Marketing Nano as ‘cheapest car’ was a mistake?

I was going through an article titled, ‘Marketing Nano as ‘cheapest car’ was a mistake’ in Times of India – 29th Nov 2013. I was really shocked to see the measurable condition of one of most innovative products of the decade. When launched, Tata group was ranked 6th among world’s top 25 most innovative companies just because of its brand new product- Tata Nano. (Economics Times of India, 2008). It was Ratan Tata’s dream to provide an affordable 4 wheeler to all Indian people who could not afford a car and spend their lives on bikes only. One interesting thing is that India is the biggest market for 2 wheelers so launching a car on that price could be a right choice or we can say could be an intelligent decision. The idea and promotion was hit. People had to be in queue for advance booking. So the response from people was great. In between Singur (WB) incident happened and Tata had to shift its plant to Gujarat, which delayed the production by few months. People were eagerly waiting for the car.
Everything went as planned and finally in 2009, Tata Nano was rolled out in Indian market with a tag line – ‘Khushiyon ki chaabi’. People started calling it – ‘Lakhtakiya car’. They positioned their car as the cheaper one and everyone can afford that one. Sooner they introduce EMI also with just 12K down payment. Tata launched the advertisements in market which was emotional ones. They tried to target the lower income group hence niche marketing. They positioned the car as cheaper and as the best option for small family and safer one also. In every ads they were showing bike with full packed or in rainy season. Actually it is said that Ratan Tata got the idea of Nano after looking at a family who were in bike and it was raining at that time. Mr. Tata was touched and gave an assignment to his engineers to make it possible.

Tata Nano - Image

What went wrong?

Later Tata started changing the concept of cars. Now Tata Nano was not just cheaper one but also gives mileage and can go by bad roads also. Sooner they started targeting college students, friends and youngsters. Sales figure was not as expected but was quite good for 2-3 years. New York times writes that Tata Nano was hurt when incident of fire came in media. Many such incidents came into picture. It was happening not in older one but also in brand new. A Mumbai based customer was taking away his car to home from dealer and it cached fire. Tata Nano started damage control and extended the warranty of its sold cars. But now people started thinking about their safety. A thought uses to come into mind when such incident happens that it might happen because it is the cheapest one. May be Nano engineers did not go through every basic dimension.
On the other hand other automobile companies like Hyundai and Maruti Suzuki were launching small cars with a price range of 2.5 Lakh to 5 Lakh. They were catching the market more aggressively. Tata Nano could not target the business class or higher income group. They only targeted middle class family and because of their tag Lakhtakiya car or the cheapest one, higher income group people use to think about their status before going for it. It was wrong decision by marketing management team. And in same time petrol and diesel prices started touching skies. Tata Nano was made for people who ride bike but petrol price was too high to afford a car. Tata Nano was a great invention but other factors like complementary product, competitors and substitute products were its market share and slowly market share declines. In Though October this year, Tata Motors launched a new version of the Nano with CNG and petrol bi-fuel system options but still sale figures is declining. Ratan Tata also said “It became termed as a 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.” Indian community has a thought that higher price products must be better than cheaper one. So we prefer foreign brand instead of cheaper Indian brand.

Tata Nano Sales Figure

Fiscal year	Sales
2009-10	30000
2010-11	70432
2011-12	74527
2012-13 (Apr- Sept)	10202

Repositioning

Now Tata Nano is bringing its new brand new Nano model – Nano Pixel. Experts believe that it would be remote controlled and would be a great innovation. We are hoping that the brand new would not be positioned as cheaper one and would be priced more than 4 Lakh.