A STUDY ON PREFERENCE

FOR TATA NANO

By

 Reshmi
 35
 PGDM-
BIF


 ACKNOWLEDGEMENT

I, Reshmi. P.G student of PGDM (BIF) extent my sincere thanks to

Mrs. JAYSHREE RAVINDRAN faculty member of INSTITUTE OF
PUBLIC ENTERPRISE for allowing me to do a project in “Preference
for Tata Nano”
 INDEX

Introduction
Literature Review
 Conceptual Model
 Research Methodology
 Data Interpretation and Analysis
Conclusion
Bibliography
Appendix
 INTRODUCTION
TATA NANO is India's largest company in the automobile and commercial vehicle
sector with upwards of 70% cumulative Market share in the Domestic Commercial
vehicle segment, and had a 0.81% share of the world market in 2007 according to
OICA data. The OICA ranked it as the 19th largest automaker, based on figures for
2007, and the second largest manufacturer of commercial vehicles in the world. The
company is the world’s fourth largest truck manufacturer, and the world’s second
largest bus manufacturer. In India Tata ranks as the leader in every commercial
vehicle segment, and is in the top 3 makers of passenger cars. Tata Motors is the
designer and manufacturer of the iconic Tata Nano, which at INR 100,000 or
approximately USD 2300, is the cheapest car in the world.

Tata Nano, The people’s car, an engineering marvel, the middle class’ dream
however you refer to it. The Tata nano is on every one’s minds. The cheapest car in
the world is all over the news and people can’t just get enough of it.

Ratan tata’s people’s car is offered at the price of Rs one lakh. Though the road tax,
service tax etc will augment the cost and the car will finally be available at a price of
about one lakh and thirty thousand rupees.

TATA Motors began development of the world's cheapest production car in 2003,
inspired by the number of Indian families with two-wheeled rather than four-wheeled
vehicles. Tata Nano, people’s car is the dream of Ratan Tata to give every family in
Indian accessibility to travel in a four wheeler. Tata Nano under Tata Motors, by its
name defines its product. Tata one of the strongest and the oldest brands in India is
trustworthy and reliable so even its products carry the same tagline. Tata Nano which
will be the world’s cheapest car will be priced from Rs. 1,000000 and vary according
to its model.

It isn’t just this variant of the Nano which is making waves, even the Tata nano
Europa will make its debut in the European countries in the early part of 2011. The
Europa model is already creating a wave in the western media. The Tata nano is
expected to take the segment of such cars segment in India by storm. Even the two
wheeler segment might get affected and so will the replacement sector. Tata nano is
an engineering marvel to come out of India in terms of cost efficiency, fuel efficiency
and space efficiency. And every Indian should be proud of this marvel.

Tata nano is one of the most awaited cars of year as it’s cheap and also caters to the
requirement of middle class in India. In Indian market it has proved to be a
revolution.

NEED FOR THE STUDY:

PROBLEM DEFINITION: To understand the Preference for TATA Nano

Secondary objective

1. To analyze whether price of Tata Nano has an impact on the preference.

2. To study the impact of design of Nano on customer preference.
3. To examine whether brand name Tata has an influence on purchase of Tata
Nano.

FEATURES:

Safer Than A Scooter - Indian consumers bought about 7 million two-wheelers and
1 million cars in 2006/07. Tipping the ratio from scooters to cars, and so improving
public safety on India’s crowded and sometimes chaotic roads, was one rationale for
creating the People’s Car, according to Ratan Tata, the company’s 70-year old
chairman: - “That’s what drove me - a man on a two-wheeler with a child standing in
front, his wife sitting behind, add to that the wet roads - a family in potential danger,”
Tata wrote on the company Web site.

The Price - Retailing for 100,000 rupees (or “one lakh”), Tata’s rear-engine, 4-seater
is expected to put automotive ownership within the grasp of the millions of young
families who make up the country’s aspirational middle class. - At that price, it will
cost less than half the cheapest car on the market now, the mini Maruti 800, and more
than double an entry-level 100cc motorbike.
Small cars, for years the best sellers in India, are being touted as a new global trend,
with Renault’s Logan entering new markets and India’s Bajaj Auto, Renault and
Nissan looking into the feasibility of a $3,000 car.

Jobs - The Tata group chief has said the car will be manufactured in three to four
locations, including West Bengal and Uttarakhand states. A plant in Singur, in eastern
West Bengal state, is expected to employ 10,000 people.

