TATA NANO

Group Members

Haseeb Ansari

Bhupendra Mehta

Azim Khan

Deepak Nanini

Bipin Gupta

Aamir Khan
EXECUTIVE SUMMARY

Tata Nano is the cheapest car in the world. It is sold in home country India around Rs

1-lakh i.e. approximately USD 2000. It is manufactured by Tata Motor Limited, the largest

automobile company in India. It’s Chairman, Mr Ratan Tata envisions that Tata Nano to become

a “People’s car“which is affordable by almost everybody.

Tata Nano was first launched in India on 1st April 2009 and expected to be in Indian

market by July 2009. Since launching, it has created a huge buzz all over India. Within the first

two days of lunching, it has received 5500 booking. The figures keep increasing every day since

the launching.

What makes Tata Nano so cheap? Basically, by making things smaller, lighter, do away

with superficial parts and change the materials wherever possible without compromising the

safety and environmental compliance. It is said that Tata Nano has better millage than any other

car in India.

Once the Tata motors plant moved out of Singur, Gujarat turned out to be the lucky

recipient. Sanand is located at a distance of 40kms from Ahmedabad. The Sanand Tata Nano

plant was chosen in this location because of the close proximity of the place from ports like

Rajkot as well as Mundra. Since most of the transportation of parts and components takes place

through the sea, a port being close to the manufacturing plant certainly has its advantages.

Tata Motors, India's largest vehicles maker, may allow local car assemblers to put together its

Nano and sell it under their own brand, the Business Standard reported on Monday.

There are three types of Tata Nano car available i.e.

  Tata Nano

 Tata Nano CX and

 Tata Nano LX.

The standard model will be available for Rs 1 lakh and there will two other models priced at Rs

1.24 lakh and Rs 1.34 lakh. (excluding the taxes, which will differ from state to state)

Tata Motors Ltd, will need to sell more than 30,000 Nanos a month for it to earn profits from the

small car, predict analysts.

All dealers of Tata Motors and branches of the State Bank of India (SBI) will accept bookings

simultaneously across the country.

SBI will initially engaged 100 branches and take the number eventually to 1,000 (SBI will not

only act as sole lender to buyers but also offer its branches for bookings.)

The company is targeting lower income group with family, first-time buyers of car (fresh

graduates) and motorcycle owners.

SITUATION ANALYSIS
  Tata Motors Limited is India’s largest automobile company, with revenues of

Rs. 35651.48 crores (USD 8.8 billion) in 2007-08.

 It is the leader in commercial vehicles in each segment, and among the top three in

passenger vehicles with winning products in the compact, midsize car and utility

vehicle segments.

 The company is the world’s fourth largest truck manufacturer, and

 The world’s second largest bus manufacturer.

 In March 2008, Tata Motors acquired Ford’s UK based car brands Jaguar and Land

Rover

According to Ratan Tata (Chairman of Tata Group), the need for an innovation like Nano has

got to do something for the people of India and transport. Unavailability and poor quality of

mass transport is a common problem in India. In a two wheeler, father driving with elder child

standing in front and wife behind holding a baby is norm in this country. Thus, this is a

relatively an unsafe mode of transporting a family. Thus, with this in mind Tata Nano was

created as a safer form of transport.

 Market Summary

India's car market is a huge draw because car penetration is just 7% per 1,000 people,
compared to 550 per 1,000 in such countries as Germany or 476 in France, according to the
Society of Indian Automobiles.

Target Markets

 Executive two wheeler segment

 second hand car user
 auto rickshaw market
 middle and lower income group people.

Positioning

Tata Nano will position itself as the world cheapest car and yet does not compromise

the quality, safety and environment. This positioning will be achieved by leveraging Tata Nano’s

competitive edge: industries experience from the parent company Tata Motor who has been in

vehicles industries (commercial, passengers & utilities) since 1945. Tata motor has good

supplier-manufacturer relationship with more than 100 components.

TATA intending to place in the mind of the consumer’s as a people’s car

Geographys

Tata Motors have targeted the rural and urban India with the low pricing of Nano.

Distribution Review

 So far we know TATA, it’s business has been extended to the overseas i.e. to the Europe,

Africa, U.S & Australia.

 Hence it has n-number of showrooms in India & outside of India.

 The exclusive showrooms are the best distribution channels for TATA itself.

Competition Analysis

The main competitor for Tata Nano is Maruti 800.

But Nano is costing almost half the price of Maruti 800.

Market Demographics

The market demographic of Nano is based on Family size and Income of the family.
 SWOT ANALYSIS
The following SWOT analysis investigates the INDIAN political, economical and business
environment.

POLITICAL SWOT ANALYSIS

Tata Motors operates in multiple countries across Europe, Africa, Asia, the Middle

East, and Australia, it needs to pay close attention to the political climate but also laws and

regulations in all the countries it operates in while also paying attention to regional governing

bodies. Laws governing commerce, trade, growth, and investment are dependent on the local

government as well as how successful local markets and economies will be due to regional,

national and local influence.

On March 26, 2008, Tata Motors reached an agreement with Ford to purchase Jaguar and

Land Rover. In order to be capable of this acquisition, Tata Motors must have a full

comprehension of the governing bodies and laws regulating commerce in the home country, the

United Kingdom, but also in countries Jaguar and Land Rover operate in.

In accordance, Tata’s headquarters in Mumbai, India, strictly controls and regulates

operations in all dealerships and subsidiaries, in addition to knowing and abiding by all labour

laws in the multiple countries where they have manufacturing plants it has to watch political

change. This will be especially vital in the future as Tata Motors continues to expand and grow

into new markets. “While currently about 18% of its revenues are from international business,

the company's objective is to expand its international business, both through organic and

inorganic growth routes” (Tata.com). The foundation of the company’s growth internationally is

a deep understand of economic stimulation, customer needs, and individual government

regulations and laws. Although it is the headquarters ultimate responsibility to make sure each

individual office and branch is operating and abiding by the local laws, it will become

increasingly more important for that duty to be taken care of at the regional or even local level.

STRENGTH

WEAKNESS

OPPURTUNITIES

On October 7, 2008, it was announced that the Chief Minister of Gujarat, Narendra

Modi had signed an MoU with Tata Motors for allocating land for Nano factory in Sanand in

Ahmedabad district of Gujarat. The state of Gujarat has allocated 1100 acres of land to the Tatas.

The proximity of the project land to the state capital would be of great advantage.

The land is already under the state government, and this will increase the pace of the
project. The plant is moving to the new site along with its 60 vendors. This will create new
employment opportunities in the state. Tata's Nano is expected to hit the road in the first quarter
of 2009.

