Almost 10 years after its launch in 2008, reports are rife that the “people’s car” Tata Nano, might be biding adieu. Tata Motors has stopped production of the car and will now produce the affordable hacthbacks only on demand.
Reports also state that the company only produced one unit of the car in the month of July as opposed to 275 in the same month last year.
When BestMediaInfo.com reached out to Tata Motors to understand what went wrong with Nano, the brand gave out a statement saying, “Nano has been an iconic car reflecting the innovative spirit of the company and its leaders. Decisions on product life cycle is a holistic view taken after considering the market developments, regulations and emerging competitive landscape. Any such decisions are announced as and when it’s taken. Production planning of a car is a conscious management of demand, system inventory and planned efficiencies. Therefore, speculating on the fate of a car based on a month’s production figure is something the company would not like to participate in.”
So, what really went wrong with Nano? Was it the positioning? The price perhaps? Or was it the demand that the company was not prepared for?
According to Ramanujam Sridhar, Founder CEO, Brand-comm, their very positioning as the “people’s car” went against them.
“In India, a car is a status symbol. People here don’t want to buy a cheap car, no matter how well it has been engineered or how wonderful the features are. The brand basically came out with a corporate statement saying that this is a car that anyone can afford. They, of course, tried to rectify this positioning through ad campaigns later but the damage was already done,” said Sridhar.
S Venkatesh, Marketing Director, RW Promotions, too believes that the “cheapest car” label might have worked against the brand.
“Cars in this country are definitely aspirational. They are not a necessity. People might own a car and still travel to work by a two-wheeler. I think the Indian consumer is still not ready for a car like that. Our perception, when it comes to cars, is that we need comfort,” said S Venkatesh.
The problem compounded when people found out that the Rs 1 lakh car, was not really that cheap.
“When the car was announced, it was promoted as a car that would cost less than a lakh rupee and by the time it came on road it was more than Rs 1.5 lakh. So, the perception of the car being the cheapest was shattered and at that point in time one could get a Maruti Alto at 2.2 lakh. It had more space and was a tried and tested car in the market when compared to Nano,” said S Venkatesh.
For Harish Bijoor, Founder,Harish Bijoor Consults Inc, the problem lay with the volumes and the fact that the brand couldn’t cope with the demand.
“The category needed volume. Volume which never came by. When price is low, as low as the Nano touted with pride, the key support is volume. The volume of cars one could sell. That key support just did not come. With volume, everything else, including the service back-bone in the remotest corners of this large country of ours could and would fall into place,” said Bijoor.
While, the brand tried to address some of the issues (this also includes the incidents of some of the cars catching fire) through marketing, it was already too late.
“If you promise something and don't deliver on it, no amount of marketing will help,” said S Venkatesh.
“They came up with a lot of campaigns afterwards, trying to address these problems but once the damage is done, it becomes very difficult to come back from it,” added Sridhar.
So, what can the industry take away from this?
“What marketers in India should be really aware of is the importance of positioning their product correctly. Positioning the product correctly in the consumer’s mind is my take away from this,” said Sridhar.
But both Sridhar and Bijoor refused to buy that the Indian consumer is not ready for experimentation.
“The industry’s take away from this should be just one thing: Keep trying. Yes, products and brands will fail. That does not mean that one must not keep trying. In the auto industry, the burn and failure rate is very high as opposed to the success rate. Possibly, there is one real success out of 32 new launches!” said Bijoor.