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MANAGEMENT

RESEARCH PROJECT

FINAL REPORT (DRAFT)

Customer Adoption Process for a New Product


– A study on TATA Nano

SUBMITTED BY
JOHNNY PRINCE D
(08BSHYD0324)

SUBMITTED TO
ASST. PROF. Y. MALINI REDDY
TABLE OF CONTENTS
LIST OF TABLES .............................................................................................................................................. 3
LIST OF FIGURES ............................................................................................................................................ 3
SYNOPSIS ....................................................................................................................................................... 5
1. INTRODUCTION ..................................................................................................................................... 6
1.1. INDIAN AUTOMOBILE INDUSTRY .................................................................................................. 7
1.2. ABOUT TATA MOTORS .................................................................................................................. 9
1.3. PRODUCT STUDY ......................................................................................................................... 11
2. MAIN TEXT .......................................................................................................................................... 14
2.1 PROJECT OBJECTIVE .................................................................................................................... 15
2.2 METHODOLOGY .......................................................................................................................... 15
2.3 SCOPE OF THE PROJECT .............................................................................................................. 16
2.4 LIMITATION OF STUDY ................................................................................................................ 17
2.5 JOURNAL REVIEWS ...................................................................................................................... 17
2.6 PERIODICAL REVIEWS.................................................................................................................. 26
2.7 GAPS IN THE LITERATURE ........................................................................................................... 32
2.8 REVIEW ABOUT TATA NANO ....................................................................................................... 33
3. QUESTIONNAIRE DESIGNING AND PILOT STUDY ................................................................................ 36
3.1 QUESTIONNAIRE DEVELOPMENT................................................................................................ 37
3.2 PILOT STUDY FINDINGS ............................................................................................................... 38
3.3 SAMPLING FRAME....................................................................................................................... 44
4. ANALYSIS AND INTERPRETATION ........................................................................................................ 45
4.1 PRELIMINARY DATA ANALYSIS .................................................................................................... 46
4.2 CROSS TABULATION ANALYSIS.................................................................................................... 54
4.3 FACTOR ANALYSIS ....................................................................................................................... 56
4.4 CORRESPONDENCE ANALYSIS ..................................................................................................... 62
4.5 MULTI DIMENSIONAL SCALING: .................................................................................................. 63
4.6 FINDINGS AND RECOMMENDATIONS ......................................................................................... 66
5. CONCLUSION, REFERENCES AND ANNEXURE ..................................................................................... 67
CONCLUSION ............................................................................................................................................... 68
REFERENCES ................................................................................................................................................ 69

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ANNEXURE –I Tata Nano Gallery............................................................................................................. 70
ANNEXURE –II Tata Nano Promotions .................................................................................................... 71
ANNEXURE –II Nano Specs ...................................................................................................................... 72
ANNEXURE –III RESPONDENTS’ QUESTIONNAIRE ................................................................................ 73
ANNEXURE –IV CORRESPONDENCE ANALYSIS INPUT FILE ..................................................................... 77
ANNEXURE –V: OUTPUT OF MULTI DIMENSIONAL SCALING (MDS) ...................................................... 80

LIST OF TABLES
Table 1 Passenger Vehicle Market ................................................................................................................ 8
Table 2 Tata Motors Story Line ................................................................................................................... 10
Table 3 Regression coefficients effect in sub market ................................................................................. 20
Table 4 Sub Constructs’ terminology ........................................................................................................ 25
Table 5 Literature Gap Table....................................................................................................................... 33
Table 6 Nano with its competitors .............................................................................................................. 35
Table 7 Design of questionnaire ................................................................................................................. 38
Table 8 KMO Test - Pilot Survey Analysis .................................................................................................... 39
Table 9 Total Variance Explained Pilot survey analysis ............................................................................... 40
Table 10 Rotated Component Matrix - Pilot survey analysis ...................................................................... 42
Table 11 Factor analysis statements - Pilot survey analysis ....................................................................... 44
Table 12 chi square test Tata Nano Preference Vs Age .............................................................................. 54
Table 13 chi square test Tata Nano Preference Vs Income ....................................................................... 55
Table 14 Table 13 chi square test Tata Nano Preference Vs Suggesting Tata Nano.................................. 55
Table 15 KMO Test - Factor analysis ........................................................................................................... 56
Table 16 Total variance Explained - Factor Analysis ................................................................................... 57
Table 17 Rotated Component Matrix - Factor Analysis .............................................................................. 59
Table 18 Factors Analysis Table .................................................................................................................. 61

LIST OF FIGURES
Figure 1 Domestic Passenger Vehicles Trend ------------------------------------------------------------------------------ 7
Figure 2 Constructs and their Relationships ------------------------------------------------------------------------------ 22
Figure 3 Constructs and the Sub-constructs in the consumer search process ----------------------------------- 23
Figure 6 Age of the respondents--------------------------------------------------------------------------------------------- 46
Figure 4 Age of the respondents--------------------------------------------------------------------------------------------- 46
Figure 5 Income Level of respondents ------------------------------------------------------------------------------------- 46
Figure 7 Car Owners break-up ----------------------------------------------------------------------------------------------- 46

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Figure 8 Wish to buy Nano and Recommendation across different age groups ------------------------------- 47
Figure 9 various car brand owners ------------------------------------------------------------------------------------------ 47
Figure 10 Ease of Driving - Nano -------------------------------------------------------------------------------------------- 48
Figure 11 Long drive - Nano--------------------------------------------------------------------------------------------------- 49
Figure 12 Hill Drive - Nano ---------------------------------------------------------------------------------------------------- 49
Figure 13 Safety Aspects – Nano -------------------------------------------------------------------------------------------- 50
Figure 14 Speed Gear system – Nano-------------------------------------------------------------------------------------- 51
Figure 15 Mileage - Nano ------------------------------------------------------------------------------------------------------ 51
Figure 16 Fuel capacity - Nano ----------------------------------------------------------------------------------------------- 52
Figure 17 Performance - Nano ----------------------------------------------------------------------------------------------- 52
Figure 18 Delivery - Nano ----------------------------------------------------------------------------------------------------- 53
Figure 19 Two wheeler preference ----------------------------------------------------------------------------------------- 53
Figure 20 Scree Plot - Factor Analysis -------------------------------------------------------------------------------------- 56
Figure 21 Correspondence Analysis Output ------------------------------------------------------------------------------ 62
Figure 22 Factors preferred by age groups less than 25 --------------------------------------------------------------- 63
Figure 23 Factors mostly preferred by age group 26-35 --------------------------------------------------------------- 64
Figure 24 Factors mostly preferred by age group 36-50 --------------------------------------------------------------- 64
Figure 25 Factors mostly preferred age group above 50 -------------------------------------------------------------- 65

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SYNOPSIS
The aim of marketing is to know and understand the customer so well that the product
or service fits and sells itself.
-Peter F. Drucker (1909).
TATA nano – The car that was conceived in 2003 came into a reality when Tata Motors
had launched the much- hyped 'cheapest' car in India in March 2009. The car has cost over
Rs. 2,000 Crore to the company. The car is expected to boost the Indian economy, create
entrepreneurial-opportunities across India, as well as expand the Indian car market by 65%. The
car was envisioned by Ratan Naval Tata, Chairman of the Tata Group and Tata Motors, who has
described it as an eco-friendly "people's car". Thanks to Tata's Nano, India has been established
as an R&D leader and the other countries look forward for India in terms of technological
breakthrough, and not just a low-cost hub known for cheap labor. Tata Nano was aimed at a
product for the existing two wheeler users who want a safe, comfortable, affordable, small
family car, but looking at the booking that has been happening, there is a good number of
existing car users also to buy Tata Nano. Taking Nano globally, there is definitely good market
in the US and Europe as well. In Europe the Nano is launched under the name Tata Nano
Europa. If the car is enriched with high technology functions to make it an intelligent car, many
in the US will look forward to own it. Tata's Nano shows that there is a huge opportunity for
Indian companies to build profitable low-cost quality products and then take them to the world.

In this project the „Customer Adoption Process of a New Product – A study on Tata Nano, we try
to understand the efforts gone into the development of a New Product for the customers. The
company states that it has been able to deliver 17,357 cars as on December 2009 of the one lakh
customers who have been selected in the first-run for Nano. The company plans to boost up its
manufacturing of Nano so that it could complete the delivery of the remaining cars by March
2010. The Automobile Plant at Sanand would become operational from this year and the
company is planning to come up with a model with additional features and higher price in
addition to the existing Nano. The market response to Nano has been studied in this project by
surveying the respondents who possess/Plan to buy/Do not intend to have Nano. The suggestions
mentioned in the report, if implemented, may increase the customer preference towards Tata
Nano.

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1. INTRODUCTION
This section contains Overview about Automobile sector in India and
about the Tata Motors and Tata Nano

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1.1. INDIAN AUTOMOBILE INDUSTRY

Automobile Industry had been hailed as the „Industry of Industries‟ by Peter Drucker-
rightly been called so. The automobile Industry has evolved continuously with changing times
from craft production in 1890s to mass production in 1910s to lean production techniques in the
1970s. The auto giants had battled the World Wars, the downfall of economies and mastered the
aspects of Quality, Delivery, and Innovative product development. The automobile industry in
India is the ninth largest in the world with an annual production of over 2.3 million units (2008).
In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South
Korea and Thailand1. The automotive industry in India grew at a computed annual growth rate
(CAGR) of 11.5%2 over the past five years,. The industry has a strong accelerating effect on the
economy due to its deep forward and backward linkages with several key segments of the
economy. The automobile industry, which was plagued by the economic downturn amidst a
credit crisis, managed a growth of 0.7 % (2008-09) with passenger car sales registering 1.31
percent growth while the commercial vehicles segment slumped 21.7%.

Indian automobile industry has come a long way to


from the era of the Ambassador car to Maruti 800 to the
latest Mahindra‟s Xylo. The industry is estimated to be a
US$ 34 billion industry. Maruti Udyog and Tata Motors
are the leading passenger car manufacturers in the country.
India is being considered as a strategic market by Suzuki,
Yamaha.., The Commercial Vehicle market is catered by
players like Tata Motors, Ashok Leyland, Volvo, Force
Motors, Eicher Motors etc. The major players have tied up
with their foreign counterparts. Like Maruti with Suzuki,
Hero with Honda, Tata with Fiat, Mahindra with Renault,
Force Motors with Mann.
Figure 1 Domestic Passenger Vehicles Trend

1
Automobile Industry in India - http://en.wikipedia.org/wiki/Automobile_industry_in_India
2
According to Economic Survey for 2008-09

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The following table explains the Segment-wise analysis3 of Passenger Vehicle Market:
SHARE IN SHARE IN
TYPE DESCRIPTION CAGR KEY BRANDS
2001-2002 2006-2007
A Mini cars, upto 28% 7% -11% M800, Nano
3400 mm length
B Compact cars, 54% 70% 22% Alto, Wagon-R, Swift, Indica,
3401 to 4000 mm Palio, Getz
C Mid size cars 4001 17% 18% 18.6% Esteem, SX4(Maruti),Elantra,
to 4500 mm length Honda City, Aveo, Optra,
Logan(M&M), Icon,
Fiesta(Ford India),Petra(Fiat
India)
D Executive Cars 0.2% 3.8% 112% Civic (Honda), Opel Vectra
between 4501 to (GM), Mercedes C-Class,
4700 mm length Skoda Octavia, Contessa(HM)
E Premium Cars 0.9% 0.55% 6.0% Sonata (Hyundai),
between 4701 to Accord(Honda), Corrolla,
5000 mm length. Camry, Mercedes E-Class
(Dialmer Chrysler India), 5
series (BMW)
F Luxury cars – 0.0% 0.02% NA. Mercedes S-Class, Maybach
Above 5001 mm (Dialmer Chrysler India),
length BMW 7 Series.
Table 1 Passenger Vehicle Market

The industry leader is Maruti Udyog with 46 per cent market share, followed by Tata
Motors and Hyundai Motors. India is considered as a strategic market by Suzuki, Japan, a co-
promoter of Maruti Udyog. Hyundai Motors, the third largest passenger vehicle manufacturer in
India, has established its global manufacturing base for small cars in India and is a leading
exporter of small cars from the country. Other major players are Toyota, Honda Motors and
Ford, all of these are operating in the premium cars segment.

3
Source - SIAM

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1.2. ABOUT TATA MOTORS

Tata Motors Limited is India's largest automobile company, with consolidated revenues
of INR.70,938.85 crores (USD 14 billion) in 2008-09. It is Market Leader in commercial
vehicles in each segment, and among the top three in passenger vehicles .The Company is the
world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. The
company's 24,000 employees are guided by the vision to be "best in the manner in which we
operate, best in the products we deliver, and best in our value system and ethics”. The various
milestones are listed below.

YEAR MILESTONE4
1945 Tata Engineering and Locomotive Co. Ltd.(Telco) was established to manufacture
locomotives and other engineering products.

1959- 1961 Research and Development Centre set up at Jamshedpur.


Exports begin with the first truck being exported to Srilanka.

1966-1977 Setting up of the Engineering Research Centre at Pune.


Introduction of DI engines.
First commercial vehicle manufactured in Pune.

First hydraulic excavator produced with Hitachi collaboration.


Manufacture of Heavy Commercial Vehicle followed by Light Commercial Vehicles.
Launch of the 1st indigenous passenger car Tata Sierra.
1985-1991 TAC 20 crane produced.
One millionth vehicle rolled out.

1992-1999 Launch of Tata Sumo - the multi utility vehicle.


Joint venture agreement signed with M/s Daimler - Benz / Mercedes - Benz for
manufacture of Mercedes Benz passenger cars in India.
Tata Sumo Delux, Tata Sierra Turbo launched, 100,000th Tata Sumo Rolled out.
Tata Safari – India‟s first SUV launched.
Indica – India‟s first fully indigenous passenger car launched.
115,000 bookings for Indica registered against full payment within a week.

