New channels and internet were abuzz with the talks of the new Tata ‘Nana’ housing project yesterday. It seems Ratan Tata has planned to tap the still neglected low cost product market (untapped in the sense that no known company has entered this sector). Be it the recently launched Tata Nano or the Tata Housing project at Boisar, about 120 kms from South Mumbai.
In a country like India, where we have such a large middle class, It is ought o the middle class deciding the future of a product in the market. It is the middle class which is going to make Tata Nano, a big hit or a flop and it was the same class which led to the record sales of Maruti 800. So, when you launch a product, you need to keep in mind this middle class. This middle class can also be easily divided into three categories: Upper Middle Class, Lower middle class and Typical Middle Class and lower middle class remains the biggest in number in the middle class segment.
So the products like Tata Nano and Tata housing are surely going to be a big hit amongst this segment, which lives in rented accommodations in these metros and dreams about having their own homes and obviously a car for the family. Ratan Tata has surely taken a big risk by entering this sector, but if it pays off, he will be become the best businessman ever, which India produced.
Which lower Middle class family can dream of having a home and car for just 5 lakhs, its like playing God and making their all dreams come true? With rents touching their all time highs, in normal circumstances, a middle class family pays around Rs. 3000-4000 per month for house rent and spends more than Rs. 2000 per month for commuting. So a family spends a total of around Rs. 6000 on housing and commuting. Calculating in normal mathematics, this family will spend Rs 5 lakh in around 83 months, if they pay same amount every month. But it is not the same, costs increase, inflation is always there.
For such a family buying a Tata house and a Tata car is going to be the first priority.