Tata Motor - Principle of Marketing

1.Tata Motor’s marketing objectives and its marketing mix strategy affect the pricing of the Nano

Market objectives

Survival

Tata Motor set survival as their major objective. To keep a plant going they set a low price on Nano considering that survival is more important than profit. As long as their variable cost and some of the fixed costs are recovered from the price they will stay in business.

Current Profit Maximization

Tata Motor set the price that can be long term run performance instead on financial result. They estimate demand and costs associated with alternative prices and choose the price that will produce less expensive production car in the world aiming for a starting price of 100,000 Rupees or approximately US$2,000. The company is more interested in long term profitability rather than current profit.

Market Share Leadership

Tata Motor want to achieve dominant market share to enjoy lowest cost and highest long term profit. To capture high market share they set Nano price as low as possible.

Product Quality Leadership

Tata Motor not pursue the objective of product quality leadership. Tata Motor set a low price on Tata Nano to produce low product quality. Further, the customer also considers that if a product is low priced it is affordable for them to buy.

Marketing mix Strategies

Tata motor set a price which is coordinated with product design, distribution, and promotion to form a consistent and effective marketing program. Tata Motor has a very wide range of products it has passenger cars, utility vehicles, Trucks, Commercial passenger Carriers and Defense Vehicles. Tata motor de-emphasize price and use other marketing mix tools to create non-price position. Tata Motor set Tata Nano price 1 lakh approximately US$ 2,000 which especially targets to the middle class people who do not afford to buy a car. Most people from India want to ride a car which is not expensive. On the other hand, they want to solve the problem of dangerous accidents when they ride a 2-wheeler vehicle. Therefore, they use the Market-Penetration pricing. By using this strategy, they can penetrate more market and know how to get large market place. The large amounts of customers are attracted by Tata Nano cars’ price. Therefore they can get more market place in India and developing countries.