In 1912, the makers and owners of the maiden ship Titanic advertised her as “unsinkable”. But, ironically, the ship sank after it hit an iceberg in the freezing waters of the Pacific. With similar hopes, the makers of Tata Nano were optimistic about its demand among the vast user base of the developing nation. But, to their utter despair and dismay, the car could not capture the heart and trust of the Indian mass. What did go wrong with this venture of the business giant Tata? As per the comments of Ratan Tata “It (Nano) became termed as the cheapest car by the public and, I am sorry to say, by ourselves, not by me, but the company when it was marketing it. I think that is unfortunate.”
In a developing nation like India, the car not only serves the purpose of commute. It also acts as prestige and social image, in this scenario owning the “cheapest car” does not solve the purpose. Nano was propagated as the car for a family of four, who were using two-wheelers for the daily commute. In India, being cheap is referred to as low quality, so cost reduction was not sufficient enough to attract attention. The cost of the “cheapest car” was much higher than the two-wheelers, and no one likes to be called the owner of the cheapest car. So, the car failed to reach anywhere near the target audience, and it’s going downhill since its launch.
The car was launched targeting the two-wheeler riders, but it failed miserably. The two-wheelers require less maintenance, take little space for parking and can squeeze in traffic congestions. They can also overcome the challenges of poor road conditions. But the “cheapest car” was costlier, needed more maintenance, thinner tyres make it unsuitable for the Indian roads. The fuel consumption of Tata Nano was three times higher than the two-wheelers. Consequently, the target consumers were reluctant to invest in the Tata Nano.
The poor advertising techniques and the weak Public Relations hampered the sales of the car. The advertising techniques must be such that they are relatable to the emotionally driven consumers. The launch ads of the Tata Nano did not arouse much interest in the minds of the targeted Indian mass. The visual appeal plays a much vital role in the marketing of a commodity, what the people are seeing matters the most. In this case, the people could not relate to what they are seeing on the TV sets. It was driving them away from this vehicle. The news of the explosion of the Tata Nano was viral, and it infused fear in the minds of the people. They were not ready to invest in something that may be life-threatening, whatever the price is. The poor public relations and the marketing strategies added fuel to the fire; they were concerned about the number of cars catching fire and not the number of cars running smoothly. This convinced the general mass that the poor build and the cut on the manufacturing cost were the main reasons for it being “cheap”.
The tough competition with the second-hand car market was yet another reason for its downfall. The cars like Maruti Suzuki 800, Alto, Fiat Petra, Hyundai Santro etc had to reduce their prices for retaining their positions, and this was popularly referred to as Nano effect. Second-hand cars were vastly popular among the masses. There they could get the five-year-old versions of branded cars like Ford, Maruti, Fiat in a price much, lower than the price of the cheapest car. The status-conscious Indian mass would prefer these second-hand cars much above the Tata Nano. In 2011, one of my neighbours purchased a second-hand sedan in the price of the Nano for the same above mentioned reason. As per the Technology Review Reports of 2011, “the car is being viewed as a glorified tuk-tuk, which is the three-wheeled runabouts synonymous with developing nations”.
The plant where Tata Nano was supposed to be manufactured was in Singur, West Bengal. But, due to severe political unrests and protest of the farmers against land acquisition, the plant had to be shifted to Gujarat, and the delayed delivery played an important role in pulling down the sales of the vehicle. The manufacturer targeted the low-income masses, but the “stigma” of being cheap wasted all the efforts, as opined by Ratan Tata himself, in an interview with BBC in 2012.
As of 2019, the production of Tata Nano stands at Zero, with a sale of only one unit in the month of February. Though the manufacturers made efforts to improve the sales of the car, it did not have any positive effect. In 2013, Tata planned to launch the car in foreign lands like Indonesia where the “stigma” of cheapest car did not exist, and then again re-launch it with new looks and names. The manufactures took the last resort by changing the tag from “cheap car” to “smart car”. Though the move was strategic, it was already too late then.
The salt-to-software conglomerate started the venture with a very meaningful objective. But due to the marketing strategies and lack substantial market research, the venture followed a downtrend from its inception. As per the Chairman of Maruti Suzuki, Mr Bhargava “I think the Nano failed because it failed to meet aspirations of customers in totality, not one or two factors. The project at that price became an insurmountable challenge”
3 Major lessons to learn from this:
- A promise is not to be broken to earn the people’s trust: The “people’s car” was initially priced at Rs 1 Lakh, but this basic model lacked basic features like airbags, other safety measures like good tyres and efficient machines. The low build of the car caused life-threatening explosions, and the revised price of the car was then higher than the early promise. The low-income mass lost trust in the model due to the shifted pricing and became reluctant in investing.
- Advertising promotes an emotional connection and gives a visual appeal to the target customers: The “cheap car” was aimed for the low-income mass, but no one likes to be the owner of the cheap car. They would stick to their two-wheelers, or stretch themselves to buy a better car than Nano. The car is a show caser of social status, and the faulty advertising killed it all.
- In-depth market research is essential to know the customer needs and extent of competition: The car faced severe competition with the second-hand car market and the brands like Hyundai and Maruti Suzuki. The people preferred to buy a second-hand sedan instead of the cheap Tata Nano.
This decade has seen several changes in the marketing techniques and rise and downfall of many business ventures. The rise of the gig economy and soloprenuers is going on in full swing. This competitive and crowded market can be a challenge for your growing business. You want to avoid such mistakes, but who can guide you? Google will give you hundreds of websites, but an expert will guide you thoroughly in your journey.
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