Shakti Singh Rathore

Nano “A Dream Car for the poor”

Q1. Examine the factors taken into account by Ratan Tata and used later on to
position the product?
Q2. How do you the customer satisfaction/Loyalty paradox?
Q3. What are the challenges Nano will face and how it should be communicated to
people?
Ratan Tata taken into considerations several factors before the launch of the Na
no like:
1. Safety: Due to large number of accidents two wheelers are a relatively u
nsafe mode of transportation as compared to four wheelers. This two wheeler imag
e got Mr.Tata thinking on safer forms of personal transport. Hence he factored i
nto changes in styling and hence increased safety performance.
2. Low Cost: RNT always wanted to produce an affordable, safe and personal
transport for a majority of Indians. Reengineering of car parts and better distr
ibution network added to low cost. Urbanisation leads to need of a mass transpo
rt of good quality. He exhorted the team of engineers to come out with a low cos
t car that would cause marginally more than two wheelers.

3. Mass Appeal: India is a growing economy at 8 percent per annum GDP growt
h. It resulted in increase in larger middle class with higher purchasing power d
ue to increased incomes. This led RNT to come out with a CAR that would appeal t
o a larger mass of people, a car that is affordable by majority of Indian buyer
and saw a large market potential for the CAR in the coming years.
4. Environment Friendly: Car causes less pollution as compared to two wheel
ers and supports green technology as supported by RNT. These would be in accorda
nce with international norms and globally appealing.

Positioning:
RNT worked and encouraged the engineers to design the Car keeping in perception
the requirements and needs of the customer. Customer satisfaction was put at hig
hest. He acknowledged the safety demand of Indian customer and came out with the
Nano.
Nano is a low cost car and positioning it as an Rs 100000 Car directly targeted
the Indian consumer who always was looking for a low cost car. Large rural marke
t with low income is great potential customers.
Company anticipated and exploited early information that customers are looking f
or a car that satisfies their social and emotional needs. Indian customer having
low budget always inspired for a car that would be under his budget and raise h
is social status. Hence in this way nano came out as a car of masses.
Today customers are more educated and well informed; hence a car that is environ
ment friendly and is an innovative design will go well with the customer’s psych
e.
Customer Satisfaction/Loyalty paradox:
It is necessary to identify niche of customers (20%) who are the bulk proportion
(80%) of customers and remaining customers who have only 20% of consumption. He
nce it is necessary to identify these 20% best customers for the company and to
treat them differently in order to acquire, retain and upgrade them. Customer sa
tisfaction is function of how closely customers experience from business conform
s to their expectation.
Customer Satisfaction= {customer experience – customer expectation}.
Customer Satisfaction>0 It enhances customer’s LMV.
Customer Satisfaction<0 Customer attrition are more frequent and reduces LMV.
LMV is customers Life time mean value of using a product.
Kotler (1997) defines customer satisfaction as follows- "satisfaction is a perso
ns feeling of pleasure or disappointment resulting from comparing a product is p
erceived performance (or outcome) in relation to his or her expectations." It po
rtrayed the idea of measuring how satisfied customers are with the organization
s efforts in a market place. Customer satisfaction measures the following variab
les:
1) Product
2) Service
3) Relationship
4) Price
5) Convenience
6) Brand image
7) Brand association
8) Total customer experience
The above explain different views related with two ambiguous terms. Now the para
dox raised the following questions.
1) Does satisfied means loyalty of customers?
2) Does satisfied leads to loyalty?
The answer to the first questions is no. As due to highly competitive market sce
nario, competitive pricing mechanism and incentives brand building programme mak
es the customer vulnerable over there lifetime.
The answer to the second questions is often no as because there are several fact
ors other than satisfaction like occasion of use, peer pressure etc influenced t
he process. Hence, the argument still exists.
In the world of mass customization, the work of the marketing department is not
only restricted to developing more customer but also to find out a way to strike
a balance between customer loyalty and customer satisfaction. However, the idea
is easy to say but difficult to implement. But taking the advantage of competit
ive environment it is necessary to effectively design and supply new product off
ering so that it indirectly enhance the long run economic life time value (LMV).
Challenges faced by Nano:
Seventy eight percent of total automobiles sales are accounted by two wheelers i
n which motorcycles form the largest part and to position Nano, a four wheeler i
n this competitive market is a challenge.
Maruti Suzuki is the largest market player with size 50.38%, while tata motors h
as only 17 percent market size, hence it will require a new strategy by tata mot
ors to sale nano and increase customer’s loyalty to brand nano.
High prices of petrol, poor road quality and absence of poor parking facilities
in commercial and residential cities, pollution and high taxes on four wheelers
affect the market for four wheeler automobile industry of which Nano is no Excep
tion.
Problems remain in the area of services and distribution. Poor service and absen
ce of trained service personnel across the country affects the growth of automot
ive vehicles especially those of passenger cars.
Now problem with Nano is how to scale up the operations of the Nano to meet ever
growing demands. What innovations are required to successfully market the produ
ct? Tata Nano is expected to spawn a new range of auto repair shops and accessor
ies. To distribute effectively Tata motors came out with the idea of converting
distributors into entrepreneurs and would transport cars in completely knuckled
down condition (CKD) kits of cars at warehouses and assemble them at the site.
Communicate Brand Positioning Strategy
It is important to communicate Nano’s Brand in a meaningful and convincing manne
r to the customer. In case of Nano following ways can be adopted:
• Instructional material giving customer a know how of car’s technology an
d its standards.
• Use of fancy car colours to make it more attractive to customers.
• Effective distribution outlets such that cost of Logistics is minimised
at a large scale and delivered to customer hassle freely.
• New pricing strategy for different segments of customers.
• Create a brand in the customer’s psyche of a low cost, pollution free an
d innovative car through campaigns and advertisements.

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