2000-2002 Indica with Bharat Stage 2 (Euro II) compliant diesel engine launched.
Indica 2000 (Euro II) with multi point fuel injection petrol engine launched.
Launch of CNG buses.
Indica V2 launched - 2nd generation Indica.
100,000th Indica wheeled out. (2001)
Launch of the Tata Safari EX

4
Obtained from Tata Motors official website - http://www.tatamotors.com/our_world/rearview.php?version=text

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Indica V2 becomes India's number one car in its segment.

2003-2005 Tata Motors unveils new product range at Auto Expo '04.
Tata Motors completes acquisition of Daewoo Commercial Vehicle Company
Tata Daewoo Commercial Vehicle Co. Ltd. (TDCV) launches the heavy duty truck
'NOVUS' , in Korea
Sumo Victa launched.
Tata ACE - India‟s first Mini-truck launched.
Tata Motors lists on the NYSE.
Tata Motors wins JRD QV award for business excellence.
Tata Motors launches Indica V2 Turbo Diesel.

2006-2007 Construction of Small Car plant at Singur, West Bengal, begins on January 21
Tata Motors vehicle sales in India cross four million mark
Tata Motors and Fiat Group announce three additional cooperation agreements
Tata Motors introduces a new Indigo range
Roll out of 100,000th Ace
Tata Motors launches Indica V2 Turbo with dual airbags and ABS

2008-2009 Indica Vista – the new generation Indica, is launched.


Tata Motors' new plant for Nano to come up in Gujarat.
Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo.
Xenon, 1-tonne pick-up truck, launched in Thailand.
Indigo CS (Compact Sedan), world‟s first sub four-metre sedan, launched.
Tata Motors completes acquisition of Jaguar Land Rover.
Tata Motors introduces new Super Milo range of buses.
Tata Motors begins distribution of Prima World truck
Tata Motors launches the next generation all-new Indigo MANZA
FREELANDER 2 launched in India.
Tata Motors launches Nano - The People's Car
Introduction of new world standard truck range.

Table 2 Tata Motors Story Line

Tata Motors' presence indeed cuts across the length and breadth of India with over four
million Tata vehicles ply on Indian roads. The company's manufacturing base in India is spread
across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar
(Uttarakhand) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has
set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to
produce both Fiat and Tata cars and Fiat powertrains. . Tata Motors also distributes and
markets Fiat branded cars in India. The company is establishing a new plant at Sanand
(Gujarat) for Production of Tata Nano. The company's dealership, sales, services and spare
parts network comprises over 3500 touch points.

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1.3. PRODUCT STUDY

The Tata Nano has been the most expected car in the automobile history and it might well
become the most important milestone to mark a beginning in the budget-cars segment. On
January 2008 at Delhi Exhibition, there were two cars of Tata Nano that were displayed. One
was the prototype and other with the cars‟ innards exposed. The mission of building Nano
began way back in 2003 when Mr. Ratan Naval Tata, Chairman of the Tata Motors set a
challenge to provide People‟s car and now it has transformed into a reality. Thanks to the
dedicated team of Engineers and the R&D who had spent sleepless nights to come up with
this wonder car. There were three clear requirements given by TATA Motors to its
engineering team.

Firstly, the vehicle should be of low cost. Secondly, the vehicle has to ensure to the
regulatory requirements and finally, the vehicle should achieve the performance targets such
as fuel efficiency and Power. Initially the Design Team came up with a vehicle that looked
more like a quadric-cycle. The design team was clearly stated that the innovative vehicle that
they build should not be perceived by the consumers as an upgraded scooter on four wheels
or anything flimsy or cheap looking product5.

As rightly said my Ratan Tata himself, it is a great innovation, because innovation is all
about thinking of the next decade and not the next quarter. The Tata Nano will certainly find
big takers in India. The Tata Nano development can be attributed to innovation inside and
outside the Organization. For instance, the regular suppliers of Tata Motors were called upon
and emphasized the need of cost-cutting whereby they can improve upon their bottom-line
and at the same time contribute to the success of Tata Nano. Rane Group, for instance, which
makes the rack and pinion steering system focused on the reducing the weight of the
materials by using steel rod instead of Iron.

Similarly in terms of the selection of engine also initially the engineers experimented
with the existing engines. But since they were unsuitable, the team decided to build its own

5
Stated by Mr. Ravi Kant – Chief Executive, TATA Motors.

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engine with a capacity of 540 cc. The engine lacked the power expected. Then the capacity
was increased to 623cc which increased considerable power. The height, the chassis, the foot
pedals, the interiors all of them had to go through a series of iterations till the expected
design was met. The fact that was considered as impossible has been achieved by the Indian
engineers. The sleek and sophisticated Nano makes the family travel safe, affordable and at
all weather conditions. The buzz created in the automobile market had been so huge that
when TATA announced that they would rollout one lakh cars in the first phase by the end of
2010, almost 2,06,7036 applicants had booked for it. This clearly brings out the abundant
demand for this product.

This has also led the competitors pitching in for their own People‟s car version. Mr. Venu
Srinivasan, M.D- TVS Motors states ‘It is a major breakthrough in the auto industry. In
terms of style, space and size, it is comparable to the small cars, but at an unbelievable
price‟. Mr. B. N. Kalyani, CMD Bharat Forge states ‘India should be proud of what he and
Tata Motors have done in spite of all the problems. It looks a very good product’. In one of
the Automobile Exhibitions held at Geneva, the CEOs of the global automobile industry
visited the stall where Tata Nano was displayed. Mr. Carlos Ghosn of Renault-Nissan and
Mr. Rick Wagoner of General Motors were prominent among them. ‘.. This is really
fantastic. This is what we should try and achieve’ exclaimed Mr Ghosn. ‘.. This is a
benchmark kind of Model. You Indians always make us think‟ commented Mr. Wagoner. The
second largest two-wheeler manufacturer, Bajaj Auto has promised to come out with its
version by 2011. Ford India has allotted INR 2000 crores to set up a small car manufacturing
facility in India. Other giants like Renault, Nissan, Volkswagen, Skoda and Fiat are in the
race to build low cost cars.

There are huge array of activities carried out by an organization in order to make the new
product acceptable to the market. All new products launched do not guarantee success in the
market. Though there is a need in the market for a particular product, the way the product is
launched taking into consideration even the finer details of the product is crucial for the
6
Figure from Tata Sources - http://www.indiasummary.com/2009/06/24/tata-nano-booking-tata-nano-draw-
complete-check-your-booking-status/

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success of the product. Edsel7 (Ford), New Coke8 (Coca-Cola) could be few products that
failed in market despite its Brand Name. A New Product Acceptance is synonymous to the
success of the Product and therefore growth for the Company.

Hence by choosing a Product that has indeed been our National Pride, It would give me
better insights of Marketing a New Product. Through this Project, I wish to study the efforts
taken by the company in terms of creating the awareness about Tata Nano, enabling
customers buy Nano. Secondly the factors customers perceive towards buying behavior
towards such a car could be studied. There could be a gap between the customers‟
expectations in terms of Price, Features, Physical appearance, Performance etc. and the
reality that is available in Nano. So understanding the expectations may help suggest the gap-
narrowing efforts thus increasing in customer preference to Tata Nano. The research may
help understand the customer preferences, dealers’ view point and the Company‟s
Objectives. The recommendations might be beneficial to TATA Motors to strengthen its
position in the Automobile Market through Nano. For companies that follow TATA by
launching low-price car,

Learnings from Tata Nano may help them fine tune their approach in the launch of a New
Product in the market. Some of the questions that would be answered towards the end of the
research could be How successful Nano had been in converting the Two-wheeler customers
to buy Nano cars?‟, ‟How successful Nano had been in enabling the already car owners buy
Nano?‟, „Has the restriction in the Price created a dent in the product features for the
consumers?‟,‟ How would Nano counter the Micro and Macro-factors?‟, ‟Could the problem
in the timely delivery of the vehicle result in cancelling of Orders?‟ , „Does the car guarantee
safety-affordability-performance for any person who buys it?‟.

7
Edsel was launched with much hype in 1957, Unfortunately the car did not live up to the high expectations. The
design of the front grill was compared to 'an oldsmobile sucking a lemon,' and 'a toilet seat' that turned off
consumers.
8
In early 80’s,to remain in number 1 spot, Coke executives decided to cease the production of the conventional
Coke over New Coke. The public outrage made Coca-Cola to re-launch its original formula

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2. MAIN TEXT
This section covers objective of the Project, Methodology, Literature
Review, Analysis of Gaps in Literature and Review about Tata Nano

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2.1 PROJECT OBJECTIVE

To study the various activities the company is involved prior to launch of its New
Product and various stages in the Customer Adoption Process.
To examine the core factors that influence customers towards buying TATA Nano.

2.2 METHODOLOGY
The Preliminary stage (that has been completed) dealt with identifying the objectives of the
project, and checking the feasibility of the Project. By discussing with the Faculty Guide, the
Project Objectives were finalized. The duration for the completion of the Project and the Project
Proposal has been drafted in this stage. The first stage will comprise of the product study –The
Marketing Mix of TATA Nano in terms of Product Features, Pricing, Promotion mode/Tools
used, distribution channels, trade and Promotional offers associated with the Tata Nano. Based
on the Product Study using various tools like the Porters five-force model, the SWOT analysis,
the PESTL the analysis of TATA Nano‟s launch, would be worked out.

The Research is being done to address the second objective of Studying of customer preference
towards buying a Tata Nano car. This research falls in the category of Exploratory Research as
we do not have a prior knowledge about the product and the customer preferences. Based on the
information derived from this further probing can be done. The Sampling method would be
convenience sampling (a non-probability sampling method) as the selection of units from the
population is based on the availability of the respondents. The sampling frame consists of the
visitors to the Tata Motors showrooms as they are looking forward to buying a Car or already
purchase Tata Nano.

The data collection is by using the questionnaire. Two questionnaires rough draft have been
designed [included in the annexure III] one for the Customer Responses sheet. A pilot test with
the customer questionnaire would be done with the students available in the campus with a small
sample size of 10-15 respondents. Based on the data obtained, after modification of the
questionnaire (if needed) the data collection process would start. The expected sample size is

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about 1209 respondents for the customer questionnaire. The Dealer questionnaire is semi-
structured which tries to understand the Tata Nano from the Dealer‟s dimension. In case of the
customer questionnaire the level of awareness of Tata Nano, the factors that could influence the
buying behavior of Tata Nano could be studied. In case of the respondents who are Nano users,
then the questionnaire would serve as a customer feedback it terms of current flaws in the
automobile and would give us an insight as in how could it be improved. The information
obtained from the dealers would add up to the customers‟ opinion along with the dealers‟
feedback about the Nano. The Errors due to Sampling and data collection would be addressed by
performing a Reliability analysis10. By increasing the sample size, the error due to sampling can
be minimized if not completely negated.

Post data collection, we would perform analysis using the statistical tool SPSS. With the data
available, primarily we run a frequency cross-tabulation to find the dependence of various factors
based on Income levels, age level and preferences. A perceptual Map using Multi Dimensional
Scaling could be performed on the customer questionnaire to study the mental map in the minds
of the customers towards different cars. This could give a picture as in where Tata Nano lies vis-
à-vis other cars in the market. Subsequently we would run a factor analysis to list down the core
factors that would influence the buying behavior of Tata Nano. Thus the recommendations
would be suggesting ways to improve the sales of Tata Nano.

2.3 SCOPE OF THE PROJECT

The study or analysis would be done based on the respondents in Hyderabad. Hence the
research findings are specific to this place and cannot be extrapolated.
The Car Owners or the customers who are interested in buying Cars would be in our
sample. Hence we are not considering the group who is not interested in buying Cars.

9
Number arrived based on the sub-questions available for factor analysis
10
Reliability Analysis is done to ensure the reliability of the data collected. The customer questionnaire is designed
in such a manner to ensure that the responses yield consistent results

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2.4 LIMITATION OF STUDY

The research project and inference is specific to the city of Hyderabad. Hence the
findings cannot be extrapolated.
Due to the fewer Tata Nano dealers available in Hyderabad, it may lead to a smaller
sample size.

2.5 JOURNAL REVIEWS

Review I

Emerald Group Publishing Limited, STRATEGIC DIRECTION, „THE CARS THAT ATE THE
SELLING TO THE BOTTOM OF THE PYRAMID – The Case of Tata Nano’ (VOL. 25 NO. 6
2009) pp. 10-12

INTRODUCTION: The article explains about how Tata Motors had been instrumental in
realizing the term „Fortune at the Bottom of the Pyramid11” by launching Tata Nano to the poor
living in low-end and middle-income countries. Normally the bottom of the pyramid has
abundant scope for the Multi National Companies because of the large population base with
pending demand, minimal consumer expectations and hardly any competition. The article tries to
explain Tata Nano in terms of Transactional Marketing elements – Product; Price; Promotion
and Place.

LEARNING: The Tata Nano may not be affordable car for the Poorest, but it could cater the
unfulfilled needs of those within the bottom of the pyramid who could afford to buy a
motorcycle but could not buy a car. The normal household spends 2.5% of the expenditure on
transportation. Out of that 71% of the transportation expenditure is derived from the Bottom of
the Pyramid. Tata Motors believed that the market Potential of the car industry in India is much
more than 1.7 to 2 million units per year. The company looked at the 6 million units of two and

11
Used by Economist Dr. C.K. Prahalad to refer to the four billion people who earn less than $2 per day.

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three-wheelers. By selling low-cost cars which has lower margins in high volumes, the company
has proved to the world that the business can still operate.

