car couldn't be made at such a low price, so initial media speculation was that the car would be a simple four-wheeled auto rickshaw. However, The Times of India reported that the vehicle is "a properly designed and built car". The Chairman is reported to have said, "It is not a car with plastic curtains or no roof — it's a real car." During development the company reinvented and minimized the manufacturing process, brought in innovative product design, and asked component manufacturers to look at current work and design approaches in a different perspective to produce logical and simple solutions.

The car was designed at Italy's Institute of Development in Automotive Engineering, with Ratan Tata ordering certain changes during the process, such as reducing the number of windscreen wipers from two to one.

Financial projection:Tata initially targeted the vehicle as "the least expensive production car in the world" — aiming for a starting price of 100,000 rupees or approximately $2300 US despite rapidly rising material prices. Tata Motors has been able to cut down the cost of the car by making things smaller and lighter, doing away with superficial parts and changing material wherever possible. Tata Motors company had received lakhs of enquiries through the internet for the Nano.Tata Motors intends to open bookings for the car three months from now. Tata Motors plans to produce 2,50,000 Tata Nano Cars in the first phase and add 1,00,000 in the second phase, taking the total production capacity to 3,50,000 cars probably by the end the next financial yearAs of August, 2008 material costs have risen from 13% to 23% over the

car’sdevelopment, and Tata now faces the choice of introducing the car with an artificially low introductory price, raising the price of the car, or foregoing profit on the car — the latter an unlikely proposition., while an increased price on the Nano will likely decrease demand.

Research methodology

1. Problem statement: objectives and the purpose of the study:

To understand the customer satisfaction levels of tata nano Features and the benefits of the car adda to high customer satisfaction Features and the benefits of the car that is not considered as important

factor for customer satisfaction

Significance of the study:

To gain insights wheather the product delivers what it promises

2. Variables under study:

Dependent variable: customer satisfaction Independent variables: Price ,After Sales Service, Availability of

Service Stations, Maintenance Cost, Comfort, Design and Dimensions, Fuel Options, Safety Features, Luggage Space, Mileage, Engine Performance, Leg Space, Warranty, Engine Sound , Resale Value, Accessories Quality,Individual Satisfaction Level

3. Research hypothesis:

Customer Satisfaction of Tata Nano Customers:

H1: Customers satisfied with Tata Nano

Factors Influencing Customer Satisfaction:

H1: Price plays an important role in customer satisfaction (CS)

H2: There is a strong relationship between CS and after sales service

H3: There is a strong relationship between CS and availability of service stations

H4: There is a strong relationship between CS and maintenance cost

H5: There is a strong relationship between CS and comfort

H6: There is a strong relationship between CS and Fuel Options

H7: There is a strong relationship between CS and Safety Features

H8: There is a strong relationship between CS and Luggage Space

H9: There is a strong relationship between CS and mileageq

H10: There is a strong relationship between CS and Engine Performance

H11: There is a strong relationship between CS and warranty

H12 : There is a strong relationship between CS and leg space

H13: There is a strong relationship between CS and Engine Sound

H14: There is a strong relationship between CS and Re-sale Value

H15: There is a strong relationship between CS and Accessory Quality

4. Research design:

Research Classification: Descriptive

Data Collection Technique: Primary Research

Population: All Tata Nano Users in Bhubaneswar

Sample Size: 20

Sampling Method: Random Convenient

Sampling

Data Collection Tool: Structured Questionnaire (17)

Data Analysis Tool: SPSS ver 11.2

5. Data analyisis:

Univariate hypothesis test:(for H1-H15)

regression analysis: for analyzing H16 Design = 1.382 + 0.915C - 0.340L + 0.127 S – 0.35 EP

Factor Analysis

Components: Design, Service Station, Luggage Space, Engine Performance, Warranty of Spare Parts, Maintenance Cost, Engine Sound contributes 80.06% of total variance in customer satisfaction

6. Findings:

Attributes which has a Strong Relationship with Customer satisfaction of Nano Cars :

Price Service Station Design Safety Engine Performance Engine Sound Resale value