What Type Of Pricing Strategy Is Tata Using For The Tata Nano For Its Product Launch In India? Justify Why This Scheme Was Chosen And Identify Both The Positives And Negatives Of Using This Strategy.
With the release of the Tata Nano it is created a splash in the universe car industry as the cheapest auto. The Tata Nano besides known as the 100,000 Sri lanka rupees auto ( ?1500 approx ) was targeted at the people who were non able to purchase a auto. In order for Tata to do this possible they had to cut down many characteristics which is seeable in the other normal autos, in order to lodge to their monetary value. Yet the Nano meets the all of India ‘s safety criterions and ordinances.
Tata has used the Market Penetration Pricing Strategy on presenting the Nano to the Indian market. They have imposed a low monetary value on the Tata Nano in order to sell the merchandise and to derive a larger market portion. As Tata has gained a big market portion in their motor industry the Nano is merely another add-on to Tata ‘s motor division. The Nano is a really low priced auto as it is been targeted chiefly at the people who are non able to afford a auto. With the low monetary value Tata can derive a larger market portion which is an advantage to Tata. With the high degree of competition the Nano has to keep their monetary value or the Nano will lose its market portion and it ‘s topographic point in the car industry and the heads of people, as Tata has besides named the Nano as the ‘peoples auto ‘ .
Even though this pricing scheme is used by companies to promote trade name shift, in here the motivation of the Tata Company to follow this pricing scheme is to pull new users who are unable to offer competitory merchandises which are expensive in monetary value. At the same clip the launch of Nano will surprise the rivals and they will non happen adequate clip to respond by researching the secrets of fabricating Nano at such a low monetary value. This low monetary value will move as a barrier for the rivals to come in the market.
The Nano can be used by a first clip user or a regular user and besides segmented to a civilization, athletics or outdoor oriented life style. The low monetary value will mostly pull first clip users and make monolithic popularity through the spreading of positive word of oral cavity. The Nano besides attracts little auto purchaser like the Maruti 800 and motorcycle riders, every bit good as the multitudes of the households that was n’t able to afford a auto. The Nano is classified as a forte merchandise because the Nano is merely sold through traders of Tata and its alone characteristics and the trade name designation it has received do this a consumer forte good.
The Nano was a merchandise that people was waiting for, so the demand for the Nano is extremely elastic which is a really good positive point for Tata when they are establishing. By this Tata will be able to hike their gross revenues of the Nano with the low monetary value which is been imposed on the Nano. If the demand for the Nano is elastic Tata will be able to cut down the cost of production per unit.
However the company will hold to confront jobs if they want to alter the monetary value of the merchandise at a peculiar point in clip of the hereafter as people will make long term outlooks. The company is besides put on the lining their image by offering this merchandise utilizing this scheme as clients will be given to make a misconception that Tata trade name is associated with low quality. Besides the company will hold to confront greater jobs in the long tally with the lower net income borders that wo n’t be sufficient for suatainability of the house in the long tally.
If Tata Did Establish The Nano In Europe What Should Be The Pricing Strategy? Should It Be The Same Across Europe Or Differ In Each State? Support Each Of Your Answers With Your Own Reasons And The Use Of Marketing Theory And / Or Models.
If Tata is to establish the Nano in Europe Tata will hold to take into consideration the premium scheme where the monetary value of the merchandise will be high every bit good as the quality of the merchandise. In order to be sold in Europe Tata has to better the quality and characteristics of the Nano as the Nano is built to the criterions and ordinances of India, where as the criterions and ordinance of Europe are different compared to India. As a low monetary value would do it difficult for the Nano to last in the European market with its current characteristics. Because of its other challengers with better characteristics and besides with a low monetary value. The Nano has to keep its monetary value to its lower limit in order to avoid competition.