The Transactional Marketing covers various P‟s of Marketing – Product, Price, Place and
Promotion. The Product Tata Nano can be considered as a safe, affordable all weather form of
transport for a small family. The target customers of Tata Nano are the two and three wheelers in
addition to the already four wheeler segment. The safety factor was given high priority and the
vehicle conformed to Indian and European Standards and had passed the frontal crash test
required in India and the Offset and side crash tests required internationally. The Price control
had been ensured to make sure that the burden does not get shifted to the consumers.

The Steel prices had increased during the designing of the Nano. Hence to keep the price
low, the car size was compacted. The engine has proved to be fuel efficient at 50 miles per gallon
which is better than the small cars in Europe. Promotion has not been done much in case of
Nano. All the awareness consumers get is through the Press. Tata Nano can also boast of coming
from a family that is one of the finest business houses in the world with products ranging from
tea to chemicals to communication services to consultancy solutions. So the customers could
associate Tata‟s brand value to that of Nano. The Distribution being followed for Tata Nano is
Open Distribution wherein the manufacture of individual units happens at a different place and
assembling happens at a place close to the selling location. In this way the Operating Cost is
minimized.

CONCLUSION: Tata motors believed in achieving what it dreamt of and thus Nano is real. The
low production costs were achieved by using less and cheaper materials. Nano stands testimony
to the fact that low cost products can be developed without compromising on the quality and the
safety. The Innovated product development enabled Tata to obtain cost advantage. Also by
effective distribution network by encouraging local assembly units, the Tatas were able to
eliminate one level distribution chain and the benefit finally reaches the consumer.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 18


Review II

JAMES WETZEL, GEORGE HOFFER, Journal Of Consumer Research (Vol 9, Sept 1982),
Consumer Demand for Automobiles: A Disaggregated Market Approach., Pages 195-199

INTRODUCTION: The paper studies the customer demand equations for several size
categories of domestic and imported automobiles in the U.S. Market in the early 80‟s. The level
of effect of changing motor fuel prices on the impact of the purchasing has been observed. The
factors affecting the demand such has been studied based on the Disaggregated Model12. To
understand these aspects statistically, using three-stage Least Squares13 (3SLS) technique, the
quarterly Demand and Supply models had been used.

STUDY: The base of the Disaggregate model is derived from the Standard economic Models of
consume choice and the theory of the firm. Consumers are considered to be the Utility
maximizers -who wish to gain utility on the purchase of any car. The Automobile firms are
considered to be the Profit maximizers –who wish to sell their units in maximum profit. Now
these two maximization principles result in the price setting and the output that in turn result in
the demand and supply conditions in each sub-market14. As per the Demand Equations, the
Demand for the ith segment is given by Di = f(Pi,Ps,Pc,E,F) where, Pi is the Price of the
automobile, Ps is the Price of the Substitutes, Pc is the Price of the Complements like in Motor
fuel, E refers to the Measures of the economic environment and F refers to the Other Factors.
Similarly from the Supply side Si= f(Pi,Pa,T) where Pi is the Price factor, Pa is the vector of
prices corresponding to the input prices and T being the level of technology. Normally most of
the models take Single equations, but as the model is disaggregate in nature, there has been a role
of both supply and demand forces in determining the number of units sold and the pricing for
that aspect. The measure of Income has been derived from the Michigan Survey Index of
Consumer Sentiment. The demand for automobiles is seasonal. Sensing this only most of the

12
Disaggregation refers to modelling in which some component is divided into a number of parts. For example A
population may be divided into age-classes or an area may be divided into subareas or a single “vegetation”
component may be divided into the separate species.
13
3SLS obtains three stage least squares estimates on a set of nonlinear equations. Three stage least squares
estimates are obtained by first estimating a set of nonlinear (or linear) equations with cross-equation constraints
imposed.
14
The paper considers US market into four categories – Standards, Intermediates, Compacts and Imports.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 19


automobile companies in the US comes out to the market with a new model in the fourth quarter
of the calendar year. The supply variables – Price (Pi) and the Input Price (Pa) data has been
taken from the Producer Price Indices15 and the Producer Price Index for Motor Vehicle Inputs16.
The Expected nature (positively related or negatively related) of the regression coefficients in
each market is mentioned below.

MARKET Pt Yt Yt-118 CSt Gt Gt-1 S PPt Style K


17 19

Standard - + + + - - + + + -
Intermediate - + + + - - + + + -
Compact - + + + + + + + -
Import - + + + + + + + -
Table 3 Regression coefficients effect in sub market

The Gasoline Price would be expected to be in negative in the larger domestic markets and
positive in the smaller in the smaller markets (Compact and Import).

In terms of the impact of these variables in the demand functions, the Price, consumer sentiment,
motor fuel prices and the seasonal factor were significant. An important observation being made
is that the motor fuel price coefficient had been negative during the price change. Thereafter one
quarter, the coefficient becomes positive.

The Styling-technological variable was significant in the Intermediate market. In case of


the compact sub-market the significant factors are Price and size of the market with the Elasticity
of Price being high in this market. In the import submarket the Price, Income and the Market size
had significant coefficients. The small cars seem to be a long-run shift caused by factors other
than energy prices. The energy price change does affect the distribution of the cars but only on a
short term basis. In case of the larger car markets, the import penetration is not strongly
correlated to the energy prices on pretext that the foreign cars are superior and of high quality. In
case of the small domestic cars, the sales are more sensitive to the price changes. Thus the profit

15
It has been taken from US Bureau of Labor Statistics 1966-1976.
16
Obtained from the Bank of Japan Annual Volumes.
17
Yt : Disposable personal Income in constant dollars in period t
18
Yt-1: Disposable personal Income in constant dollars in period t-1
19
Gt Index for Price of Gasoline

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margins in the domestic small car market is lower if the market switches from the large car
market to smaller market.

CONCLUSION: The article has tried to explain how each submarket is different in terms of the
variables used in the demand and supply equations. The Price elasticity of demand was greater
than one for each submarket which means that the demand is sensitive to the price changes. The
small car sales would grow as the demographic changes continue to grow further thus companies
that were operating in the developed market has to shift its focus in the developing market
because of this reason.

Review III

GIRISH N. PUNJ, RICHARD STAELIN Journal Of Consumer Research (Vol 9, Sept 1983), A
Model of Consumer Information Search Behavior for New Automobiles., Pages 366-379

INTRODUCTION: The article elucidates Information Search as a critical component of the


purchase decision process for the new automobiles. The article comes up with the building of
model for information search, various factors that determine the successful information search.
Then the model has been statistically tested using the data generated by mail questionnaire sent
to a sample close to 2400 buyers. The consumer information search process for new automobiles
has provided insights on the level of search activity and how it affects the consumer satisfaction
and the price paid for the automobile.

STUDY: The Model for the Information Search is given from the diagram below. The
positive(+) indicates that there is a direct relationship between the two variables. For eg. Cost
Savings (Y8*) is directly related to the Satisfaction (Y9*). Similarly the cost of external search is
inversely related to the Amount of External Information search.

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Figure 2 Constructs and their Relationships

Generally the amount of External Information Search is dependent on the time spent to
obtain the information and the Quality of Information obtained from other sources like friends,
book and magazine articles on automobiles, sales persons at dealerships and actual experience
test driving new automobiles by all participating member of the family. The internal search
refers to scanning the internal memory and that is dependent on the amount of prior knowledge
associated with the available alternatives and the other relevant information available in the
memory that helps a consumer process newly acquired information. In case the customer obtains
more information prior to the active search, the less the need for external search and vice versa.
The two dimensions of the knowledge is explained in the model - the quantity of directly
relevant information and the consumer‟s ability to comprehend new information. The first
dimension

Usable Prior Information refers to elements like the dealer information, model specific
knowledge. The Prior Memory Structure attempts to capture the consumer‟s knowledge of
buying as well as the knowledge associated with cars. The Cost of External Search is defined as
a sum total of all direct and indirect costs incurred by all the members of the family. The size of
the feasible set tried to capture the tastes and the financial constraints. The information about the
cars within a product class is viewed as having benefit in and the desire to capture information is
recorded in Desire to Seek Information. The Effectiveness of the Search is a construct which
refers the consumer skills. Cost savings may be considered as the difference in the actual price

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 22


paid by the house hold and the actual price paid by other households buying the same model. It
considers the buying of the car model at the lowest possible cost. Satisfaction is another benefit
associated with search. It is defined as the chief decision maker‟s subjective state of satisfaction
with all aspects of the of the purchase decision.

Out of the nine variables, the five variables Usable Prior Information, Prior Memory
Structure, Cost of External Search, Desire to Seek Information and Effectiveness of Search are
considered as Antecedent Variables. Now each of these antecedents are dependent on these sub
factors mentioned in the diagram below:

Figure 3 Constructs and the Sub-constructs in the consumer search process

As seen from the diagram the Desire to Seek Information (Y3*) is dependent on the sub
constructs Total makes(X6) and Magazine Readership (X7). Both these sub constructs are
directly related to the Desire to Seek Information. Similarly for each of the antecedent variables
there are the sub constructs and the terms are explained in the table given in the next page.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 23


USABLE PRIOR KNOWLEDGE(Y1*)
X1 Previous Satisfaction: A seven point scale measure of the
decisionmaket‟s satisfaction with his/her previous car
X2 Time since last purchase: A measre of the days elapsed
between purchase of this ar and the previous car. Obtained by
asking both dates and then subtracting to get difference.
X3 Total Purchases:The response to a question asking the decision
maker to state the number of new or uses care bought in the last
10 years.
PRIOR MEMORY STRUCTURE(Y2*)
X3 Total Purchases: The response to a question asking the
decisionmaker to state the number of new or uses care bought in
the last 10 years.
X4 Car Knowledge: Yes/No response to whether anyone in the
immediate household regularly reads car magazines, works on
cars or sells cars.
X5 Education: Highest grade or level of school completed by
decision maket, measured on a six-category scale
DESIRE TO SEEK INFORMATION (Y3*)
X6 Total Makes: A count of number of makes owned in the last 10
years.
X7 Magazine Readership: Yes/No response to whether
decisionmaket regularly reads consumer magazines like
consumer Reports or Newspaper/ Magazines columns for
consumers.
COST OF EXTERNAL SEARCH (Y4*)
X8 Income: 11-category scale measurement of the total combined
annual income from all sources of all members in 1978.
X9 Urgency: Determined from the response why the consumers are
preferring to buy a New car. Ranking had to be done on 9

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various factors associated with urgency.
EFFECTIVENESS OF SEARCH(Y7*)
X10 Occupation: Responder‟s nature of work from the eight
categories listed.
X11 Number of Decision makers:The decision making authority,
with whom does it lie with regard to buying a car
X12 Number of hours spent by a source outside the immediate
household in helping the decisionmaker make the purchase.
Table 4 Sub Constructs’ terminology

For the variable Amount of External Information Search there have been five sub
variables that are considered. Total Hours1 (Number of hours spent by all participating members
of the household in deciding on the car to buy), Total Hours2 (About specific information search
activities), Dealer Hours (Time spent in dealership), Dealer Visits (Number of times the visit to
dealer shops has happened) and the Total Activities( Total number of information search
activities). The Cost Savings Factor explains the amount a person paid below the quoted price.
The size of Feasible set is determined by the Make of the model and its style combinations.

Out of 2381 respondents who were mailed the questionnaire, around 65% were willing to
fill-in the questionnaire. The data had been collected from three different cities in the United
States. There have been multiple response questions to check the accuracy of the respondent.
Based on the data obtained, various statistic tests like Chi-square, Anova and 3-SLS were
performed and various aspects were studied. The variables Usable prior Information and Prior
Memory Structure have been found to be statistically significant with high β values. The
Customers with good knowledge and prior car purchase experience were estimated to have
higher Prior Memory Structure.

The variables like cost of external search and Effectiveness of search were found to be
statistically insignificant. There has been a significant negative relationship between the costs of
search and the positive relationship between costs of search and the amount of search and
positive relationship between the amount of search and the positive relationship between the

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 25


amount of search activity and cost savings. The consumer amount of search and the cost
incurred, both are positively related and there is an inverse relationship between the cost of
expenses and the cost savings. The desire to seek information construct was considered to be the
most important factor followed by the size of the feasibility set and the cost of external search.

CONCLUSION: The research findings help us understand the importance of the constructs
which has impact on the mode of the search the customer executes while purchasing the new
automobile. For instance, if a company could find ways to address the cost savings, then the
satisfaction level increase and the effectiveness of search can also be guaranteed. There may be
other important factors that might even influence the consumer search process that has not been
included. But out of the model developed with these constructs, the different aspects are
analyzed.

2.6 PERIODICAL REVIEWS

Review I

RAVI MARPHATIA (Feb 2008). Surveying the Scene., PaintIndia, Pages 61-64

INTRODUCTION: The article explains the Launch of Tata Nano – The design and functional
features of the four-wheeler, the impact that it can bring to the Business Environment.

LEARNING: The World came to know about the Smart Car by name Tata Nano on January
2008 during the Auto Expo when Tata Nano was awarded the Car of the Year Winner by a big
margin. The Press reporters from all over the world had lauded Nano for its appreciative Style,
Comfort, Sophistication, Speed, Technology, Design, Luxury and above all the price tag of one
lakh rupees. Nano‟s design features are two cylinders 523cc engine. The other important aspect
is the Lean design20 strategy that could maximize the performance and fuel efficiency. In terms
of the emission standards, Nano has got the lower pollution compared to the two wheeler
vehicles. Good Fuel efficiency ensures low carbon-di-oxide emissions. The fuel tank capacity is
30L and 4-speed Manual Gear shifting. Nano, if it could succeed with this model, it could be a

20
Best way to achieve excellence in the product design by focusing on elimination of non-value waste.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 26


New Business Model with variety of economy cars cater larger clusters of people. This could
even result in creating entrepreneurs across the country and their job would be to ship individual
components and the assembly would be done at one place improving the Supply chain

CONCLUSION: The Vision of Ratan Tata, when he saw the Families riding on the two
wheelers with the father driving the scooter, the young kid standing in front of him, behind him,
the wife holding a little baby led him to wonder whether one could conceive of a safe,
affordable, all weather mode of transport. But now it is in reality after Tata Motors engineers and
designers gave their best for about four years to realize this goal. There is been a mixed response
in terms of attracting foreign investments on the Nano Roll out especially from the West. There
have been articles from across the world acknowledging Tata for its product at affordable price.
But how much would that turn into business is for us to wait and see.

