Instructions
(i) Do you like or not like the idea of producing a car with $2500 target price? (ii) How do consumers may respond psychologically to the cheapest car in the world? (iii) How do you resolve consumers’ psychological concerns?
Solutions
Nano Car Case Study
The small car market in India has been experiencing a steady growth in the past few years, as industrial participants continue to expand their activities in manufacturing smaller cars of different designs. In 2008, Tata Motors unveiled its $2,500 car which is touted as the cheapest automotive in the world (Palepu et al 112). In addition to its low-cost, Nano is also attributed to fuel efficiency, which makes it a highly preferred car among middle-income earners. Despite its numerous benefits, critics still question the quality of the car due to its low pricing. While consumers may have a negative psychological response to the low-pricing of the car, firms such as Tata Motors can resolve such concerns by emphasizing on the value proposition of the vehicle to convince consumers on the need to purchase the product.
Personal Opinion
Based on analysis of the small car market in India, producing a car with $2,500 target price is a suitable idea. This is mainly because consumers in India are cost-conscious (Palepu et al 117). As such, a large fraction of the potential buyers would prefer a cheap, safe and comfortable car to a large automotive that is not only expensive but also costly in terms of fuel consumption. Besides, India’s transport market mainly comprises middle-income families and college students who utilize bikes that cost a minimum of 40,000 to 50,000 rupees (Palepu et al 120). Therefore, producing a car with $2,500 target price is a good idea as it would attract a larger customer base of individuals who wish to maintain their spending while utilizing a more comfortable mode of transport. Generally, I like the idea of producing a low-cost car as it would meet the needs of middle-income households.
Customer’s Psychological response to Cheapest Car in the World
Despite being suited to meet the needs of middle-income individuals, the cheapest cars would receive a negative psychological response from consumers. This is evident from the case of Nano, where critics question whether the low price means that the vehicle is of low quality (Palepu et al 119). The car industry is a lucrative business that attaches prices to the model, design and unique features of an automotive. For instance, consumers consider some of the most expensive cars in the world such as Bugatti, Lykan Hypersport and Lamborghini to be of outstanding quality because they are highly priced. Therefore, consumers that hold a similar perception may be skeptical about the quality of the cheapest cars.
Resolving consumers’ psychological concerns regarding low-priced cars requires a strategic approach that mainly focuses on value proposition. Sellers of low-priced cars should aim at enlightening consumers about the value that such cars offer. For instance, Tata Motors can include the unique benefits of the Nano cars in their marketing strategy. Examples of value propositions that the firm can emphasize on is fuel-efficiency. As observed by Palepu et al, Nano is one of the world’s most fuel-efficient cars, utilizing a gallon of fuel for every 52 and 61 miles covered in the city and highway respectively (113). Focusing on such an attribute would compel consumers to realize that despite their pricing, less expensive cars have a high quality of saving fuel compared to high-priced automotive.
Apart from fuel efficiency, manufacturers of low-priced cars can also focus on the considerable seating capacity of the automotive to resolve consumers’ psychological concerns. For instance, Palepu et al aver that despite being a small, low-priced car, Nano provides an ample room for four adults (113). This implies that manufacturers of the automotive retain the standard seating capacity of the car despite charging low prices among consumers. Emphasizing on this aspect of the cars would help consumers realize that the low-pricing model does not interfere with the value that the automotive offers to households of three to four individuals.
Apart from value proposition, manufacturers can resolve consumers’ psychological concerns by focusing on the social benefits of the cars in their marketing strategy. For instance, Palepu et al observe that assembly of some of the cheapest cars such as Nano creates wealth dispersion as some of the major components of the vehicle are assembled in village garages (118). The initial car model lacks some few components whose assembly can be sourced to trained local workers. Including the value that assembly of low-priced cars offers to communities, in terms of wealth dispersion and job creation, can help address the psychological concerns that consumers may have regarding the vehicles.
In conclusion, low-priced cars can attract negative psychological response from consumers due to concerns over quality of the automotive. Nonetheless, manufacturers can resolve the psychological concerns by marketing their low-priced cars in terms of the value that they offer to users and the community as a whole. Examples of such value propositions include fuel-efficiency, considerable standard seating capacity and wealth dispersion in areas where manufacturers operate. From the perspective of a small car market, the idea of producing a car with $2,500 target price would be ideal as it would meet the transportation needs of middle-income households. Furthermore, considering that some nations are cost-conscious, low-priced cars would be the most ideal opportunity for manufacturers to attract a significant customer base in the automotive industry.
Work Cited
Palepu, Krishna, et al. “Tata Nano – The People’s Car.” Harvard Business School, 2010.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
