Professional Documents
Culture Documents
Cost Leadership Strategy is the strategy that Tata Motors following regarding Nano in this
case study. This Cost Leadership Strategy is describes a way to establish the competitive
advantage. Cost leadership, in basic words, means the lowest cost of operation in the industry.
Here Tata motors also use this strategy for Tata Nano.
We think this strategy gives a competitive advantage to the Tata Motors company because by
this product they shows that they have better technology, better supplier of raw materials and
increasing Brand image.
Price of the Nano was lowest which causes the biggest competitive advantage in the
emerging competitive market. They had managed to grow interest in peoples mind by
announcing that Buy a brand new car with a cost of only $2000. As a result, they got
so many response from customers and customers started to make booking before even
launching the car.
This car also having the technology of less fuel consumption with a greater mileage.
Tata Nano required only one gallon to travel 55.5 miles (23.6 kilometers per liter). This
makes Tata Nano a fuel efficient vehicle, which will save money in the long-term. This
mileage comes with a powerful engine of 623 cc with a maximum speed of 105
Kilometers per hour.
The problems Tata Motors face in Producing and Marketing Nano are given below:-
Future strategies should be taken by Nano in the face of upcoming competition from the new
entrants are given below:1) Clean up the Brand Image: - Nano first of all needs to re-establish itself as a credible
brand. This might be the hardest thing to do given the beating the brand image has
taken because of the fires. Nano would need to aggressively work on its PR and show
how the accidents are not because of flaws in Nanos design but because of some
unfortunate external factors.
2) Define a clear Marketing Strategy: - Nano needs to have marketing strategies to target
its real consumer segment which is the masses of India and showcase the Nano as an
aspirational product for them instead of coming across as an accessory for the rich.
3) Rework on Pricing: - when Nano started, a major challenge was to prove whether it
was possible to manufacture a car which can be sold at the price of Rs. 1 lakh. That
point has been proven. The real challenge now is creating profitable car business. If Tata
starts pricing its Nano in a range where it is more cost-effective, it would first, reduce the
losses Tata incurs per car, as well as give the brand a facelift.
4) Innovate new segments and ideas: - Tatas Nano can be powered with MDIs
compressed-air engine which will potentially bring about sweeping changes in the
automobile industry.
5) Focus on Other Countries: - Export Nano to Indonesia, Eastern Europe and also Brazil
as well as Southeast Asia where it can be sold without the bad name it has earned in
India.
6) Exchange offer for getting more customers: - Tata should give exchange offer
against a two/four wheeler so that those consumers can be easily converted to Nano
users.
7) Enhancing safety measures: - Safety measures can be enhanced, because people
consider it as their prime concern while purchasing. Including some basic safety features
like: - Air bag, Antilock, Double brake and better quality that dont burns out.
8) Option for Customization: - An option for customization should be available.
Creating a functionality advantage is at the core of product development. The development of
the NANO shows that it is possible to build cars for the poor without compromising on safety
and comfort.