The industrial friendly nature of Gujarat has attracted huge investment in the state. There
are a number of big projects in the pipeline. These will take off once the financial condition
stabilizes. This corporate friendly nature of the CM is reflected in the increase in share prices of
all the scripts whose name included ‘Gujarat' on the day of the outcome of the results of the
Ahmadabad polls. Every state requires such a CM, who holds the people's interest above his
own. The CM should be credited for converting the downtrodden state into one of the most
developed states of the nation, which today is home to a large number of big corporate houses.
The state has changed drastically during his tenure.
Threats

Tata Motors announced on May 19, 2006 that it will be manufacturing Tata Nano from
Singur, West Bengal.However, within a week protests were started by a few farmers in the area
against the acquisition of their lands by Tata. The cause was taken up by Mamata Banerjee, the
leader of Trinamool Congress. The situation escalated with Tatas threatening to pull out, and
disruption of compensation for farmers who had volunteered to sell their land by anti-acquisition
activists. This was followed by a state-wide bandh by Trinamool Congress in October. The
government banned political parties from holding meetings or processions at Singur and installed
a huge police force there. There was widespread violence in the clashes between the police and
the farmers on December 2, 2006.

On December 4, 2006 Mamata Banerjee entered into a hunger strike. A 48-hour strike
was later called by her to protest the death of Tapasi, a Save Farmland Committee campaigner,
whose burnt body was found at the Nano plant site in Singur. Two CPM activists were later
convicted and sentenced to life imprisonment for the murder. On the 24th day of her strike,
Banerjee was given oxygen support and finally called off her fast after appeals from the then
President Abdul Kalam and Prime Minister Manmohan Singh.

As the protests over the land continued in 2007, Ratan Tata accused that the
competitors had a role in the controversy. The acquisition of land was initially criticised in
February 2007, but later approved by the Calcutta High Court in 2008. As political unrest and
rains hampered the construction, Tata Motors delayed the launch of Nano to September 2008.

Violence continued throughout 2008 and on September 2, 2008, Tata Motors announced
that they have suspended work at Singur. On October 2, 2008 Tata Motors announced that they
are pulling out of Singur..
 ECONOMIC SWOT ANALYSIS
Operating in numerous countries across the world, Tata Motors functions with a global

economic perspective while focusing on each individual market. Because Tata is in a rapid

growth period, expanding or forming a joint venture in over five countries world-wide since

2004, a global approach enables Tata Motors to adapt and learn from the many different regions

within the whole automotive industry. They have experience and resources from five continents

across the globe, thus when any variable changes in the market they can gather information and

resources from all over the world to address any issues. For instance, if the price of the

aluminium required to make engine blocks goes up in Kenya, Tata has the option to get the

aluminium from other suppliers in Europe or Asia who they would normally get from for

production in Ukraine or Russia.

Tata Motors also has to pay close attention to shifts in currency rates throughout the

world. Currency fluctuations can equate to higher or lower demands for Tata vehicles which in

turn affect profitability. It can also mean a rise in costs or a drop in returns. But they also have to

pay attention to not just the domestic currency, the rupee, but also to the dollar, euro, bhat, won,

and pound, to just name a few. Just because the rupee is strong against the dollar does not mean

it is strong against all the other currencies. Attention to currency is important because it

influences where capital investment will develop and prosper.

STRENGTH

During the last three decades, India’s oil production increased from 7 million tonnes in

1971 to 34 million tonnes in 2006. India’s production of POL (petroleum, oil and lubricants)

increased from 19 million tonnes in 1971 to 96 million tonnes in 2000 to 120 million tonnes in

2006 .All this provides a solid platform for economic growth. Refining capacity, which stood at

116.5 million tonnes in 2002, has made India self-sufficient in crude oil refining. This sector,

predominantly controlled by public sector companies, is now witnessing increased

participation from the private sector. Public sector oil companies are also divesting their

equity to the public

WEAKNESS
In India, consumption of oil resources is increases day by day and the price of oil and
petroleum is also increased. India’s relative insulation from global energy price shocks is being
eroded. After sometime, India could become a net importer of oil. India ’s economic openness
can be as much of a burden as a benefit, since it confers a high degree of vulnerability to global
growth and capital flows

SWOT ANALYIS IN BUSINESS ENVIRONMENT IN

INDIA
Strength of Tata nano

1. First innovation set a benchmark

2. 41 patents for innovation

3. Low price and stylish

4. High fuel efficiency

5. Space internal 21% more than Maruti 800

6. External space is 8% less than Maruti -800

7. Variometrics gear system magnitudes toques

8. Tested successfully for crumple zone

Weaknesses of Tata Nano

1. No modern facilities ABS , PS , AC etc

2. Less Boot space

3. No headlight levellers

4. Not fit for Hilly Terrain

5. Poor traction Control

6. Poor Engine cooling

7. Gets overheating many times

 8. Small tyres

9. Windows Wind down by hand

10. No Passenger side mirror

Opportunities Of Tata nano

1. It created a Niche Market for itself in India and across the Globe where it is
launched with add on features which is missing from Tata nano in India

2. It works on Diesel and it also has additional edge over its competitors because it
has Electric Variant

3. It’s the only cheapest car in the world launched in India Just over one lakh
rupees, because of this many people can afford to buy even when there is economic
meltdown across the globe.

4. It enjoys Royalty from its buyer because it gives them more than enough
comfort which was desired by its buyer.

5. Tata nano has developed low price engine oil over its competitors

6. It created lots of employment opportunities for the people who were

unemployed

7. Have edge over its competitor in almost every aspect.

Threats for Tata nano

 1. New Competitor such as Bajaj , Chery , Honda Siel , General Motors
etc are entering the market with small car segment.

2. Traffic Congestion will increase since many people desire to have Tata
nano it might get tough to handle the traffic in the congestion cities of India.

3. Government May increase taxes because in Metro Cities like Mumbai and
Delhi people prefer driving self rather than government transport.

4. Rising cost of Raw Material is one the most significant threat which Tata
Nano will face providing number of car they have targeted to sell in a year

5. Tata Nano will also leads to reducing parking space

6. Tata Nano also facing Threat in European market because of that it came
out with additional Safety standards for the people across the globe not just in
European countries

Summary SWOT Analysis – some Of the Objectives and

issues are as follows:
Strengths

Low Price and styling

High Fuel efficiency

Weakness
No Modern Facilities Like ABS, AC etc.

No passenger Side mirror.

Opportunities

Created a Niche Market for itself

Has electric variant

Threat
New Competitor Entrance such as Bajaj, Chery etc.

Reducing Parking space

OBJECTIVES and ISSUES

1. To provide economical and affordable car

 2. Fuel efficient engine

3. Meet all safety requirements

4. Environmental friendly

5. We have set aggressive yet achievable objectives for the first, second and third year of

market entry.

First year objective ( July 2009 to December 2009)

Tata Nano wants to achieve 25,000 units of sales gaining ….market share %

get from market entry.

Second year objective (JAN 2010 TO DEC 2010)

Tata Nano wants achieve 10% increase in quarterly basis (RM 48,600)

Third year objective (JAN 2011 TO DEC 2011)

Tata Nano wants to achieve 10% increase in quarterly basis (RM 53, 460)
More over there is always scope for improvement and achieve more than what we all expect

same is with Tata Nano always keeps coming out with new ways to meet customer needs and

desire.

MARKETING MIX STRATEGIES:

Product Strategies:

The product strategy which will be adapted would be the straight product extension. This is
because there would be no additional product development cost, manufacturing changes, or new
promotion.