Review II

Market Watch Global Round-up (June 2009). Automakers need to address every link in the
Supply chain., Datamonitor, Pages 11,12

INTRODUCTION: The article speaks about the Finished Vehicle Logistics (FVLs) and the
importance of focusing on the Holistic approach to logistics. The downturn has necessitated the
automakers to think about nouveau ways of improving the efficiency and effectiveness in the
supply chain and distribution.

LEARNING: Tata Nano in India can be considered as a more as a breakthrough in the Product
distribution with the variable Pricing Model. The Company has come up with a unique „Modular
Design‟ for the vehicle thereby enabling to distribute as Complete-knock-down(CKD)21 kits to
be assembled and serviced by local assembly closer to consumers. This method was traditionally
followed for bicycles. The cost of transporting modular CKD kits made at the central plant
would be charged to the consumers directly. For instance, a customer buying a Tata Nano from
Mumbai would end up paying 11% more than from a customer from New Delhi. This approach

21
Complete Knock Down (CKD), is a complete kit needed to assemble a motor vehicle. The CKD concept enables
firms in developing countries to gain more expertise in a particular industry. The CKD Kit exporting company gains
new markets that may otherwise be closed.

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would result in three main developments for the automobile companies. Firstly it would
definitely speed up the process of the distribution process even in the far-reaching areas.
Secondly this could enable Government‟s interest in developing the nascent FVL sector which
accounts to 2% of the $98 billion Indian Logistics Industry. The market currently is highly
fragmented with the a number of local and regional players. Lastly the issues related to poor
equipment handling and packaging, issues related to loading and unloading resulting in higher
insurance costs can be minimized.

CONCLUSION: Like Maruti-Suzuki has tied up with the seaports in Gujarat for transportation
of its vehicles to South India, Tata is expected to collaborate with Indian Railways to obtain full
purpose railcars for the Nano. With a lot of companies treating India as a cost-competitive
manufacturing hub, there could be great opportunities for the logistics providers to improve their
market positions by coming up with innovative products and services.

Review III

Media (7th May 2009). Small Cars drive India’s motor industry growth, Page 21.

INTRODUCTION: The article highlights the importance of the small cars in Indian market.
Generally the car buyers desire sense of exclusivity, trustworthiness and reliability. The opinion
of friends and relatives, test drive, cars seen on road are among the top influencers of customer
preference. The automobile sector hence shifts from the Customer satisfaction to Brand
positioning by adopting more products in the product lines.

LEARNING: The launch of Tata Nano has made the Tata Motors complete the pyramid of car
models. Now Tata Motors can boast of having cars from around 1.25 Lakhs to 25 Crores. In the
month of April the Indians were busy buying forms for the Tata Nano that was scheduled to be
launched in July. Thanks to the Government for announcing flexible loans for the purchase of
automobiles in February. This resulted in a sales jump of the sales vehicles to 24% for the same
month. According to Dilip Chenoy, Director General – Society of Automobile Manufacturers‟
“Small cars will continue to be the leading sub-segment and the growth will come from Small
towns and newer cities”. If we look at the mid-size and the luxury cars sales in January-February

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it has been just one per-cent of 256,30322 passenger cars sold. The SUVs (Sport Utility Vehicles)
and the Minivans sales contributed to 15% and the remaining 82% has come from Small cars.
Another observation made by Mr. Nikhil Rawal, Senior VP, IMRB International is that Premium
hatchbacks23 like Swift and Fabia are more preferred by the Young consumers for the crowded
city roads where parking is a Big problem.

CONCLUSION: Due to the launch of Nano, the consumers‟ expectations would focus on what
features the consumers would get for the particular price. There has been an increase in the TV
advertisements over the Newspaper ads because of the Car companies looking for growth outside
the urban centers.

Review IV

Business Week (18th March 2009). What can Tata’s Nano teach Detroit?

INTRODUCTION: To start with, the vision of Ratan Tata to build a ultra cheap car for the
market which could not afford the normal price cars turned things around. No other automakers
had any idea about targeting the unexplored segment. The Nano‟s launch is an example of Blue
ocean strategy. The two-page article mentions that there are many things that world auto
companies can learn from the Nano.

LEARNING; The Tata Motors when it unveiled the prototype of the Nano in January 2008, the
auto executives were taken by surprise at the engineering marvel. The reason for Nano‟s success
they found was due to the engineering and supply chain breakthroughs. Now the US auto
industry is struggling to survive with General Motors filed for bankruptcy. Tata Motors had
created a new market by launching Nano and that is the way Great companies are built – in the
new markets, not increasing market share in existing ones according to Mr. Vijay Govindarajan,
Chief Innovation consultant at General Electric. Normally the companies sit down to think and
formulate how to target the existing market. But Tata Motors fixed on the end price of the
product when delivered to the customer and planned everything from design, raw materials cost,

22
According to JD Power and Associates
23
Hatchback refers to an automobile design, containing a passenger cabin with an integrated cargo space that can
be accessed from behind the vehicle by a single, top-hinged tailgate or large flip-up window.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 29


Production cost with the viewpoint on the price control. This resulted in making compromise in
terms of going for a cost-effective model. For eg. Nano uses a smaller engine than most other
cars because more power would be wasted on the Indian Roads because of the packed cities the
normal speed in the city could be around 20 mph. Tata Motors has planned to build the nano by
shipping parts to local assemblies at different places. By this way the Tata‟s working capital
costs gets lowered but there is a huge risk involved in the quality in case the local assemblers do
not follow the standards of work.
.
CONCLUSION: Now the challenge for the auto majors in Detroit is to work out on how to face
the companies in the developing countries. The reason being the market in United States is
almost saturated and the advantage of technical knowhow and the global distribution networks
has to be utilized in the developing market like in India or China.

Review V

Auto Car India (April 2009). Cover Story: MISSION IMPOSSIBLE, Pages 66-77

INTRODUCTION: The cover story issue on the Tata Nano analyses the various technical
features/functions of Tata Nano and how far has it been able to satisfy the customers‟ preference
of a small car at affordable price. The article also covers what kind of additional features can be
added in the future as some kind of design improvements based on the customers‟ needs.

LEARNING; Nano looks to be a cute car and would definitely make anyone looking at it give a
second look. Nano has got with air inlets behind the rear doors and tightly formed rear section.
The bumper is meshed that allows for the fair amount of heat dissipation from the rear end of the
car. The front end houses a 135 section tyre and the rear end has larger size tyre (155 mm). This
variation in the height of the tyres is to give stability in motion and at rest. The unconventional
shape has made the Tata engineers use a combination of monocoque24 chassis and space frame
with supports from two long members and three cross-members to bear the moment of Inertia

24
Construction technique that supports structural load by using an object's external skin as opposed to using an
internal frame and it is used in Automobiles and Aircraft body for giving enough support

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due to its highness. The battery and the fuel tanks are being placed under the front seats. Nano
weighs around 600 kgs and 60% of the weight is placed over the rear wheels. The dashboard is
basic but sufficient for a normal vehicle. The dash board contains the digital fuel gauge and the
mounted speedometer. The steering wheel seems to be a bit low and the seat fabrics are good and
can work for a good period of time. There are no headrests for the rear seats. The fuel capacity in
the boot is around 15 litres. The interiors are spacious enough for a six-foot passenger to very
easily enter or leave the car and plenty of leg room available. The LX version of Nano has the
power windows feature. But the buttons are placed at an inconvenient position. The air cooling is
available in the features LX and CX versions using 60cc rotary compressor. The 2 valve unit
produces 35 bhp of power that is similar to Maruti 800 model.

Nano clocks 60 kmph in 9.1 seconds while 800s are a second faster. When the wheels
reach the speed of 106 kmph there is an automatic warning light that glows indicating the driver
to slowdown. Nano is better in cities where there needs to be more of maneuverings than in
Highways wherein the vehicle might suffer overtaking trucks because of the restrictive 4-speed
gear system. Nano has a ground clearance of 180 mm and seems to be a good one to drive in the
worst of the roads. In the Power steering model, the car, at its low speed can make an incredible
turning radius of just eight metres.

CONCLUSION: Nano has definitely stood up to the expectations of the consumers who had
been searching for an affordable value for money car. The pros in the car are astonishing space
and comfort, brilliant fuel economy, solid and robust look. The hurdles seen by the customers
who have purchased are need for a five-speed box, Movable fixed rear glass and the fuel tank
capacity to be greater than 15 litres. This kind of improvements if implemented even at a higher
price, the customers would prefer buying the car.

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2.7 GAPS IN THE LITERATURE
The Gaps in the literature is listed below in the following table.

JOURNAL TITLE GAPS IN LITERATURE


/PERIODICAL
Journal Review -I THE CARS THAT ATE The article could have included few more
THE SELLING TO THE facts about how has the shift taken place
BOTTOM OF THE from two and three wheeler customers to
PYRAMID – The Case of Nano users
Tata Nano
Journal Review –II Consumer Demand for The entire study has been conducted in United
Automobiles: A States. The consumer demand for automobiles
Disaggregated Market may vary when compared to Indian
Approach Households.
The Article analyses the variation of different
parameters in each submarket. But how each
submarket has been classified has not been
explained in the article
Journal Review –III A Model of Consumer The model based on which the consumer
Information Search Behavior search behavior has been formed does not
for New Automobiles take all the variables. There could be some
factors which have not been considered and
its because of that the R-square value is low.
Periodical –Review- I Surveying the Scene The article mentions that Nano if successful
could bring a New Business Model. But how
could that happen is not mentioned in the
article.
Periodical –Review- Automakers need to address Tata Nano‟s Finished Vehicle Logistics to
II every link in the Supply strengthen the supply chain has been covered
chain in the article. But the concerns related to the
quality and inspection when the parts are

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given to the local assemblers has been missed
out.
Periodical –Review- Small Cars drive India‟s The small cars contributing to the auto
III motor industry growth industry‟s growth has been covered. But what
are the factors could influence the cars to sell
in the market could have been included.
Periodical –Review- What can Tata‟s Nano teach No Gaps in the article. But could have
IV Detroit? explained about the Tata Nano sales till now
to emphasize on the superior distribution
network
Periodical –Review- MISSION IMPOSSIBLE The various functionalities and design
V attributes have been explained. But how
consumers feel about every aspect has not
been covered.
Table 5 Literature Gap Table

2.8 REVIEW ABOUT TATA NANO

Tata Nano – The People‟s car had been launched in three Variants – Nano CX, Nano LX and
Nano. The Gallery on Nano is available in Annexure I. The major highlights of Nano is listed
below:
The Warranty period for Nano is 18 months or 24,000 Kms. whichever is earlier for the
Vehicle
A Non- AC Standard version comes with an ex-factory price of Rs. one lakh and will cost
INR 1.23 Lakh in Delhi. An AC version would be priced at INR 1.48 Lakh in Delhi
The sale of application forms and acceptance of bookings went from 9th April to 25th
April 2009.
For those who seek financing, Tata Motors has tie-ups with around 15 lending institutions
including State Bank of India.
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Total Booking that happened during the above mentioned period was 2.03 Lakh cars with
20% on Nano Standard, 30% on Nano CX and the rest for Nano LX.
The total booking was able to generate revenue of 2500 crores and out of that 70% has
been financed by lending institutions.
The Company has gone with Nationwide launch with distribution through its strong
dealer network
The existing Tata Motors Showrooms are being used to showcase Nano to the visitors.
Unlike New Product Promotion wherein the company has to invest huge amount on
promotional activities, for Nano the awareness was high as it was considered as a
National Pride.
The Car was showcased in various Auto Expos around the world to create a global buzz
about Nano.
There were regular Print Ads to remind the readers about Tata Nano. A few ads are
included in Annexure II.
The Design had to undergo the following considerations in order to achieve cost
advantage
 New type of seats with  Plastic Panels
Integrated Seat Rests  Instrument Cluster located at the
 No Radio, No passenger side centre with analog display
Mirror  Two cylinder engine for lower cost
 Rear Mounted Engine layout and better fuel efficiency
 One wind shield wiper

An efficient usage of steel in the overall construction has resulted in reducing the
building costs.
The usual welding procedure is replaced by using a superior kind of glue.
The Fuel tank capacity is 15 litres. The dimensions and the other Specifications of Nano
is presented in Annexure II.

A comparison of Tata Nano with various other car models in terms of various features has been
explained below:

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Maruti Maruti Santro
Nano Nano Alto Santro
Details 800 800 Alto Non-
CX LX LX GL
Std AC AC
Airconditioner - - -
Heater - - -
Mileage 23.5 - 14.2 - 14.5 12.7 -
Gears 4 4 4 4 5 5 5 5
Power PS @ 35@ 37@ 47@ 63 @
-
rpm 5250 5000 6200 5500
Min. Turning
4 4 4.4 4.4 4.6 4.6 4.4 -
Radius (m)
Front Power
- - - - - - - -
Windows
Central
- - - - - - -
Locking
Body Colored
- - - - - - -
Bumpers
Handles &
- - - - - - -
ORVM
Front & Rear
- - - - - - -
Fog Lamps
Tinted Glasses - - -
Digital Fuel
- - - - - -
Gauge*
Tubeless
- - - - - -
Tyres*
Table 6 Nano with its competitors

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3. QUESTIONNAIRE
DESIGNING AND
PILOT STUDY
This section covers the designing of the questionnaire (Customer &
Dealer Survey), Sampling procedure and the Pilot Study.

