The premise is simple. You’re a CEO in one the biggest multinational auto company in the world attempting to monopolize in one of the largest car markets in the world. There is a large consumer segment with low incomes who cannot afford cars but would have like to. The logical step would be to expand the consumer base by providing cheap and affordable cars to low income groups and therefore procure greater profits. What could possibly go wrong right?
As it turns out, in this particular scenario, a lot. Tata Nano is an interesting case study for business students because it puts theory into practice with the assumption that cheaper cars result in greater sales and higher profits. The case study of Tata Nano interested me as I was first introduced to it in the ‘marketing meets accounting’ comm 101 class. I decided to investigate this topic further and to construe reasons as to why such a project with such great potential resulted in a colossal failure.
In the external blog, “Autoblog”, the blogger examines the extent to which Tata Nano has failed, with projected sales of 20,000 to 25,000 cars to a mere 1,200. One of the reasons why the project failed was simply because of image of the product; no one, regardless of socioeconomic status, is willing to buy a product if its main attribute is to be cheap. The stigma associated with buying the product will lead consumers to choose substitute products that deliver the same function, a motorbike for instance. Hence, the product image and perception led to the demise of the Tata Nano
References:
http://www.autoblog.com/2011/10/12/is-the-tata-nano-a-failure/
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