Posted at 11.15.2018
With the discharge of the Tata Nano it is created a stir on the globe automobile industry as the least expensive car. The Tata Nano also known as the 100, 000 Rupees car (£1500 approx) was targeted at the individuals who were not in a position to buy an automobile. In order for Tata to get this to possible that they had to lessen many features which is obvious in the other normal cars, in order to adhere to their price. The Nano fulfills the all of India's safety specifications and polices.
Tata has used the Market Penetration Prices Strategy on producing the Nano to the Indian market. They have got imposed a minimal price on the Tata Nano to be able to sell the product and gain a more substantial market talk about. As Tata has gained a huge market talk about in their engine industry the Nano is only another addition to Tata's motor unit section. The Nano is a very low priced car as it is been targeted mainly at the people who are not able to afford a car. With the reduced price Tata can gain a more substantial market show which is an gain to Tata. While using higher level of competition the Nano has to maintain their price or the Nano will eventually lose its market show and it's place in the automobile industry and the minds of individuals, as Tata has also known as the Nano as the 'individuals car'.
Even though this charges strategy is employed by companies to encourage brand turning, in here the purpose of the Tata Company to look at this costing strategy is to get new users who are unable to offer competitive products which are costly in price. At the same time the introduction of Nano will shock the competitors and they'll not find enough time to react by exploring the secrets of manufacturing Nano at such a minimal price. This low price will become a hurdle for the competition to enter the market.
The Nano can be used by an initial time user or a normal user and also segmented to a culture, sport or outdoor oriented lifestyle. The low price will typically attract first time users and create considerable acceptance through the growing of positive word of mouth. The Nano also appeals to small car buyer like the Maruti 800 and bike riders, as well as the public of the people that wasn't in a position to afford a car. The Nano is categorized as a niche product because the Nano is merely sold through dealers of Tata and its unique features and the brand recognition it has received get this to a consumer specialty good.
The Nano was a product that people was waiting for, therefore the demand for the Nano is highly stretchy which is a very good positive point for Tata when they are starting. By this Tata will be able to enhance their sales of the Nano with the reduced price which is been imposed on the Nano. In case the demand for the Nano is flexible Tata can reduce the cost of production per product.
However the company must face problems if indeed they want to improve the price tag on the merchandise at a specific time into the future as people will generate long term goals. The company is also risking their image by offering the product using this strategy as customers will tend to generate a misconception that Tata brand is associated with low quality. Also the business will have to face higher problems over time with the low profit margins that will not be sufficient for suatainability of the firm in the long run.
If Tata is to start the Nano in Europe Tata must take into consideration the high quality strategy where in fact the price of the product will be high as well as the quality of the product. In order to be sold in Europe Tata must enhance the quality and features of the Nano as the Nano was created to the criteria and restrictions of India, while the criteria and regulation of Europe are different in comparison to India. As a minimal price would make it hard for the Nano to survive in the Western market using its current features. Due to its other competitors with better features and also with a low price. The Nano has to maintain its price to its minimum to avoid competition.
But at the time of launching the product the company will have to choose one of the two new product prices strategies available. From the two it'll be best for the business to just do it with the same market penetration prices technique for the launch as it can not go ahead with the Market Skimming Rates Strategy even in the European market. The company cannot use Skimming rates here unless the Nano car moves as a high end product. This means that if the Tata Company will release the same Nano car that they have launched in India, in the European market as well they will have no option apart from to utilize the Penetration Charges Strategy for the start. If the product is likely to be launched as a higher end product with the relevant improvements to ultimately suite the European market then the company can use Skimming Pricing.
But Tata cannot apply the same pricing strategy across all countries because each country is different to each other, because the price billed in a country depends on many factors. That's where the international costing price adjustment strategy is applied. One country's economic background may be different to some other country's economic backdrop. The income level and the per capita income of the countries even within the Western continent will vary. Company can go with a higher price in par with the features provided by the merchandise in richest countries in Europe such as Luxembourg, Norway, Great Britain, Germany or Belgium. However they need to charge a relatively low price in poor countries within the continent like Kosovo, Albania, Moltova etc. As most of the founded car designers such as Chrysler, Ford and Peugeot can be purchased in the rich countries like Germany, THE UK and France etc. it's best for the Tata Company to focus on Nano to the poor countries in the Western continent with its positioning as the least expensive car on earth.
The price of the Nano may change with respect to the level of duty the government will be imposing on the Nano; a higher taxes would relatively improve the price of the Nano and vice versa. As a result of this the projected price by Tata of 100, 000(rupees) can't be maintained in other countries, which is a drawback for Tata. The financial conditions is not the only real drawback, Tata has to face problems such as competitive situations and laws and regulations. At the same time Tata will have to make alterations to the merchandise to meet up with the safety criteria and vehicle polices among different countries on the planet. The vehicle expectations and safety rules among the different countries in the European continent won't be the same. As Tata must make changes to suit the markets of each country definitely the purchase price that they might ask for will also differ from country to country.