Protests - Farmers and activists staged violent protests at Tata Motor’s Singur plant
last February, saying local people were forced off prime farmland to make room for
the plant. The government says it has compensated most of the affected farmers.

Environment - Environmentalists worry that a car so cheap could lead millions down
what they see as the wrong road, with soaring car ownership damaging the
environment and locking India into greater dependence on oil. India imports 70 per
cent of its crude oil. - Indian climate change expert R K Pachauri, chairman of the
Intergovernmental Panel on Climate Change, says the One Lakh Car is giving him
“nightmares”

Competitor: Tata Nano’s main competitor is Maruti 800, which is considered as

every Indian family’s first car so the proper positioning and marketing of Nano is
very essential. Maruti 800 is the cheapest car available in India and so Tata Nano
must break the barrier and turn the attention towards the new arrival of the cheapest
car, though the price is the main focus, we must not forget the package value and
what the car offers.
 LITERATURE REVIEW

1. Title: What Tata Nano means to India

Author: Mehul Sreevastava

Source: BusinessWeek; 5/11/2009, Issue 4130,

Abstract: The article reports on the Tata Nano automobile and India. A Nano
prototype was introduced in India in January 2008 and, as of May 2009, there will be
100,000 sold over a period of 12 months after entry into a lottery. The lottery requires
an $80 deposit and the Nano costs $2,000. Tata Motors, due to not having enough
factories, is unable to provide enough cars for the amount of customers wanting them
in India.

2.Title: Tata Nano heralds new era for Asian car brands.

Author: Fitzsimmons, Ella

Source: Media: Asia's Media & Marketing Newspaper; 10/16/2008, p20-20, 1/2p

Abstract: The article reports on the launch of a car by Tata Nano in India. The car
is intended for the masses since it costs for only $2,500. Its market segment starts in
India followed in the emerging markets in Asia. According to Shiva Seth Raman, a
CEO of TBWA, Tata Nano follows the Suzuki Maruti 800 in the democratizing car
ownership in India. The Nano prototypes have been featured to be 20 percent more
spacious than Maruti 800. The Indian group is producing the cheapest car in the
world. The potential for Asia’s masses is huge. The Nano, then, could transform
Car marketing in the region. Rival car makers are working on their responses.
Renault-Nissan is teaming up with Indian motorcycle producer Bajaj to enter the local
market with an ultra-cheap car of its own. Another potential problem for the
pioneering ultra-cheap cars is durability — especially in light of the fact that the cars
are primarily aimed at first time buyers. According to Seth Raman, the Tata Nano has
built-in brand equity, thanks to the high esteem in which the Tata family’s businesses
are held. However, the proof of the Nano will be whether it survives India’s roads.
This is obviously a concern close to the hearts of many car manufacturers.

3. Title: Tata Nano: not only a product revolution, but also a breakthrough in
product distribution.

Source: Market Watch: Global Round-up; Jun2009, Vol. 8 Issue 6, p11-12,

Abstract: The article reports on the implication of customers' decision to purchase a

Tata Nano city car from Tata Motors in India. It notes that people who buy such
vehicle will pay a variable transportation charge depending on the location where the
vehicle was purchased. It states that this approach would inspire other companies to
file lawsuit with pioneering distribution strategies. Finished vehicle logistics is of
vital importance to automakers and although there has been a greater emphasis on the
inbound supply chain in the past, manufacturers now need a holistic approach to
Logistics. Changes in production patterns provide an opportunity to re-assess
structures throughout the supply chain, including areas which have not previously
been central to the logistics strategy. The current downturn has provided an
opportunity for automakers to improve their handling of finished vehicle
logistics, as well as highlighting the necessity of doing so. Given the difficult market
conditions, no stone should be left unturned in the search for efficiencies and
initiatives in the supply chain. Indeed, there are many avenues for optimizing finished
vehicle logistics, such as co-loading with other original equipment manufacturers
(OEMs), using multi-modal options, collaboration with suppliers to improve
efficiency, and addressing environmental footprint concerns, which will gain
consumer approval. At a time when volumes in the automotive market are lower
overall, OEMs can consolidate their volumes by utilizing some of these methods. Co-
loading and sharing suppliers' services would lead to improved load factors and
therefore lower cost per unit. Automakers have put up barriers to co-loading in the
past, as they have sought to protect their own capacity allocations, however this
practice may be an unaffordable luxury in the current market. Having said that, in
order for co-loading to work the sharing parties would need the highest possible
forecasting accuracy, which is difficult in a market that is reacting to unfolding events
daily. As in all other sectors of manufacturing, automakers should be assessing which
modes of transport they are using on both a cost and environmental basis, such as
using sea instead of air freight to cut costs and using rail instead of road to improve
their carbon footprint. Now is also the time to reconsider whether roll-on/roll-off
(roro) or container sea freight is the most cost-effective option, particularly while
container lines are crying out for business. As well as the mode of transport, the
quality of service offered by logistics service providers is also of great importance,
including damage control and improving processes when damage does occur. Current
collaboration through industry bodies to standardize reporting procedures will bring
about progress toward removing duplicated costs. Additionally, IT improvements
such as data sharing, to allow effective track and trace and proactive communication
to the dealer at particular shipment milestones, will also improve transparency. As
automakers have a tough year ahead, efficiency and quality improvements must be
made in finished vehicle logistics to bring the sector in line with the more heavily
scrutinized inbound logistics.