Branding:

Brands identify the source or maker of a product and allow consumers – either
Individuals or organizations to assign responsibility for its performance to a particular
Manufacturer or distributor. Branding is endowing products and services with the power of a
brand. It’s all about creating differences between products. For branding strategies to be
successful and brand value to be created, consumers must be convinced there are meaningful
differences among brands in the product or service category. In Tata Nano’s case, the branding
strategy used is corporate name combined with individual product names. This company’s name
legitimizes and the individual name individualizes the new product.
Pricing Strategy:

The Tata Nano CX, including all the features described in the earlier Product Review section,
will be sold with a three-year warranty or 100,000km warranty, whichever comes first. We will
introduce the Tata Nano LX during the following year, after we have established our Tata brand.
The brand and logo will be displayed on the car as well as in all marketing campaigns

PROMOTION STRATEGIES:

Before determine the promotion strategies, we need to very clear about what are the
objectives we need to achieve. We know as above, our missions are to promote Tata nano in
india and increase the sales quarterly. Tata Nano is very new for india, they feel freshwith this
new brand and concept of this car. Tata Nano will get into indian market in July2009.

So first of the objective for promotion strategies are aims to create brand awareness
andconcept/knowledge of this new car – Tata Nano. This is the cheapest car in the world .. But
still is the new brand for the indians , so wedo the advertisement and organize the event or
campaign in sufficient detail to establish the goodbrand attitudes. Brand awareness is important
to provide a foundation for brand equity.After that, our second objective is knowledge and
persuasive. We aim to create liking,preference, conviction, and purchase of a Tata Nano car. We
can do the comparison with othercars which are higher purchase priceand this price is not every
people will be affordablespecially lower income families and students. Beside that we will
convince current purchaserthat we will give the potential customer to enjoying the good
experience with Tata Nano by givetry to drive the Tata Nano before buying the car. And also
will provide them warranty to the TataNano.We will organize all the promotion strategies with
lower cost to maintain the lower purchase price for tata nano in india.
MEANING OF CHANNEL DISTRIBUTION
STRATEGIES
Distribution strategies are concerned with the channels a firm may employ to make its
goods and services available to customers. Channels are organized structures of buyers and
sellers that bridge the gap of time and space between the manufacturer and the customer.
Marketing is defined as an exchange process. In relation to distribution, exchange poses two
problems. First, goods must be moved to a central location from the warehouses of producers
who make heterogeneous goods and who are geographically widespread. Second, the goods that
are accumulated from diversified sources should represent a desired assortment from the
viewpoint of customers. These two problems can be solved by the process of sorting, which
combines concentration (i.e., bringing the goods from different sources to a central location) and
dispersion (i.e., picking an assortment of goods from different points of concentration). Two
basic questions need to be answered here. Who should perform the concentration and dispersion
tasks the manufacturer or intermediaries? Which intermediary should the manufacturer select to
bring goods close to the customer? These questions are central to distribution strategies. Other
strategy-related matters discussed in this article include scope of distribution (i.e., how
widespread distribution may be), use of multiple channels to serve different segments,
modification of channels to accommodate environmental shifts, resolution of conflict among
channels, and use of vertical systems to institute control over channels. Each strategic issue is
examined for its relevance in different circumstances. The application of each strategy is
illustrated with examples from marketing literature.
An important market factor is "buyer behaviour"; how do buyer's want to purchase the
product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the
Internet? Another important factor is buyer needs for product information, installation and
servicing. Which channels are best served to provide the customer with the information they
need before buying? Does the product need specific technical assistance either to install or
service a product? Intermediaries are often best placed to provide servicing rather than the
original producer - for example in the case of motor cars.
The willingness of channel intermediaries to market product is also a factor. Retailers in
particular invest heavily in properties, shop fitting etc. They may decide not to support a
particular product if it requires too much investment (e.g. training, display equipment,
warehousing).

Another important factor is intermediary cost. Intermediaries typically charge a "mark-up" or

"commission" for participating in the channel. This might be deemed unacceptably high for the
ultimate producer business.

A key question is whether the producer have the resources to perform the functions of the
channel? For example a producer may not have the resources to recruit, train and equip a sales
team. If so, the only option may be to use agents and/or other distributors.

Producers may also feel that they do not possess the customer-based skills to distribute their
products. Many channel intermediaries focus heavily on the customer interface as a way of
creating competitive advantage and cementing the relationship with their supplying producers

Another factor is the extent to which producers want to maintain control over how, to whom and
at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control
over the final consumer price, since the retailer sets the price and any relevant discounts or
promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are
actually been stocked by the retailer. Direct distribution gives a producer much more control
over these issues

A key decision a business has to make about distribution is whether to sell “direct”.

This method of distribution is usually called “direct marketing”.

Direct marketing means selling products by dealing directly with consumers rather than through
intermediaries.

Traditional methods include mail order, direct-mail selling, cold calling, telephone selling, and
door-to-door calling. More recently telemarketing, direct radio selling, magazine and TV
advertising, and on-line computer shopping have been developed.

The main advantages of selling direct are that there is no need to share profit margins and the
producer has complete control over the sales process. Products are not sold alongside those of
competitors either.
There may also be specific market factors that encourage direct selling:

• There may be a need for an expert sales force, to demonstrate products, provide detailed pre-
sale information and after-sales service

• Retailers, distributors, dealers and other intermediaries may be unwilling to sell the product

• Existing distribution channels may be owned by, or linked to, competing producers (making it
hard to obtain distribution by any other means than direct)

However, there are significant costs associated with selling direct which may be higher than the
costs associated with using an intermediary to generate the same level of sales.

There are several potential advantages of using an intermediary:

• More efficient distribution logistics

• Overall costs (even taking into account the intermediaries’ margin or commission) may be
lower

• Consumers may expect choice (i.e. the products and brands of many producers) at the point of
sale

• Producers may not have sufficient resources or expertise to sell direct.

 Channel of Distribution Strategies

Direct marketing channel (zero-level channel)

We consider direct marketing early in the term as a “contrast” situation against which
later channels can be compared.  In general, you cannot save money by “eliminating the
middleman” because intermediaries specialize in performing certain tasks that they can perform
more cheaply than the manufacturer.  Most grocery products are most efficiently sold to the
consumer through retail stores that take a modest mark-up—it would not make sense for
manufacturers to ship their grocery products in small quantities directly to consumers. 

Intermediaries perform tasks such as:

Moving the goods efficiently (e.g., large quantities are moved from factories or warehouses
to retail stores)

Breaking bulk (manufacturers sell to a modest number of wholesalers in large quantities—

quantities are then gradually broken down as they make their way toward the consumer)

Consolidating goods (retail stores carry a wide assortment of goods from different manufacturers
—e.g., supermarkets span from toilet paper to catsup)

Adding services (e.g., demonstrations and repairs).

