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Consumer Behavior Project On CUSTOMER PERCEPTION OF TATA NANO

FOR UNDERSTANDING WHAT MADE SALES OF NANO DECLINE INSPITE OF ITS BEING COST-EFFECTIVE

TABLE OF CONTENTS
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1. 2. 3. 4. 5. 6.

Title page1 Table of contents........................2 Letter of Transmittal... ..3 Executive summary.4 Introduction...........................5-6 Problem definition..7

7. Approach to the problem..8 8. Research design..9-11 a) b) c) d) e) 7. Information needs.................9 Data collection from primary and secondary sources9 Scaling techniques..10 Questionnaire development and pretesting10 Sampling techniques and field work.10-11

Data analysis..11-19 f) g) h) i) j) k) Methodology....11 Plan of data analysis11 Results11-17 Limitations of the study............18 Conclusions and recommendations.18-19 References..19

8. Exhibits l) Questionnaire and format20-24 m) Statistical output

Customer Attitude and Perception towards Tata Nano

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During the course of this project we visited TATA AUTOMOBILE dealers in DELHI-NCR region (Dhingra Motors, ABS motors, TATA Motors Workshop etc. A questionnaire was prepared by us for all the people who visited the Tata showroom which included prospects looking at buying cars in the range of Rs 1 3lakhs.

EXECUTIVE SUMMARY
The sales of NANO dipped drastically in month of November, which is why we thought of taking this up as our project topic. We began our research by visiting the above mentioned dealers, with an aim to get a broader view about the current status of sales of the car. That is where we met a sales agent by the name of Mr. Akshay. He gave us good amount of information about what according to him were the reasons behind the sipping sales. According to him, some of the reasons included: Bad word of mouth when a few cars caught fire. Reasons like lack of power steering, engine at the back, AC unavailable in the base model. Hence, with a sample size of 50 people, we decided to undertake DESCRIPTIVE research. Also, according to the type of information required, we framed our questionnaire using a combination of scaling techniques like, likert, itemized, semantic differential and scales like nominal and interval. We got most of our questionnaires filled from the showroom, where people came asking about NANO, as they were the real prospects, and a few from other locations too. Simultaneously, we gathered secondary data.

INTRODUCTION
COMPANY PROFILE TATA MOTORS was incorporated in 1945 as TATA engineering and locomotive company (TELCO). It started its operation with manufacturing of locomotives and engineering product. Tata motors are Indias largest automobile company with the revenues of 35651.48 crores .The Company is world fourth largest truck manufacturer, and the world second largest bus manufacturer. Tata motors acquired Fords UK based car brands Jaguar and Land rover. The introduction of Tata Nano by Ratan Tata (Chairman of Tata group) was a great innovation that got something for the people of India. Looking at the unavailability or quality of transport was a common problem in India and with the introduction of Tata Nano it came to be as a boost for public. On a two wheeler when a
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family of four people sitting on one motor bike or a scooter it becomes relatively unsafe for a family. Keeping this in the mind Tata Nano was created to make it reach to people of India.

IDEA GENERATION I saw families riding around on scooters with kids standing up and mother carrying a baby and sitting with uncomfort and so decided to something about it. It started as a quest for an affordable transportation for the solution of problem of Indian public. (Ratan Tata) ABOUT TATA NANO Tata Motors today announced the commercial launch of the Tata Nano, keenly awaited across India since its unveiling on January 10, 2008. The Tata Nano is BS-III* compliant and comes with an all-new 2-cylinder aluminum MPFI 624 cc petrol engine mated to a four-speed gear box and will be available in three variants. The cars will be on display across the country at Tata Motors Passenger Car dealerships and other select authorized outlets from April 1st.

THE THREE VARIANTS The Tata Nano offers an incredibly spacious passenger compartment which can comfortably seat four adults. With a length of just 3.1 metres, width of 1.5 metres and height of 1.6 metres, the Tata Nano has the smallest exterior footprint for a car in India but is 21% more spacious than the smallest car available today. A high seating position makes ingress and egress easy. Its small size coupled with a turning radius of just 4 metres, makes it extremely manoeuvrable in the smallest of parking slots. The three trim levels and their key features available at launch are:

Tata Nano Standard (BSII* and BSIII*): The standard version, in three colour options, single-tone seats, and fold-down rear seat. Tata Nano CX (BSII* and BSIII*): In five colour options, with heating and air-conditioning (HVAC), two-tone seats, parcel shelf, booster-assisted brakes, fold-down rear seat with nap rest; Tata Nano LX: (BSIII*) With the features of CX plus complete fabric seats, central locking, front power windows, body coloured exteriors in three premium colours, fog lamps, electronic trip
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meter, cup holder in front console, mobile charger point, and rear spoiler. Many of these features are not available on current entry-level small cars in the country. TECHNICAL SPECIFICATIONS: 1. Length : 3.1 m 2. Width : 1.5 m 3. Height : 1.6 m 4. To seat : 4 5. Engine : 643cc, 2-cylinder, all-aluminum 6. Power : 33 BHP 7. Position : Engine, battery at rear end 8. Boot : In front 9. Fuel : Petrol 10. Fuel injection : MPFI 11. Fuel consumption: 20 kmpl. 12. AC : Only in deluxe version 13. Passenger side mirror : No 14. Power steering : No 15. Price: $2500 at dealer + VAT + transport cost. Base version approximate on-road price: $3000 16. Tyres: Tubeless tyres. 17. Body : All-steel Features: Crumple zones, intrusion-resistant doors, seat belts, 2 A-Pillars

Problem Definition
In 2003 Ratan Tata the chairman of TATA came out with the vision to launch a car which is affordable to all the families riding around on scooters with kids standing up and mother carrying a baby and sitting with uncomfort and so he decided to do something about it. It started as a quest for an affordable transportation for the solution of problem of Indian public. The TATA NANO was previewed firstly at Indias 9th Annual Auto Expo January 10, 2008. Before this Tata had pulled out of its Singur plant, in West Bengal for producing this car, where they had invested Rs. 1500 Crores in October 2008, due to opposition by Trinamool Congress. Then after exploring opportunities & possibilities of setting up plan in Maharashtra, Uttrakhand, Karnataka Tata Motors chose Gujarat, to give reality to their dream car. The Car was set to roll out in 2009. The first Tata NANO manufactured at Gujarat plant was set to roll out by the end of 2010. But commercially it was launched on March 23, 2009.

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After analyzing the secondary data about the NANO we come to know that the sales of the car declined in 2009-2010 due to some failures (secondary data): The car catching fire Bad word of mouth Inadequate distribution network

Possibly due to the above reasons the market of NANO declined drastically in 2009. From selling 9000 units in July to 509 in November, the major problem in front of us was to determine the possible aspects of customers perception and attitude that led to such a decline.

Consumer Decision making process in buying TATA Nano

Even though Tata Nano is the least priced car in India, it falls in the category of complex buying behaviour.
HIGH involvement
LOW involvement

SIGNIFICANT DIFFERENCE

Complex buying behaviour

Variety seeking Buying Behaviour

FEW DIFFERANCES

Dissonance reducing buying behaviour

Habitual buying behaviour

Buying behavior

To substantiate the above statement, secondary data suggests indicates that people feel that buying TATA NANO is as difficult as buying other cars.

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Analysis of stages in complex buying behavior

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

Need Recognition

The 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 Maslows theory.

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) B) C) D)

Personal Sources- Family, friend and neighbours Commercial sources: Advertising, sales people, dealers, display Public Sources: Mass media and consumer rating agencies Experiential sources: Demonstration, examining the product

Since buying Tata Nano is complex buying behavior 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.

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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. 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 Price (Ex-Showroom) SPARK ALTO

Rs. 1,23,361 Rs. 3,184 (for 36 month loan)

Rs. 3,23,458 Rs. 8,350 (for 36 month loan) 3495 mm 16 km/litre 5 Person 161Km/Hour Ventilated discs Self-Adjusting Drum

Rs. 2,29,148 Rs. 5,915 (for 36 month loan) 3495 mm 18.3 km/litre 5 Person 137 Km/Hour Disc Drum

Immobilizer Overall Length Mileage (Highway) Seating Capacity Maximum Speed Front Brakes Rear Brakes

3099 mm 24 km/litre 4 Person 105 Km/Hour 180 mm dia. drum b 180 mm dia. drum brake

We can see that Tata Nano does not have immobilizer. An immobilizer 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.

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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.

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 behavior. 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 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.

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8o% Satisfied

20% Dissatisfied

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.

8o% Average Safe

20% equally safe Safe

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. 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 that 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 behavior 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.
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Target Audience Who will buy the Tata Nano? If online polls are an indication, target audience of TATA Nano "humdo-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 is 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.

