Case Study: Tata Motor

Tata Motor penetrates three different market segments. The company produces utility vehicles, commercial vehicles, and passenger cars. Tata’s largest market is in India but there expanding internationally by providing the best value for the money by focusing on low cost. Tata noticed that the vehicle market was not efficient and certain vehicles were being sold too expensive for the middle-class buyer. Having started in India, a developing nation, Tata focused on the problems first hand.
In India, a three wheeled auto rickshaws are common to use for commercial use. The rickshaws are cheap and are cheaper than a four-wheel commercial truck. The rickshaw are not safe and tilt over when heavy loads are being carried but majority of Indians still use them. Tata noticed a problem in the market and introduced the Tata Ace. The Ace was a four-wheel utility truck used for commercial use and was more affordable than …show more content…
Since there was a huge price gap between the two types of vehicles, more and more people could only afford motorcycles. Tata noticed this void and wanted to improve the situation, same as what it did with Tata Ace. Tata rolled out the Tata Nano, which was a substitute product to the motorcycle. It was meant to be cheaper than the average car and affordable enough to switch over from a motorcycle. Tata Nano cost $2,300 for the base model.
By introducing a car that is cheaper than the average vehicle cost, Tata Nano had to be limited. Tata did not include airbags, ABS, seatbelts, and air conditioner. The engine was closed up and not accessible by lifting the hood. The placement of fuel tank was right under the passenger seat causing the car to be a safety hazard. By not including what Tata considered essential, Tata was able to reduce the price to where anyone in India who could afford a motorcycle, could afford a car. Before the Nano, not many people could afford a car of their