Brand Management Assignment 1

Air India Limited

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Faculty of Management Studies

University Of Delhi

MBA Executive, 2016-18

Brand Management

A Study on Brand Equity of

Tata NANO

Submitted By

Krishnanunni U (S029)
Pankaj Dhingra (S048)
Prajil PK (S053)
Sandeep Punia (S061)
Shakher Saini (S070)

Under the guidance of

Prof. Harsh Verma

Faculty of Management Studies

February, 2018
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 Brand Management Assignment 2
Air India Limited
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Brand Equity
Brand equity refers to the intangible value that accrues to a company as a result of its successful efforts
to establish a strong brand. A brand is a name, symbol, or other feature that distinguishes the
company's goods or services in the marketplace. Consumers often rely upon brands to guide their
purchase decisions. The positive feelings consumers accumulate about a particular brand are what
makes the brand a valuable asset for the company that owns it.
Brand Equity is the storehouse of future profits which result from past marketing activities.

Five Main Elements of Brand Equity are as follows:

 Awareness
 Brand associations
 Perceived quality
 Brand loyalty
 Proprietary brand assets.

A brand is an intangible asset for an organization. The concept of brand equity originated in order to
measure the financial worth of this significant, yet intangible entity.

Brand equity is the value and power of the brand that determines its worth. The brand equity can be
determined by measuring:

i. The price premium that the brand charges over unbranded products
ii. The additional volume of sales generated by the brand as compared to other brands in the same
category or segment

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 Brand Management Assignment 3
Air India Limited
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iii. The share prices that the company commands in the market (particularly if the brand name is the
same as the corporate name, or customers can easily associate the performance of all the individual
brands of the company with the financial performance of the corporate)
iv. Returns to shareholders
v. The image of the brand on various parameters that are deemed important
vi. The future earnings potential of the brand
vii. Or a combination of the above methods. Some methods of measuring brand equity involve the
formulation of a multiplier by using a combination of the above methods. Such multipliers as brand
strength or brand esteem can be determined by combining several variables to ultimately arrive at the
brand equity.

Brand equity comprises the following elements:

1. Awareness:
Awareness of the brand name among target customers is the first step in the equity building process.
Awareness essentially means that customers know about the existence of the brand and can also recall
what category the brand is in.
The lowest level of awareness is when the customer has to be reminded about the existence of the
brand name, and that it is being a part of a particular category. In aided recall, the customer can
recognize the company’s brand from among a list of brands in the category.
In unaided recall, the customer himself mentions the company’s brand. The highest level of awareness is
when the first brand that the customer can recall upon the mention of the product category is the
company’s brand. This is called top-of-mind recall.
Building awareness involves making the brand visible to the relevant target audience by various
promotional methods such as publicity, sponsorships, events, advertising, instigating word-of-mouth
promotion, etc.

2. Brand associations:
Anything that is connected to the customer’s memory about the brand is an association. Customers
form associations on the basis of quality perceptions, their interactions with employees and the
organization, advertisements of the brand, price points at which the brand is sold, product categories
that the brand is in, product displays in retail stores, publicity in various media, offerings of competitors,
celebrity associations, word of mouth, etc.
Associations contribute to brand equity, as strong, positive associations induce brand purchases, besides
generating good word-of-mouth publicity. Such associations can also help the company in leveraging the
brand, create strong barriers to entry for competitors, give trade leverage to the company and enable
the company to achieve differential advantage.

3. Perceived quality:
Perceived quality is also a brand association, though because of its significance, it is accorded a distinct
status while studying brand equity. Perceived quality is the perception of the customer about the overall
quality of a brand.
Quality perceptions influence pricing decisions of companies. Better quality products can be charged a
price premium. Quality is one of the main reasons for consumer preference for a brand in any product
category. Thus, superior perceived quality can also be used to position the brand.

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 Brand Management Assignment 4
Air India Limited
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4. Brand loyalty:
A customer is brand loyal when he purchases one brand from among a set of alternatives consistently
over a period of time. In the traditional sense, brand loyalty was considered to be related to repetitive
purchase behavior, even when the customer is presented with similarly placed brands.
Brand loyalty is usually rated as the most important indicator of brand equity because loyalty develops
post purchase and indicates a consistent patronage by a customer over a long period of time whereas all
other elements of brand equity may or may not translate into purchases.
Brand loyal customers form the bedrock of a company. Higher loyalty levels lead to a decrease in
marketing expenditure as such customers act as positive advocates for the brand. Besides, a company
can introduce more products in its portfolio that are aimed at the same customers at less expenditure.
It also acts as a potential barrier to entry for new players and gives time to the company to respond to
competitive threats.

5. Other proprietary brand assets:

Proprietary assets include patents, trademarks and channel relationships. These assets are valuable as
they prevent competitors from attacking the company and prevent the erosion of competitive
advantages and loyal customer base.

