What sales goal would you recommend for the Tata Nano?
When Tata Motors Ldt. decided to create the Tato Nano they wanted to make the most fuel-efficient, smallest and cheapest car in the world. They had the advantage of already having the trust of consumers’ in India and being known for its commitment to ethics, by promising to improve the quality of life of its consumers. However, they were not the market leaders for the passenger vehicles with a market share of 16,45% against 46,07% for their competitor’s car, the Maruti Suzuki India. The Maruti had placed itself in the market has everyone’s car. Whether you are young or old, single or married, with children or not, you could have the Maruti. And it succeeded.
Tata Motors also faced the problem that most people in India drove two wheelers (76% of all vehicles sales were for motorcycles) since they were perceived as being more fuel efficient and had lower maintenance costs than cars. Also they allowed the driver to get anywhere faster than in a car due to the traffic.
The first idea was to create a low cost passenger car. Targeting families that would drive their whole family in a motorcycle, the Tata Nano would be the car to replace such two-wheelers in an affordable way, making it possible to travel with your family in a much safer way. Summarizing, they wanted to target low income families. In 2008, India had a population of 1,1 billions with a median age under 25 years old. It is expected that the middle class will account for 19% of the country by 2015 and 41% by 2025. Also, the proportion of income devoted to transportation is expected to be of 19% in 2015 and 20% by 2025. However, absolute income levels are low.
The company started working on the Nano and initially predicted production to be of 350.000 cars in the first year. However, due to problems unrelated to the car production, they would only be able to initially produce 50,000 cars. The company decided to create a booking process; and if...
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