New Market Creation via Innovation: A Study on Tata Nano

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Objective of the paper - This research paper focuses on how innovations support new market creation emerging from latent opportunities for low-income group. It also emphasizes on novel strategies that can be implemented for sustaining. The paper concludes with a discussion on the implications of the study and directions to stimulate future research on the subject.Design/methodology/approach - A hybrid methodology comprising of a case study on the 2200 USD (equivalent to INR 1,00,000) car Tata Nano and supported with a quantitative survey on a random sample of prospective Nano customers has been deployed. The qualitative case study helps to understand the macro picture on how innovation helped create new market for the masses. The quantitative survey measures the impact of various attributes of Nano on customer’s intent to purchase. These attributes have been identified through interviews of prospective Nano customers. Factor analysis has been deployed to establish corporate brand equity, aesthetics, and value for money & reliability as main attributes of Nano. Regression analysis is used to find out the influence of these attributes on intent to purchase Nano.Findings - The study highlights the power of brand equity in new market creation and n innovation sustainability. The survey indicates the perception of prospective customers about Nano and how it impacts their buying decisions. The case reflects on how companies can successfully create products and at the same time positions it for its market adoption. The paper concludes with the development of new strategies to sustain this innovation.Originality/value - The study’s originality springs from the diffusion of innovations theories and emphasising the need for organizations targeting the bottom of the pyramid. The case study reflects how a dream became a reality to own an affordable four-wheeler by masses.Implications - A key implication of this paper is that the organizations must adapt ‘blue ocean strategy’ (Kim & Mauborgne, 2005) whereby organizations can generate high growths and profits by creating new demand in an uncontested market space. It also provides insights into understanding market behaviour towards innovation and adaption of low cost products.Directions for future research - Similar studies can be carried out that can help in comparative analysis of different products targeted at the bottom of the pyramid. There is a possibility that selling to the bottom of the pyramid could be attractive in some industries or firms but not others. It would provide better understanding of what features help in sustainability of such products in the long run. It would also be interesting to find out how such products would be helpful in reverse innovation.Research limitations - This case focuses on an automobile, which is a high involvement product. The implications and strategies could differ for products in other categories. The sample size for the study is not very large so it only gives an indication and not generalization of the findings. The case study on Nano focuses on the marketing and strategy perspective rather than production and technology.