But at the clip of establishing the merchandise the company will hold to choose one of the two new merchandise pricing schemes available. Out of the two it will be best for the company to travel in front with the same market incursion pricing scheme for the launch as it can non travel in front with the Market Skimming Pricing Strategy even in the European market. The company can non utilize Planing pricing here unless the Nano auto goes as a high terminal merchandise. This means that if the Tata Company is traveling to establish the same Nano auto that they have launched in India, in the European market every bit good they will hold no option other than to utilize the Penetration Pricing Strategy for the launch. If the merchandise is traveling to be launched as a high terminal merchandise with the relevant alterations to ideally suite the European market so the company can utilize Planing Pricing.
But Tata can non use the same pricing scheme across all states because each state is different to each other, because the monetary value charged in a state depends on many factors. This is where the international pricing monetary value accommodation scheme is applied. One state ‘s economic background may be different to another state ‘s economic background. The income degree and the per capita income of the states even within the European continent are different. Company can travel with a high monetary value in par with the characteristics offered by the merchandise in richest states in Europe such as Luxembourg, Norway, Great Britain, Germany or Belgium. But they need to bear down a comparatively low monetary value in hapless states within the continent like Kosovo, Albania, Moltova etc. As most of the constituted auto shapers such as Chrysler, Ford and Peugeot are available in the rich states like Germany, Great Britain and France etc. it is best for the Tata Company to aim Nano to the hapless states in the European continent with its placement as the cheapest auto in the universe.
The monetary value of the Nano may alter depending on the degree of revenue enhancement the authorities will be enforcing on the Nano ; a higher revenue enhancement would comparatively increase the monetary value of the Nano and frailty versa. Because of this the projected monetary value by Tata of 100,000 ( rupees ) can non be maintained in other states, which is a drawback for Tata. The economic conditions is non the lone drawback, Tata has to confront jobs such as competitory state of affairss and Torahs and ordinances. At the same clip Tata will hold to do alterations to the merchandise to run into the safety criterions and vehicle ordinances among different states in the universe. The vehicle criterions and safety ordinances among the different states in the European continent are non the same. As Tata will hold to do alterations to accommodate the markets of each state decidedly the monetary value that they would bear down will besides differ from state to state.
Critically Evaluate The Drawbacks Of Charging Such A Low Price For The Nano For All Concerned, And The Likely Social And Other Repercussions ( If It Were To Be Sold In Europe And The USA, For Example ) .
The dream of Mr. Ratan Tata is a good one which he intends to assist the lower category of people with an low-cost manner of transit. But the Tata Nano has its negatives and positives. If the auto is to be sold at such a low monetary value there would be immense extra demand. In a state like India a auto like Nano would be perfect to acquire around traffic but as people start purchasing more and more Nano ‘s there will be a big job of extra traffic in the metropoliss. Once this happens people will hold a serious job of traveling someplace as there is a immense traffic doing people to pass most of their clip in the route. This will make immense traffic congestion demanding the governments to spread out the breadth of the roads and to build more metros so that people could avoid traffic. This will necessitate monolithic authorities investings by the authorities for which they will hold to raise financess through the aggregation or charging of revenue enhancements from the corporate community and the ordinary citizens. This will once more impact Tata as it is besides a member of the corporate community of India and it will hold to pay a comparatively larger part of its revenue enhancements to the authorities.
If the demand for the Nano starts to increase it will cut down the demand for the two Wheeler makers ( motor bikes and bikes ) which will make a monopolistic competition. This will impact the being of this type of concerns every bit good as it will impact the concern of established car manufacturers in the European continent. As Nano will make immense competition to these makers, the gross degree of these companies will come down and their net incomes would fall. This will impact the income of the employees of these concerns every bit good as to the life of providers who had been on a regular basis providing constituent parts to them. These will make a immense occupation hazard for the employment of these people as they might hold to confront expirations of employment and layoffs.
