Thursday, December 16, 2010

Small wonder or big challenge?

For all the excitement surrounding what was meant to be a Rs 1-lakh marvel, the Nano hasn't been having a smooth ride..

Whatever is happening to the Tata Nano? The brand which was touted as the greatest thing to happen to the Indian automotive industry and promised to transform the life of the middle-class consumer in India suddenly seems to have hit a speed breaker. Let us just go back a little in time to the pre-launch and the announcement of the Rs 1 lakh car which was actually made by Ratan Tata in March 2003 at the Geneva Motor Show. It was hailed as a triumph of Indian innovation and showed the disbelieving Western world as to how India was able to tap the fortune at the bottom of the pyramid and how India had leapfrogged to the forefront with its dramatic new offering. The media went to town. Airport book stalls were full of books on the car and its amazing journey — Small wonder — the making of the Nano was just one of the titles.

Along with the Corus and Jaguar takeovers, this announcement and consequent hype really put India on the global map and projected the Tatas as a name to reckon with in the international business arena. Then a few things went wrong. The company could not go ahead with its original plans of having a plant in Singur, thanks to a few well-meaning politicians, which set the project back quite a bit in time. Neither were they able to hold to the original price promise of Rs 1 lakh, which to my mind is a far bigger problem than it seems. To further compound the brand's woes, a few cars caught fire, leading to nasty jokes from the competition as to how the car is the first to have an external combustion engine! The demand tanked. If media reports are to be believed, there is an inventory of nearly 20,000 Nano vehicles and a very worrying order book position. The opposition secretly gloated, much as the rest of the cricketing world is gloating at Australia's current misery.

The company too seems worried as it must be. What exactly is the problem? Is it a case of hype overtaking the brand? Is it a case of an inferior product that does not meet the safety requirements of Indian conditions and weather? Is it a case of poor positioning as the much-touted people's car can easily be seen as a cheap car? Who is actually buying that car, is it an affluent Indian buying his third car that he had read about in the business press and could talk about it in his cocktail circuit or a middle-class Indian wishing to upgrade from his current two-wheeler? Neither Andrew Hilditch nor I have a solution to Australia's current cricketing problems, but I do have some thoughts on the Nano and what it can possibly do, so let's stay with the car that started to make history and yet seems to be going speedily downhill.

The great Indian consumer

Sometimes we get caught up in the power of our own rhetoric. We believe that we know everything about the consumer; after all we have built brands and businesses. While that may be true we sometimes miss ‘the blinding flash of the obvious' as Tom Peters would say perhaps when it comes to customers. Way back in 1987 (hope you were born then) I bought my first car. It was a second-hand Premier Padmini (23 years later and 15 cars later I still remember the number of the car). That was a special day in my life and if I may add, in the lives of my neighbours. Suddenly I was somebody. A hitherto unknown individual who zipped around in a TVS Suzuki with his child in the front seat, had grown in front of their very eyes, simply because a car had entered a middle-class home. It was a manifestation of my success in life. I know how proud my parents were of me that day.

Now here is my disconnect with the Nano: Has all the hype created in stereotyping the brand as synonymous with “cheap” devalued respect for the brand? As an expert asked me, “Who would want to be owner of el cheapo?” Let's spend a moment understanding the ‘social currency' of a car in our lives. It is about status, prestige, recognition and authority. Does the Nano, the way it is perceived now, deliver on these? I wonder.

Who is the customer?

The lowest priced car has certain advantages and certain disadvantages as well. The advantage is the price (even though it is not Rs 1 lakh) is affordable to a whole lot of Indians. I know a number of affluent Indians too who have bought it as their third car! Are they the core target audience? Or is it someone who is currently riding his two-wheeler in the dust and grime, breathing in the exhaust of the bus in front of him, who wishes to graduate to the safety and comfort of a four-wheeler, however small? This actually leads me to the next concern and that is the concern, or is the right word obsession, with space. Indians live in cramped conditions and dream of more space. They want more spacious houses, space for their children to play and space to park their commodious luggage in the boot. Have you seen any Indian travel light? While the Nano seems fine for two, how many families have two members and even if they are “dinks” (double income no kids) they would find another similar family to travel with. Consumers often do not state the way they actually feel and brands can get into trouble by ignoring what the consumer is not saying overtly. In many ways one wonders if the design of the car, though excellent, is anchored in Indian needs and will address our concerns.

