Case Study On Tata Nano

NEW PRODUCT DEVELOPMENT

TATA NANO

Submitted by :Adhiraj Sengupta - 907 Amit Kumar Madaan - 911 Arif Masud – 918 Avinash Kumar – 920 Chaman Rai – 925 Kushagra Charan - 935

IDEA GENERATION So , how did TATA known for making lumbering trucks come out with a “cute as a bug “ car that its rivals could not built to a target price of 1 lakh? “In India , a middle class family would travel by scooter in the classic, deathdefying Indian fashion. The father would drive with his son on the floorboard in front of him and the mother seated pillion, cradling her infant daughter in her arms. In India at that time, CARS for a young family were far out of reach and is still the same.”- Ratan Tata It all started with a dream which was translated into a reality on the 10th of January, 2008 at the Auto Expo, Delhi. The concept behind the creation of the People’s Car was to fill the status void that was felt by the middle class families.

IDEA SCREENING The next step was the screening of idea. How is this dream possible? What should they make?  A scooter with two extra wheels at the back for better stability?  An Auto-rickshaw with four wheels?  A three wheeled car like a closed auto- rickshaw??  A four wheeled car made of Engineering Plastics?

 A Four wheeled rural car?  Rolled up Plastic curtains in place of windows?  Openings like Auto rickshaws from the side  A four wheeled open car with safety side bars? But the market wanted a car and if they build a people’s car it should be a car and not something that people would say,“ Ah! That’s just a scooter with four wheels or an auto-rickshaw with four wheels & not really a Car.” Trying to build a car cheap enough for motorcycle buyers seems to make sense now but seemed crazy several years ago when Ratan Tata, longtime chairman of Tata Motors , first mentioned his dream of building a one-lakh car in 2003. "They are still saying it can't be done," he says, insisting that it can and will. After we get done with it, there will hopefully be a new definition of low-cost."

CONCEPT TESTING AND DEVLOPMENT Before starting the project, Wagh did something no one at Tata Motors ever had: He talked to customers. The three-wheeler men inevitably insisted on a cheap, dependable truck that could go from village to market carrying, say, a ton of onions or potatoes, one night, as sunset approached, Wagh stuck with one rickshaw driver. He says, "I kept asking the question. Why? Why? Why do you want a four-wheeler?" Wagh remembered. Finally, he got the real answer. It turned out it wasn't really a problem of transportation of vegetables “If I had a

four-wheeler, I would have better marriage prospects in my village," the young man said. Drivers of three-wheelers are looked down upon in India. Wagh realized that four wheels had emotional, not just practical, appeal. Thus the new product was now to be developed.

The car was to cost Rs. 1 lakh on road.

 The car should be built on a different platform than conventional ones.  It must be meeting all the safety and regulatory requirements.  The car has to be designed so that it can be exported to other countries as the domestic demand may not materialize as per projections. 

The car must be a beacon for the Indian Automobile industry and prove to

the world that we are capable to take any challenge and come out worthy winners.

That quest to build the world's cheapest car hasn't ended. The mission began back in 2003, when Ratan Tata, chairman of Tata Motors and the $50 billion Tata conglomerate, set a challenge to build a "people's car".

Tata gave three requirements for the new vehicle: It should be low-cost, adhere to regulatory requirements, and achieve performance targets such as fuel efficiency and acceleration capacity. The design team initially came up with a vehicle which had bars instead of doors and plastic flaps to keep out the monsoon rains. It was closer to a quadricycle than a car, and the first prototype, even a bigger engine, which boosted the power by nearly 20 per cent, was still dismal. But failure didn’t stop them they quickly realized it was necessary to bring everyone on board. Every one from manufacturers to vendor development teams were asked to be a part of decision-making. The body had to be changed because Ratan Tata, over six feet tall himself, wanted it to be easy for tall people to get in and out of the car. The attention to detail paid off: When the car rolled onto the dais at the Auto Show in New Delhi in January, and Ratan Tata stepped out of the driver's seat with ease, it made an immediate impact. What shook the automobile world most was the fact that the designers seem to have done the impossible: The sleek, sophisticated Nano didnt look flimsy or inexpensive. If it had been an upgraded scooter on four wheels, Tata still would have been applauded for making a family of four safer on Indian roads. The Nano, however, affords both safety and status. "The innovation wasn't in technology; it was in a mindset change".

BUSINESS ANALYSIS Since the car had to be built within a cost of Rs. 1 Lac, no conventional design would work as the costs shall be higher and so the entire car has to be redesigned. What makes Nano so less expensive can be well understood from the following diagram.

