1. 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

2. Development of a One lakh Car

3. 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.

4. Target Market

5. 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

6. But was It REALLY a 1 LAKH Rupees Car?

7. 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.

8. TATA PRICING OBJECTIVES Survival Maximizing market share Keeping the price range near 1 lakh Discouraging potential competition

9. 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

10. PRICE OF VARIOUS CARS NANO 1.3-1.9 LACK MARUTI 800 1.9-2.3 LACK ALTO 2.3 LACK SANTRO 2.77 LACK

11. 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.

12. Proposed pricing objectives Survival New market penetration Increase the perceived value of Nano Increase market share

13. 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

14. Selecting the final pricing Influence of other marketing mix Cash discount

15. Price List ex showroom prices Model Nano BS IV Nano CX BS IV Nano LX BS IV Price Rs 145,000 Rs 170,078 Rs 196,956

16. Banks

17. PROJECTED NEW COST % allocated20102011 145,000153,000 Manufacturing cost 405800061200 place 202900030600 promotion 304350045900 tax 572507650 misc. 343504590 profit 2029003060 sales 60,00069000

18. RECOMMENDATIONS Through government subsidies and tax Collaboration for loans with Gramin banks and post offices

19. Cost effectiveness – Spare parts packages Nano Special Outlets( NSO ) discount Decreasing down payment in rural areas

20. Thank You