TATA NANO – An Analysis

Nano Car also known as “People’s Car”, a marvel of innovation in the automobile sector was brought to
life by salt to steel conglomerate Tata Group’s Tata Motors. It was in 2003, when Ratan Tata felt the
need of having a safe and affordable car for the common man. “What drove me — a man on a two-
wheeler with a child standing in front, his wife sitting behind, add to that the wet roads — was a family
in potential danger,” said Ratan Tata, while explaining why he went for the Nano. Finally, after a wait of
five years, he delivered his promise and unveiled the car in January 2008 at the Biennial Auto Expo 2008,
New Delhi. It was coveted as the World’s Cheapest Car with a price tag of $2500, as promised.

Brand Equity of TATA NANO

Its cliche overused but still significant and relevant, “Great power comes with the
responsibility” similarly “Great publicity comes with Great expectations”. When TATA Nano was
announced the publicity and curiosity it had aroused was phenomenal. There were few jokes that TATA
will recover Nano’s R&D cost just from the interest of booking deposit of Nano. Time passed people
grew impatient TATA couldn’t deliver on time and then some unwanted, undesirable incidents
happened that gave Nano negative publicity. Those who believe that any publicity is good publicity for
them it is a lesson to be learnt, and poor TATA who thought they will conquer the world sitting on this
free tiger of publicity unfortunately the tiger on which they were riding so happily got bigger than them
and ate away the rider.

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 Brand Management Assignment 5
Air India Limited
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The Positioning Failure of Tata Nano
For every brand positioning remains inevitable if it wants to succeed in the market.
According to Kapferer (1997) brand consists of six main factors that are: physic personality, culture,
relationship, reflection and self-image
According to Kotler (2005), ―Positioning is the act of designing the company‘s offering and image to
occupy a distinct place in the mind of the target market.
Brand positioning remains highly crucial to face the cut throat competition in the highly volatile and
dynamic markets. A brand can only succeed it is able to capture a unique and specific image and
position in relation to its competitors. The main dimensions of branding are brand positioning and brand
image. Both are the psychological attributes but play a crucial role when it comes to success or failure of
a brand in market. According to Ries and Trout (1969), positioning is a marketing method for creating
the perception of product, brand or identity. Positioning is where your product‘s image is placed in
relation to image of your competitor‘s products. Brand positioning is the sum of all activities that
position the brand in the mind of the customer relative to its competition. Positioning is not about
creating something new or different, but to manipulate the mind set and to retie existing connections
(Ries& Trout, 1981).
The product can be a leader in the market, when the product attributes are coupled with marketing
efforts.

Figure 1. Value disciple model (Treacy&Wiersema, 1993).

William I. McGirr, (1973) provided following recommendation on product positioning:

”Position your product in the marketplace so that it stands apart from competing brands. You can cover
that consumer space as if you had a patent on it. Find a strong product position and sit on it. Positioning
tells what you stand for, what you are, how you would like customers to evaluate you. Your position
telegraphs the simple truth of your products.
The positioning of Tata Nano was devised to place it as People‘s Car. The cause behind this was the
social concern on the part of top management of tata Motors. During the initial campaign Ratan Tata
promoted it as a replacement of two wheelers or a people‘s Car. The advertisements also showed it as a
lower middle class Indian buying their first cat which was a budget or Rs. 1 Lakh car. Even the Then US
president Barack Obama and the first lady of US Michelle Obama also took interest in the Tata Nano as
innovation and expressed their pleasure for the launching of World‘s Cheapest Car.

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 Brand Management Assignment 6
Air India Limited
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Here the Cheapest Car was not a term used in absolute word meaning but it was a term showing relative
price of Tata Nano to the other cars available in the market. The Cheap here was used as a replacement
for cost effectiveness and affordability but the social meaning of the car was taken as ―Poor People‘s
Car literally

Psychographic Factors responsible for Failure

The Models of Consumer Behaviour clearly indicate the importance of psychographic Factors affecting
Consumer Buying behaviour. Especially the product like Car is a matter of Social exhibit and prestige.
The needs behind buying a car follow a different category

Faulty Selection of Reference Group

According to Kotler (2006) reference groups have a direct impact on the buying decision process of
consumer. All these groups include family, friends, neighbours, and co-workers. People also belong to
secondary groups, such as religious, professional, and trade-union groups, which tend to be more formal
and require less continuous interaction.
Reference groups influence members in at least three ways. They expose an individual to new
behaviours and lifestyles, they influence attitudes and self-concept, and they create pressures for
conformity that may affect product and brand choices. People are also influenced by groups to which
they do not belong. Aspirational groups are those a person hopes to join; dissociative groups are those
whose values or behaviour an individual rejects.
Kotler (2006) also emphasizes on the significance of opinion leaders that to be successful lmarketer the
opinion leader has tobe strong.
In the case of positioning of the cars and automobiles the economic class to which actually the person is
belonging to is dissociative group. The middle class persons doesn‘t want to be viewed as a member of
the same economicclass but the advertisements of Tata Nano directly were disclosing the association
with the their actual income class.
In a country like India, a car which a matter of social prestige and economic state , a consumer wants to
be viewed as financially well doingprestigious owner of a four wheeler and this psychological need was
totally ignored in the case of Tata Nano.