Direct marketers come in a variety of forms, but their categorization is somewhat arbitrary.  The
main thing to consider here is each firm’s functions and intentions.  Some firms sell directly to
consumers with the express purpose of eliminating retailers that supposedly add cost (e.g., Dell
Computer).  Others are in the business not so much to save on costs, but rather to reach groups of
consumes that are not easily reached through the stores.   Others—e.g., online travel agents or
check printers—provide heavily customized services where the user can perform much of the
services.   Telemarketers operate by making the promotion in integral part of the process—you
are explained the benefits of the program in an advertisement or infomercial and you then order
directly in response to the promotion.  Finally, some firms combine these roles—e.g., Geico is a
customizer, but also claims, in principle, to cut out intermediaries

There are certain circumstances when direct marketing may be more useful—e.g., when absolute
margins are very large (e.g., computers) or when a large inventory may be needed (e.g.,
computer CDs) or when the customer base is widely dispersed (e.g., bee keepers).

Direct marketing offers exceptional opportunities for segmentation because marketers can buy
lists of consumer names, addresses, and phone-numbers that indicate their specific interests.  For
example, if we want to target auto enthusiasts, we can buy lists of subscribers to auto magazines
and people who have bought auto supplies through the mail.  We can also buy lists of people
who have particular auto makes registered.

No one list will contain all the consumers we want, and in recent years technology has made it
possible, through the “merge-purge” process, to combine lists.  For example, to reach the above-
mentioned auto-enthusiasts, we buy lists of subscribers to several different car magazines, lists of
buyers from the Hot Wheels and Wiring catalog, and registrations of Porsche automobiles in
several states.  We then combine these lists (the merge part).  However, there will obviously be
some overlap between the different lists—some people subscribe to more than one magazine, for
example.  The purge process, in turn, identifies and takes out as many duplicates as possible. 
This is not as simple task as it may sound up front.  For example, the address “123 Main Street,
Apartment 45” can be written several ways—e.g., 123 Main St., #123, or 123-45 Main Str.  
Similarly, John J. Jones could also be written as J. J. Jones, or it could be misspelled Jon J.
Jonnes.  Software thus “standardizes” addresses (e.g., all street addresses would be converted
into the format “123 Main St #45” and even uses phonetic analysis to identify a likely alternative
spelling of the same name.

Response rates for “good” lists—lists that represent a logical reason why consumer would be
interested in a product—are typically quite low, hovering around 2-3%.  Simply picking a
consumer out of the phone-book would yield even lower responses—much less than one
percent.  Keep in mind that a relevant comparison here is to conventional advertising.  The
response rate to an ad placed in the newspaper or on television is usually well below one percent
(frequently more like one-tenth of one percent).  (More than one percent of people who see an ad
for Coca Cola on TV will buy the product, but most of these people would have bought Coke
anyway, so the marginal response is low).

Internet Marketing (Electronic Commerce)

Online marketing can serve several purposes:

Actual sales of products—e.g., Amazon.com.

Promotion/advertising:  Customers can be quite effectively targeted in many situations because

of the context that they, themselves, have sought out.  For example, when a consumer searches
for a specific term in a search engine, a “banner” or link to a firm selling products in that area
can be displayed.  Print and television advertisements can also feature the firm’s web address,
thus inexpensively drawing in those who would like additional information.

Customer service:  The site may contain information for those who no longer have their
manuals handy and, for electronic products, provide updated drivers and software patches.

Market research:  Data can be collected relatively inexpensively on the Net.  However, the
response rates are likely to be very unrepresentative and recent research shows that it is very
difficult to get consumers to read instructions.  This is one of the reasons why the quality of data
collected online is often suspect.
 CHALLENGES IN RUNNING WEB SITES
There are a number of problems in running and developing web sites. First of all, the desired
domain name may not be available—e.g., American Airlines could not get “American.com” and
had to settle for “AmericanAir.com.” There is also a question having your site identified to
potential users. Research has found that most search engines have a great deal of “false hits”
(sites irrelevant that are identified in a search—e.g., information about computer languages when
the user searches for foreign language instruction) and “misses” (sites that would have been
relevant but are not identified). It is crucial for a firm to have its site indexed favorably in major
search engines such as Yahoo, AOLFind, and Google. However, there is often a constant
struggle between web site operators and the search engines to outguess each other, with the web
promoters trying to “spam” the search engines with repeated usage of terms and “meta tags.” The
fact that many computer users employ different web browsers raises questions about
compatibility. A major problem is that many of the more recent, fancier web sites rely on “java
script” to provide animation and various other impressive features. These animations have
proven very unreliable. Sites may “crash” on the user or prove unreliable, and many consumers
have found themselves unable to complete their transactions.

ECONOMICS OF ELECTRONIC COMMERCE:

SELLING ONLINE IS USUALLY MORE EXPENSIVE
          Some people have suggested that the Internet may be a less expensive way to distribute
products than traditional “brick-and-mortar” stores.  However, in most cases, selling online will
probably be more costly than selling in traditional stores due to the high costs of processing
orders and direct shipping to the customer.   Some products may, however, be economically
marketed online.  Some factors that are relevant in assessing the potential for e-commerce to be
an effective way to sell a specific products are:

“Value-to-bulk” ratio.  Products that have a lot of value squeezed into a small volume (e.g., high
end jewelry and certain electronic products) are often more cost-effective to ship to end-
customers than are bulkier products with less value (e.g., low end furniture).
Absolute margins.  Some products may have a rather high percentage margin—e.g., a scarf
bought at wholesale at $10 and marked up 100% to be sold at $20.  However, the absolute
margin is only $20-$10=$10.  In contrast, a laptop computer may be bought at $1,000 and be
marked up by only 15%, or $150, for a total price of $1,150.  Here, however, the absolute margin
will be larger--$150.  This allows the merchant to spend money on processing, packaging, and
shipping the order.  Ten dollars, in contrast, can only cover a small amount of employee time and
very limited packaging and shipping.  Some online merchants do charge for shipping, but doing
so will ultimately make the online merchant less competitive.

Extent of customization needed.  Some products need to be customized—e.g., checks have to be

personalized and airline tickets have to be issued for a specific departure site, destination time,
and travel time.  Here, online processing may be useful because the customer can do much of the
work.

Willingness of customers to pay for convenience.  Some consumers may be willing to pay for the
convenience of having products delivered to their door.  For example, delivering high bulk,
generally low value groceries is generally not efficient.  However, for some customers, it may be
worthwhile to pay to avoid an inconvenient trip to the grocery store.

Geographic dispersal of customers.  Electronic commerce, when value-to-bulk ratios and

absolute margins are not favorable, is often not viable when customers are located conveniently
close to a retail outlet.  However, for some products—e.g., bee keeping equipment—customers
are widely geographically dispersed and thus, a centralized distribution center may be more
economically viable.  Specialty books—e.g., for collectors of vintage automobiles—may not be
worthwhile for bookstores to stock, and these may thus be economically sold online.

Vulnerability of inventory to loss of value.  Some products—especially high tech products—have

a very high effective carrying costs.  It has been estimated that because of the rapid technological
progress made in the computer field, computer parts may lose as much as 1.5% of their value per
week.  If shipping directly to the customer can reduce the channel time by five weeks, this
potentially “rescues” as much as 7.5% of the product value.  In such a situation, then, trying to
reach the customer directly may make sense, even if the direct costs of distribution are higher,
because of the inventory value issue.

