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Tata Nano was one of the longest awaited and most talked about automobile
debuts in India. It is known as peoples car. It is an engineering marvel to come
out of India in terms of cost efficiency, fuel efficiency and space efficiency.
This paper is an attempt to study the consumer behavior and also their perception
towards car in the post-launch period. Factors that motivate buyers to purchase
this car have also been studied.
Introduction
Consumer behavior is the field of study that focuses on consumer activities. It should
be primary focus of every aspect of the firms marketing program. Consumption is
a key to understand why consumers buy products (Blackwell et al., 2007). In this
study, analysis has been made to judge the perception of individuals towards Tata
Nano after its launch. The small car market in India is increasing at a great pace.
The main players in the small car market like Tata Motors and Maruti Udyog are
competing fiercely. All the small car manufacturers are trying to out do each other
in terms of design, innovation, pricing, technology, etc., in order to increase their
market share. There is a healthy competition in the Indian small car market which
has intensified since the Indian government decided to boost the small car sector.
Due to this reason, excise duties have also been reduced. Demand for small cars
has increased due to aspirational lifestyle of people which makes them strive to
purchase a car early in life. Moreover these cars are more affordable and utilitarian.
Tata Nano was one of the longest awaited and most talked about automobile
debut in India (Farris et al., 2009). Tata Nano was launched in Mumbai on March 23,
2009. The car was priced of at Rs. 130,000 approximately. Tata Nano is an
engineering marvel to come out of India in terms of cost efficiency, fuel efficiency
and space efficiency.
To target the specific segment and also to tap bottom of pyramid, Tata Motors
has entered into agreements with 15 preferred banks/NBFCs for the Tata Nano
booking loan product. The preferred financial institutions areState Bank of India,
Tata Motor Finance, State Bank of Patiala, ICICI Bank, State Bank of Travancore,
* Reader, Department of Commerce and Business Management, GNDU Amritsar, India.
E-mail: bikramhundal@rediffmail.com
**Junior Research Fellow, Department of Commerce and Business Management, GNDU
Amritsar, India. E-mail: saurabhgrover1985@gmail.com
Consumer
Behavior
Towards
Tata Nano: A Perceptual Study
2010 IUP.
All Rights
Reserved.
29
State Bank of Mysore, State Bank of Hyderabad, State Bank of Bikaner and Jaipur,
State Bank of Indore, Axis Bank, Punjab National Bank, Federal Bank, Corporation
Bank, Indian Bank and the Central Bank of India (http://www.tata.com/media/
releases/inside.aspx?artid=24zoKJrlFVk=).
Review of Literature
Goyal and Aggarwal (2008) attempted to find the relative importance of various
factors that attract the customers while selecting a particular car in its segment.
For the said purpose, the questionnaire was developed and respondents were
selected by convenience sampling method. As many as 277 respondents were
selected from Ludhiana city including 67 respondents with luxury cars and 117
with small cars. Various techniques like factor analysis, mean, standard deviation
and bivariate correlation had been used. The study revealed in the case of purchase
of luxury cars, the factors like horsepower, model, luggage capacity, accessories
and loan facility emerged as most significant; in the case of medium cars; aftersales service, availability of spare parts, model, shape and engine capacity were
important; and in the case of small cars, the factors like accessories, engine capacity,
after-sales service and price were main considerations. So, it was recommended
that the car manufacturers had to properly understand the relative importance of
various attributes for the different segments of cars.
Kaushik and Kaushik (2008) investigated empirically customers preference
towards passenger car brands in South West Haryana region. They also considered
pre-purchase and post-purchase behavior and factors influencing the brand
preference of passenger cars. Judgmental sampling method was followed and study
was carried out in Bhiwani and Mahendragarh districts of Haryana during JuneAugust 2007. Cross tabulation and multi dimensional scaling techniques were used.
It was observed that Maruti 800, Alto and Wagon-R were favorite in that region
and customers were more influenced by friends and relatives rather than dealers
and sales persons. Brand name, fuel, efficiency and price were found to be primary
determinants for buying cars in that region.
Research Methodology
The present study is mainly based on primary data collected from around 100
respondents from Amritsar. These respondents were interviewed through a
pre-tested, well structured questionnaire which was administered personally.
