Tata Nano: The People's Car

In January 2008, Tata Motors introduced the Nano which is a small, inexpensive car built with solving the traveling needs of middle-class level families as the primary objective. The international automobile entity was aimed at creating something that would serve a significant part of the Indian population that had difficulties traveling within and outside the big cities of the country (421). It hoped to raise the number of car owners in this nation with a population of over one billion from approximately eight million to around thirty million considering that by 2009, 18 million Indians had the potential to purchase a personal vehicle. It also hoped to gain customers' preference internationally as the project was believed to be a game changer in the world. Later the following year, the company launched the estimated $2,500 automobile and the consumers were given an official green light to begin booking.

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As much as the initial production stage was not smooth as the company would have expected as it had to deal with land problems, the launching would also be followed by more challenges. Nano's appealing features and price resulted in the rise of orders to 203,000 by May 2009, which was more than twice than the projected figure during production (427). The land issues influenced the inability to meet these demands, and the company was prompted to choose only 100,000 buyers through a lottery. Over a year after launching, criticisms from some initial consumers regarding the quality and effectiveness of the car implicated the perceptions of potential others leading to a dramatic fall in sales from 10,000 to 509 a month in less than half a year (427). However, recovered and stabilized to about 2,500 cars per month. The drop was attributed to high-interest rates and fuel prices.

Moreover, the company faced challenges in the international market such as the US and German where Nano could not sell because of failure to reach the required standards needed to sell in these markets (428). Also, some consumers were unsatisfied with the low-quality features of this low-cost vehicle. Hence, Tata Motors need to make certain changes in the design and features of the car to counteract these challenges. It requires formulating and implementing effective strategies if it has to achieve its goals of developing Nano maximally.

Factors to Consider While Developing a Strategy

Tata Motors' management needs to make certain significant decisions that would see them through the current situation of sales' stagnation both domestically and internationally. The process of decision-making requires an evaluation of numerous and diverse ideas of which must be done professionally and strategically. It is, therefore, necessary to seek through specific factors that could influence the implementation of the most suitable and relevant strategies that could lead to better solutions to the challenges at hand. The factors include the following;

Customer Focus

When Tata Motors introduced Nano car, they were focused on the domestic Indian market such that they needed to increase the number of car owners in the country and that influenced the making of low-quality automobiles that were affordable to the residents. They made less consideration about the international market; thus, the rejection of their product, especially in the developed countries. Although they achieved their objective to build low-cost vehicles that passed the Indian safety standards, they did not consider how international regulatory agencies and consumers would react, and this led to the negative criticism (Palepu n.p). Hence, this being one of the problems, it is crucial to understand the type of consumers they need. In this case, for instance, some of them are fundamental value buyers that are experienced and sophisticated such that they can influence the manufacturer's decision (Mendoza p.933). In this way, they will be able to come up with a substantial strategy that would significantly help in creating cars with consumers' preference.

Company-Consumer Relationship

After launching, one of the primary challenges that the company faced was the criticism of the car's quality by some of the initial customers of which led to backing off of others who probably were willing to buy the product. It is essential to understand there is more after delivering what was promised, and this is strengthening the bond. Most likely the entity has already created loyal customers considering it has operated for more than half a century and this is a marketing advantage. However, Nano car is a new product that is being introduced in the market, so it is vital to ensure the consumers bond with it as much as they are to the company and this will involve giving them what they want. This way, criticisms will reduce while promotion will shoot up through customer-customer recommendations. Hence, this is a worthy factor that should be considered to enhance the chances of implementing the right strategies.

Type of offering

In India, it has already been established that the consumers are bonding with Nano although the growth rate is slow considering that the profit margin is below 5%. However, it is still unclear in some other markets, especially where there is rejection due to regulatory safety standards. Therefore, it is vital to consider whether the small, low-cost car, which is the offering, is adding value to the people as expected considering there is stiff competition in these markets. It is a consideration that significantly influences the kind of strategies to formulate and implement to address the apparent issues effectively.