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3.1 QUESTIONNAIRE DEVELOPMENT

The Customer Questionnaire [in Annexure-III] is designed to study the following:


Understand the perception in the customers‟ minds on different cars based on
different parameters
Factors that the customers‟ consider important which could induce the buying
behavior of Tata Nano
Satisfaction Level of the Tata Nano customers.
Demographic Influence like Age, Income Levels on various Attributes.

The following table can help us understand the purpose of the each question in the
questionnaire.

Question Question Question Description


Number Type25
1,2 Do you own a Two-wheeler? Lead –in Dichotomous questions to know whether
Do you own a Car? the respondent already possesses a Two
wheeler or a four wheeler
3 If yes, Name the car(s) that you Probing To probe what kind of car the respondent
own already has.
4 When did you buy the Car Probing
5 Please tick the reason(s) for not Probing Understanding why the respondent does
owning the car not own a car
6 Please specify the brand(s) of Cars Qualifying/ Here we understand the perception level of
recollected by you in the top most Lead-in the cars mentioned/not-mentioned. Thus
rows and rate them on the different this helps us in comparing the cars in each
parameters mentioned below parameter.
7 Tick the preferred rating for the Probing To understand the factors that induce the
statements given below that may buying behavior of Tata Nano in terms of
influence your buying of Tata various factors
Nano
8,9 Are you satisfied with the use of Specific This is to study the satisfaction levels of

25
Question type refers to any of the Types : Lead-in, Qualifying, Specific, Demographic and Probing

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 37


Tata Nano the customers who own Tata Nano.
Tick the preferred rating for the
following features of Tata Nano
10,11 Do you feel that Nano can pull the Specific To evaluate the impact of Tata Nano on
Two-wheelers market by making Two wheeler segment. A cross tabulation
them prefer Nano Car? with some attributes and the respondents
Would you like to own a Tata who preferred „Yes‟ could give us an idea
Nano? of where the need is.
12,13 Your friend is considering buying Specific This again is to see if the respondents turn
a Small Car. Would you out as influencers to make others buy Tata
recommend Tata Nano? Nano.
If No specify the Reason
Personal Questions Demographic To understand the demographic profile of
the customers. This can be used to perform
a Cross-tabulation between different
categogies like „Age Vs Preference
Attribute‟, „Income levels Vs Preference‟
Table 7 Design of questionnaire

3.2 PILOT STUDY FINDINGS

As mentioned earlier a sample size of 30 was considered for the Pilot Study. The type of
sampling technique used for this process was convenient sampling wherein the majority of
the respondents were from our college. Henceforth, most of the respondents fall under the
category of first two age intervals. The results of the respondents are discussed below:

Total number of Respondents : 30


Number of Respondents who own Tata Nano : 2
Number of Male Respondents : 17
Age Group:
o Below 25 : 20
o 26-35 : 9
o Above 35 : 1

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Factor Analysis:

A Factor Analysis was performed to understand the buying preference for Tata Nano in the
customers‟ minds. Though factor analysis has to be done in case of large number of samples,
in this case we try to understand if the statements combine to give some meaningful
information based on the Pilot survey of 30 respondents.

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling


.461
Adequacy.

Bartlett's Test of Approx. Chi-Square 530.556


Sphericity df 276
Sig. .000
Table 8 KMO Test - Pilot Survey Analysis

The KMO Sampling Test of Adequacy (0.461) suggests that the pilot sample is marginally
less than 0.5 that is needed as a criterion for the sufficiency of observations. In our
questionnaire, there are 24 statements used. So during the Data Collection Procedure there
has to be atleast 125 to get appropriate results. Significance value for the Bartlett‟s test of
sphercity is below 0.05 hence we reject the null hypothesis and conclude that correlation
exists between the statements and factor analysis can be conducted.

Total Variance Explained

Extraction Sums of Squared Rotation Sums of Squared


Initial Eigenvalues Loadings Loadings
Compon % of Cumulativ % of Cumulativ % of Cumulativ
ent Total Variance e% Total Variance e% Total Variance e%
1 7.022 29.259 29.259 7.022 29.259 29.259 5.392 22.467 22.467
2 3.665 15.270 44.529 3.665 15.270 44.529 4.581 19.088 41.556
3 3.041 12.669 57.198 3.041 12.669 57.198 3.098 12.909 54.465
4 2.192 9.134 66.332 2.192 9.134 66.332 2.289 9.536 64.000
5 1.377 5.736 72.068 1.377 5.736 72.068 1.694 7.057 71.058
6 1.357 5.652 77.720 1.357 5.652 77.720 1.599 6.663 77.720
7 .946 3.941 81.661
8 .831 3.461 85.122

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9 .576 2.401 87.523
10 .489 2.038 89.561
11 .445 1.856 91.417
12 .396 1.651 93.068
13 .323 1.345 94.413
14 .306 1.274 95.686
15 .239 .996 96.683
16 .203 .847 97.530
17 .172 .717 98.247
18 .126 .527 98.774
19 .102 .424 99.198
20 .067 .280 99.478
21 .057 .237 99.715
22 .041 .169 99.884
23 .017 .072 99.956
24 .010 .044 100.000

Table 9 Total Variance Explained Pilot survey analysis

Extraction Method: Principal Component Analysis.

Rotated Component Matrix(a)

Component
1 2 3 4 5 6
I would look at the Festival
Season/Offers provided for
.910
Tata Nano while planning
to buy.
The Price of the Car to fit
my budget is very important .898
to me while selecting a Car
Nano car has to be priced
between One and Two .896
lakhs.
I would look into the
Mileage of the car could .880
give while selecting a Car

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I would look into the resale
value of the Car after some .816
time while selecting a car.
I would like to see more
aggressive promotional
campaigns for awareness .752
about the Tata Nano
available in the market
I would look into the spare
parts availability while .653 -.430
selecting a car.
I feel taking Suggestions
from my family members is
.904
very important to me while
selecting Tata Nano.
I would look into your
friends and relatives
.902
opinion while selecting a
car
The Information Provided
by the Salesperson is very
.889
important for me to prefer
buying a Nano
I look into the Information
Provided By Car
.876
magazines while buying the
car
I feel that Tata Nano that
would suit for my Family .680
Tours/ Outings
Nano satisfying the
emission norms of Bharat
Stage II and Stage III
-.468 .609
standards are very
important for me for
selecting Nano
I would look into buying of
.891
car of Indian Make
The variants available with
Nano is very important for .828
me

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I would want Nano to be a
.780
more attractive car
The Brand Name
associated with the Tata .757
Nano is very high
In-built power window is
very important for me while .874
selecting a car.
I feel it is important for
Nano to have inbuilt power .849
steering
I would look on the Car
Accessories while selecting .778
the Car
Safety elements are very
important in the Car while .501 .581
selecting a Car
Effective after Sales
Service is very important .550
for me to select Nano.
The Insurance Facility
offered by a Nano Dealer is
.793
very important for me to
prefer Nano
I wish to have a convenient
Mode of Payment when .408 .693
selecting Tata Nano
Table 10 Rotated Component Matrix - Pilot survey analysis

Extraction Method: Principal Component Analysis.


Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 6 iterations.

From the Factor Analysis Output, we understand that the 24 statements can be classified into 7
Factors. Each Factor and the Combining Statements are mentioned below.

S.No. STATEMENTS FACTOR

1 I would look at the Festival Season/Offers provided for Tata Nano while
planning to buy.

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2 I would like to see more aggressive promotional campaigns for awareness about Promotion
the Tata Nano available in the market

3 The Price of the Car to fit my budget is very important to me while selecting a
Car

4 Nano car has to be priced between One and Two lakhs.

5 I would look into the Mileage of the car could give while selecting a Car

6 I would look into the resale value of the Car after some time while selecting a
Value for Money
car.
7 I would look into the spare parts availability while selecting a car.

8 I feel taking Suggestions from my family members is very important to me


while selecting Tata Nano.
9 I would look into your friends and relatives opinion while selecting a car

10 The Information Provided by the Salesperson is very important for me to prefer


buying a Nano
11 I look into the Information Provided By Car magazines while buying the car
External Influencing
12 I feel that Tata Nano that would suit for my Family Tours/ Outings Factors

13 Nano satisfying the emission norms of Bharat Stage II and Stage III standards
are very important for me for selecting Nano
14 I would look into buying of car of Indian Make

15 The variants available with Nano is very important for me

16 I would want Nano to be a more attractive car

17 The Brand Name associated with the Tata Nano is very high
Psychological Factors

18 I would look on the Car Accessories while selecting the Car

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19 Safety elements are very important in the Car while selecting a Car
Core Factors
20 Effective after Sales Service is very important for me to select Nano.

21 The Insurance Facility offered by a Nano Dealer is very important for me to


prefer Nano
22 I wish to have a convenient Mode of Payment when selecting Tata Nano Desired Factors

23 In-built power window is very important for me while selecting a car.

24 I feel it is important for Nano to have inbuilt power steering Augmentative Factors

Table 11 Factor analysis statements - Pilot survey analysis

As seen from the table, the statement collate under different factor heads. Thus this could help us
in making some meaningful interpretations. In the next stage we could even do a conjoint
analysis to study the preference for different Attributes and different Attributes.

Apart from Factor Analysis, MDS can be performed based on the Rating given on different cars
as given in. Corresponding analysis the Perception in terms of the Attributes like Safety,
Affordability, Variety of models, After sales service, Comfort, Brand Image, Dealers,
Advertisements and Promotions can be studied.

3.3 SAMPLING FRAME

For the Data Collection, a sample size of a Minimum of 125 is needed because of the
Factor Analysis involved. The respondents for the Survey would be the visitors to the Tata
Nano Show room, the respondents around that location. To understand the preference across
different age levels, good number of respondents from each age category has to be surveyed..

For the dealer survey, the following showrooms have to be visited in Hyderabad to
understand hear from Dealer point of view on Tata Nano

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4. ANALYSIS AND
INTERPRETATION
This section includes the Data Collection, Primary Data Tabulation,
Usage of Statistical Tool to Analyze the data obtained. The Analysis is
followed with the Interpretation of the Output and suggesting
recommendations in increasing the customer preference towards Tata
Nano.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 45


4.1 PRELIMINARY DATA ANALYSIS

From the responses received from the questionnaire a preliminary analysis (qualitative) is done
in which has been presented below.

Age of the Income Level of the


Respondents Respondents
Below 25 26-35 36-50 Above 50 Less than 3 L 3 - 5 Lakhs
5 - 7 Lakhs Above 7 Lakhs
20% 30% 12%
13% 39%

46% 36%

Figure 46 Age
Figure Age of
of the
the respondents
respondents Figure 5 Income Level of respondents

Out of the 107 respondents being surveyed there are a good number (almost 75%) belonging to
the age group of below 35 years. The Income levels of less than 3 Lakh per annum has almost
40% of the respondents followed by the next income level. These respondents can be converted
to Nano Buyers.

Own a Bike Own a Car


No 31%
16%

Yes
84% 69%

Yes No

Figure 7 Car Owners break-up


Figure 6 Bike Owners’ break- up

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Out of the 107 respondents being surveyed almost 89 respondents have stated that they have
Bikes. In case of the question on car, almost 73 respondents do own a car.

Wish to own a Nano Ability to Recommend


Yes No Nano Vs Age
35
30
25
20
39% 15 Above 50
10
5 36-50
0
61% 26-35
Below 25

Figure 8 Wish to buy Nano and Recommendation across different age groups

As seen from the graphs above, almost 66 respondents (61%) are willing to own Nano. So given
an opportunity a good number of respondents would be willing to buy Nano. The other graph
gives the split up of the recommendations being made to friends to buy Nano. The Age group
below 25 has been influential in suggesting Nano to others. The next age level (26-35) also has
seen to be influenced by Nano. So it could be a Strategy targeting these Age segment groups for
marketing Nano.

Car Brands
35
30
25
20
15
10
5
0

Figure 9 various car brand owners

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The graph gives the Cars owned by the respondents. An interesting aspect to note is that there are
almost 73 respondents who already own a car. But given a chance they are interested to buy
Nano. Hence Nano is even preferred by the car owners. There are close to 32 respondents who
do not own any car. Asked to state the reason for not owning a car, most of them have stated the
reason as „Not having the need to buy a Car‟. From the graph we could find that out of 107
respondents surveyed, 9 respondents own Tata Nano. It has been just nine months since the
launch of Nano and it has made good penetration level of the respondents surveyed. The Tata
Nano respondents were satisfied with the smart car. Most of them had issue on the small fuel
capacity of the Nano and the rear view fixed mirror. Rest all the features were appreciated by the
Nano users.

The respondents were asked to give their feedback on the Tata Nano. Close to 35 respondents
were unable to give in the feedback about various features of Nano. Features and the acceptance
levels of the respondents are given below.

Tata Nano in terms of 'Ease of


Driving'
Good Average Bad Very Bad Dono

10%
21%

7%
40%

22%

Figure 10 Ease of Driving - Nano

The respondents have rated Tata Nano as a better car in terms of the Driving comfort. There had
been around 21% who were unable to comment on this aspect.

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In terms of long distance driving the rating has been from Average to Very Bad. The respondents
feel that Nano is a car for City traffic where the car, being small can easily maneuver. But when
it comes to long journey they have given a lower rating.

Tata Nano in terms of 'Long distance


Driving'
Very Good Good Average Bad Very Bad Dono

2% 7%

30%
23%

10%

28%

Figure 11 Long drive - Nano

In terms of the Drive in Hills, the vehicle stands anywhere between Average to Very Bad. The
Nano engine is the one of the smallest and the power is moderate compared to other cars.