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 Brand Management Assignment 7
Air India Limited
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According to the A. H. Maslow (1943), as per needhierarchy theory person will exhibit the behaviour
according to the need he wants to satisfy. As per Kotler (2006) implication of this theory in marketing
says that the kind of need, a product is to satisfy will determine the factors affecting the buying decision
process. Here Tata Nano was placed as a replacement of Two Wheelers as to enhance safety and
security needs of a person and according the safety has to be available at lowest cost possible. But
buying car doesn‘t fall in the category of thefirst two need of hierarchy, it is not just a matter of
Physiological safety or security but this is a part of social need. So protection from weather is a hidden
need but the underlying need also is of being viewed asan owner of a car.

As per Product Levelsrecommendedby Philip Kotler (2006), for creating Customer-Value Hierarchy, the
marketer needs to address five product levels out of which each level adds more customer value.

• The fundamental level is the core benefit: the service or benefit the customer is really buying.
• At the second level, the marketer must turn the core benefit into a basic product.
• At the third level, the marketer prepares an expected product, a set of attributes and conditions
buyers normally expect when they purchase this product.
• At the fourth level, the marketer prepares an augmented product that exceeds customer expectations.
• At the fifth level stands the potential product, which encompasses all the possible augmentations.

In case of TataNano, Tata group emphasized more on the core benefit of the product which id to
provide asafe and secure mode of transportation at low affordable prices but it could not reach up to
the expectations of customers and failed to be an augmented or potential products.

Revival Strategy for TATA NANO

TATA has to take bold actions and keep 3 years horizon in mind, in next 3 years if it fails to generate the
demand again then it is better to scrap Nano.
1) Target Market : Promotion Strategy TATA Nano should be marketed as niche segment product
rather than everyone’s product. Age wise market segmentation will be from the age 18 to 30 year and
above 55 years. More than 65% population is under the age of 35 years so there is significant market
available in 18 to 30 years segment. Potential buyers will be rich kids who will be turning 18 and will be
getting car as their birthday gift, single men and women earning good salary and living alone in cities.
DINK (Double Income No Kids) families who will not be planning for kids for another 3 to 5 years. These
demographics are steadily increasing; they are in need of a car which addresses their priorities like

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 Brand Management Assignment 8
Air India Limited
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mileage, performance, safety, easy parking and easy maneuverability. Nano can be ideal for them.
Identifying this niche and promoting Nano for this market segment can revitalize the dying demand.
Shed the tag of cheapest car & promote it as small car with no compromise

2) Add Luxury – (Change Price preposition )

One thing that TATA got totally wrong is Indian mindset regarding low cost model, For Majority Indians,
car is not a necessity or about convenience, for them it is a luxury and a sense of pride is attached to it.
When Nano was marketed as cheapest car with minimalist approach whole fun and excitement of
buying a first car got killed. People don’t really feel proud about showing off Nano, which is a big factor
behind purchasing a car. A movie like Do Duni Char has rightly reflected the sentiments of middle class
family purchasing their first car. Rather than selling it at dirt cheap rate sell it at a higher price with lot of
cool and safety features. High end model of Nano can be sold at around 3.5 lacs this will improve profit
margin for TATA and for the dealers as well.

3) Make it Powerful and Safest Small Car – (Change in Product)

Let me be very clear if TATA really want Nano to be successful it has to be reengineered, with current
engine no amount of marketing or promotion is going to help Nano. Rather than making it poor people’s
first car, make it at rich people’s first car. First thing that requires a change is an engine, rather than
having 750 cc engine, equip Nano with powerful high cc engine probably Vista’s engine can be used here
that will save lot of cost also. Second Make it two sitter car remaining space should be used for safety
features and for boot space. This will also increase lot of boot space. So even if it is a small car it will
have very powerful engine, international level of safety standards and unmatched boot space, thus
three primary concern of consumer is being taken care of. These changes can be game changer because
there are no such cars available in the market. In a true sense it can be small car with no compromise

4) It’s Urban car – (Place)

Sometimes product success has lot to do with its scarcity. Unavailability of a particular product creates
cult status as everybody wants to have it but very few will get it. TATA should to focus on urban area
only. Even the demographic segmentation suggests that target group is more urban i.e. Top 50 cities,
roughly around 150 million people it is more than Germany and UK put together. Promoting Nano in few
cities will significantly reduce the cost of marketing as well. Apart from this TATA can think of promoting
Nano in tourist spot like Goa, Dehradun, Shimla etc TATA Nano can be used there for rentals it will be
the one of the unique way to promote it. As these are the couples most probably both earning and will
soon be buying a car, they may not have thought about buying Nano until they will be experiencing it.
Once they will experience it, feature rich Nano will be attractive buy for them.

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