There are a number of economic realities of online competition:

As discussed, costs of handling online orders is often higher than that of distributing through
traditional stores.

Even if online selling is more cost effective in some situations, a firm selling online will, in the
long run, be competing with other online merchants—not just against traditional “brick-and-
mortar” stores.  By the forces of supply and demand, online prices will then be driven down so
that the profit from selling online will be no greater than that from traditional retailing.  Any
reduced costs would then be expected to go to customers.

Competition will be greater for products that have large markets than for those where markets
are smaller and more specialized.  Amazon.com, for example, has found it necessary to discount
best selling books deeply.  Higher prices—closer to the list price—can be charged for specialty
books, but for a large part of the market, competition will be intense.

A new online merchant will face competition from established traditional merchants.  These will
often have the cash reserves to stay in business for a long time even with temporary competition. 
The online merchant, if it has no cash reserves other than stockholders’ investment, may run out
of cash before it can become profitable.
 ISSUES IN WEB SITE DESIGN

Web site design:  The web designer must make various issues into consideration:

Speed vs. aesthetics:  As we saw, some of the fancier sites have serious problems
functioning practically.  Consumers may be impressed by a fancy site, or may lack confidence in
a firm that offers a simple one.  Yet, fancier sites with extensive graphics take time to download
—particularly for users dialing in with a modem as opposed to being “hard” wired—and may
result in site crashes.

Keeping users on the site:  A large number of “baskets” are abandoned online as
consumers fail to complete the “check-out” process for the products they have selected.  One
problem here is that many consumers are drawn away from a site and then are unlikely to come
back.  A large number of links may be desirable to consumers, but they tend to draw people
away.  Taking banner advertisers on your site from other sites may be profitable, but it may
result in customers lost.

Information collection:  An increasing number of consumers resist collection of

information about them, and a number of consumers have set up their browsers to disallow
“cookies,” files that contain information about their computers and shopping habits.

 
Cyber-consumer behavior:  In principle, it is fairly easy to search and compare online, and
it was feared that this might wipe out all margins online.  More recent research suggests that
consumers in fact do not tend to search very intently and that large price differences between
sites persist.  We saw above the problem of keeping consumers from prematurely departing from
one’s site.

Site content: The content of a site should generally be based on the purposes of operating a
site. For most sites, however, having a clear purpose be evident is essential. The site should
generally provide some evidence for this position. For example, if the site claims a large
selection, the vast choices offered should be evident. Sites that claim convenience should make
this evident. A main purpose of the Internet is to make information readily available, and the site
should be designed so that finding the needed information among all the content of the site is as
easy as possible. Since it is easy for consumers to move to other sites, the site should be made
interesting. To provide the information and options desired by customers, two-way interaction
capabilities are essential.

WEB SITE TRAFFIC GENERATION

The web is now so large that getting traffic to any one site can be difficult. One method is search
engine optimization, a topic that will be covered below. Other methods include “viral”
campaigns wherein current users are used to spread the word about a site, firm, or service. For
example, Hotmail attaches a message to every e-mail sent from its service alerting the recipient
that a free e-mail account can be had there. Google offers a free e-mail account with a full
gigabyte of storage. This is available only by invitation from others who have such e-mail
accounts.  Amazon.com at one point invited people, when they had completed a purchase, to
automatically e-mail friends whose e-mail addresses they provided with a message about what
they had just bought. If the friend bought any of the same items, both the original customer and
the friend would get a discount.

Another method of gaining traffic is through online advertising. Sites like Yahoo! are mainly
sponsored by advertisers, as are many sites for newspapers and magazines. Individuals who see
an ad on these sites can usually click to go to the sponsor’s web site. Occasionally, a firm may
advertise their sites in traditional media. Geico, Dell Computer, and Progressive Insurance do
this. Overstock.com has also advertised a lot on traditional TV programs. Conventional
advertising may also contain a web site address as part of a larger advertising message.

Viral marketing is more suitable for some products than for others. To get others involved in
spreading the word, the product usually must be interesting and unique. It must also be simple
enough so that it can be explained briefly. It is most useful when switching or trial costs are low.
It is more difficult, for example, getting people to sign up for a satellite system or cellular phone
service where equipment has to be bought up front and/or a long term contract is required makes
viral marketing more difficult. Viral marketing does raise some problems about control of the
campaign. For example, if a service is aimed at higher income countries and residents there
spread the word to consumers in lower income countries, people attracted may be unprofitable.
For Google’s one gigabyte e-mail account, for example, there are large costs that may be covered
by advertising revenues from ads aimed at people who can afford to buy products and services.
Advertisers, however, may not be willing to pay for targets who cannot afford their products. It
is also difficult to control “word of mouth” (or “word of keyboard”). Measuring the effectiveness
of a campaign may be difficult. When a viral campaign relies on e-mail, messages received may
be considered spam by some recipients, leading to potential brand damage and loss of goodwill.

Online promotions. One way to generate traffic is promotions. Many sites often offer new
customers discounts or free gifts. This can be expensive, but sometimes, the gifts can be ones
that have a low marginal cost. For example, once the firms pays for the development of a game,
the cost of letting new users download it is modest. The U.S. army uses this approach in making
a game available. To be allowed to use some of the “cooler” features, the user has to go through
various stages of “basic training.”

Distribution Objectives:

Objectives: A firm’s distribution objectives will ultimately be highly related—some will

enhance each other while others will compete.  For example, as we have discussed, more
exclusive and higher service distribution will generally entail less intensity and lesser reach. 
Cost has to be traded off against speed of delivery and intensity (it is much more expensive to
have a product available in convenience stores than in supermarkets, for example).

Narrow vs. wide reach: The extent to which a firm should seek narrow (exclusive) vs. wide
(intense) distribution depends on a number of factors.  One issue is the consumer’s likelihood of
switching and willingness to search.  For example, most consumers will switch soft drink brands
rather than walking from a vending machine to a convenience store several blocks away, so
intensity of distribution is essential here.  However, for sewing machines, consumers will expect
to travel at least to a department or discount store, and premium brands may have more
credibility if they are carried only in full service specialty stores.

Retailers involved in a more exclusive distribution arrangement are likely to be more “loyal”—
i.e., they will tend to

Recommend the product to the customer and thus sell large quantities;

Carry larger inventories and selections;

Provide more services

Thus, for example, Compaq in its early history instituted a policy that all computers must be
purchased through a dealer.  On the surface, Compaq passed up the opportunity to sell large
numbers of computers directly to large firms without sharing the profits with dealers.  On the
other hand, dealers were more likely to recommend Compaq since they knew that consumers
would be buying these from dealers.  When customers came in asking for IBMs, the dealers were
more likely to indicate that if they really wanted those, they could have them—“But first, let’s
show you how you will get much better value with a Compaq.”

Distribution opportunities:  Distribution provides a number of opportunities for the

marketer that may normally be associated with other elements of the marketing mix.  For
example, for a cost, the firm can promote its objective by such activities as in-store
demonstrations/samples and special placement (for which the retailer is often paid).  Placement
is also an opportunity for promotion—e.g., airlines know that they, as “prestige accounts,” can
get  very good deals from soft drink makers who are eager to have their products offered on the
airlines.  Similarly, it may be useful to give away, or sell at low prices, certain premiums (e.g., T-
shirts or cups with the corporate logo.)  It may even be possible to have advertisements printed
on the retailer’s bags (e.g., “Got milk?”)

