Automaker says ‘Ta-ta’ to competition, eyes Blue Ocean

What would happen if carmakers could defy conventional wisdom?  While Detroit automakers continue down a slippery slope, India’s Tata Motors has set its sights on a new, Blue Ocean marketspace.  This previously overlooked market — of approximately 50 - 100 million consumers in India alone — had been unable to afford current cars on the market, and so relied on alternate forms of transportation such as motorcylces and skooters.  With its introduction of the ultra low-cost Nano, which retains the features most important to buyers in this new market, Ratan Tata, chairman of Tata Group, aims to fill that vauum. 

From BusinessWeek: 

The lessons start with the vision of Ratan Tata, chairman of Tata Motors' parent, Tata Group, to create an ultralow-cost car for a new category of Indian consumer: someone who couldn't afford the $5,000 sticker price of what was then the cheapest car on the market and instead drove his family around on a $1,000 motorcycle. "Just in India there are 50 million to 100 million people caught in that automotive chasm," says vice-president Vikas Sehgal, a principal at Booz & Co. And yet none of the automakers in India were focused on that segment. In that respect, the Nano is a great example of the so-called blue ocean strategy.

"Great companies are built on creating new markets, not increasing market share in existing ones," says Vijay Govindarajan, a professor at Tuck School of Business at Dartmouth College and chief innovation consultant at General Electric (GE), who quickly runs off 10 lessons for Detroit. Among them: U.S. automakers should focus less on incremental improvements to existing cars or adding a new model to the Cadillac line in order to compete against Lexus, and think more broadly about new market opportunities.”

If Tata’s vision is successful, it will demonstrate that one can create blue oceans on both spectrums of mature industries, with the Nano at the lower end, and the Koenigsegg, another blue ocean example, at the ultra-high end.  We will keep you posted!