4.Title: Low-cost cars: Lessons learned.

Source: Business India Intelligence; 11/4/2009, Vol. 16 Issue 20, p3-5,
Abstract: The article discusses the positive development of ultra-cheap car, the
Nano of Tata Motors in India. It notes that the company confirmed the additional
20% or 3,000 units’ monthly production of the cars to regain its name in the market
and to consumers. It mentioned that Tata's Nano car primarily aimed to appeal low-
income families but was hindered due to some uncalled hindrances including the
costly relocation of site, vehicle test and price.

5. Title: Worth the price.

Authors: Honeywell, Tristan
Source: Automotive Engineer; Dec2008, Vol. 33 Issue 11, p29-29
Abstract: The article reports on the move of Johnson Controls Inc. to use simple
design that was elegant and attractive to its Tata Nano in Asia. It states that low-cost
cars' interiors are not necessarily cheap to develop. It says that they can use lower-
cost materials but not those that have a cheaper image. It adds that the foam layers in
seats for emerging markets do not have to be as complex and the structures differ, but
comfort is still needed. People who buy low-cost cars don't have low standards. When
it comes to quality', buyers in emerging markets just have different expectations. The
same goes for the manufacturers. The question of how you create the value for money
in the product is even more important than with an expensive vehicle. Programme
managers have to focus the budget on the things that customers really appreciate, and
any reduction in content, features, quality- or safety has to be in areas where they'll be
accepted. There are two basic approaches for the low-cost segment. One takes
existing parts and reduces their content and cost. The other starts from scratch with
different designs that integrate functions and parts.
 CONCEPTUAL MODEL

 Dependent Variable:
 Preference for Tata Nano

 Independent Variables:
 Price
 Design
  Service and brand image

 Dependent variable: Preference for Tata nano

Under this variable we can measure the preference for Tata nano by a
customer. It measures why an individual would purchase TATA Nano.
Preference would help us understand individual customer’s wants and how the
product is able to satisfy this requirement.

 Independent variable:

 Price: This variable is an essential part of the research as price of Tata

Nano is very attractive. When a customer purchases a product price is
given a lot of importance. Tata Nano has been priced with a starting
rate of Rs.134000.00 for the Base model and Rs.160000.00 &
Rs.185000.00 for the CX & LX model respectively. It is cheaper than
the Maruti 800, its main competitor which is next cheapest Indian car
priced at 1, 84,600.00 Rupees. Nano is very affordable and cheap.

 Design: this variable talks about the design aspect of the car. Design
of a car plays a vital role for the customers to opt it. Its small size and
trendy looks have attracted a lot of attention from the customers. Tata
Nano has been designed with a family in mind, has a roomy passenger
compartment with generous leg space and head room. It can
comfortably seat four persons. It requires fewer parking spaces.

 Service and brand image: this variable measures the impact of brand
“TATA” on the purchase of the car. Tata has got a significant image in
small car segment. Thus it helps us measure whether the brand TATA
and the service network it has would influence the customer to
purchase the car.
 RESEARCH METHODOLOGY

PROBLEM OBJECTIVE:

“To understand the preference for TATA Nano”

RESEARCH DESIGN:
Research design tells us the procedure to conduct a marketing research. It details all
the steps which are to be followed to solve the marketing research problem. In this
research the design which is applied is Descriptive Research Design. It’s a formal
design. Under it a sample is identified and research is conducted. Under this analysis
we study the preference of a customer and what factors would persuade an individual
to purchase Nano.

