I had an interesting conversation with my driver the other day. His sister will soon be married. He was explaining to me the arrangements being made for the wedding. "We will be gifting an Alto," he mentioned.
As some of the conversation had been about how budgets were stretched, I asked him if he had considered gifting a Nano instead.
“Umm, that," he said, "Would appear too down-market. Everyone will say, they gave a cheap car."
Take that, Tata.
The Nano was meant to be a surefire success, based on an idea that was so clear, a need that was so universal, a concept that was so obvious. The much hyped lakh-takia, a bottom-of-the pyramid copy-book launch, a shining example of Indian ingenuity. And yet, in FY 2011, the Nano sold 70,000 cars and in FY 2012, 75,000 cars - only thirty percent of capacity. The Alto continues to sell twice or thrice the numbers, at roughly twice the price. What went so wrong with the poster-product of innovation?
The Nano, with twenty-twenty hindsight, teaches us once again that every sharp customer insight does not always translate literally and directly into a wholesome selling story.
Why do mothers buy diapers? The simple reason is that they don’t want the mess, and they want to sleep peacefully at night, rather than waking up several times to change nappies. But tell them that, and they will hate you forever. So you tell them it is about keeping the baby happy, about avoiding nappy rash, even about toilet training the baby! It cannot be about putting the mother’s sleep first, it has to be about putting the baby first.
Why do housewives buy convenience food? Obviously, because it is convenient. It cuts down on effort that gets them no credit. But tell them that, and you just called them lazy. So you tell them it allows them to become great moms, putting delicious food on the table that has their special magic in it.
So why then, did Tata go to town, bleeding heart and all, with the story of how a thunderbolt struck him when he saw a family of five on a scooter?
Buying a car -- no matter what the segment -- is about pride, prestige and achievement. Instead, this legend made it a brand of "pity" and "sympathy." There was an 'India’s cheapest car' before the Nano came along. It was one of the most successful cars in India’s automotive history, a beloved of the masses. Only, no one thought of it as 'cheap.' Not my driver. Not me. Remember the Alto ad that showed a couple in a car celebrating the rains? "Boondon me jaane kya naya hai?" Obviously targeted at the scooter rider, but no baggage of sympathy.
And then there is this other problem. Manufacturing-driven companies often believe that if you make a good product, it will sell itself.
Once it was established that 'price' was the main reason that kept two-wheeler families from graduating to a four-wheeler, the development task was simple. The engineers stepped in, and started chopping cost. It was all about design and manufacturing excellence, supply chain innovation, component optimization and weight reduction. Above all, it was about good old hard-nosed negotiation with vendors using large projected sales as a lever.
The Nano development became the biggest reality show the country had seen. No doubt, the hurdles were too high - challenges related to design and manufacturing, as well as the larger political challenges that ultimately saw the factory being relocated. So finally, when the car was made within the stipulated price threshold, the heroes of the day couldn’t stop talking about how they had hit the target. The engineers’ euphoria resulted in a detailed ball-by-ball commentary of how they won the match to realize their captain’s dream. "How did they do it?" was a question everyone was asking. The entire country heard that there was only one wind-screen wiper instead of two. There wasn’t a tailgate, no passenger seat adjustment, and only three wheel nuts instead of four. All the accompanying stories of product development focused on how the excess frills were given up. In other words,"stripped down." Cars exist in every price segment. Has there ever been such an excessive focus anytime else, on what a car "does not have" -- versus what it has?
Why did this happen? The company built its value proposition keeping in mind the transport its target segment was using: a two-wheeler. A stripped-down car like the Nano should still have been an upgrade. Logical, but real life is hardly so linear. The customers made a multi-dimensional comparison, mostly with cars in entry-level segments. One may argue these comparisons were made by people who were not in the target segment. Fair enough, but who buys a car without consulting people with prior experience? Their target segment wasn’t reading auto magazine reviews. Who was recommending the Nano, especially after news about fires in Nano cars broke immediately after launch?
Now, the Nano has been "repositioned." Almost to say that the initial marketing was flawed, and now there will be a correction. Improvements to the product in 2012 are also helping. No doubt, the surge in Nano sales following the supply disruption at Maruti will be seen as vindication of the changed pitch. But the Nano marketing appears flawed in its Genesis. Not in Mr Tata’s insight - but in his decision to publically communicate that insight as a selling story. That’s when the marketing of Nano started. It continued when his engineers were describing how they stripped cost down. Manufacturing companies often think of marketing as “advertising" - the tear-jerkers that get made when the product is ready for filming. But the marketing of Nano began the day Mr Tata spoke about it in connection with a hapless family of five on a scooter. In Nano’s lone rear-view mirror, that appears to have been bad marketing. Hope his company steers the Nano to success. It is a good product, undoubtedly, and deserves better.
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