When the Nano was launched by Tata, an ambitious Indian Conglomerate, in March 2009 the expectations were sky

high. And for good reasons. In many ways the Nano Seemed like a real game changer in the auto industry. A car that could do for cars, what Ikea has done for furniture, Amazon for book retailing or Netflix for video rentals, disrupt an entire industry. Buying a car is a dream of every average middle class and lower class Indian consumer. Mr. Ratan Tata, Chairman of Tata Group righteously recognized this and created this innovative product. There was a simple philanthropic thought of Mr. Ratan Tata to make luxury of a car available to average Indian person with average income, thus the car was priced at Rs. 1 Lakh (1250) and is presently available only for Indian market. This brought the eyes of whole world to Nano, the cheapest car in the world became its main identity. Innovating all aspects of the value chain Like other disruptive business Nano innovates all aspects of the value chain to achieve its aim of a radically cheaper product. Nano was created with use of frugal engineering principles. Frugal Engineering or Gandhian Engineering is the science of breaking up complex engineering

processes/products into basic components and then rebuilding the product in the most economical manner possible. This process helps to build a value-based quality product at a very low cost. Thus, the cheapest but most durable material for production was used for production. Nano has only 24 patents unlike other cars that exceed more than 100 patents. A very economic route was chosen for the supply chain and distribution system, by making the car available in supermarkets like Big Bazaar, electronics store like Croma and retailers outlets like Westside. With very less above line advertising, many innovative & modern marketing techniques like digital and social media were used to position the brand in the market. Being worlds cheapest car, Nano benefited from huge free PR all over the world. The party was over Indias automobile industry is the 7th largest in the world, growing at around 16 - 18 % p.a. TATA Motors is the largest automobile manufacturer of this industry with revenues of 27 billion USD. They have more than 10 car brands in different segments. They also manufacture commercial and defense vehicles as well as own European brands Jaguar & Land Rover. They are often praised and awarded for their technological expertise and design. Despite all this, the product failed. After launch Nano didnt hit its target sales ever. Below is the sales chart of Nano from its launch in March 2009. It is still struggling to reach up to their 20,000 units per month breakeven. This is in contrast to Tatas other car brands like Indica, Sumo, Safari etc. whos sales have been really well in past 3 years. Neither the two-wheeler industry nor the four-wheeler industry as a whole was disrupted by entry of Nano. Also, the closest four-wheeler competitors like Alto, Estilo, Maruti 800 and Santro etc. dont seem to have their sales affected. Why did such a disruptive product fail? What went wrong? What is the learning for other disruptive innovators? My research among Indian consumers point to three key mistakes. Positioning problems From the outset the positioning of the new car seemed self-evident. This was after all the worlds cheapest car, an attractive proposition one would have thought. But no. Worlds cheapest car turned out to be a disastrous positioning for Nano, because it didnt take into account that people dont buy cars solely based o the price and utility, they buy a brand, an identity, a dream. For Nano the car has become a poor peoples car. Indian consumer is complex phenomenon and it has always been a challenge for the consumer researchers. Indian consumers are more value conscious than price conscious. Cheap Chinese brands still struggle to find its place in Indian market. Indian consumer dont have much purchasing power but still they will wait for their financial positions to get better so that they can buy something better than a Nano. Simple law of branding is that people associate themselves with the attitudes and attributes of the brand that they use. Consumers dont want to associate themselves or their dream with the cheap tag. Car is still a luxury, a biggest status symbol for any Indian person. Why would anyone want to have a cheapest luxury? Even today, in every household puja is performed on the new car. People believe that car is a gift of god to the family. It was never a utility product and probably wont be in near future. Nokias strategy of providing cheap mobile phones in India and making it a basic need for every person was a big success, but