As the Tata Nano is built of a low class metal ( aluminium ) the harm caused to the vehicle is huge and it is really hazardous for the people who travel in it as it has no air bags, and that the forepart of the vehicle is really short it could do a big harm to vehicles every bit good as the riders. The addition in the gross revenues of the Nano would make a batch of sound and air pollution particularly in states like India ; it would besides do a batch of parking jobs if the sum of autos starts to increase. As there are more vehicles on the route the emanations will be tremendous making planetary heating and ozone bed depletion. This will adversely impact the wellness conditions particularly of the urban population who live by the roads.
The Nano is merely a metropolis auto and it can non go at really high velocity on main roads particularly in USA and Europe. Once the auto is at its top velocity it will be given to be thrown of the route doing accidents, and a auto like this is non good at all for going long distances. But the people will non truly understand the occasions in which it could be used as they will be blind by the low monetary value attractive force. This low monetary value will make a false belief among everybody to purchase the vehicle without truly measuring their travel demands and their suitableness for them. This might take topographic point in the mode of a craze for a short period of clip and subsequently when the people understand it the craze will melt off but it will make a bad image for the universe renowned ‘Tata ‘ trade name name.
Using A Selling Analysis Tool, And The Output You Obtain From Using It, Discuss ( With Justifications ) The Following
- Should Tata modify the Nano, to run into the vehicle criterions and ordinances of Europe and the USA
- Are these suited export markets for Tata and the Nano auto?
In order for the Nano to be sold in Europe or USA it will hold to travel under serious alterations, because Tata can non present the Nano which they had manufactured for India in the same manner to the European and US markets. The current Nano is made under the criterions and ordinances of India, and as such in order for it to be sold to the European or the US market Tata will hold to modify the Nano harmonizing to the relevant states criterions and ordinances, where the US and European criterions and ordinances are much stricter than India.
Tata will hold to be concerned about the safety issues of the Nano and run trials to look into if the Nano still has any mill defaults. Tata has to be on the qui vive on this issue because it is one of the major criterions that are mandatory in any vehicle in the Europe and the USA. Tata will besides hold to see about the emanation of the auto. Tata will hold to construct two different types of Nano ‘s for the US and European Markets in order to run into the criterions and ordinances of those two markets.
Through the purchase of land wanderer and panther Tata has made a good feeling on the heads of people, and Tata wo n’t be holding any job in marketing the Nano in these markets if the Nano goes with the expected alterations. Tata is really popular for its heavy vehicles which is been widely used in many European states Tata already has established the market. As Tata will be constructing a Nano which meets the criterions and ordinances of the European market with more characteristics Tata will be able to sell the Nano easy. Besides with Nano ‘s low monetary value compared to the other trade names, it has gained popularity and as many people are looking frontward for its reaching of the European version Europe will be a good export market.
After sing the factors about the European market we can come to a decision that, there are better export markets for Nano than the Europe and US markets. There are so many other markets where the Tata Company can direct the auto without much investing on alterations. Then this is more convenient for the maker besides, as they can export the original theoretical account of Nano without making any alterations to it if the Tata Company exports the auto to states like Sri Lanka, Bangladesh, and Nepal. African states like Namibia, Erithria, Libya, Malawi etc. are besides good export markets for the company ‘s merchandise as the societal and economic conditions of these states are slightly similar to India the merchandise will suite these states in the original version without necessitating any alterations. The transit costs of the vehicle ( cargo charges ) besides will be high if the auto is to be exported to Europe and US than exporting it to other states and when they add the cargo charges besides the monetary value of the Nano will lift and the company will non be able to sell it at the low monetary value that they expect.
Entering western markets with this merchandise being an Asiatic company will besides do the company to face certain International Marketing hazards. As engineerings get advanced at a rate in the European part the auto will necessitate regular alterations to stay competitory. And as people in this part ever prefer to travel for the large and big auto theoretical accounts like Chrysler the clients of Nano will besides non hold any trade name trueness to the merchandise. Harmonizing to all these the company is confronting immense hazards by exporting the auto to this European market.