The imagine Mr. Ratan Tata is a good one that he intends to help the lower class of men and women with an inexpensive way of vehicles. But the Tata Nano has its negatives and positives. If the automobile is usually to be sold at such a low price there would be huge excessive demand. Inside a country like India an automobile like Nano would be perfect to bypass traffic but as people start buying more and more Nano's there will be a large issue of unnecessary traffic in the locations. Once this happens people will have a significant problem of heading somewhere as there is a huge traffic leading to people to spend most of their amount of time in the road. This will generate huge traffic congestion challenging the regulators to expand the width of the roads and build more subways so that individuals could avoid traffic. This will demand massive government opportunities by the government for which they will have to raise funds through the collection or charging of taxes from the organization community and the normal citizens. This may again influence Tata as it is also a member of the organization community of India and it'll have to pay a relatively bigger portion of its taxes to the federal government.
If the demand for the Nano begins to increase it'll reduce the demand for the two wheeler manufacturers (engine bicycles and bicycles) that may make a monopolistic competition. This will likely affect the lifestyle of this type of businesses as well as it will affect the business enterprise of founded automakers in the European continent. As Nano will generate huge competition to these manufacturers, the earnings level of these businesses should come down and their income would fall. This can have an impact on the income of the employees of the businesses as well as to the living of suppliers who was simply regularly supplying part parts to them. These will create an enormous job risk for the career of these people as they could have to face terminations of work and layoffs.
As the Tata Nano is built of a minimal grade metallic (lightweight aluminum) the damage caused to the automobile is immense which is very high-risk for individuals who travel in it as it does not have any air bags, which the front of the vehicle is very brief it could cause a big damage to vehicles as well as the passengers. The increase in the sales of the Nano would create a lot of audio and air pollution especially in countries like India; it would also cause a lot of car parking problems if the amount of cars begins to increase. As there are more vehicles on the highway the emissions will be substantial creating global warming and ozone part depletion. This can adversely affect medical conditions especially of the urban populace who live by the roads.
The Nano is merely a city car and it cannot travel at very high speed on highways especially in USA and European countries. Once the car is at its top quickness it will have a tendency to be tossed of the street causing damages, and an automobile like this is not good at all for venturing long distances. However the people will not really understand the days in which it could be used as they'll be blind by the reduced price interest. This good deal will create a fallacy among everybody to buy the vehicle without really assessing their travel requirements and their suitability for them. This might take place in the way of any fad for a short time frame and later when individuals understand it the fad will fade but it will create a bad image for the globally renowned 'Tata' brand.
In order for the Nano to be bought from European countries or USA it has to look under serious improvements, because Tata cannot present the Nano which they had created for India just as to the Western and US marketplaces. The current Nano is made under the standards and laws of India, and as such for it to be sold to the Western or the united states market Tata must change the Nano based on the relevant countries requirements and regulations, where in fact the US and Western standards and regulations are much stricter than India.
Tata will have to be worried about the safety issues of the Nano and run assessments to check on if the Nano still has any factory defaults. Tata should be on the alert on this issue because it is one of the major benchmarks that are compulsory in virtually any vehicle in the Europe and the united states. Tata will also need to consider about the emission of the car. Tata will have to build two different types of Nano's for the US and European Marketplaces in order to meet up with the standards and legislation of these two market segments.
Through the purchase of land rover and jaguar Tata has made a good impression on the thoughts of people, and Tata will not be having any problem in marketing the Nano in these marketplaces if the Nano goes with the expected adjustments. Tata is very popular for its heavy vehicles which is been trusted in many European countries Tata already has established the marketplace. As Tata will be creating a Nano which fits the criteria and laws of the Western market with more features Tata will be able to sell the Nano easily. Also with Nano's good deal compared to the other brands, they have gained popularity and as many people are looking ahead for its introduction of the Western version Europe is a good export market.
After taking into consideration the factors about the European market we will come to a finish that, there are better export marketplaces for Nano than the European countries and US markets. There are so many other markets where the Tata Company can send the automobile without much investment on alterations. Then this is far more convenient for the manufacturer also, as they can export the initial style of Nano without doing any changes to it if the Tata Company exports the automobile to countries like Sri Lanka, Bangladesh, and Nepal. African countries like Namibia, Erithria, Libya, Malawi etc. are also good export markets for the company's product as the social and economical conditions of these countries are somewhat just like India the merchandise will suite these countries in the original version without requiring any alterations. The travelling costs of the automobile (freight charges) also will be high if the automobile is usually to be exported to European countries and US than exporting it abroad so when they add the freight charges also the price of the Nano will surge and the company will never be in a position to sell it at the low price that they expect.
Entering western markets with this product being an Asian company will also cause the company to handle certain International Marketing hazards. As systems get advanced at a level in the Western european region the car will require regular modifications to stay competitive. So that people in this area always opt to go for the big and large car models like Chrysler the customers of Nano will also have no brand commitment to the merchandise. According to all these the company is facing huge dangers by exporting the car to this Western european market.