after all mobile is a low involvement purchase decision for a consumer. Unlike cars, which is a high involvement purchase decision. The whole family is involved in this decision. Cheap mobiles are available from Rs. 1000, but Nano is available for Rs. 1 Lakh, which is still 3 times the average income of the Indian consumer. Tata motors tried to make Nano, a very generic product. Selling Nano though a Lucky draw and supermarkets has made Nano loose its credibility and seriousness. Technical problems The short circuit in the combination switch led to the burning of some Nano cars in India in 2010. This gave a big set back to whole Nano brand. The news spread like wildfire through all mainstream and social media. A brand may take years to build the credibility but may lose it very quickly. Nano had to face huge amount of criticism and negative comments on their award winning product design. People became skeptical and afraid of buying a Nano. TATA Motors claim that they have fixed the problem and replaced parts of the cars sold before the burnings, but all this has managed to gain a very negative perception in the minds of Indian people. Now, Nano is used as a derogatory abbreviation, its often mentioned as a 4-wheeled rickshaw. Rising costs and new competition The main competitors of Nano are not other cars, but the tow-wheelers and second hand cars. Due to ever-increasing traffic and petrol prices in India since 3 years has made it difficult for people to invest in Nano. Instead people still prefer two wheelers, which give almost double the mileage in half the cost and easy for parking. People also prefer to buy second hand Maruti Alto or Santro instead of Nano. And in rural villages, people feel Nano is a very delicate car for the rough village roads. Strong and durable vehicles still rule the rural market. Bullets outsell Scootys and Jeeps outsell city cars. Sounds like Nano is caught in the middle, not attractive to the urban middle class and too expensive to maintain for the rural class. Future of Nano Recently at Auto Expo in Delhi, Tata Motors have announced Nano Plus for 2012. This new car will have improved color options, 90% finance availability, good air conditioning, more space, more mileage, 1000 cc engine, flexible seats and power steering etc. Its predicted that, Tata Motors would probably position it in the urban youth segment, and will be trying to make it more trendy and fashionable. Bajaj also showcased their ultra-low-cost car RE60 at the Auto Expo. They specifically said that this new car wouldnt be competing directly with Nano. Learning from Nano, Bajaj are more looking forward to compete with rickshaw and public transport segment. Key learning The Nano brand problem is more fundamental. In such situation, a brand can revive and survive with some positive advertising campaigns but may not sustain in the long run. As the competition in the low cost car segment will increase, Nano will start loosing its monopoly position and thus Tata motors will have to take some concrete steps for building up the trust for

Nano that the TATA corporate brand holds. First of all they need to change the positioning of Nano from a consumer product to a more mass premium product. If TATA motors dont want to make Nano a luxury through change in pricing, then they can position it as a utility, but differently. A second car? Urban customers, who already own a car, can have one more car just for the sake of quick use. Everyone hates to take the big car to the market and places where there is a parking problem, Nano can very well solve that. Also may be by making Nano a niche like BMW Mini did in Europe. Target many different niche customer segments like Youth, women, rural elites, etc. Develop hybrid model, Nano electric and Nano Diesel asap. One thing that Tata Motors can bank upon is the Indian mentality about need for mileage. If they give more sustainable and fuel friendly options, people may be compelled to change their perception about Nano. Better Place, a car company from China is making replaceable batteries available at the fuel stations for their electric car, Tata Motors can be first car brand in India to do the same for its electric version of Nano. Also Nano has received so many different awards for its innovative design. Tata Motors can position Nano as the design marvel. The same way as Ikea did to position themselves as excellent design modular furniture manufacturers. This strategy of value with cost today help Ikea rank in top world brands. Also the most awaited launches of Nano Europa and Nano Pixel and Nano Mega Pixel for international markets will be a crucial opportunity for Nano to regain its momentum. If the car is appreciated and performing well in the international market, it will regain its limelight in Indian market. Today also, Nano has a huge potential to be the game changer brand in car market, most importantly, without changing its price point.
Nano's sales chart

Many said it is not possible, others laughed and some even challenged the idea. As the world watched TATA did succeeded in delivering what was promised a car which costs INR 100000 or $2000 car or simply called as NANO. The motoring world took lessons from it to announce their own such projects including Volkswagen UP and small car project by Renault. When Ferdinand Porsche was asked to develop Volkswagen (peoples car in German) which was capable of transporting two adults and three children, and would be

available to citizens for about the price of a small motorcycle, the result was Volkswagen Beetle, which became the largest selling car and the most adorable family car for almost more than 50 years and literally became a cult figure, on the other hand NANO which too was supposed to be a peoples car, almost available at the price of an motorcycle yet could not achieve the same success. The failure of NANO as a product has many interesting factors, lets take a closer look at the some of them. TATA NANO was a revolutionary concept and an engineering marvel. When it was showcased at an Auto Expo, driven by none other than Ratan Tata himself,

the world watched the 4 wheel marvel which had intelligently mixed fuel, space and cost efficiencies in a way like no other with good impressive and sleek design as well as world-class features. As a matter of fact NANO had its own little issues like low quality paint job, no air bags, undersized engine, small boot and fuel tank, but all this was more than compensated by the price and it could still do what it was supposed to do that is carry a family of four to five people in comfort and in more safely than a two wheeler.

