PRICING STRATEGIES
for “the people’s car”
Presented by:
Dr. Amrita Singh
Alok Kumar
Ajay Singh
Anushree Pandit
Gaganbir Kaur
Jatin Saxena
Jyoti
Ishrat Batool
Development of a One lakh Car
WHAT MAKES IT SO CHEAP!
• The TATA Nano uses plastics and adhesives
rather than welding.
• Partially using inexpensive polymers or
biodegradable plastics instead of a full metal
body.
• It has no AC, no power steering, no power
windows.
Target Market
Why should People Buy Nano..
•
•
•
•
Low price and covers basic needs of a car.
Its look cute and attractive
Better facilities for servicing and maintenance
Easy finance
But was It REALLY a 1 LAKH Rupees
Car?
Why the price hike?
Tata said that
“ expensive lending rates, higher
fuel costs, and inflation hit
margins during the last year is
forcing us to pass on the costs
to its customers.”
Increasing input costs, especially that of steel and other commodities like rubber, had put
pressure on margins.
TATA PRICING OBJECTIVES
•
•
•
•
Survival
Maximizing market share
Keeping the price range near 1 lakh
Discouraging potential competition
TATA’S PRICING STRATEGY
Though the one lack tag was not fixed by TATA group, it
was the word of mouth of people which fixed the range.
This expectation of people creates a big challenge for the
company. To accept this challenge the following strategies
are followed:
• Increasing market share
• Penetration pricing
• Low pricing policy with minimum profit margin
PRICE OF VARIOUS CARS
NANO
1.3-1.9 LACK
ALTO
2.3 LACK
MARUTI 800
1.9-2.3 LACK
SANTRO
2.77 LACK
AVAILABLE FINANCING SCHEMES
• Tata Motors Finance (TMF) will provide finance
up to 90% for the Nano at easy rates.
• the company has announced a four-year or
60,000 kilometer manufacturing warranty at no
extra cost.
• Loan within 48 hours
• comprehensive maintenance contract at Rs. 99
per month for all new customers.
Proposed pricing objectives
• Survival
• New market penetration
• Increase the perceived value of Nano
• Increase market share
PROPOSED PRICING STRATEGIES
• Penetration pricing
• Target costing
• Low pricing policy with minimum profit margin which is only
2%
• Perceived value pricing
• Increased market growth
• Discouraged potential competition
Selecting the final pricing
• Influence of other marketing mix
• Cash discount
Price List
ex showroom prices
Model
Nano BS IV
Price
Rs 145,000
Nano CX BS IV
Rs 170,078
Nano LX BS IV
Rs 196,956
Banks
PROJECTED NEW COST
% allocated
2010
2011
145,000
153,000
Manufacturing
cost
40
58000
61200
place
20
29000
30600
promotion
30
43500
45900
tax
5
7250
7650
misc.
3
4350
4590
profit
20
2900
3060
sales
60,000
69000
RECOMMENDATIONS
• Through government subsidies and tax
• Collaboration for loans with Gramin banks and
post offices
• Cost effectiveness – Spare parts packages
• Nano Special Outlets(NSO) discount
• Decreasing down payment in rural areas
Thank You