Convenient and judgmental sampling method has been used keeping in view the
socioeconomic characteristics. Five-point scale has been used for the said purpose
ranging from strongly agree to strongly disagree. The families residing in the posh
30
and planned colonies were selected for the survey. To find out the perception of
respondents towards Nano, factor analysis was used. Factor analysis is a set of
techniques which, by analyzing correlations between variables, reduces their
number into fewer factors which explains much of the original data, more
economically (Nargundkar, 2010). The survey was conducted during the period
from January 2010 to March 2010. The demographic characteristics of the
respondents depict that the majority of users of Tata Nano were in the age group
of 20-30 years and 64% of them were females and most of them were graduates.
Factor Analysis
Explanatory factor analysis is used to identify the underlying constructs and
investigate relationships among the key survey interval-scaled questions regarding
perception towards Tata Nano in the post-launch period. To test the suitability of
data, reliability test has been conducted and value of Cronbachs alpha comes out
to be 0.7678 which is significant. This significant value is derived by deleting three
variables that were lowering the value of alpha. So, factor analysis is applied to 24
statements (after deleting three statements). The following steps have been
conducted to analyze the data (Hair et al., 1995):
1. The correlation matrix is computed and examined. It reveals that there
are enough correlations to go ahead with factor analysis.
2. Kaiser-Meyer-Olkin measure of sampling adequacy is computed which is
found to be 0.577. It indicated that the sample is good enough for survey.
3. The overall significance of correlation matrices is tested with Bartlett Test of
Sphericity (approximately chi square = 669.097 and significant at 0) provided
as well as support for validity of the factor analysis of the data set (Table 1).
Table 1: KMO and Bartletts Test
Tests
Corresponding Values
Kaiser-Meyer-Olkin measure
0.577
of sampling adequacy
Bartletts test of sphericity
Approx. Chi-Square
669.097
df
276.000
Sig.
Hence, all these three standards indicate that the data is suitable for factor
analysis. Principal components analysis is employed for extracting factors.
Rotation Method
Orthogonal rotation with varimax was applied (Table 2). The latent root criterion is
used for extraction of factors. As per it, only the factors having latent roots or
eigenvalues greater than one are considered significant, and all the factors with latent
roots less than one are considered insignificant and disregarded (Hair et al., 1995).
There are only eight factors having eigenvalues exceeding one in our study.
The percentage of total variance is used as an index to determine how well the
Consumer Behavior Towards Tata Nano: A Perceptual Study
31
32
VAR23
VAR24
Note:
0.219000
0.70300
28.19200
2.75200
0.20800
0.08962
0.40100
0.05690
0.22300
0.08389
0.33000
36.274000
1.940000
0.031650
0.071030
0.131000
0.042050
0.129000
0.077960
0.212000
0.378000
0.121000
0.117000
0.40200
0.147000
0.106000
0.066610
0.251000
0.009865
0.031290
0.074890
F5
43.46100
1.72500
0.21700
0.11200
0.23800
0.13800
F6
F7
0.05112
0.0528
0.07171
0.16000
0.35400
0.18600
49.175000
1.371000
0.004543
1.18900
54.317000 59.26900
1.234000
0.545000 0.47600
0.218000 0.09170
0.02768
0.049410
0.139000
0.538000
0.10900
0.05208
0.14400
0.062330 0.00750
0.178000
0.005030
0.114000
0.07216
0.008890 0.02910
0.118000
63.95600
1.12500
0.27200
0.72500
0.17800
0.08610
0.21500
0.00540
0.25800
0.04423
0.13300
0.17700
0.15700
0.05920
0.10100
0.08300
0.693
0.627
0.642
0.662
0.728
0.753
0.584
0.649
0.577
0.561
0.748
0.633
0.595
0.492
0.596
0.702
0.752
0.02310
0.639
0.73400
0.657
0.766
0.454
0.651
0.470
0.722
Communalities
0.10400
0.01960
0.19000
0.04240
0.12700
0.01351
0.60100
0.203000 0.35600
0.389000
0.088960
F8
0.209
0.69800
0.38600
0.14300
0.17500
0.19900
0.043600 0.07810
0.011180
0.116000
0.071090
0.308000
0.744000
0.239000
0.217000 1.31000
0.052070