Alternative Suggestions for Strategy

Tata Motors's management can implement various strategies to address the issues affecting their sales. Two of these strategies include the following;

Find new markets

It is one of the riskiest strategies that can be implemented considering the fact the company will have to keep off some of the most profitable markets in the world including the developed countries with advanced safety regulations such as the US and German. This is one of the disadvantages because the customers in these locations would not be able to purchase the product unless they are out and beyond their boundaries. Thus, it has another limitation since the entity will be required to use a lot of resources and time to find other markets that are equivalent to some of the largest consumers' bases in the world. However, the company could benefit from an increased number of sales compared to the current situation where they are not as impressive as anticipated (Doole & Robin n.p). It can venture into other locations where the safety standards are compatible with the car's features and model, and it suits consumers' preferences. Another benefit is that the company will spread the usefulness of the Nano car vastly and it will be required to make minimal changes to enter the markets of the developed countries. Also, it will have accumulated resources through the vehicle of which is worth as it raises the profit margin and knowledge of how the consumers need the product to be modified. Hence, this strategy is applicable, but it is important to assess how the pros and cons implicate the company's entire productivity including in the markets that are to be forgone either temporary or permanently.

Offer a different quality for different prices

In this case, this is the most suitable strategy to implement considering that the sales are mostly affected by the features and model of the Nano car. The drop from 10,000 to 509 and back to 2,500 units a month was because of the criticisms from some consumers that they were unsatisfied with the product. Similarly, it was unable to venture into the developed markets since it failed to meet the safety regulations of those countries. Thus, Tata Motors can decide to create a higher quality model with more advanced features but will have to adjust prices to meet the enhanced costs of production (Fawcett et al. n.p). It will benefit in that the sales would most likely augment since the consumers will be buying a car that suits their needs. The appreciation of points of view will have a significant impact on the preference of the customers and will have the will to buy the improved automobile. Also, it will have the required standards to enter more and large markets in the world to promote the car. Unlike before, the advanced features will enable the company to sell Nano to consumers of developed countries and this is a boost to the sales. However, it will have forgone its dream of creating vehicles that suit the middle-class families because of the price augmentation. Also, it will be required to change a lot of things in the process of improvement that might alter with the car's model including shape and size of which this not the anticipation.

Final Recommendations

Upon evaluation of the merits and demerits of the two alternative suggestions above, the best strategy to implement in the apparent situation is enhancing quality and adjust the prices. In both alternatives, the motive is to create more market to improve on sales, but there is more in quality enhancement as interests of both the manufacturer and the consumer are prioritized (Besanko et al. n.p). The company can build a healthy relationship with the customers in the respective markets without having to choose some over others because of the inability to produce and offer them what they need. Hence, it is a strategy that is aimed at achieving long-term goals, and that will help create long-term and loyal consumers.

Steps of Implementation

The following are two of the most significant steps in the implementation of the selected strategy.

Determine the Target Market

It is important to identify the market where the car is expected to sell to ensure that the production is based on their preference and its reliability to meet their needs. It is a step that involves interaction with potential customers to gather different opinions and points of view regarding the intended enhancements (Fawcett et al. n.p). This way, the entity will have crucial information on what to include in the modified automobile and how to set the price to ensure it achieves its objectives.

Monitoring

It is a step after distributing, and it mostly involves keeping track of the progress in establishing whether the strategy worked as per the expectations to ascertain what needs improvement of changing. It will help create room for adjustment to avoid more errors that could lead to thwarting of the entire process and failure to fulfill the goals.

Consequences of Implementation

Some of the possible implications of the application of this particular recommendation are that the company will be required to add more workforces to ensure significant transformations from what was created before and did not reach the required standards. This, however, is a minor issue considering that Tata Motors is a large entity and has some of the best talents and skilled human resources, so it will just need to reassign duties (Doole & Robin n.p). The automobile manufacturer will create a car that is liked by many due to it is uniqueness and improved quality, and which can compete in the global market for low-cost cars. Hence, the consequences of this implementation would not have significant effects on the productivity of the large international car assembling entity.

Conclusion

Tata Motors' leaders hoped that Nano car would be a life-changing innovation that would turn the lives of many families in India around who could not afford cars because of their high prices. The low-cost automobile was the solution to the unsafe conditions in which some people were traveling in including overcrowded scooters and motorcycles. However, these expectations were disma...