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In 2009, Tata Motors, one of India’s leading automotive firms, launched the Nano – a automobile priced at approx. $2,500 (or INR 100,000), which is about half the price of its closest rival. He was often known as “the most cost-effective automobile in the world” The company’s website crashed because it was exceeded 40 million in a short time he struck, which he was unable to manage with.
Buying a automobile in India was a luxury back then. For context, the variety of cars in India per person was much lower than in the United States—about 20 in India compared with 800 in the United States per 1,000 people. While the Indian passenger automobile market has seen (*4*)1.4 million units sold in 2008, the then most cost-effective automobile, Maruti Alto, sold 230,000 units, which is almost 15% of the total market. As a very cost-sensitive population, Indians have taken to riding motorcycles 8 million units sold in 2008. Thus, cars from the lowest price range competed with motorcycles, and not necessarily only with other cars.
The launch of the Nano was led by Ratan Tata, chairman of the Tata Group, who promised a automobile priced at INR 100,000 (or INR 1 lakh). Dad focused on this price range because it is a symbolic benchmark in India and then on its engineers to build a automobile that could possibly be sold at that price. He believed that the Nano would democratize automobile ownership and make the dream of owning a automobile accessible to a whole latest layer of society, especially those that would otherwise buy motorcycles.
It was estimated that Tata Nano could expand the Indian automobile market by approx 65%. But the Nano failed – it was the highest sales ever achieved 75,000 units in 2012, after which sales dropped sharply. In fact, in February 2019 exactly one Tata Nano sold across the country and Tatas arrested total automobile production in 2020.
It was a costly misfortune for the Tata Group and has many precious lessons for marketers.
What positioning lessons can we learn from Nano?
1. Don’t forget about your customers’ emotional motivations
When positioning your product, it is advisable truly understand your consumer and their emotional needs. For Indians, owning a automobile was a matter of pride, not only utility, and buying a automobile was a sign that somebody had arrived society. Understanding this is extremely essential. The previous most cost-effective automobile in the market, the Maruti Alto, was a huge success and was bought by a whole bunch of hundreds of Indians, but it was never advertised as the most cost-effective automobile in the market.
No one who desires to signal to society that they are doing well in life would wish to be associated with “the cheapest car in the world.” But, consciously or unconsciously, this is unfortunately how Nano was arrange and it turned out to be a colossal mistake. As a marketer, it is advisable fully understand your customers’ motivations because this is key to positioning.
2. Remember that price often means quality
The Indian consumer’s preferences did evolved over time: Quality was also a key element of the automobile purchasing decision, not only price. They also associated low price with low quality. In this case, the Nano’s extremely low price was a signal of its quality, and consumers interpreted the Rs 1 lakh price tag to mean that the Nano was a poorly built automobile. Reports of the Nano catching fire didn’t improve this opinion. In practice, the automobile only produced 36 horsepower and a top speed of 100 km/h.
Although it lacked many things that will normally be expected in even the most cost-effective cars in Western countries, equivalent to air-con, the price made one query whether the automobile’s structure had been compromised and whether it was in any way safer than, say, a motorcycle. So concentrate on what your price point may unintentionally convey to your customer.
3. Don’t attempt to be all the things to everyone
When introducing any product to the market, it is extremely essential to obviously define and understand the target market – this makes it essential to focus on the positioning approach. A well-defined market allows the marketer to tailor the message to higher suit the goal consumer segment. This was the case with Nano it is never clear who the Nano was intended for. Was it intended to switch the commuting motorcycle? Was it an aspiring first automobile for a young driver? Or possibly it was a second automobile for a wealthy family? In trying to satisfy everyone’s needs, Nano failed to ascertain a strong connection with any particular customer segment.
4. Respect your marketers’ research
Even if a company’s CEO is leading a product launch, it’s price listening to a marketing manager who can be closer to consumer sentiment, market research, and the pitfalls of branding. Visionary leadership have to be balanced with grounded marketing strategies that mix consumer psychology and positioning.
When Ratan Tata selected a price point and guided product design based on price, he unwittingly took away some of the most significant levers that Tata’s marketers had. Marketing managers at Tata Motors couldn’t influence the positioning at all. The incontrovertible fact that Tata announced all this publicly, long before the launch, meant that marketers had no control over the message and perception of the product. So, as a business leader, respect the opinions of your marketers.
In conclusion, the Tata Nano debacle provides marketers with key information and highlights the importance of understanding customers’ emotional motivations, price and quality perceptions, clearly defining the target market and respecting marketers’ research. With these positioning lessons in mind, you possibly can be confident that your next product launch can be a success.