Even before the production started NANO, was being discussed on national television about its impact on the future of Auto Industry as well as the environmental impact due to the numbers in which it was supposed to sell. But the actual market realty is that the car which was supposed to be a game changer has miserable failed to take off, in spite of the massive hype and the goodwill of Brand TATA. What were the reasons? Positioning: TATA-NANO was positioned as logical upgrade for a family of four with a two wheeler. This concept did not gel as every such household had an aspiration to move to something better and not necessarily cheaper, thus NANO was brought as a second car and not as a first car. Price: TATA-NANO was supposed to be available for Rupees One Hundred Thousand only, which was increased due to the increase in the input cost, yet it was called as a One-lakh car. The company did come out to explain the reason for price increase but it did not go well with the buyers. Promotion: Instead of using right marketing channels, NANO was promoted using nonconventional marketing concepts like social-media which was simply a case of lack of communication to the appropriate customer. What could have helped NANO to position better ? a) A different positioning strategy for rural, urban and smaller cities as a totally different sub brands and with minor customization. b) Promotion based on the attributes like performance, efficiency instead of affordability. c) Create special segments for college, women and first time drivers. d) Position NANO as a regular car rather than as an upgrade for and from two-wheelers. e) Evolve in every two years based on the market feedback. NANO was a great product, but it is a case where aspiration of the prospective customers was not respected. The saying that A Man buys a car for what he wants to be and not for what he is, is enough to describe the story of NANO. This opens an interesting debate that do we marketing professionals need a lesson in

They said it couldnt be done. But Tata went ahead and did it anyway. They got out a car that cost a lakh rupees. And although the prices have escalated recently due to surges in raw material costs, the Tata Nano is certainly a revolutionary product. The idea for the Nano was conceived sometime in 2003, and the car hit the roads in 2009. Its been two years since the launch, but has the Nano lived up to its promise as a product? It has. And has it lived up to all the hype? It hasnt. That sounds a little paradoxical. So lets take a closer look at this phenomenon. The idea behind the Tata Nano itself was revolutionary. While the execution hit some roadblocks (read the Singur plant controversy), the product was an engineering marvel without a doubt. It brought together cost, fuel and space efficiencies in a way like no other while still retaining world-class features and a sleek design. True, there were a few safety issues (no air bags) and the fire incidents in a few cars. There was also the lack of power, low stability, less boot space and small fuel tank. But all in all, the price tag more than compensated for these. But heres the market reality. The car which promised to see a million units is somewhere around 920,000 short after two years of its launch. Now why would a discerning and price-conscious Indian public shun a product thats so good? The reasons are simple. The Tatas have messed up with the marketing. The very nature of the product created massive hype. Add to that the goodwill that the prestigious Tata brand carries. And you should ideally have a sure fire recipe for success. But even after two years, the Tata Nano continues to languish when it comes to sales. So what happened? With the plant being shifted to Gujarat, there were obvious delays. Furthermore, a lack of capacity only added to the woes as the initial demand was huge. A lottery system was used to select buyers, but the delays as well as refunds and cancellations led to a wane in the interest. Tata expected the initial hype and its reputation to carry the brand, but when that failed, it did not take the necessary steps to build its sales, assuming that it would be able to sell its stock due to limited capacity. Hence, marketing was sidelined. The restructuring only served to escalate the problems. Then there was the problem of positioning. The car was obviously to be targeted to families that travelled on two-wheelers at great discomfort and risk. But instead of using marketing channels to reach their target audience, Tata used social media and other non-conventional methods of marketing, probably due to margin issues. The sales reflected this. Half of the Nanos purchased were second cars, clearly violating the positioning which sought to transition people from two wheelers to four wheelers. The lack of communication to the appropriate customer segment led to the downfall. But Tata is taking concrete steps to rectify its mistakes. It has launched an extensive media campaign with articles, television and even radio being used to reach potential customers. With additional showrooms, countrywide campaigns and attractive incentives such as a doubling of the warranty and low maintenance contracts, Tata is going all out with its marketing. Most importantly, Tata has propped up its financing options with more tie-ups and through its internal financing arm. But is it all too late as the dynamics of the market have changed over the last two years?

Tata has a great product on hand. But it failed to communicate effectively with its target consumer. And although it is beginning to get its strategy right, Maruti and other car manufacturers are planning on launching cars around the same price point as the Nano. Has Tata already lost its first mover advantage? Only time can tell. Featured Image Source: http://www.flickr.com/photos/bradphor - See more at: http://mediapanther.co.in/branding/the-nano-story/#sthash.WzBdNOw9.dpuf