Thursday, October 17, 2013

Why the World's Cheapest Car Flopped


This analysis will discuss why the world’s cheapest car flopped. When India’s Tata motors introduced the Nano with the concept of world’s cheapest car, it aimed at achieving commercial success. This could offer an affordable solution to lower middle class families in India. However, the many anticipated success could not be achieved by the Tata Company a fact which can be attributed to factors like, targeted customers and business model, which the company did not put into consideration.
Business model; it is agreeable that Tata Company designed an innovative product, however; it did not put into consideration the need to come up with innovation in its strategy channel. The company did not a have good and viable strategy to reach its targeted customers who mostly do not leave in urban areas. In addition, the company did not seem to have the knowledge on what the targeted population perceived best, and instead; it designed a car they thought the targeted customers needed. Malhotra and Jagota observed that, it turns out that those who graduate into India's middle class prefer buying cheap cars, but not interested in cars that appear to be cheap. This in turn, affected the sales of Nano negatively hence; its sale dropped by forty percent in that year. It is clear that the Tata Company did not carry out market research to know what targeted customers required; in terms of features and usability. The first model did not have attractive features, which would attract customers to buy the cheap car. According to Mr. Bahl, “the car was underpowered for driving in the mountains” (Malhotra and Jagota).
Therefore, it can be concluded that the Tata Company did not conduct enough research to know which features and usability of the Nano car, the targeted customers would like in the car. Thus, the car did not meet the expectation and preference of the targeted population.  




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