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In 2009, Tata Motors, one of India’s leading automobile companies, made approx. 2500 dollars (or 100,000 rupees), about half the price of its nearest rival.It was known as “cheapest car in the world” The company’s website crashed due to oversubscription. 40 million They couldn’t respond to hits in a short span of time.
Back then, buying a car in India was a luxury.For reference, the number of cars in India per person India has significantly fewer people per 1,000 people than the United States: 800 people per 1,000 people, compared to about 20 in India.On the other hand, the Indian passenger car market 1.4 million Maruti Alto, the cheapest car at the time, sold in 2008 and sold 230,000 units, accounting for almost 15% of the total market. Indians, who are very cost conscious, flocked to bikes. 8 million Therefore, cars at the lower end of the price range do not compete with motorcycles, and they do not necessarily compete with other cars.
The launch of the Nano was led by Tata Group Chairman Ratan Tata, who promised to offer the car at a price of Rs 100,000 (or Rs 100,000). Tata focused on this price range. symbolic He got the benchmark in India and then had his engineers build a car that could be sold at this price. He believed that the Nano would democratize car ownership and make the dream of car ownership affordable for a whole new segment of society, especially those who would otherwise buy cars.
It is estimated that Tata Nano can expand the Indian automobile market by: 65%. But the Nano was underwhelming.The highest sales achieved to date are 75,000 units In 2012, sales declined rapidly.Actually, just in February 2019 One Tata Nano is sold nationwide, Tatas Stop Full production is expected in 2020.
This was a costly misadventure for the Tata Group that holds many valuable lessons for marketers.
So what positioning lessons can we learn from Nano?
Related: Why positioning is more important than ever
1. Don’t overlook your customers’ emotional motivations
When positioning your product, you need to really understand your consumers and their emotional needs. For Indians, car ownership was a matter of pride as well as practicality, and buying a car was a sign of arriving in the country. society. It’s important to understand this. The Maruti Alto, the cheapest car in the market earlier, was a very successful car and was bought by hundreds of thousands of Indians, but it was never advertised as the cheapest car in the market. .
People who want to show society that their life is going well probably don’t want anything to do with the world’s cheapest car. But unfortunately, knowingly or not, that was the positioning of the Nano, and it turned out to be a big mistake. Marketers need to fully understand customer motivations, which are key to positioning.
2. Remember that price often means quality
Indian consumer preferences include: evolved Over time, not only price, but also quality became an important factor when deciding on the purchase of a car. Low prices were also associated with low quality. In this case, the Nano’s unusually low price was a signal about its quality, and the consumer interpreted the 100,000 price tag to mean that the Nano was a poorly manufactured car. Reports of the Nano catching fire didn’t help that realization. In fact, the power of this car was only 36 hp, and the maximum speed was 100 km / h.
It lacked many features expected of even the cheapest cars in the Western world, such as air conditioning, but the price was determined by whether the car’s construction was compromised and whether the car was safer than usual. posed the question. , bike. So be aware of what your pricing may be unintentionally communicating to your customers.
Related: How to define and price your products
3. Don’t try to be everything to everyone
When launching a product, it’s important to clearly define and understand your target audience. This brings important focus to your positioning approach. A clearly defined market allows marketers to tailor their messages to further resonate with their target consumer segment. In the case of Nano, it was never clear who it was for. Are you replacing your commuter bike? Was it the coveted first car for a young driver? Or was it a second car for a wealthy family? Because Nano tried to cater to everyone, it was unable to connect strongly with a specific customer group.
4. Respect marketers’ research
Even if a company’s top leaders are driving a product launch, it may be worth listening to marketing managers who are familiar with consumer psychology, market research, and the pitfalls of branding. Visionary leadership must be balanced with an evidence-based marketing strategy that combines consumer psychology and positioning.
When Ratan Tata made price choices and designed products around price, he unwittingly deprived Tata marketers of some of the most important levers they had. I did. Tata Motors’ marketing managers were unable to influence the positioning at all. The fact that Tata announced all of this publicly well in advance of launch meant that marketers had no control over the messaging or how the product was perceived. So, as a business leader, respect the opinions of marketers.
Related: 5 steps to maximize your brand’s success
In conclusion, the Tata Nano fiasco provides important insights for marketers to understand customers’ emotional motivations, price and quality perceptions, clearly define target audiences, and improve marketer research. It highlighted the importance of respect. By keeping these positioning lessons in mind, you can ensure your next product launch is a success.