HYPOTHESIS TESTING
My approach to the problem was as follows: 1. First of all, we visited the dealer, so that we can get a real insight of what the customers feel about NANO, what are the problems they are facing and therefore are not ready to buy it. The dealer told us the problems of customers, as to which features satisfy them as well as those which dissatisfy them. They also told us about what are the techniques that are again attracting the customers and they have started buying NANO. 2. From this insight, we came to know that we have to conduct descriptive research; accordingly, we framed the questionnaire, using various scaling techniques. As to what is the kind of data we need, and who will be our prospects, that is our sample size, and from where we will be getting our sample. 3. Then, we decided our sample would be those people who are from middle income demographics, who have already bought NANO, or who are going to buy it, as well as those who have cars between 1-3 lakhs. Also we realized gradually that, people of upper segment that is with higher income group also are buying NANO, for their young children, as well as for giving it as gifts, so we considered them as our sample too. 4. Then, we got our questionnaire filled, by this sample.
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5. After that, we made our hypothesis. 6. Then we started analyzing it through a tool known as SPSS. 7. And finally we arrived on the conclusion part.

RESEARCH DESIGN
We conducted descriptive research. We have taken up this research, since our product- NANO already exists, and we need to know the customers attitude and perception, and what is the relationship between various variables, so that we can find out the association. Descriptive research does not fit neatly into the definition of either quantitative or qualitative research methodologies, but instead it can utilize elements of both, often within the same study. The term descriptive research refers to the type of research question, design, and data analysis that will be applied to a given topic. Descriptive statistics tell what is, while inferential statistics try to determine cause and effect. Descriptive research can be either quantitative or qualitative. It can involve collections of quantitative information that can be tabulated along a continuum in numerical form, such as scores on a test or the number of times a person chooses to use a-certain feature of a multimedia program, or it can describe categories of information such as gender or patterns of interaction when using technology in a group situation. Descriptive research involves gathering data that describe events and then organizes, tabulates, depicts, and describes the data collection Descriptive studies report summary data such as measures of central tendency including the mean, median, and mode, deviance from the mean, variation, percentage, and correlation between variables More specifically, we have conducted cross-sectional design, where we have taken, a sample in a snap-shot, that is, in one go, for the respondents.

TYPE OF DATA NEEDED: For our research, we need to collect primary as well as secondary data. 1. PRIMARY DATA: We conducted interviews of our sample. We went to 2 dealers in Gurgaon and 1 in Delhi.

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2. SECONDARY DATA: We collected data from the web-site www.tatamotors.com . We also collected feedback of NANO users from website. We also got information from our text bookNARESH K. MALHOTRA and library.

SCALING TECHNIQUES Most of our question in our questionnaire is close ended but some of them are open ended too. The primary scales of measurement which we used in our research are NOMINAL AND INTERVAL. In case of non-comparative scaling techniques, we used ITEMIZED RATING SCALE, more specifically, the LIKERT scale as well as SEMANTIC DIFFERENTIAL SCALE.

SAMPLE TECHNIQUES In our research, we have used NON-PROBABILITY SAMPLING, more specifically, QUOTA SAMPLING, where we selected quotas of people who already have NANO, who are expecting to buy it in the near future, those who have cars ranging from 1-3 lakhs, and those who want to buy it for their children, wife or for the gift purposes, and finally among these quotas we used CONVENIENCE SAMPLING.

QUESTIONNAIRE DESIGN:

Mentioned in appendix

WHY HAVE WE CHOSEN THIS QUESTIONNAIRE? We have chosen this questionnaire keeping in mind the expectations of the answers. For e.g., when we want to find out which features of NANO are important and to what extent they find them in NANO as in question 20 and 21. This questionnaire fulfills our requirement of type of data we need, in order to know about the attitude and perception of people about NANO.

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WHAT IS SAMPLE SIZE AND WHY HAVE I CHOOSE THIS? Our sample size is 50, and we opted for this, since, we had a long questionnaire, for which people were not ready to fill it easily, also there was a time constraint. Also, we couldnt take sample of less than 50, or our analysis could not have been done, and the sample would not have been the true representative of the actual population.

FIELDWORK: We collected our most of the data from the people from TATA NANO showroom, where people came asking for NANO, for this purpose we visited two dealers of Gurgaon- ABS motors and DHINGRA motors. Also we collected a few from a market, as well as some from our locality from 21st to 26th.

DATA ANALYSIS:
Methodology:

DEPENDENT VARIABLES: Gender, age and price. INDEPENDENT VARIABLES: cost effectiveness, usage as taxi, perception, preference and purpose.

