TATA NANO: Failure Due to Perception

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 (“people’s 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, let’s 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 non-conventional 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.