Tata Nano in terms of 'Hilly Drive'


Good Average Bad Very Bad Dono

0% 14%
23%

23%
13%

27%

Figure 12 Hill Drive - Nano

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Tata Nano has been so much spoken about the safety aspects embossed in it. Even the
respondents feel the same in case of the Tata Nano as they have rated the safety in the „Very
Good „to „Average‟ category.

Tata Nano in terms of 'Safety


Aspects'
Safety Aspects Very Good Good Average Bad Very Bad Dono

6%
20%

4% 32%

9%

29%

Figure 13 Safety Aspects – Nano

The 4 gear system has also not being liked by the respondents as many have given „average(3) –
poor(4)‟ rating for this feature. Almost in all Cars it‟s the 5 speed system and even in Nano, this
is an issue. Hence even the Tata Motors is planning to come up with the updated version of Nano
with the 5-speed system by 2011.

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4-speed Gear system of Nano
Very Good Good Average Bad Very Bad Dono

1% 8%
21%

22%

17%

31%

Figure 14 Speed Gear system – Nano

Nano has been a big boon to the economic category people as the mileage it gives is the best in
Indian roads. When asked about the mileage that they get, one of the Nano users said that the
mileage very easily comes to 22 Km/liter.

Tata Nano in terms of 'Mileage'


Mileage Very Good Good Average Bad Very Bad Dono

22% 17%

0%
8%

37%
16%

Figure 15 Mileage - Nano

The fuel tank capacity has also been a issue as the capacity is considered to be small. Hence in
case of planning for long distance trips, the tank had to be refilled quite obten.

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Tata Nano in terms of 'Fuel Capacity'
Very Good Good Average Bad Very Bad Dono

5%
23%
19%

8%

25%
20%

Figure 16 Fuel capacity - Nano

The performance of Nano has been good as many respondents have appreciated for being a
Smart performance vehicle.

Tata Nano in terms of 'Vehicle


Performance'
Very Good Good Average Bad Very Bad Dono

14%
21%

9% 23%

10%

23%

Figure 17 Performance - Nano

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Tata Nano in terms of 'On Time Delivery'
Very Good Good Average Bad Very Bad Dono

2% 11%
22%

10% 27%

28%

Figure 18 Delivery - Nano

The delivery of Nano has also been an issue which Tata has faced for the very first time. There
had been a huge response for buying nano. The delay has happened due to the shift of the
manufacturing plant from Singur to Sanand. So the perception of the respondents is also in a
negative trend because of this.

The 2-wheeler to Nano shift is quite well reached in the minds of the customers with more
respondents feeling that Nano would take over the two wheeler market. May be because of that
or so Bajaj Auto which has got a strong hold in the two wheeler market has decided to launch a
small car in same kind like Nano.

2-wheeler to Nano Preference


Strongly Agree Agree Not Sure Disagree Strongly Disagree

7%2%
24%
12%

55%

Figure 19 Two wheeler preference

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4.2 CROSS TABULATION ANALYSIS

To check the level of association of a dependent variable with the independent variable we use
cross tabulation using chi square.

To check the association of the Preference to buy Tata Nano Vs Age category.

Ho: No association exists between the age and the preference to buy Tata Nano.

Ha: Association exists between the two variables

ά : Level of significance = 0.05

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 3.733(a) 4 .443
Likelihood Ratio 3.690 4 .450
Linear-by-Linear
.015 1 .902
Association
N of Valid Cases
106

Table 12 chi square test Tata Nano Preference Vs Age

a 3 cells (33.3%) have expected count less than 5. The minimum expected count is 2.70.

The Asymp. Sig value is greater than 0.05 indicating that the Null Hypothesis cannot be rejected.
Hence in a way we accept the null Hypothesis which means that no level of association between
the Age and the preference for buying the Tata Nano from the sample drawn.

To check the level of association between the Preference to Buy Tata Nano Vs. Income Level

Ho: No association exists between the customer preference to buy Tata Nano and their Income
level

Ha: Association exists between the two variables

ά : Level of significance = 0.05

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Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 5.946(a) 4 .203
Likelihood Ratio 5.883 4 .208
Linear-by-Linear
.852 1 .356
Association
N of Valid Cases
106

Table 13 chi square test Tata Nano Preference Vs Income

a 3 cells (33.3%) have expected count less than 5. The minimum expected count is 2.80.

Again the Asymp significance value is greater than 0.05 indicates that the null hypothesis cannot
be rejected. Thus we mean to say that there exists no level of association between the Preference
to Buy Tata Nano and Income Level.

To check for the association between the preference of for Tata Nano and Suggesting Tata
Nano for friends and relatives.

Hypothesis Definition:

Ho: No association exists between the preference for Tata Nano and those suggesting of Tata
Nano for friends and relatives

Ha: Association exists between the two variables

ά : Level of significance = 0.05

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 5.026(a) 2 .081
Likelihood Ratio 5.012 2 .082
Linear-by-Linear
4.114 1 .043
Association
N of Valid Cases
96

Table 14 Table 13 chi square test Tata Nano Preference Vs Suggesting Tata Nano

a 2 cells (33.3%) have expected count less than 5. The minimum expected count is 3.08.

Again the Asymp significance value is greater than 0.05 indicates that the null hypothesis cannot
be rejected. Thus we mean to say statistically that there exists no level of association between the
Preference to Buy Tata Nano and Recommending Tata Nano to friends and Relatives.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 55


4.3 FACTOR ANALYSIS
KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling


Adequacy. .626

Bartlett's Test of Approx. Chi-Square 2852.784


Sphericity df 276
Sig. .000
Table 15 KMO Test - Factor analysis

The factor analysis is performed with the responses received from 107 customers. The
value of KMO sampling adequacy is coming to be 0.626 which is greater than 0.5 – The criteria
needed to state that the data collected is sufficient to make an interpretation. A higher chi-square
value states that there exists factors that can be combined together. In other words it means that
the various statements have some correlation with one another. Hence factor analysis can be
performed with the existing data.

Figure 20 Scree Plot - Factor Analysis

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Total Variance Explained

Co
mpo Extraction Sums of Squared
nent Initial Eigenvalues Loadings Rotation Sums of Squared Loadings
% of
Varian Cumulative % of Cumula % of Cumulative
Total ce % Total Variance tive % Total Variance %
1 6.411 26.714 26.714 6.411 26.714 26.714 5.204 21.684 21.684
2 5.563 23.179 49.893 5.563 23.179 49.893 5.019 20.912 42.597
3 2.481 10.338 60.231 2.481 10.338 60.231 2.539 10.580 53.177
4 1.799 7.498 67.728 1.799 7.498 67.728 2.422 10.090 63.266
5 1.575 6.561 74.289 1.575 6.561 74.289 2.123 8.844 72.110
6 1.452 6.050 80.339 1.452 6.050 80.339 1.774 7.394 79.504
7 1.119 4.661 85.000 1.119 4.661 85.000 1.319 5.496 85.000
8 .742 3.091 88.091
9 .535 2.229 90.320
10 .433 1.805 92.125
11 .374 1.558 93.684
12 .323 1.346 95.029
13 .255 1.060 96.090
14 .178 .742 96.832
15 .166 .690 97.522
16 .137 .573 98.095
17 .111 .463 98.558
18 .108 .449 99.006
19 .080 .335 99.341
20 .053 .221 99.562
21 .035 .144 99.706
22 .032 .132 99.838
23 .023 .096 99.934
24 .016 .066 100.000
Table 16 Total variance Explained - Factor Analysis

Extraction Method: Principal Component Analysis.

The total variance explained table explains that by combining all the 24 statements to seven
factors, 85% of the cumulative variance can be explained.
Rotated Component Matrix(a)

Component
1 2 3 4 5 6 7
I feel taking Suggestions
from my family members is
very important to me while .935
selecting Tata Nano.

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I would look into your
friends and relatives
opinion while selecting a .927
car
The Information Provided
by the Salesperson is very
important for me to prefer .900
buying a Nano
I look into the Information
Provided By Car
magazines while buying the .884
car
I feel that Tata Nano that
would suit for my Family .798 .418
Tours/ Outings
Nano satisfying the
emission norms of Bharat
Stage II and Stage III
standards are very .792
important for me for
selecting Nano

Nano car has to be priced


between One and Two .929
lakhs.
The Price of the Car to fit
my budget is very important
to me while selecting a Car .927

I would look at the Festival


Season/Offers provided for
Tata Nano while planning .896
to buy.
I would look into the resale
value of the Car after some
time while selecting a car. .887

I would look into the


Mileage of the car could .739 .416
give while selecting a Car
I would like to see more
aggressive promotional
campaigns for awareness
about the Tata Nano .714
available in the market

I would look into buying of


car of Indian Make .935
The Brand Name
associated with the Tata .800
Nano is very high
The variants available with
Nano is very important for .574 .423
me

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In-built power window is
very important for me while .881
selecting a car.
I feel it is important for
Nano to have inbuilt power .844
steering
I would look on the Car
Accessories while selecting .773
the Car
Safety elements are very
important in the Car while .658
selecting a Car
I would want Nano to be a
more attractive car .513 .603
The Insurance Facility
offered by a Nano Dealer is
very important for me to .896
prefer Nano
I wish to have a convenient
Mode of Payment when
selecting Tata Nano .452 .569

I would look into the spare


parts availability while -.411 .472 .484
selecting a car.
Effective after Sales
Service is very important .847
for me to select Nano.
Table 17 Rotated Component Matrix - Factor Analysis

Extraction Method: Principal Component Analysis.


Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 8 iterations.

From the table, we could identify 7 factors as tabled below:

S.No. STATEMENTS FACTOR

1 I would like to see more aggressive promotional campaigns for awareness about
the Tata Nano available in the market

2 Nano car has to be priced between One and Two lakhs.

3 The Price of the Car to fit my budget is very important to me while selecting a
Value for Money
Car
4 I would look at the Festival Season/Offers provided for Tata Nano while

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planning to buy.

5 I would look into the resale value of the Car after some time while selecting a
car.
6 I would look into the Mileage of the car could give while selecting a Car

7 I feel taking Suggestions from my family members is very important to me


while selecting Tata Nano.
8 I would look into your friends and relatives opinion while selecting a car

9 The Information Provided by the Salesperson is very important for me to prefer


buying a Nano
10 I look into the Information Provided By Car magazines while buying the car
External Influencing
11 I feel that Tata Nano that would suit for my Family Tours/ Outings Factors

12 Nano satisfying the emission norms of Bharat Stage II and Stage III standards
are very important for me for selecting Nano
13 I would look into buying of car of Indian Make

14 The variants available with Nano is very important for me


Psychological Factors

15 The Brand Name associated with the Tata Nano is very high

16 I would look on the Car Accessories while selecting the Car

17 Safety elements are very important in the Car while selecting a Car

Core Factors
18 I would want Nano to be a more attractive car

19 The Insurance Facility offered by a Nano Dealer is very important for me to


prefer Nano
20 I wish to have a convenient Mode of Payment when selecting Tata Nano Desired Factors

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21 In-built power window is very important for me while selecting a car.

22 I feel it is important for Nano to have inbuilt power steering Augmentative Factors

23 Effective after Sales Service is very important for me to select Nano. Post purchase Factor

Table 18 Factors Analysis Table

As we could see there are few changes in the variables getting clubbed when we compare the
Pilot study results with the final sample test.‟ The Value for Money‟, „External Influencing
Factor‟ , Desired Factor‟, „Augmentative Factor‟ has been the same in both the studies.

The only difference has been in the Core factors that did not contain the after sales service. This
has pronounced as a separate factor altogether.

Now if we look at the factors that we could target, there is a strong Value for Money Involved in
Buying Tata Nano. The Car has actually been for the people who wish to shift from two wheeler
but do not have the luxury to buy a Car. So the aspects like Price of the Car, The Resale value,
the mileage factors need to be considered as these drive the buying intensions for the customers.

If we look at the second factor, those are the factors from outside that could influence the
purchase of Car. The recommendations from family and friends could be a part of it. So its
looking if Tata Nano could suit the family travel. The satisfying of the emission norms and the
Information provided by Car Magazines could also be a part of the external influencing factors.

The Psychological factors include aspects like Be Indian, Buy Indian, and trying to associate the
Brand of Tata with that of Nano. The core factors include Safety and Attractiveness of the Car.
When Nano was shown to the world, what caught everyone‟s attention was how different the car
looked. So the Look of the car has been well and even considered as a Core factor for the
preference level towards Nano.

The Car Insurance and convenient mode of payment could be helpful in creating a desired
interest towards buying Nano. The company may certainly form tie-ups with a lot of other
lending institutions for effective loan offers.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 61


The Power window and Power Steering can be considered as Augmentative factors which are not
essential and something which the respondents fancy upon.

4.4 CORRESPONDENCE ANALYSIS

The correspondence analysis is done to study the perception of each aspects associated in the
minds of the respondents. In the questionnaire we had asked the respondents to rate the Cars
(Maruti 800, Alto, Nano, Car1, Car2,Car3) on a scale from 1-10 with 1 being the Best. So the
same way the data was captured and correspondence analysis was performed on that.

There happened to be variation in the „Car1‟,‟Car2‟,‟Car3‟ that only a few had filled. Thus those
had been left for uniformity in the analysis. Hence we consider only those three listed Cars. The
Means for these cars are taken and the same is compared with the aggregate rating on each
parameters. The data table is available in Annexure IV

Figure 21 Correspondence Analysis Output

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 62


As seen from the Graph, the Nano Mean is close to factors like Brand Image, Variety, Dealers
and Sales service. The same is compared vis-à-vis the positions of the other cars – The Alto and
M800. In case of Maruti 800, still the customers have the mindset the affordability is on a higher
note. Alto is known for the Safety and Comfort parameters according to the analysis done.

4.5 MULTI DIMENSIONAL SCALING:

In this case we are trying to understand the rating being given for various factors used in factor
analysis and how well it is influenced to the age of the respondent. Based on the age level there
has been variations in the factors listed. the graph below explains the factors that are most
preferred(1st Quadrant) and the factors least preferred (3rd Quadrant). The detailed output is
available in Annexure V.