VARIABLES AND MEASURES:

Measuring dependent variable: Preference for TATA Nano

1. Appropriate for your family: It measures how well TATA Nano is

suitable to the customer family requirements. It’s affordable car with
attractive features. This would help us understand people preference for the
car.

2. Easy to drive: TATA Nano is a small car which would make it easy to
drive especially for women. This would be a major aspect for opting Nano.

3. Prefer it to a 2 wheeler: Nano is preferred by the customer over a two

wheeler because it would provide safety and better seating space.
Measuring independent variable:

 Price:

1. Affordable car: Nano is the cheapest car in the world which proves to
be a major plus point. It’s cheap and reasonably priced.

2. Fuel efficiency: Nano provides better mileage compared to any other

small car.

3. Maintenance cost: The cost of maintenance of the car is very low

which would result in purchase of the car.

 Design :

1. Trendy Look: Nano has an attractive design and look. Nano is

available in different colours. The customer could select the required
colour. Apart from this it also provides various additional features
which could be availed by the customer according to his requirements.

2. Fewer parking spaces: As Nano is a small car it requires fewer

parking spaces. It’s an add on feature for Nano.

3. Better seating capacity: Nano is a comfortable car for a family of

four. It provides better seating capacity compared to that of a two-
wheeler.

 Service and Brand image:

 1. Service Network: The service network of Tata would influence the
purchase of car to a larger extend. Apart from this the spare parts of
nano which are available in the market also would play a vital role.

2. Brand Image: The brand name Tata in the market would persuade the
customers to opt for Nano.

Data Collection: The data collected is primary data. A questionnaire was used to
collect the data from the sample. The unit of analysis was customers who are willing
to purchase Tata Nano.

Sample Size: The data was collected from 40 respondents.

STATISTICAL TOOL USED

Statistical tool used here are

• Reliability analysis
• Correlation
• Regression
Respected Sir/ Mam

I, Reshmi P.G, am conducting a survey on “Preference for TATA NANO”. I request

you to answer the following questions and choose a degree of acceptance from the
options provided. Your response and personal details will be kept entirely
confidential.

NAME: OCCUPATION:

SA: strongly agree, A: agree, N: neutral, D: disagree, SD: strongly disagree.

SA A N D SD
1. TATA Nano is more appropriate
for my family.
2. I would purchase TATA Nano
because of its attractive features.
3. I feel TATA Nano is easy to drive
than bigger cars.
4. I would purchase TATA Nano
instead of a two wheeler.
5. I think TATA Nano is an
affordable car.
6. TATA Nano provides fuel
efficiency.
7. TATA Nano has less maintenance
cost.
8. I feel TATA Nano is cheaper mean
of transport
9. I get attracted to TATA Nano
because of its trendy look.
10. TATA Nano provides better
seating capacity.
11.TATA Nano is desirable as it’s a
small car and requires fewer
parking spaces.
12. TATA Nano provides a better
service network.
13. The spare parts of TATA nano are
readily available in the market.
 14. I feel the brand “TATA” in small
car segment will affect my
purchase of Nano.

DATA INTERPRETATION AND ANALYSIS

 Reliability analysis:

Scale: PREFERENCE CRONBACH’S ALPHA

Case Processing Summary

N %
Cases Valid 40 100.0
Exclude
0 .0
d(a)
Total 40 100.0
a Listwise deletion based on all variables in the procedure.

Reliability Statistics

Cronbach's N of
Alpha Items
.602 4

The reliability scale for Preference is 0.602. This implies that the values considered
for Preference are consistent.

Scale: PRICE CRONBACH’S ALPHA

Case Processing Summary

N %
Cases Valid 40 100.0
Exclude
0 .0
d(a)
Total 40 100.0
a Listwise deletion based on all variables in the procedure.

Reliability Statistics

Cronbach's N of
Alpha Items
 .710 4

The reliability scale for Price is 0.710. This implies that the values considered for
Price are consistent.

Scale: DESIGN CRONBACH’S ALPHA

Case Processing Summary

N %
Cases Valid 40 100.0
Exclude
0 .0
d(a)
Total 40 100.0
a Listwise deletion based on all variables in the procedure.

