Product Positioning Holds The Key: Tata Nano’s Second Coming

Its been nearly 5 years since the first Tata Nano was delivered to Mumbai resident Ashok Vichare and the product’s journey since then, is turning out to be the stuff that classic marketing case studies are made of. First, an emotional story that led to a grand vision. Then, unprecedented hype leading up to launch and finally, the kind of global coverage at unveiling which even Hollywood icons would envy.

nano silver

However, the fairy tale story of India’s innovation poster-boy soon got a nasty reality check. As sluggish sales numbers started coming in, The Economist raised the alarm in August 2011 and quoted a leading Indian auto journalist who termed it a ¨monumental marketing blunder¨. According to its report:

The price crept up by around 15%, putting it out of the reach of first-time buyers with no regular employment or payslips to back an application for credit. And by emphasizing its cheapness rather than its basic but appealing qualities, it deterred slightly better-off consumers who could afford one but aspired to more sophisticated vehicles.

The most high-profile criticism though came over 2 years later from one of the leading ‘Gurus’ of marketing, Jack Trout. His scathing assessment of the brand’s positioning made the front page of the Economic Times that quoted him as saying:

I think they did the wrong piece of psychology. Tata Nano is hard to save. My view is, I would kill the brand. The damage is done there. The most telling thing they did is calling it a ‘cheap car’. People don’t want a ‘cheap’ car, which their neighbors can see. Especially in India, there’s a prestige thing about buying a car.

It was enough to catch the attention of the man whose vision of creating something safe for an entire Indian family, dangerously balancing on a two-wheeler, led to the very idea of the Nano. In an interview with CNBC Asia, a fortnight after Trout made those comments, Ratan Tata admitted that the communication was flawed (2:38 onwards in the video below):

The TATA Group Chairman Emeritus’ acceptance of the blunder meant that the company had to attempt an overhaul of the Nano’s positioning with a vengeance. After all, the situation wasn’t entirely gloomy. The product had been crowned ¨Most Trusted Brand¨ by TRA in their 2013 Brand Trust Report and Tata Motors’ Board member and Padma Vibhushan awardee, the eminent scientist Dr. R. A. Mashelkar was championing it in the press by saying:

The Nano is such a great product, it has 86 patents. So, excellence should have been put at the front, and affordability at the back.

The latest edition of Business Today has an extensive cover story on the ongoing attempt within the company to re-position the Nano and its new variant, the ‘Twist’. The idea is to sell it as the ‘smart city car’ to urban youth and as a second or third car to the affluent. It quotes Delna Avari, Marketing Head for all passenger vehicles at Tata Motors:

Everyone will buy a car if they think it is the one that the well-heeled drive. When we launched, and through the booking phase… 80 per cent of the buyers wanted it as their third or fourth car.¨ She sees evidence of this every day around her house in Mumbai’s upscale Cuffe Parade area, which she says is full of Nanos. “All of them are driven by their owners.

Interestingly, this approach was also criticized by some commentators such as Chintamani Rao, President of Brand Direction, who in a column for Campaign India back in December 2010 felt that the car was ¨way too cool¨ for its own good:

… the Nano has become the rich man’s toy, to be bought on a whim, instead of a real car for real, hard-working middle-class families taking out a loan to get one. It doesn’t even look like a real car – funny shape, no bonnet, and no boot. In a market accustomed to hatchbacks, it doesn’t even have a hatch… did not fire the aspiration of the family on the scooter that inspired the vision, and assure them that this technological marvel was safe, reliable economical transportation.

So there you have it – criticized for calling it ¨cheap¨ and questioned for making it ¨too cool¨. It’s a thin line that the company will have to tread if it is to resurrect the fortunes of the Tata Nano. It will be fascinating to see the next few quarters play out as  the company executes its new marketing plan. We at IMR will be paying close attention, but until then, we leave you with the latest TV commercial for the new Twist: