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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 referred to as 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 in a position 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 USA — round 20 in India vs. 800 within the U.S. per 1000 inhabitants. Whereas the Indian passenger automotive market noticed 1.4 million models being offered in 2008, the then lowest-priced automotive, the Maruti Alto offered 230,000 models, nearly 15% of all the market. As a extremely cost-sensitive inhabitants, Indians flocked to motorbikes, with 8 million models offered 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 offered for this value. He believed that the Nano would democratize automotive possession and make the dream of proudly owning a automotive reasonably priced to a complete new stratum of society, particularly those that would have in any other case purchased motorbikes.
It was estimated that Tata Nano may develop the Indian automotive market by 65%. However the Nano underwhelmed — the utmost gross sales ever achieved was 75,000 models in 2012, with gross sales declining quickly thereafter. In reality, in February 2019, only one Tata Nano was offered in all the nation, and the Tatas stopped manufacturing of the automotive in 2020 altogether.
This was a pricey misadventure for the Tata Group that holds a number of useful classes for entrepreneurs.
So, what positioning classes can we study from the Nano?
Associated: Why Positioning Is Extra Vital Than Ever
1. Don’t overlook your prospects’ emotional motivations
If you end up positioning your product, you should 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 essential to know. The earlier most cost-effective automotive available in the market, the Maruti Alto, was a really profitable vehicle and acquired by a whole lot of 1000’s of Indians, nevertheless it was by no means marketed as the most affordable automotive available in the market.
Nobody who needs to sign to society that they’re doing properly in life would wish 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, you should 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 advanced over time: High quality was additionally a essential factor in automotive buy choices, not simply the worth. In addition 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 shoppers interpreted the 1 Lakh price ticket to imply that the Nano was a poorly constructed automotive. Stories of the Nano catching hearth did nothing to assist that notion. In sensible phrases, the automotive offered solely 36 horsepower and a prime pace of 65 mph.
Whereas it was lacking most of the issues that one would usually count on even within the most cost-effective vehicles within the Western nations, resembling 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 motorcycle. So, be cognizant of what your value level may unintentionally convey to your buyer.
Associated: Outline Your Product and Set Your Costs
3. Do not attempt to be the whole lot for everyone
When launching any product, it’s essential to obviously outline and perceive the audience — this brings an necessary focus to your positioning strategy. 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 interchange 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 shoppers.
4. Respect your entrepreneurs’ analysis
Even when the highest govt of an organization drives a product launch, it’d nonetheless be worthwhile listening to your advertising supervisor who can 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 among 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 gives essential insights for entrepreneurs and highlights the significance of understanding your prospects’ emotional motivations, perceptions of value and high quality, clearly defining your audience and respecting your entrepreneurs’ analysis. By conserving these positioning classes in thoughts, you may guarantee your subsequent product launch is a hit.
