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In 2009, Tata Motors, one in all India’s main vehicle corporations, launched Nano, a automotive priced at about $2500 (or INR 100,000), round half the price of its nearest rival. It was often called the “world’s most cost-effective automotive.” The corporate’s web site crashed as a result of it obtained over 40 million hits in a brief span, which it was not ready to deal with.
Shopping for a automotive in India was a luxurious again then. For context, the variety of vehicles in India per capita was considerably fewer than in the US — round 20 in India vs. 800 within the U.S. per 1000 inhabitants. Whereas the Indian passenger automotive market noticed 1.4 million items being bought in 2008, the then lowest-priced automotive, the Maruti Alto bought 230,000 items, nearly 15% of the complete market. As a extremely cost-sensitive inhabitants, Indians flocked to motorbikes, with 8 million items bought in 2008. Thus, vehicles on the lowest finish of the worth vary competed with motorbikes and never essentially with simply different vehicles.
The launch of the Nano was pushed by Ratan Tata, Chairman of the Tata Group, who promised a automotive priced at INR 100,000 (or INR 1 Lakh). Tata zeroed in on this value level, as it’s a symbolic benchmark in India, after which on his engineers to construct a automotive that might be bought for this value. He believed that the Nano would democratize automotive possession and make the dream of proudly owning a automotive reasonably priced to an entire new stratum of society, particularly those that would have in any other case purchased motorbikes.
It was estimated that Tata Nano might develop the Indian automotive market by 65%. However the Nano underwhelmed — the utmost gross sales ever achieved was 75,000 items in 2012, with gross sales declining quickly thereafter. In truth, in February 2019, only one Tata Nano was bought in the complete nation, and the Tatas stopped manufacturing of the automotive in 2020 altogether.
This was a expensive misadventure for the Tata Group that holds quite a lot of useful classes for entrepreneurs.
So, what positioning classes can we be taught from the Nano?
Associated: Why Positioning Is Extra Necessary Than Ever
1. Don’t overlook your clients’ emotional motivations
When you find yourself positioning your product, it’s essential actually perceive your client and their emotional wants. For Indians, automotive possession was a matter of delight, not simply utility, and shopping for a automotive was an indication that one had arrived in society. That is crucial to grasp. The earlier most cost-effective automotive out there, the Maruti Alto, was a really profitable vehicle and acquired by a whole bunch of 1000’s of Indians, however it was by no means marketed as the most affordable automotive out there.
Nobody who needs to sign to society that they’re doing properly in life would need to be related to the “world’s most cost-effective automotive.” However, wittingly or unwittingly, that’s sadly how the Nano was positioned, and it turned out to be a colossal mistake. As a marketer, it’s essential absolutely perceive your buyer’s motivations as that is key to positioning.
2. Keep in mind that value usually implies high quality
The Indian client’s preferences had developed over time: High quality was additionally a crucial component in automotive buy choices, not simply the worth. Additionally they related low value with low high quality. On this occasion, the terribly low value of the Nano was a sign about its high quality, and customers interpreted the 1 Lakh price ticket to imply that the Nano was a poorly constructed automotive. Experiences of the Nano catching fireplace did nothing to assist that notion. In sensible phrases, the automotive offered solely 36 horsepower and a prime velocity of 65 mph.
Whereas it was lacking most of the issues that one would usually count on even within the most cost-effective cars within the Western international locations, equivalent to air-con, the worth level threw into query whether or not the automotive’s construct was compromised and whether or not the automotive was any safer than, say, a bike. So, be cognizant of what your value level would possibly unintentionally convey to your buyer.
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3. Do not attempt to be all the things for everyone
When launching any product, it’s crucial to obviously outline and perceive the target market — this brings an necessary focus to your positioning method. A well-defined market permits a marketer to tailor messaging to resonate higher with the goal client phase. Within the Nano’s case, it was by no means clear who the Nano was for. Was it to switch the motorcycle for commuting? Was it an aspirational first automotive for a younger driver? Or was it a second automotive for an prosperous household? By attempting to cater to everybody, the Nano failed to attach strongly with any particular phase of consumers.
4. Respect your entrepreneurs’ analysis
Even when the highest govt of an organization drives a product launch, it would nonetheless be worthwhile listening to your advertising supervisor who shall be nearer to client sentiment, market analysis and branding pitfalls. Visionary management must be balanced with grounded advertising methods that mix client psychology and positioning.
When Ratan Tata selected the worth level and drove the product design across the value, he unwittingly took away a number of the most necessary levers that Tata’s entrepreneurs had. The advertising managers at Tata Motors could not affect positioning in any respect. The truth that Tata introduced all of this publicly, properly earlier than launch, meant that the entrepreneurs managed nothing about messaging and the way the product can be perceived. So, as a enterprise chief, respect your entrepreneurs’ opinions.
Associated: 5 Steps to Place Your Model for Most Success
In conclusion, the failure of the Tata Nano provides essential insights for entrepreneurs and highlights the significance of understanding your clients’ emotional motivations, perceptions of value and high quality, clearly defining your target market and respecting your entrepreneurs’ analysis. By preserving these positioning classes in thoughts, you may guarantee your subsequent product launch is successful.