0.545000 0.16600
0.004961
0.229
0.717000
0.350000
0.021830
0.84800
0.66200
0.310000
0.250000
0.069240
0.332000
0.359000
0.142000
0.152000
0.133000
0.150000
0.357000
0.232000
0.010870
0.060480
0.154000
0.155000
0.305000
0.078670
0.216
0.52100
0.05150
0.09920
0.01270
0.08320
0.30100
0.22600
0.19000
0.03942
0.32400
0.08610
0.01989
0.08767
0.11200
0.734000
0.802000
0.08030
0.11700
0.02301
0.51100
0.62700
F4
0. 138
0.619000
0.030280
0.034850
0.67400
0.11400
0.21300
0.02127
0.23200
0.07120
0.10900
0.02700
0.05120
0.18500
0.07680
F3
0. 119
4.01400
16.72500
Eigen-value
Cumulative
Percentage
of Variance
0.06810
0.13400
VAR22
VAR27
0.18500
VAR21
0.28900
0.16200
0.03110
0.07620
VAR19
VAR20
VAR26
0.27300
VAR18
VAR25
0.01435
0.19100
VAR17
0.69200
VAR13
VAR14
0.01457
0.51100
VAR9
0.03300
0.17400
VAR8
VAR12
0.16100
VAR7
VAR10
0.02130
0.09530
VAR5
VAR4
VAR6
0.45200
0.03950
VAR3
0.07290
0.66400
VAR2
F2
0.0020
0.73700
VAR1
F1
total factor solution accounts for what the variables together represent. The index
for present solution accounts for 63.956% of the total variation. It is pretty good
figure and we lost only 36% of the information content in our study.
F1
F2
F3
F4
F5
F6
F7
F8
Name of
Dimension
Statement
Factor
Loading
Status symbol
0.737
and reference
0.692
group
0.664
0.511
0.703
0.674
Risk and
0.627
discomfort
0.511
0.402
Product
0.802
performance
0.734
0.619
0.848
environmental
0.662
issues
0.447
Product
promotion
0.717
0.538
Market
0.744
penetration
0.545
0.545
Customer
0.698
dissatisfaction
Noisy engine.
0.601
Running and
0.734
maintenance
0.725
cost
Consumer Behavior Towards Tata Nano: A Perceptual Study
33
Conclusion
The perception of people towards Tata Nano after its launch has been worked out
with the help of questionnaire. The results of factor analysis revealed that
motivational variables like enhancement of social status, low maintenance cost,
etc., motivates a potential customer to purchase this car.
Some persons were disappointed with the working of this car as they considered
it risky. They think that Tata Nano is more accident prone as its a very small car
and moreover there were some reports regarding bursting of its rear engine in
case of rear collision. There is a huge waiting list for the purchase of this car and
more over it is uncomfortable due to less boot space.
There is a performance problem as its pick up is very low and engine is less
powerful. It is not suitable to drive on highways as its highest speed limit is only
80 km/h adding to dissatisfaction in customers.
It is a less expensive car when compared to other cars. Therefore even low
income group can buy it leading to high congestion on roads and adding to parking
problems.
Promotional strategies also tempted potential customers to buy it. Its brand
ambassador being Ratan Tata himself really helped it in increasing its sales. Dealers
image also affects customers decisions adding to high sales of Tata Nano.
The price of car is low, and so it can be gifted to children instead of two wheelers.
Its low price complemented with the Tatas market penetration strategy as with
this low price figure, it can even reach rural areas and capture this untapped market.
Some of the customers of Tata Nano were dissatisfied with the car due to bad
after-sales service and moreover its noisy engine disturbs the customer. At last, it
is recommended that Tata Nano is really a peoples car but company needs to
work more on its features and safety and enhance its production so that people
dont have to wait to purchase it. @
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Consumer Behavior Towards Tata Nano: A Perceptual Study
35
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13. auto.indiamart.com/cars/indica/index.html
14. http://www.tata.com/media/releases/inside.aspx?artid=24zoKJrlFVk=
15. tatanano.inservices.tatamotors.com
16
www.autocarindia.com
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22. www.cartradeindia.com
36
23. www.carwale.com
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Reference # 02J-2010-10-03-01
37
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