Other opportunities involve “parallel” distribution (e.g., having products sold both through
conventional channels and through the Internet or factory outlet stores).  Partnerships and joint
promotions may involve distribution (e.g., Burger King sells clearly branded Hershey pies).
Deciding on a strategy.  In view of the need for markets to be balanced, the same
distribution strategy is unlikely to be successful for each firm.  The question, then, is exactly
which strategy should one use?  It may not be obvious whether higher margins in a selective
distribution setting will compensate for smaller unit sales.  Here, various research tools are
useful.  In focus groups, it is possible to assess what consumers are looking for an which
attributes are more important.  Scanner data, indicating how frequently various products are
purchased and items whose sales correlate with each other may suggest the best placement
strategies.  It may also, to the extent ethically possible, be useful to observe consumers in the
field using products and making purchase decisions.  Here, one can observe factors such as (1)
how much time is devoted to selecting a product in a given category, (2) how many products are
compared, (3) what different kinds of products are compared or are substitutes (e.g., frozen
yogurt vs. cookies in a mall), (4) what are “complementing” products that may cue the purchase
of others if placed nearby.  Channel members—both wholesalers and retailers—may have
valuable information, but their comments should be viewed with suspicion as they have their
own agendas and may distort information.

SEARCH ENGINE OPTIMIZATION

Many Internet users find desired information and sites through search engines such as Google.
Research shows that a large proportion of the traffic goes to the first three sites listed, and few
people go so sites that appear beyond the first “page” or screen. On Google, the default screen
size is ten sites, so being in the top ten is essential.

Because of the importance of search engines, getting a good ranking or coming up early on the
list for important keywords is vitally important. Many consultants offer, for large fees, to help
improve a site’s ranking.

There are several types of sites that are similar to search engines. Directories involve sites that
index information based on human analysis. Yahoo! started out that way, but now most of the
information is accessed through search engine features. The Open Directory Project at
http://www.dmoz.org indexes sites by volunteer human analysts. Some sites contain link
collections as part of their sites—e.g., business magazines may have links to business
information sites.

Several issues in search engines and directories are important. Some search engines, such as
Google, base rankings strictly on merit (although sites are allowed to get preferred paid listings
on the right side of the screen). Other search engines allow sites to “bid” to get listed first. Some
sites may end up paying as much as a dollar for each surfer who clicks through. If a potential
customer is valuable enough, it may be worth paying for enhanced listings. Often, however, it is
better to be listed as number two or three since only more serious searchers are likely to go
beyond the first site. The first listed site may attract a number of people who click through
without much serious inspection of the site.

Some search engines are more specific than others. The goal of Google, Yahoo! and MSN is to
contain as many sites as possible. Others may specialize in sites of a specific type to reduce the
amount of irrelevant information that may come up.

Search engines often have different types of strategies. Google is very much technology oriented
while Yahoo! appears to be more market oriented. Another major goal of Google is speed. Some
sites may contain more content of one type than another. For example, AltaVista appears to have
more images, as opposed to text pages, indexed.

Search engine rankings. The order in which different sites are listed for a given term is
determined by a secret algorithm developed by the search engine. An algorithm is a collection
of rules put together to identify the most relevant sites. The specific algorithms are highly
guarded trade secrets, but most tend to heavily weigh the number of links from other sites to a
site and the keywords involved. More credit is given for a link from a highly rated site—thus,
having a link from CNN.com would count much more than one from the site of the Imperial
Valley Press. On any given page, the weight given from a link will depend on the total number of
links on that page. Having one of one hundred links will count less than being the only one. One
source reports that the weight appears to be proportional so that one out of one hundred links
would carry one percent of the weight of being the sole link, but that may change and/or vary
among search engines.

For Google, some of the main ranking factors appear to be:

Number and quality of links to the site, as discussed above.

Relevant keywords.  Note that the ranking algorithm tests for “spam.”  Reckless repeating
keywords may actually count against the rating of the site.

The “click-through” share of the site.  Since late 2006 or early 2007, Google reportedly fine-
tunes rankings by observing the percentage of the time that a particular site is chosen for a given
set of search terms.  Sites that are selected more frequently may improve in rank and those less
frequently selected—despite their merits presumed from the other factors—may move down.

Types of search engines. Some engines, such as Google, are general purpose search engines.
Some are specialized. Some are hybrids, containing some directory structure in addition to
search engine capabilities. Some “reward” sites such as iwon.com attract people by allowing
them to enter a lottery when doing a search. Some sites are aggregator sites—they do not have
their own databases but instead combine the results from simultaneous searches on other search
engines.

Text optimization. It is important to repeat important words as much as possible subject to

credibility. Search engines today are increasingly sophisticated in identifying “spamming”
through frivolous repetition of the same words or early use of words that are not relevant to the
main content of the site. Words that appear early in the text and on the index page will tend to be
weighted more heavily. For some search engines, it may be useful to include common
misspellings of a word so that the site will come up when that spelling is used. Some web site
owners have attempted to include hidden text so that a search engine would find the desired
words while the visitor would see something else. Some web designers, for example, would hide
text behind a graphic, make the text in a very small font, and/or make the font color the same, or
nearly the same, as the background. Other web site designers have made a “legitimate” site, only
to have a command to move the visitor to another site when they go to the searched site. Search
engines today are increasingly able to detect this type of abuse, and sites may be penalized as a
result.

Early search engines relied heavily on “meta tags” where the web site creator specified what he
or she believed to be appropriate keywords, content descriptions, and titles. Because these tags
are subject to a lot of abuse, these no longer appear to be significant.

Link optimization. Many web sites engage in “link exchanges”—that is, complementary sites
will agree to feature links to each other. It may be useful for a webmaster to ask firms whose
content does not compete for a link. Sites should register with the Open Directory Project at
http://www.dmoz.org since, if a site is classified favorably, this may help rankings.

The bottom line on Google.  Today, the most significant factor in search engine rankings
appears to be the “value” of the links that reach a site.  Links from “low value” sites (those that
are not rated highly, and especially those considered to the “spam”) count for very little.  Links
from highly rated sites on the relevant keywords count for literally thousands—sometimes tens
and hundreds of thousands—times as much as less important site.  In the past, the presence of
important key terms on a site was the main driver of rankings, subject to some rudimentary
safeguards against obvious “spamming” sites which used the words as a way to gain rankings
without providing relevant information.  Now, the effect of keywords is secondary except for
searches that involve a very unique key term.  Search engines cannot usually measure the amount
of traffic that goes to a site.[1]  Traditionally, then, the traffic of a site was not directly
incorporated into the ranking system.  Today, however, Google is reported to weigh the
percentage that a site is chosen for click-through when the site comes up in a search.  That is, if a
site is initially highly ranked, if a small proportion of searchers actually choose to go to that site,
this site is likely to have its rank reduced.