The age group less than 25 years has preferred factors like attractiveness, insurance, spare parts
availability etc.,

Figure 22 Factors preferred by age groups less than 25

For the age group 26-35 years, factors like low priced, promotion, mileage and resale value are
being preferred while buying Tata Nano
MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 63
Figure 23 Factors mostly preferred by age group 26-35

In the age group of 36-50 years group the factors like mileage, safety, accessories, attractiveness
and low priced are being considered

Figure 24 Factors mostly preferred by age group 36-50

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 64


In the last age category (above 50 years), the respondents have given importance to festive
offers, promotion mileage etc.,

Figure 25 Factors mostly preferred age group above 50

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 65


4.6 FINDINGS AND RECOMMENDATIONS

The level of awareness of Tata Nano is very high among the respondents. There is also a
strong Brand association with Tata Group and that has made Nano to be looked into a
revolutionary product.
Out of the respondents surveyed, Tata Indica has been more in number compared to all
other cars. So Tata Motors can try to tap these Indica users to recommend/suggest Tata
Nano to their friends and relatives. Its easy for them to push this product to these people.
Factors like Safety, Mileage and Performance have been rated closely rated as „Above
Average‟. The factors like long drive, hilly drive, delivery have been close to „Average‟
and factors like 4-speed gearing, fuel tank capacity have been rated below average. In
terms of correcting the product, these aspects need to be re-visited as it could be deterrent
for future potential buyers to choose this product.
The external influential factors have shown to be strongly influence factor for the
customer preference to buy Tata Nano. Hence the suggestions from others are important
driving factors to buy Tata Nano. Another important observation from chi-square test is
that there is no relationship between the Buying of Nano and Suggesting of Nano
according to this sample.
The Correspondence analysis has shown Nano to be closer to aspects like Dealers,
Variety, Brand Image. But factors like comfortness, safety are close to Alto and
affordability factor close to Maruti 800. Hence Tata Motors should have to be more
aggressive in clearing this from the customer mindset that Tata Nano is even more
affordable than Maruti 800.
Across different age groups, the preference for Nano for various factors had kept on
changing. Thus the different variants of Nano can help cater to different age groups in
terms of variations in features.
The concept of one-lakh car has been achieved. But to cater to the customers who are
ready to shell out few more thousands for additional features, those prospects should not
be left out in the market. Hence by coming up with different models with different
features, the entire small car market can be captured.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 66


5. CONCLUSION,
REFERENCES
AND ANNEXURE
This section contains the conclusion part of the report with the
annexure that includes the output file of MDS, the Tata Nano car
specifications and the survey questionnaire.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 67


CONCLUSION

Nano has definitely been able to bring the automobile revolution in terms of providing
affordable-safe small car. The product has been in market for just around six months. The initial
response has been amazing in terms of more than 2 lakh people applying to buy Nano. As we
could see from the survey results that anyone would be willing to buy a Nano and the two-
wheeler to Nano shift could be phenomenal. Unlike other new-product adoption cases, Tata
Nano had been easily created the awareness needed with good promotional campaigns. Now to
take this a leap higher, the company has to identify the ways to increase the Nano share in the
market by coming up with additional features that could fill in the gap existing between the cars
above 3 lakhs and the car in the range 1 lakh.

The lessons to be learnt in a new product development taking the example of Nano could be
many. The very important of the lot could be thinking out of box. This was done by Tata Motors
where they just did not rest with the laurels of Tata Indica. They had a vision of launching a one
lakh car and they had undergone the technological breakthroughs in this regard. The car is
smaller than Maruti in terms of the outside dimensions, but 20% more seating capacity by
making radical changes in the designing. The trust built over the years by the Tata group had
made the Tata group loyalists to accept Nano as a symbol of the small car revolution. The vision
of Ratan Naval Tata has come true, he had made to realize that the real fortune lied in the bottom
of the pyramid and international car makers having set plans to come up with the small car
models in the market is an indicative of this fact.

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 68


REFERENCES
Market Research Text and Cases – Rajendra Nargundkar, Tata McGraw-Hill Publishing
Company Limited.
Business Research Methods – ICMR Text book
Marketing Research – Naresh K. Malhotra
Automotive Market and Opportunities – A report by India Brand Equity Association
RAQUEL CASTANO, MITA SUJAN, MANISH KACKER, and HARISH SUJAN(2008), Managing
Consumer Uncertainty in the Adoption of New Products: Temporal Distance and Mental
Simulation, Journal of Marketing Research Vol. XLV (June 2008), Pp320–336
SALAH S. HASSAN, (2008), Bringing Lead-User Innovations to the Market: Research and
Management Implications, Journal of Marketing Research Vol. XLV (June 2008), Pp51-59
Auto Car India – April 2009 Pp 67-77.
http://www.infibeam.com/static/tata-nano,.html -Tata Nano, Tata Nano car
specifications [Page Last Visited 5th Aug 2009]
http://www.economist.com/businessfinance/displaystory.cfm?story_id=13354060 –
Tata’s New car: Hello Nano The Economist [Page Last Visited 20th Sept. 2009]
http://tatanano.inservices.tatamotors.com/tatamotors/index.php?option=com_content
&task=view&id=263&Itemid=207 – The Story behind Nano [Page Last Visited 20th Sept.
2009]
http://www.csmonitor.com/World/Asia-South-Central/2010/0125/In-India-rich-and-
poor-line-up-for-2-000-Nano [Page Last Visited 20th Sept. 2009]
http://business.rediff.com/slide-show/2010/feb/03/slide-show-1-auto-maruti-cervo-to-
be-priced-between-rs-1-point-5-2-lakh.htm [Page Last Visited 16th Feb 2010]
http://www.financialexpress.com/news/People-s-Car--People-s-Lives/576483/[Page
Last Visited 16th Feb 2010]
http://www.businessweek.com/globalbiz/content/jan2010/gb20100129_489420.htm
[Page Last Visited 18th Feb 2010]
http://www.financialexpress.com/news/Nano--Pulsar-among-winners-of-Bloomberg-
UTV-Autocar-awards/568379/ [Page Last Visited 20th Feb 2010]

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 69


ANNEXURE –I Tata Nano Gallery

TATA NANO LX TATA NANO CX

TATA NANO NANO INTERIORS

NANO INTERIORS
NANO DESIGN

NANO ON A GO

RATAN TATA WITH NANO

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 70


ANNEXURE –II Tata Nano Promotions

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 71


26
ANNEXURE –II Nano Specs

DIMENSION - NANO ENGINE TRANSMISSION


Overall Length 3099 mm
Engine Type 624 cc, 2 cylinder,
Overall Width 1495 mm (&
MPFI
1620 mm with
Maximum 35 PS @ 5250 rpm
ORVM)
Engine
Overall Height 1652 mm
Output
Wheelbase 2230 mm
Maximum 48 NM @ 3000 +/-
Ground clearance 180 mm
Torque 500 rpm
Min. Turning Circle Radius 4m
Maximum 105 kmph
Seating Capacity 4 persons Speed
Fuel Tank Capacity 15 Liters No. of Gears 4 Forward + 1
Kerb Weight Reverse
Nano 600 kg
Nano CX 615 kg
Nano LX 635 kg
Payload 300 kg

DETAILS NANO MARUTI 800 ALTO SANTRO


Base Model Nano M800 Std Alto Santro Non-AC
Plus Air Nano CX/LX M800 AC Alto LX/LXi Santro GL/GLS
Conditioner
Plus Heater Nano CX/LX Feature Not Available Alto LX/LXi Santro GL/GLS
Plus Tinted Nano CX/LX M800 AC Alto LX/LXi Santro GL/GLS
Glasses
Fully Loaded Nano LX M800 AC Alto LXi Santro GLS
Plus Front Power Nano LX Feature Not Available Feature Not Available Santro GLS
Windows
Plus Body Nano LX Feature Not Available Feature Not Available Santro GLS (Only Body
Colored Bumper, Colored Bumper)
Door Handle &
ORVM
Plus Central Nano LX Feature Not Available Feature Not Available Santro GLS
Locking
Plus Front & Rear Nano LX Feature Not Available Feature Not Available Feature Not Available
Fog Lamp

26
Obtained from Tata Nano Website -
http://tatanano.inservices.tatamotors.com/tatamotors/index.php?option=com_whynano&task=comparison&Item
id=302

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 72


ANNEXURE –III RESPONDENTS’ QUESTIONNAIRE

CUSTOMER QUESTIONNAIRE
Respected Sir/Madam,

We are conducting a Survey to analyze the Customer adoption process for TATA Nano car. In this
regard we request you to kindly spare a few moments of your valuable time and fill up the following
Questionnaire. Kindly note that there is no right or a wrong answers for these questions. It is your
opinion that matters.

1. Do you own a Two-wheeler?


a) Yes b) No
2. Do you own a Car?
a) Yes b) No [If ‘No’ Go to Qn.5 ]
3. If yes, name the car(s) that you own?
_________________________

4. When did you buy the Car?


a) Less than a year before c) Five Years before
b) Three years before d) More than five years before
5. Please tick the reason(s) for not owning a CAR?
a) Lack of Proper Financing d) Commutation would be difficult
b) Did not have the need to buy a Car while using a Car
c) Unable to find the required features e) Any others Kindly Specify
in the Car _____________________
6. Please specify the brand(s) of Cars recollected by you in the top most rows and rate them on the
different parameters mentioned below. Rate them on a scale of 1 to 10, 1 indicating your
maximum preference
Cars Tata Maruti Maruti …………… …………… ………………
Nano 800 Alto ………….. …………… …………
Parameters
Safety

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 73


Affordability
Variety of Models
After Sales Service
Comfort
Brand Image
Large number of Dealers
Advertising
Promotional offers
7. Tick the preferred rating for the statements given below that may influence your buying
of Tata Nano.
1 -Strongly Agree; 2-Agree; 3- Neutral; 4- Disagree; 5- Strongly Disagree
SNO STATEMENTS 1 2 3 4 5
1. The Price of the Car to fit my budget is very important to me while 1 2 3 4 5

selecting a Car
2. I feel taking Suggestions from my family members is very important 1 2 3 4 5

to me while selecting Tata Nano.


3. The Brand Name associated with the Tata Nano is very high 1 2 3 4 5

4. I would look at the Festival Season/Offers provided for Tata Nano 1 2 3 4 5

while planning to buy.


5. I feel that Tata Nano that would suit for my Family Tours/ Outings 1 2 3 4 5

6. Nano satisfying the emission norms of Bharat Stage II and Stage III 1 2 3 4 5

standards are very important for me for selecting Nano


7. I would like to see more aggressive promotional campaigns for 1 2 3 4 5

awareness about the Tata Nano available in the market


8. Effective after Sales Service is very important for me to select Nano. 1 2 3 4 5

9. I wish to have a convenient Mode of Payment when selecting Tata 1 2 3 4 5

Nano
10. The Insurance Facility offered by a Nano Dealer is very important for 1 2 3 4 5

me to prefer Nano
11. I feel it is important for Nano to have inbuilt power steering 1 2 3 4 5

12. The Information Provided by the Salesperson is very important for 1 2 3 4 5

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 74


me to prefer buying a Nano
13. Nano car has to be priced between One and Two lakhs. 1 2 3 4 5

14. I would look into the resale value of the Car after some time while 1 2 3 4 5

selecting a car.
15. In-built power window is very important for me while selecting a car. 1 2 3 4 5

16. The variants available with Nano is very important for me 1 2 3 4 5

17. I look into the Information Provided By Car magazines while buying 1 2 3 4 5

the car
18. I would look into the Mileage of the car could give while selecting a 1 2 3 4 5

Car
19. I would want Nano to be a more attractive car 1 2 3 4 5

20. I would look into buying of car of Indian Make 1 2 3 4 5

21. Safety elements are very important in the Car while selecting a Car 1 2 3 4 5

22. I would look on the Car Accessories while selecting the Car 1 2 3 4 5

23. I would look into the spare parts availability while selecting a car. 1 2 3 4 5

24. I would look into your friends and relatives opinion while selecting a 1 2 3 4 5

car

8. Are you satisfied with the use of Tata Nano (Please skip this if you do not own a TATA Nano)
a) Yes b) No
9. Tick the preferred rating for the following features relating to Tata Nano. ( You may tick the last
column in case you are unsure about the particular feature)

1 –Very Good; 2-Good; 3- Average; 4- Bad; 5- Very Bad

SNO STATEMENTS 1 2 3 4 5 X

1. Spaciousness for 4 persons in the car 1 2 3 4 5

2. Ease of driving while commuting in the City 1 2 3 4 5

3. Level of Comfort while driving for a Long Distance 1 2 3 4 5

4. Level of comfort while driving in hilly roads 1 2 3 4 5

5. The Safety aspects available in the Car 1 2 3 4 5

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 75


6. The 4-speed Gear Box 1 2 3 4 5

7. The Mileage obtained in Tata Nano 1 2 3 4 5

8. The Fuel tank capacity of 15-litres 1 2 3 4 5

9. Ability to install accessories like central locking, Fog lamps, 1 2 3 4 5

CD/MP3 Player in a later stage.


10. Vehicle Performance in terms of Power and Acceleration 1 2 3 4 5

11. The Fixed Rear Glass in the car 1 2 3 4 5

12. The Ease of Opening and closing the Doors and Windows 1 2 3 4 5

13. Time taken for the delivery of the Tata Nano 1 2 3 4 5

14. Smooth running of the engine 1 2 3 4 5

15. Instrument Panel/Dashboard designing 1 2 3 4 5

10. Do you feel that Nano can pull the Two-wheelers market by making them prefer Nano Car?
a) Very Likely b) Likely c) Not sure d) Unlikely e)Very Unlikely
11. Would you like to own a Tata Nano?
a. Yes b) No
12. Your friend is considering buying a Small Car. Would you recommend Tata Nano?
a. Yes b) No
13. If No, Please specify why you feel so ________________________________________________

Personal Details:

Date of Interview: ___________________ Name (Optional) ________________________


Age:
a) Below 25 b) 26-35 c) 36-50 d)51 and above
Gender:
a) Male b) Female
Annual Income:
a) < less than 5 lakhs b) 5-10 lakhs c) 10-15 lakhs d) Above 15 Lakhs

THANK YOU FOR YOUR TIME AND PATIENCE!!!

