A crashing Nano dream
An essential business strategy for a product to succeed in the market is that its winning features must be effectively communicated to the potential clients. For this, a certain degree of hype needs to be created about the product and this is done through advertisements and other measures of brand positioning. In order to ensure continuous visibility of the product in the market, companies spend a lot of money on product promotion and follow an aggressive marketing strategy. Any mistake in positioning the product in the right segment can cost the company dear. The case of Tata Motor's Nano, which has seen a steady decline in demand over the last 10 years of its existence in the Indian market, forcing it to cut the production to a mere single piece in June 2018, is the most intriguing one in the country' automobile sector. Marketing and branding experts at Tata Motors are at their wits' end to explain what exactly went wrong with the product. In the long and illustrious history of Tata Sons' business empire, seldom did a product fail in the market like Nano did. From salt to software and from tea to automobile, whatever the group launched went on to become the market leader. Then, why did the Nano, despite being the cheapest car, fail to click with the customers?
Ironic though it may look, the production of the world's cheapest car is on the verge of closure. In a regulatory filing, Tata Motors stated that only one unit of the car was produced in June compared to 275 units during the same month in 2017. The sales stood at three units during the month compared to 167 in the corresponding period last year. Not a single Nano was exported in June 2018 while 25 units were shipped in the same month last year. When the Tata Motors announced the launch of Nano in 2008, everybody thought it is going to be a game changer in the intensely competitive Indian automobile sector where most of the top brands were competing hard for a share of the market. Given the strong brand value that Tata products enjoy in the Indian market, few doubted that Nano would be a mega success. After all, it was promised to be delivered at a paltry sum of Rs one lakh. At that price point, it was not only extremely cheap but also highly affordable for most of those who were owning and riding two-wheelers. It provided the safety of a car and could accommodate a small family a lot more comfortably than a two-wheeler. Before the first car was handed over to its owner in 2009, the company had said that it had an advance booking of more than two lakh Nano cars. The initial response to the product was encouraging and the company believed that it would give a competition to other existing brands in the low-price category. But that never happened, Nano kept on losing its appeal and the demand never picked up.
There were some problems with the car in its early years such as the incidents of Nano catching fire. The company immediately responded by fixing the problem but somehow the impression that the car is not strong enough or has enough safety features became stronger over the years, making the customers choose cars of other brands with a proven track record, which were available for about Rs one lakh more than the revised price of Nano. The later variants of Nano came with added features such as power steering and enhanced capacity of the engine. Besides petrol and diesel variants, Nano was also made available with factory-fitted CNG kit. The brand Nano became more diversified and trendy compared to its initial image of a cheap car, which was meant to cater to the travel needs of the poor, an image that did more harm to the brand than any good. At one point of time, Tata Sons stalwart Ratan Tata admitted that promoting Nano as the cheapest car was a mistake. After all, in a country like India, owning a car is also a symbol of status. Who would want to roam around in the cheapest car when the roads and highways are teeming with expensive SUVs?
Besides that mistake of branding it as the cheapest car, Nano also faced a great deal of negative publicity in its initial stages. The car was supposed to be produced at Singur in West Bengal but it faced unprecedented opposition from local farmers whose land was taken over by the company to set up the factory. The project had received the support of the CPI-M government of the time, which hailed it as a mega private investment in the otherwise industry-starved state. But the opposition led by Mamata Banerjee, the current Chief Minister, waged a spirited fight for the cause of the farmers and made Tata Sons give up the idea to produce the car from the Singur factory. Banerjee went on to win the next two Assembly election in 2011 and 2016 and is the Chief Minister of the state. Nearly 1,000 acres of land where the factory was supposed to come up has been restored to their owners while Tata Sons shifted the production of Nano to Sanand in Gujarat.