The design has to question the need of each and every component from the point of view of its necessity of existence and also the minimum requirements of its functionality. TATA used the concept of Disruptive Technology which was

cheaper than existing Technology, much higher performing, is convenient to use and brings radical changes. The Guiding factor was that the cost has to be minimized for each component yet maintaining its basic functionality. The Alternatives are:  Reduce Consumption of Material being used.  Alternate Suppliers to get same material at fewer prices. 

Use alternate materials.

The design was outsourced to Italy's Institute of Development in Automotive Engineering, but Tata himself ordered changes along the way. Most recently he vetoed the design of the windshield wipers. His solution: a single wiper instead of two . The target was very clearly defined that within the given cost structure of 1 Lakh all the components have to be allocated a maximum price and the same had to be achieved using the available alternatives. The Guiding factor was that the tax structure, on materials and manufacturing, must support the final cost of Rs. 1 Lakh. The Decisions were:

Establish factory in a tax free zone. Get the tax advantages on infrastructure development. Get the suppliers to establish base near the factory. Get special concessions from State Govt. 

In short select a manufacturing location where all the advantages could be

achieved.

TOTAL SALES ESTIMATION Now the question was, “how much to produce” 

It was estimated that the demand for the people’s car shall be at least twice the demand for Maruti 800, the lowest end car. Initial projections were at about 500,000 cars per year.

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The basic reason was the conviction that the target price shall redefine the 4 - wheeler segment.

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The price decision of Rs 1 lakh is definitely going to make a lot many people transit to 4-wheeler fold and that shall explode the demand.

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If only 10% customers of 9 Million two wheeler market transit to 4wheelers it shall amount to 50% of the passenger car market share.

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It was decided to set up plants with 5 lakhs cars per annum capacity and ramp the same up in stages, in line with increase in market demand.

PRODUCT DEVELOPMENT And finally the product was developed with the following features. 

Engine Capacity Bosch 624 c.c. twin cylinder.

 Low capacity, Lighter, sufficient with better Power Rear Engine to reduce the transmission length using a balancer shaft. 

4 Speed Manual Gear Box.

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All Aluminum Engine.

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Higher thermal conductivity than cast iron, Lighter and so better mileage.

 Engine Management System by Bosch  Superb control over emission and smooth acceleration.  Dimensions L: 3.1m, W: 1.5m, H: 1.6m  Less length but more inner cabin space due to height. Comfortable leg room.

 Independent Front & Rear Suspension McPherson Strut in Front & Coil spring & trailing arm in rear.  Better ride than Maruti 800.  Single piece ribbed steel body with safety features such as crumple zones, intrusion resistant doors, seat belts, strong seats & anchorages.  Safety requirements are adequately met.  Single Wiper in place of two. 

Cost effective .

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Tube less Tires.

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Weight reduced by 2 Kg. Cost reductions 200 Rs. And in line with modern vehicles.

 Instrument console in the centre  Elegant to look at and can be used both in Left Hand & Right hand version.

COMMERCIALIZATION It will be commercialized in whole of India. It is mostly targeted to the middle class and lower middle class people.

INNOVATIVE MARKETING. Tata will sell its ultra cheap new car through its own retail and electronics megastore outlets as well as auto dealerships The Rs 1 lakh car, which broke new ground in design, engineering and production processes, will opt for "cost-effective and innovative use of media," say people with knowledge of the Nano marketing strategy. To make the car more easily accessible to people, the Tata Motors team will sell the Nano not just through Tata car dealerships across the country, but also through conventional retail outlets like Westside and Croma. Westside and Croma outlets will display the Nano and also take bookings. Also available will be a whole range of Nano merchandise like baseball caps, T-shirts and key chains, among others The Nano's overall marketing strategy will use conventional media in an unconventional manner. Unlike most small cars, (Nano won't be big on advertising. There will be no TV campaign, only innovative use of print, radio and other media, particularly the web. The Tata team is working on Nano news in papers, Nano breaks on radio, Nano appearing in the form of messages or ticker news on TV, online Nano games, Nano chatrooms on the Net, Nano popups on major websites and Nano conversation on Facebook, Orkut and blogspaces). According to people in the ad industry with direct knowledge of the Nano's marketing strategy, the campaign will be cost-effective and innovative so that Nano becomes synonymous with anything "small, cute and brief." "The idea is to make the Nano part of our everyday lingo like 'see you after a nano,' it's a totally word-of-mouth campaign," said a person familiar with the Nano marketing strategy.”

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