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 76


ANNEXURE –IV CORRESPONDENCE ANALYSIS INPUT FILE
Respondent rowcat_ Nano maruti Alto Respondent Row_cat Nano Maruti Alto
1 1 1 2 3 16 1 7 6 5
1 2 3 3 3 16 2 3 3 3
1 3 2 2 2 16 3 2 3 2
1 4 3 4 2 16 4 3 3 3
1 5 1 3 3 16 5 3 3 3
1 6 3 2 2 16 6 4 3 6
1 7 5 3 2 16 7 5 3 5
1 8 2 2 2 16 8 4 2 3
2 1 1 3 3 17 1 1 1 1
2 2 6 4 5 17 2 9 5 5
2 3 8 1 1 17 3 3 2 2
2 4 9 6 6 17 4 7 7 3
2 5 6 2 4 17 5 6 3 7
2 6 5 1 1 17 6 4 8 6
2 7 8 4 6 17 7 2 6 8
2 8 5 3 6 17 8 5 9 9
3 1 10 10 10 18 1 10 1 10
3 2 10 10 10 18 2 10 9 10
3 3 10 10 10 18 3 10 3 10
3 4 10 10 10 18 4 10 8 10
3 5 10 10 10 18 5 10 10 2
3 6 10 10 10 18 6 10 5 10
3 7 10 10 10 18 7 10 6 10
3 8 10 10 10 18 8 10 7 10
4 1 3 3 10 19 1 2 1 1
4 2 8 8 10 19 2 8 6 6
4 3 5 5 10 19 3 9 2 2
4 4 5 5 10 19 4 6 1 2
4 5 5 5 10 19 5 4 2 1
4 6 5 5 10 19 6 3 1 1
4 7 5 5 10 19 7 6 5 2
4 8 5 5 10 19 8 7 3 2
5 1 1 2 2 20 1 10 2 1
5 2 6 7 5 20 2 10 3 1
5 3 3 3 3 20 3 10 4 1
5 4 6 5 4 20 4 10 3 1
5 5 2 3 3 20 5 10 2 1
5 6 2 2 3 20 6 10 5 1
5 7 1 4 3 20 7 2 2 3
20 8 3 2 10
MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 77
5 8 2 2 3 21 1 1 2 2
6 1 1 2 3 21 2 6 5 4
6 2 10 10 10 21 3 3 1 1
6 3 3 1 2 21 4 5 4 3
6 4 3 2 1 21 5 2 1 1
6 5 3 2 1 21 6 4 1 1
6 6 2 1 1 21 7 1 6 6
6 7 3 1 2 21 8 6 7 8
6 8 1 2 3 22 1 1 2 3
7 1 10 8 7 22 2 9 8 7
7 2 6 9 7 22 3 8 2 2
7 3 6 10 10 22 4 7 5 4
7 4 5 7 8 22 5 5 7 4
7 5 9 9 9 22 6 7 1 1
7 6 9 9 9 22 7 6 4 4
7 7 9 9 9 22 8 3 5 5
7 8 8 9 9 23 1 3 6 5
8 1 1 2 3 23 2 2 3 3
8 2 2 3 3 23 3 2 5 2
8 3 2 1 1 23 4 3 3 4
8 4 3 2 1 23 5 3 3 3
8 5 4 1 2 23 6 4 3 3
8 6 5 3 3 23 7 5 4 5
8 7 2 3 3 23 8 4 2 3
8 8 1 3 4 24 1 1 3 10
9 1 10 10 8 24 2 5 9 10
9 2 10 10 8 24 3 8 2 10
9 3 10 10 8 24 4 9 4 10
9 4 10 10 8 24 5 2 1 10
9 5 10 10 8 24 6 4 6 10
9 6 10 10 8 24 7 7 8 10
9 7 10 10 8 24 8 3 7 10
9 8 10 10 8 25 2 3 6 5
10 1 1 2 3 25 3 8 1 2
10 2 9 8 8 25 4 9 4 6
10 3 5 5 5 25 5 5 2 3
10 4 8 8 7 25 6 5 2 1
10 5 2 4 5 25 7 8 3 4
10 6 2 2 4 25 8 5 3 6
10 7 3 5 5
10 8 2 2 5

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 78


11 1 5 4 4 26 1 10 10 10
11 2 3 3 4 26 2 10 10 10
11 3 3 3 4 26 3 10 10 10
11 4 3 3 4 26 4 10 10 10
11 5 4 4 4 26 5 10 10 10
11 6 4 5 5 26 6 10 10 10
11 7 3 4 4 26 7 10 10 10
11 8 4 4 4 26 8 10 10 10
12 1 10 9 8 27 1 1 2 3
12 2 10 10 10 27 2 9 8 8
12 3 8 10 10 27 3 5 5 5
12 4 5 8 8 27 4 8 8 7
12 5 7 9 9 27 5 2 4 5
12 6 10 9 9 27 6 2 2 4
12 7 6 6 6 27 7 3 5 5
12 8 10 10 10 27 8 2 2 5
13 1 7 7 8 28 1 7 5 8
13 2 7 8 9 28 2 7 7 9
13 3 6 7 9 28 3 6 7 9
13 4 6 7 9 28 4 6 7 8
13 5 7 6 9 28 5 7 6 9
13 6 7 10 10 28 6 7 8 10
13 7 8 7 10 28 7 8 7 10
13 8 8 9 10 28 8 8 9 10
14 1 1 1 1 29 1 10 2 10
14 2 8 4 4 29 2 10 3 10
14 3 8 3 3 29 3 10 2 10
14 4 10 7 5 29 4 10 2 10
14 5 8 7 7 29 5 10 3 10
14 6 6 2 2 29 6 10 1 10
14 7 5 7 4 29 7 10 2 10
14 8 7 8 6 29 8 10 2 10
15 1 6 9 8 30 1 1 2 5
15 2 8 6 7 30 2 3 3 3
15 3 10 9 9 30 3 2 2 2
15 4 6 5 5 30 4 3 4 1
15 5 5 8 8 30 5 1 3 2
15 6 4 8 8 30 6 3 2 4
15 7 7 8 8 30 7 5 3 2
15 8 6 10 6 30 8 2 2 3

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 79


ANNEXURE –V: OUTPUT OF MULTI DIMENSIONAL SCALING (MDS)

Age: 4 above 50

Age: 1 under 25
Iteration history for the 2 dimensional solution (in squared distances)

Young's S-stress formula 1 is used.

Iteration S-stress Improvement

1 .12546
2 .10697 .01849
3 .10565 .00132
4 .10512 .00053

Iterations stopped because


S-stress improvement is less than .001000

Stress and squared correlation (RSQ) in distances


RSQ values are the proportion of variance of the scaled data (disparities)
in the partition (row, matrix, or entire data) which
is accounted for by their corresponding distances.
Stress values are Kruskal's stress formula 1.

For matrix
Stress = .13436 RSQ = .93715

Age: 1 under 25
Configuration derived in 2 dimensions

Stimulus Coordinates

Dimension
Stimulus Stimulus 1 2
Number Name

1 price 1.3289 .2846


2 suggesti -1.9277 .7359
3 brandnam .2360 -.1121
4 festive .5826 -.1517
5 family_t -2.0516 -.5683
6 emission -1.5738 .0954
7 promotio .5700 -.5508
8 salesser 1.4198 .1575
9 payment .1659 -.3782
10 insuranc .7586 .3148
11 powerste -.5686 -1.2157
12 salesper -1.5089 .4302

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 80


13 pricelow 1.0564 .2917
14 resaleva .8659 -.0991
15 powerwin -.7602 -1.8185
16 variant .3170 -.3603
17 carmagaz -2.4195 .4205
18 mileage 1.3701 .4004
19 attracti .7946 .6116
20 indianma .1577 .2203
21 safety 1.4185 .0537
22 accessor .5055 .5633
23 availabi 1.6688 .1688
24 opinion -2.4062 .5060

Age: 2 26-35
Iteration history for the 2 dimensional solution (in squared distances)

Young's S-stress formula 1 is used.

Iteration S-stress Improvement

1 .24414
2 .17947 .06467
3 .17068 .00879
4 .16861 .00207
5 .16789 .00072

Iterations stopped because


S-stress improvement is less than .001000
Stress and squared correlation (RSQ) in distances
RSQ values are the proportion of variance of the scaled data (disparities)
in the partition (row, matrix, or entire data) which
is accounted for by their corresponding distances.
Stress values are Kruskal's stress formula 1.
For matrix
Stress = .14132 RSQ = .89525

Age: 2 26-35
Configuration derived in 2 dimensions

Stimulus Coordinates

Dimension

Stimulus Stimulus 1 2
Number Name

1 price 1.2380 .6752


2 suggesti -1.2489 -.5947
3 brandnam .1314 -.0656
4 festive .7811 .8684
5 family_t -1.9239 -.0509
6 emission -1.6084 -.3211

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 81


7 promotio .4516 .9361
8 salesser 1.2335 -1.0573
9 payment -.3031 -.5986
10 insuranc .4111 -1.2297
11 powerste -.4811 1.0634
12 salesper -1.3016 .0178
13 pricelow 1.0331 1.2126
14 resaleva .7732 .5072
15 powerwin -.9325 1.4118
16 variant .0853 -.0655
17 carmagaz -2.1664 .3171
18 mileage 1.6591 .3424
19 attracti .4334 -.7606
20 indianma .2034 -.0399
21 safety 1.1430 -1.0761
22 accessor .2690 -1.1235
23 availabi 2.1144 -.6054
24 opinion -1.9946 .2370

Age: 3 36-50
Iteration history for the 2 dimensional solution (in squared distances)

Young's S-stress formula 1 is used.

Iteration S-stress Improvement

1 .19758
2 .16584 .03173
3 .16030 .00554
4 .15846 .00184
5 .15741 .00105
6 .15678 .00063

Iterations stopped because


S-stress improvement is less than .001000
Stress and squared correlation (RSQ) in distances
RSQ values are the proportion of variance of the scaled data (disparities)
in the partition (row, matrix, or entire data) which
is accounted for by their corresponding distances.
Stress values are Kruskal's stress formula 1.

For matrix
Stress = .15190 RSQ = .89207

Age: 3 36-50
Configuration derived in 2 dimensions

Stimulus Coordinates

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 82


Dimension

Stimulus Stimulus 1 2
Number Name

1 price 1.0175 -.1536


2 suggesti -1.3688 .7670
3 brandnam .1587 -.1444
4 festive .3741 -.2354
5 family_t -2.1030 -.3158
6 emission -1.2770 -.2947
7 promotio .6674 -.7350
8 salesser 1.2806 1.2027
9 payment -.0843 -.0348
10 insuranc 1.2435 -.3437
11 powerste -.1625 -1.5118
12 salesper -1.0421 .7476
13 pricelow .6694 .5434
14 resaleva .9951 -.6705
15 powerwin -1.5400 -1.4967
16 variant -.4891 -.5073
17 carmagaz -2.3097 .5393
18 mileage 1.6061 .3289
19 attracti .2589 .8377
20 indianma .5800 -.5168
21 safety 1.5585 .6261
22 accessor .5149 .8279
23 availabi 1.6291 .3316
24 opinion -2.1772 .2085

Age: 4 above 50
Iteration history for the 2 dimensional solution (in squared distances)

Young's S-stress formula 1 is used.

Iteration S-stress Improvement

1 .09611
2 .08170 .01441
3 .07997 .00173
4 .07961 .00036

Iterations stopped because


S-stress improvement is less than .001000
Stress and squared correlation (RSQ) in distances
RSQ values are the proportion of variance of the scaled data (disparities)
in the partition (row, matrix, or entire data) which
is accounted for by their corresponding distances.
Stress values are Kruskal's stress formula 1.

For matrix
Stress = .08871 RSQ = .96662

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 83


Age: 4 above 50
Configuration derived in 2 dimensions

Stimulus Coordinates
Dimension

Stimulus Stimulus 1 2
Number Name

1 price 1.4127 .5831


2 suggesti -1.2069 -.3084
3 brandnam -.9420 .3524
4 festive .7775 .6422
5 family_t -1.9321 .6463
6 emission -1.9400 -.2662
7 promotio .9828 .6444
8 salesser 1.2244 -.3265
9 payment .7267 -.1118
10 insuranc .7581 -.2663
11 powerste .3070 -.7959
12 salesper -.5513 .3298
13 pricelow .4588 -.0232
14 resaleva 1.6750 .3584
15 powerwin -.1796 .0982
16 variant -.9386 .3497
17 carmagaz -1.9566 -.3471
18 mileage 1.7264 .2638
19 attracti -1.0268 -1.3377
20 indianma -1.2033 -.3085
21 safety 1.2280 -1.1393
22 accessor 1.1872 -.3113
23 availabi 1.6749 .3515
24 opinion -2.2622 .9224

Abbreviated Extended
Name Name
accessor accessories
attracti attractiveness
availabi availability
brandnam brandname
carmagaz carmagazine
emission emissionnorms
family_t family_tours
indianma indianmake
insuranc insurance
powerste powersteering
powerwin powerwindow
promotio promotion
resaleva resalevalue
salesper salesperson
salesser salesservice
suggesti suggestion

MANAGEMENT RESEARCH PROJECT (DRAFT REPORT) Page 84

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