I still remember Tata saying what inspired him to think about a car suitable for India. He said when he was passing on a road, he saw a family of 3 or 4 riding a bike and the same inspired him to conceptualize a car which will give comfort to families risking their lives on bikes to switch to the safety of a 4 wheeler. When Tata launched Nano, it was not just a business opportunity, but also a tool to improve quality of lives of millions of Indian who were facing the dangers of fast paced roads and everyday were being exposed to accidents due to non-affordable four wheelers. When media wrote about Nano being cheap, Tata allowed the frenzy as it allowed free promotion. When media started comparing Nano to other cars to show how economical, Tata allowed the frenzy. So the question is what went wrong?
- Buying a car in India is associated with social status and prestige; if a person owns a car, he is assumed to be successful and settled. Indian car buyers are not utilitarian but aspirational. It differs hugely from the Western market, where cars are more of a necessity rather than luxury. If a person buys a car in US, no one gives a damn unless it’s a Ferrari or Lamborghini. Indian market is different, and a different marketing strategy was required for selling Nano, which is arguably world’s cheapest car. But the word ‘cheap’ in its marketing campaigns spoiled everything. It had to be subtle yet hidden from the promotional messages.
- From the start they should have stressed that it is not competing with cars but giving alternate to two wheeler. They should have allowed or directed media to compare a bike to Nano. For a few rupees more a lower middle class man can take his family out in the comfort of a car. Instead they got carried away and deviated from initial inspiration. The media frenzy was such that the whole nation saw the few Nanos on fire which suggested that in order to minimize cost, Tata compromised on safety which is against the initial inspiration. Tata wanted to give a safe ride to bike riding families but it turned out that it is a “cheap car” without safety.
- There were various psychographic factors involved in the failure of Tata Nano as well. The Models of Consumer Behaviour clearly indicate the importance of psychographic Factors affecting Consumer Buying behaviour. Especially a product like car is a matter of Social exhibit and prestige. The needs behind buying a car follow a different category. As per Product Levels recommended by Philip Kotler (2006), for creating Customer-Value Hierarchy, the marketer needs to address five product levels out of which each level adds more customer value.
- The fundamental level is the core benefit: the service or benefit the customer is really buying.
- At the second level, the marketer must turn the core benefit into a basic product.
- At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product.
- At the fourth level, the marketer prepares an augmented product that exceeds customer expectations.
- At the fifth level stands the potential product, which encompasses all the possible augmentations.
In case of Tata Nano, Tata group emphasized more on the core benefit of the product which is to provide a safe and secure mode of transportation at low affordable prices but it could not reach up to the expectations of customers and failed to be an augmented or potential products.
- The launch price came in two variants ranging between 1.2 lacs to 1.5lacs. It was 20 – 50% higher then the proposed rates which was a major setback to customers. Within a few months of initial sales, technical problems were found in the product and there were a few reports of Nano catching fire, which further weakened the trust for the brand ‘Nano’ as a whole. Tata also faced political problems and had to shift the plant location which led to production delays. And now due to inflation, Nano’s prices had further increased due to increase in the prices of raw material such as steel, rubber and others.
The failure of Tata Nano present with a great lesson for all the marketers the car was positioned as a symbol of social liberty and equality. It was positioned as dream car of common man of India. It was targeting the laymen who want to have a car and it got successful to some extent but only till a functional level. The Nano made sense in terms of a social mission, on a purely functional level. Good quality engineering focused on the task of making something reliable and safe as cheap as possible. Sell it to people with not much money. But it has been criticized all around as the one to the greatest positioning blunder as even the most cost effective producers do not label their products as cheap. Here the cheap has a great social connotation and the social tag because nobody aspires to buy the cheapest thing on the market, and driving around in a car is as big a statement as you get to make. Human psychology is that the motivation behind buying isn’t to have a car, or a shampoo, or whatever the product is. If a product is positioned as poor‘s product then poor people will definitely avoid it because they don‘t want to be viewed as poor yet. The marketer just need to place their product right in the minds of customer and the brands like Giorgio Armani, Raymond‘s, Toyota and even other brands of Tata are examples of that. So positioning remains the main mantra behind the success of any product.