Google now offers a set of “Analytics” tools, including a set of web traffic statistics. 
Webmasters can sign up voluntarily to participate in this by placing certain “meta tag” code in
their web pages.  (This code is invisible to people viewing the respective web page in its regular
display mode).  Therefore, for such sites, Google does, in principle, have access to traffic
information from all sources, including other search engines or links from other sites.  It is not
clear whether Google actually uses this information, however.

Channel Structure and Membership Issues

Paths to the customer

For most products and situations, it is generally more efficient for a manufacturer to go through
a distributor rather than selling directly to the customer. This is especially the case when
consumers need to have variety and assortment (e.g., consumer would like to buy not just
toothpaste but also other personal hygiene products, and even other grocery products at the same
place), when products are bought in small volumes or at low value (e.g., a candy bar sells for less
than $1.00), or even intermediaries have skills or resources that the manufacturer does not (a
sales force, warehousing, and financing). Nevertheless, there are situations when these
conditions are not met—most typically in industrial settings. As an extreme case, most airlines
are perfectly happy only being able to buy aircraft and accessories from Boeing and would prefer
not to go through a retailer—particularly since the planes are often highly customized. More in
the "gray" area, it may or may not be appropriate to sell microcomputers directly to consumers
rather than going through a distributor—the costs of providing those costs may be roughly
comparable to the margin that a distributor would take.

Potential channel structures

Channel structures can assume a variety of forms. In the extreme case of Boeing aircraft or
commercial satellites, the product is made by the manufacturer and sent directly to the
customer’s preferred delivery site. The manufacturer, may, however, involve a broker or agent
who handles negotiations but does not take physical possession of the property. When deals take
on a smaller magnitude, however, it may be appropriate to involve retailer--but no other
intermediary. For example, automobiles, small planes, and yachts are frequently sold by the
manufacturer to a dealer who then sends directly to the customer. It does not make sense to
deliver these bulky products to a wholesaler only to move them again. On the other hand, it
would not make sense for a California customer to fly to Detroit, buy a car there, and then drive
it home. As the need for variety increases, a wholesaler may then be introduced. For example, an
office supply store needs to sell more merchandise than any one manufacturer can produce.
Therefore, a wholesaler will buy a very large quantity of binders, file folders, staplers, reams of
paper, glue sticks, and similar products and sell this in smaller quantities—say 200 staplers at a
time—to the office supply store, which, in turn, may go to another wholesaler who has acquired
telephones, typewriters, and photocopiers. Note that more than one wholesaler level may be
involved—a local wholesaler serving the Inland Empire may buy from each of the two
wholesalers listed above and then sell all, or most, of the products needed by local office supply
stores. Finally, even in longer channels, agents or brokers may be involved. This, in particular,
will happen when the owner of a small, entrepreneurial company has more experience with
technology than with businesses negotiations. Here, the manufacturer can be freed, in return for
paying the agent, from such tasks, allowing him or her to focus on what he or she does well.

Since the above mentioned all four diagrams says a different message about it :

In the diagram no 1 it says about the direct marketing from farmer to consumer. And in the
second diagram it says that the farmer passes the goods to the showrooms and then to the
consumer. And in the third and fourth diagram as we can see there is an chain of distribution and
there is an in direct sale happening . so in this case of tata nano I would like to conclude that
there is direct marketing

Criteria in selecting channel members

Typically, the most important consideration whether to include a potential channel member is the
cost at which he or she can perform the required functions at the needed level of service. For
example, it will be much less expensive for a specialty foods manufacturer to have a wholesaler
get its products to the retailer. On the other hand, it would not be cost effective for Procter &
Gamble and Wal-Mart to involve a third party to move their merchandise—Wal-Mart has been
able to develop, based on its information systems and huge demand volumes, a more efficient
distribution system. Note the important caveat that cost alone is not the only consideration—
premium furniture must arrive in the store on time in perfect condition, so paying more for a
more dependable distributor would be indicated. Further, channels for perishable products are
often inefficiently short, but the additional cost is needed in order to ensure that the merchandise
moves quickly. Note also that image is important—Wal-Mart could very efficiently carry Rolex
watches, but this would destroy value from the brand.

"Piggy-backing." A special opportunity to gain distribution that a manufacturer would

otherwise lack involves "piggy-backing." Here, a manufacturer enlists another manufacturer that
already has a channel to a desired customer base, to pick up products into an existing channel.
For example, a manufacturer of rhinoserous and hippopotamus shampoo might be able to reach
zoos by approaching a manufacturer of crocodile teeth cleaning supplies that already reaches this
target. In the case of reciprocal piggy-backing, the shampoo manufacturer might then, in turn,
bring the teeth cleaning supplies through its existing channel to exotic animal veterinarians.

Parallel Distribution. Most manufacturers find it useful to go through at least one

wholesaler in order to reach the retailer, and it is simply not efficient for Colgate to sell directly
to pathetic little "mom and pop" neighborhood stores. However, large retail chains such as K-
Mart and Ralph’s buy toothpaste and other Colgate products in such large volumes that it may be
efficient to sell directly to those chains. Thus, we have a "parallel" distribution network whereby
some retailers buy through a distributor and others do not. Note that we may also be tempted to
add a direct channel—e.g., many clothing manufacturers have factory outlet stores. However,
note that the full service retailers will likely object to being "undercut" in this manner and may
decide to drop or give less emphasis to the brand. It may be possible to minimize this contract by
precautions such as (1) having outlet stores located in vacation areas not within easy access of
most people, (2) presenting the merchandise as being slightly irregular, and/or (3) emphasizing
discontinued brands and merchandise not sold in regular stores.

As this diagram directly says

wat kind of statergy applied to
market the tata nano .

Evaluating Channel
Performance.
The performance of channel
members should be periodically
monitored—a channel member may have looked attractive earlier but may not, in practice be
able to live up to promises. (This can be either because of complacency or because the channel
member simply did not realize the skills and resources needed to perform to standards). Thus,
performance level (service outputs) and costs should be evaluated. Further, changes in
technology or in the market place may make it worthwhile to shift certain functions to another
channel member (e.g., a distributor has expanded its coverage into another region or may have
gained or lost access to certain retail chains). Finally, the extent to which compensation is
awarded in proportion to performance should be reassessed—e.g., a distributor that ends up
holding inventory longer or taking on more returns may need additional compensation.

Gap Analysis

Market Deficiencies. "Gap" analysis involves analyzing current market offering to assess the
extent to which they meet customer demands. Demand side gaps involve a market situation
where consumers are not satisfied buying what is available—usually either because the level of
service provided is not adequate or because the offering is too expensive. Supply side gaps, in
contrast, involve firms that provide services that are needed, but ones that can be met elsewhere
at lower prices.