LIMITATIONS:

The accuracy of the responses given by the respondents. Data was collected from the limited locations of GURGAON; therefore findings cannot be generalized for the whole city or country. Lack of the interest in people due to long questionnaire. Language was a barrier between the interviewer and the respondents to collect the responses.

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QUESTIONNAIRE
Name Email Age Occupation .

QUESTIONNAIRE ON TATA NANO

Q.1 what is the first thing that comes to your mind when you encounter word Nano? People's car Poor man's car Innovation Tata

7% 13% 50% 30% people car poor man's car innovation tata

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Q.2 Do you have a four wheeler? Yes No

Chart Title
Yes No

9%

91%

Q.3 what purpose do a car serve for you? 1.Transportation(personal) 2. Taxi 3. shopping 4. to flaunt

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Chart Title
Transportation(personel) Taxi Shopping To flaunt

10% 25% 54% 11%

Q.4 Instead of purchasing a bike, will you prefer to go for NANO? Yes No Cant say

2%

36%

yes 62% no can't say

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Q.5 which car do you prefer to buy? Alto Santro Nano Others(please specify)

Chart Title
Alto Santro Nano Other

22%

39%

18% 21%

Q.6 which characteristics of Nano are disliked by you and that if those were not there, you would have bought it? (Liked it, for those who already have) Safety features AC is not available in the base model Engine at the back Making noise while starting

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Chart Title
Saftey A/c not available Engine at the back Making noise while starting

22% 42% 18%

18%

Q.7 what are the possible issues in nano which prevent you from buying it? Loan availability Delivery time No frills in the car Middle class status perceived by the people

Chart Title
Loan facility Delivery time No frills Middle class status perceived by the people

16% 45% 31% 8%

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Q.8 Will you recommend Nano to your relatives and friends? Strongly recommend Recommend Will not recommend Cant say

Chart Title
Strongly recommend Recommend Will not recommend Cant say

10%

15%

45%

30%

Q. 9. Can you trust NANO for safety? Yes No Cant say

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19%

21%

yes 60% no can't say

Q.10 how will you feel if NANO is used as a taxi? Embarrass Dont care Cant say

Chart Title
Embarrass Dont care Cant say

10%

12%

78%

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ANALYSIS

I found it essential to know the immediate thought that came to peoples mind the moment they hear the about NANO. In my attempt to find out some association, the findings suggested that majority of the respondents associates NANO with Tata, followed by linking NANO with innovation. Secondly, it was found that people enquiring about NANO were already existing car users. There are different reasons for people buying a car. Hence, we were trying to understand as to what needs a car caters to, for the respondents. My findings suggest that majority of the people were looking at buying a car for pure utility (utilitarian), that is, for transportation and not to flaunt or use it as a taxi etc. Quite contrary to the companys perception, that people would like to upgrade to a car from two wheelers, it was found that most people would still prefer buying a fancy bike rather than upgrading to NANO. Post the tragic incidents of a few NANOs catching fire, 61% of the people felt that safety was not a concern with the car and it did not come in way of making purchase decisions. Another major finding has been that people do not prefer NANO as banks only provide 90% of finances for buying the car, contrary to 100% finances provided for the purchase of other cars besides NANO. People would not recommend NANO to others. Lastly, the data suggests that people attitude was indeed neutral towards the car catching fire and they did not really give it too much of heed.

RECOMMENDATIONS:

Tata as a brand is extremely strong. That is the reason why most people think of Tata the moment they hear the word NANO. This is a big plus point for marketers.
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They can use this exceptionally high brand value to promote the car and encourage purchase. The survey has clearly revealed that people enquiring about the car were not those who were looking at upgrading from a two wheeler to a car, but those who were already existing car users. Hence, the company must reposition itself and would greatly benefit by devising innovative communication strategies for different target audience (youngsters, women & elderly). This would also help in increasing awareness and diversifying target groups. Safety features should be highlighted in advertisements, which would bring about confidence in the minds of consumers and over a period of time, this would not come in way while considering to buy the NANO. Warranty period can be extended by the company from 2 years to 3 years for some time, which would assure customers of quality and reduce the dissonance in their minds. A/Cs must be made a part of the basic model of the car. The company must aim at establishing as many service centers as possible in order to enhance convenience for customers.

REFERENCES:

ABS MOTORS- Sales executive (AKSHAY KUMAR) DHINGRA MOTORS www.tatamotors.com MARKET RESEARCH (an applied orientation-5th edition)-by NARESH K. MALHOTRA AND SATYABHUSAN DASH CONSUMER BEHAVIOR- BY MATIN KHAN

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