Public relations and the brand

I am a great believer in public relations and have seen that a disciplined, strategic approach builds credibility and image. The media coverage for the Nano has been phenomenal; I am sure running into several hundred crores, if one were to do an analysis. But what has the coverage been about? It has been in the business press about innovation, Indian ingenuity, the people's car … A lot of this is corporate PR and coverage which has limited if any, relevance to the consumer, if he happens to be a middle-class Indian currently zipping around on a scooter with aims and hopes of buying a car. And the challenge of the cars bursting into flames or smoke has not been addressed adequately by PR. PR can handle crises, soften the blow and even shift the focus to actual consumer experience. I am sure there are enough satisfied customers of the Nano. How come I have not heard about their experiences while the accidents have been blown out of proportion?

Positioning — biggest opportunity,

greatest challenge

The biggest challenge, in my view, at least, is that the brand has not been positioned clearly. The corporate position of “innovation”, “affordable car”, have all been milked. Different people have formed their own opinions of what the car is and unfortunately many of these have not been helping the brand. In the early stages the brand did very little advertising as it probably believed that it had a healthy order book and a waiting period. But advertising clearly helps define and answer some key questions — who is the car for? What is the “reward” for the consumer and what is the “support” for what we are claiming? The problem has just gotten a little more complex now, but nothing that sharp strategy and smart execution cannot handle.

It's the consumer, silly!

I too wanted to buy a Nano when I saw all the hype and my family asked me a simple question that they often do, “Are you mad?”, and I promptly desisted. How many such conversations are happening all over India? Often companies forget that business is not so much about innovation, hype and media coverage but about listening to the consumer. What do people who have bought the car have to say about the Nano? Who is not buying the Nano and why? Is there some mental block? I also think there has been a serious breach of confidence in the inability of the company to deliver a car at Rs 1 lakh. I really do not know how that is going to be bridged. And there are some practical issues that need to be ironed out, such as finance. Car finance is more difficult and messier than two-wheeler finance and the company must address this problem if it wants the numbers.

In the final analysis, the Nano seems to be an excellent product poorly marketed and even more confusingly branded. It is in the interests of the Tatas to ensure that they do not end up with egg on their face and in my view, the problems of the Nano can be handled. “The small wonder” is going through a big challenge. But it is not insurmountable.

Ramanujam Sridhar, CEO, brand – comm.
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4 comments: said...

I am reading your articles in BL for the past 2-3 years.
Regarding NaNo - please advise Tatas to change the name.
Tata Mini or Tata Miny
Tata Cute or Tata Kute.
In NaNo, I think the No diminishes the brand.

Ashwin said...

Dear Sridhar,
As I see it, the problem is if one were to graduate from two wheeler to a Car, why should he buy a NANO when he/she prefers to buy a second hand maruti 800 or Santro.
I see on the Roads most NANO are of the top of the line LX model, which means people like you and I are more interested to buy it out as a fashion. I too had an interest in the Car, but when I came to know that it does not have power stearing I gave up. A car has to be complete it cannot be lacking.
Another thought is that this car could be an excellent public transport vehicle inbetween Auto Rickshaw and Taxi, how about mktng it as one ? for this it will need to be operated on CNG and/or LPG
TATA's are I am sure working on these

Thanks Ashwin Shah

Techie, the TUX Warrior said...

From what i have seen the few nanos on road is driven by people who ALREADY have a car, hell even i have a sedan but cant help staring the nano every time i see one, even you wanted to buy one ;-).
So what prevents us from doing it, a car is not a personal choice, its a family choice and most women DONT get nano, its the man who drives the car and knows the trouble in maintaining/driving a big car in Traffic, also the novelty of owning a Small car when you already have one should not be ignored.
So i'd start repositioning Nano as a leisure/desired vehicle enjoyed by people who are used to larger/expensive cars, so why not you(the motobiker, first time car owner)

Anonymous said...

Sir, Nano's new ads are giving us the message that it is a family car , husband and wife in the front seat , and two children behind , a classic show casing of Nano as a family car which can pull along fairly well inside the cities and and as well in the rural /urban fringes- kind of suitable for all kinds of places inside India. Sir, now these new Nano ads are trying hard to push this car into the first car buying segment and not just as it was earlier seen as a car which your wife may own or your college going children or your old father may own . A Nano may not have the power steering or it may have a rear side engine which does not impress a modern day car buyer , but definitely if the nano could satisfy the customer in terms of the original pricing , then it can see the light of the tunnel .