Demand Side Gaps. Customer satisfaction abounds, and many consumers would like to replace
their current suppliers. This can happen either generally—there is a widespread dissatisfaction
with banks among consumers, and many would switch if they found one that they thought to
provide better service—or the gap can be with one segment that is not being well served. As an
example of the latter, consider parents who, if they had not had children, would have been
perfectly satisfied with an ordinary Internet service provider but are now worried that their
children can be exposed to inappropriate material online. Therefore, the PAX Network, which
features family-oriented television programming, stepped in to offer a service that claims to
block out most objectionable sites. Further, one auto parts store owned by a woman ran an
advertising campaign aimed at women, acknowledging that women were often being asked by
their husbands and boyfriends to be "parts runners." The ad then went on to talk about the
cleanliness of the store and non-condescending attitudes of the sales people.

Note that although a gap may exist in the sense that existing firms are not offering what
consumers may ideally want, there is a limit to what buyers would be willing to pay for. For
example, before starting their ice-cream business, Ben and Jerry considered going into business
delivering the New York Times to people’s doors on Sunday mornings along with fresh baked
bagels. A problem here, however, could have been the cost of this service. Sometimes, a firm
may be able to come in and fill a gap, but may need to compromise on exactly how far to go.
There are usually some struggles between what would be nice to have and what customers are
wiling to pay for.  For example, many computer buyers would like to have someone come and
set up the computer, the peripherals, and the Internet connection, but might balk at paying $150
for this service.  Many consumers would like to have their dry cleaning picked up and delivered,
but when push comes to shove, they would not be willing to pay for the extra service.

In the early 1990s, a firm owning several supermarket chains decided start Tiangues, a chain
aimed at Hispanic consumers in Southern California.  Employees were screened to be fluent in
both Spanish and English, and foods that would appeal especially to different Hispanic groups
were emphasized.  The chain was very popular when it first opened, but it soon lost market share
as it was found that with time, what mattered most to customers was low prices.

Wheel of Retailing. An interesting phenomenon that has been consistently observed in the retail
world is the tendency of stores to progressively add to their services. Many stores have started
out as discount facilities but have gradually added services that customers have desired. For
example, the main purpose of shopping at establishments like Costco and Sam’s Club is to get
low prices. These stores have, however, added a tremendous number of services—e.g., eye
examinations, eye glass prescription services, tire installation, insurance services, upscale coffee,
and vaccinations. To the extent these services can be added in a cost effective manner, that is a
good thing. Ironically, however, what frequently happens is that "room" now opens up for a
"bare bones" chain to come in and fill the void that the original store was supposed to have
filled! New stores can now come in and offer lower prices before additional, costly services
"creep" in.  Note that upscaling over time may be an appropriate strategy and that the owner of
the "rising" chain may itself want to start another, lower-service division (e.g., Ralph’s may want
to own another chain such as Food 4 Less).

Supply Side Gaps. Supply side gaps come about when a business finds that the services that it
has traditionally offered to customers in the past are now too expensive to justify the value they
provide. For example, in the "old days" (i.e., until the early 1990s), travel agents provided a
valuable service—they would "match" travelers and airlines, finding a reasonable fare and travel
time and issuing the ticket to the customer who, then, did not have to call all the airlines for a
fare and then visit the airport or an airline office. However, nowadays, it is much more
convenient for consumers to carry e-tickets, and it is frequently easier to go online to compare
fares and travel time at one’s convenience. Therefore, travel agents, to command their
commissions, will often need to provide something extra that the online services cannot. The
problem is that, for most consumers, there just isn’t much that the travel agent can offer other
than fancy coffee or donuts, which you can get more conveniently elsewhere anywhere. Maybe
they can take passport photos or arrange bus transportation to a cruise ship, but is that enough to
justify people coming to them? Online services are starting to offer package deals—air fare,
hotel, and car rental—anyway.

Finding opportunities. Again, it is important to emphasize the need for market balance.
Frequently, there will be room for higher cost services for one segment, and perhaps a
diametrically opposed service for the lower cost service.

Gaps, costs, and performance. Generally, we find that gaps do not exist when cost and service
are "in line" with customer expectations. Thus, for example, Nordstrom serves a segment that
desires high service. Nordstrom incurs a great deal of costs in this, which are ultimately passed
on to the consumer, but Nordstrom’s customers are willing to pay for this. Similarly, Wal-Mart
provides some, but less, service and does so at a very low cost. Thus, another segment’s
preferences are served. Thus, service output demand is matched with supply. On the other hand,
many auto repair facilities provide less service than is expected and do not adequately make up
for this by low prices. Therefore, an opportunity might exist for someone to offer better service
at a not much higher cost. On the other hand, nowadays people may not be willing to pay the
extra cost for going to a butcher shop and pay significantly more if what they get is only a little
better than what is available in the supermarket meat section.

Closing gaps. Firms may be able to close, or reduce, their gaps by reconsidering their offerings.
A gasoline station that offers an "average" level of service at prices higher than those of self-
service stations might either target the low cost segment, lowering prices and cutting costs, or
targeting a premium service and "beefing up" service. Similarly, a firm that faces a segmented
market might "branch off" into different units that offer different levels of service to different
customers. For example, Toyota started the Lexus division for consumers who demanded more
service than would have been cost effective to offer to its traditional customers. On the supply
side, closing gaps mostly involves improving efficiency and/or reducing costs in other ways.
Alternatively, existing channels may be reassessed—e.g., airlines have deemphasized travel
agents.

Physical flow:

Tata motors in Showrooms warehouse Customers

india

From the above diagram as we came to know that tata nano sends the path to the their warrhouse
after receiving the order from the sales office. After that we will assemble a car at the workshop
and then finally deliver to the consumer.

Payment flow:

Tata motor at india Banks customers

Customers paying bills by cash or to do the financing from banks .customers pay less by this
diagram because of the direct mode of payment .so even the company collect the payment more
efficiently.

Information flow:

Tata motor at india Tata showrooms customers

Custmers can get the information directly from the tata showroom about the
features , price and etc. tata motors can more understanding the customers
needs when receiving the customers calls and mailings through internet . if
the customers faces any need or problem we would resolve it there and there.

Promotion flow

Tata motors at india Media customers

Here have a tow ways of the promotion flow , diretly and indirectly.directly is well
organized the maret compaign . since in this way we promote the product face to
face and also to provide the oppourtunites to drive and test it so that they
themselves feel about it . and about the indirect for eg TV etc.

Financial plan:

This section will offer the overview of Tata Nano related marketing activities. It is includes

 Saleforecast

 expense forecast

 break even analysis

  how those relate to the market strategy

Implementation and controls:

The objective of tata nano marketing plan is to serve as reference for the organizations.

Thefollowing areas will be monitored to gauge performance:

 Revenue: monthly and annual

 Expense : monthly and annual

 Customer satisfaction

 Sales growth by 10 percent annually.

Marketing Organization:

Marketing manager will be primarily responsible for the marketing activities. Marketing
manager will delegate responsibilities to promotion and advertising manager to manage product
promotion and advertising. Sales manager will responsible for sale performance. Marketing
director will supervise all department.

Difficulties and risks:

 Slow sales resulting less than projected cash flow

  Unexpected and excessive cost increase compared to the forecasted sales

 Overly aggressive and debilitating actions by competitors

 Significant economic downturns

Risk include:

 Liquidate asset to cover marketing expenses and liabilities

 Determining the product cannot support itself on ongoing basis