Reliability Statistics

Cronbach's N of
Alpha Items
.573 3

The reliability scale for Design is 0.573. This implies that the values considered for
design are consistent.
Scale: SERVICE AND BRAND IMAGE CRONBACH’S ALPHA

Case Processing Summary

N %
Cases Valid 40 100.0
Exclude
0 .0
d(a)
Total 40 100.0
A Listwise deletion based on all variables in the procedure.

Reliability Statistics

Cronbach's N of
Alpha Items
.650 3

The reliability scale for service and brand image is 0.650. This implies that the values
considered for service and reliability are consistent.
 Regression Analysis

Variables Entered/Removed (b)

Mode Variables Variables

l Entered Removed Method
1 brandands
ermean,
designme . Enter
an, price
mean(a)
An All requested variables entered.
B Dependent Variable: prefmean

Model Summary

Std. Error
Mode Adjusted of the
l R R Square R Square Estimate
1 .703(a) .495 .453 .55555
Predictors: (Constant), brandandsermean, designmean, price mean

From the above table we can analyse that the Adjusted R square value is high. Thus
the model is apt and reliable and the analysis would provide accurate results.

ANOVA (b)

Mode Sum of Mean

l Squares df Square F Sig.
1 Regressio
10.875 3 3.625 11.745 .000(a)
n
Residual 11.111 36 .309
Total 21.986 39
Predictors: (Constant), brandandsermean, designmean, price mean
B Dependent Variable: prefmean
From the above table we can interpret that the significance value is less than 0.05 and
the regression model is a good fit. The predictors measure the variables appropriately.

Coefficients (a)

Unstandardized Standardized
Coefficients Coefficients t Sig.
Mode Std. Std.
l B Error Beta B Error
1 (Constant) .528 .541 .975 .336
price mean .253 .188 .217 1.348 .186
designmean .414 .131 .438 3.156 .003
brandandsermea
.185 .148 .192 1.248 .220
n
A Dependent Variable: prefmean

Hypothesis for Price

H0: Null Hypothesis

H1: Alternative Hypothesis

H0: The independent variable Price has no significant effect on dependent variable
“Preference for Tata Nano”.
H1: The independent variable Price has a significant effect on dependent variable
“Preference for Tata Nano”.

The Significant Level of price from T-test is 0.186 it implies the independent variable
price has 81% confidence on accuracy on data. We accept Null hypothesis H0 i.e. the
independent variable Price as no significant effect on dependent variables “Preference
for Tata Nano”.

Hypothesis for Design

H0: Null Hypothesis

H1: Alternative Hypothesis

H0: The independent variable Design has no significant effect on dependent variable
“Preference for Tata Nano”.
H1: The independent variable Design has a significant effect on dependent variable
“Preference for Tata Nano”.

The Significant Level of documentation from T-test is 0.003.This implies the

independent variable design has 99.7%confidence on accuracy on data. We accept
alternative hypothesis H1 i.e. the independent variable Design has a significant effect
on dependent variable ““Preference for Tata Nano”.

Hypothesis for Service and Brand Image

H0: Null Hypothesis

H1: Alternative Hypothesis

H0: The independent variable interest rates have no significant effect on dependent
variable “Preference for Tata Nano”.
H1: The independent variable service and brand image have a significant effect on
dependent variable “Preference for Tata Nano”.

The Significant Level of Interest rates from T-test is 0.22. This implies the
independent variable Interest rates have 78.0% confidence on accuracy on data. We
accept Null hypothesis H0 i.e. the independent variable service and brand image has
no significant impact on dependent variable on “Preference for Tata Nano”.
 CONCLUSION

From the study we can understand that

1. The major plus point for Nano is its price. Majority of the respondent feel it’s
an affordable car and suits the requirement of their family
2. Design of the car has not been appreciated by many respondents. It’s a small
car, occupies less space and is available in all colours. Many respondents have
not liked the idea of small car.
3. Brand Name Tata surely has a lot of influence on the customer when he
purchases the car. As Tata is a well known company its products are well
received by the market.

The sample size of the study was 40 respondents. To get better results we can always
go for a bigger sample size.
 BIBLIOGRAPHY

1. Naresh k. Malhotra and Satyabhushan Dash, “ Marketing

Research”
2. Ebsco.com
3. Google.com
APPENDIX