The Fall of Tata Nano || Tata Motors || Reasons and Lessons

The Fall Of Tata Nano

Tata Motors

Hey friends, How have you been? Hope you are doing well. This era of COVID-19 is indeed providing us with sufficient boredom in our homes. So let's become a little nostalgic. Let's rewind ourselves to the year of 2008. In those days, eye-catching headlines made its presence in the automobile industry. And that was the news of Launching of TATA  NANO. The car which was priced just above iPhone 7, a car which was meant for the common people, it was a car which most of the Indians could afford but still failed. What were the reasons for this failure, what were the consequences and from where Tata Nano lacked from? Let's discuss.

A Brief Look Into Tata Nano

Tata Nano was a compact city car which was launched in the year 2008, manufactured and marketed by Tata Motors. It had a launch price of just ₹1 Lakh and got the status of the Cheapest car in India. It was a tremendous achievement for Tata Motors to produce a car in just ₹1 Lakh. Its cost-cutting glory was brought into light all over the world. It was designed by Justin Norek (I.DE.A Institute), Pierre Castinel (Tata Design Studio), Girish Wagh (Project Manager). But despite its popularity, Tata Nano failed, not making sufficient sales. Eventually, it had to stop the production of Tata Nano in 2018.

Attention Seeking Potential

Tata Nano had an amazing attention-seeking potential to grab all the eyeballs. It easily made its space in the headlines of the newspapers. Nobody believed that a car was priced just ₹ 1 Lakh. This cost-cutting feature was the main strength of its attention-seeking potential. The talks of Nano further rose when the USA's former President Barack Obama praised it. From then, Tata Nano skyrocketed. Because of this hype, Tata Nano became overbooked. It took them 22 months to deliver the first 1 Lakh cars. All was going well. 

Then where did the problem started? The car had excellent qualities, the price was also very low, the car had good values, then from which sector did Tata Nano lack from?

Nano's Failure: Its Strength?

 Tata's marketing team didn't have to make much effort. The advertisement for Tata Nano automatically spread. People made this car viral on social media. Newspapers and magazines published and discussed Tata Nano without any cost.  The tagline of 'WORLD'S CHEAPEST CAR' was punched everywhere. The hype spread without any effort. But all this was By Default Branding. Tata Motors didn't advertise the car, it was advertised by itself. Perhaps, the Marketing team forgot that the branding was not done by design it was done by default. It was not done by choice but done by chance. As the marketing team didn't position the car, people took the car in their perspectives. This cheapest car tagline was taken in the wrong way by the public because it was spread by chance. Nano was not reflected as Tata Motors wanted. This Cheapest car tagline was the biggest reason for failure. Tata produced Nano for every Indian. From the word 'Cheapest', they meant a car for every Indian. But the public took the word 'cheapest' for representing low quality. They thought it was unreliable. The word Cheapest created a rub-off effect. It was displayed as a fragile and unreliable car. Seeing it in the context of Tata Motors, the price was its biggest strength but seeing it in the view of the market, it became its reason for failure. And indeed, the problem was not there in the Price of the car, the problem was in the positioning of the car. Car in Rs.1 Lakh was its power but the positioning of the tagline 'The Cheapest Car' was its weakness. According to me, if nano went in a subtle and in a hidden way, with less talk in the media, then it would have made an impact. As it's advertising started before it's production, it gave an ample amount of time to the competitors to derail its marketing. Even if the Tata Nano, would make a late appearance in the market, I think it would have spread its talks within a short period of time because its cost-cutting features were amazing. Tata Group should be proud that they made a car in just 1 Lakh rupees.

Inferiority complex

From the era of the Britishers, Indians have an inferiority complex. A man who has a large tummy bulging out, no hairs in the head, with no good looks want a beautiful girl for marriage. Every time in the matrimonial sections of the newspapers there is written that a girl with slim, fair complexion and a beautiful face is needed. From the very first stage in India, looks are given more importance. This is another reason for Nano's failure. Nano was reflected as a blown-up matchbox or a covered Autorickshaw or a mouse. Again the inferiority complex worked out, and people were reluctant to buy this car.

Lack of Positive Rebuttal

When the car was initially launched, two to three cars caught fire. The number was not very large. Only two to three cars caught fire in 1 million. But this was hyped. It was used as a medium to defame the car. The marketing team was not able to generate Positive Rebuttal. The marketing team was not able to compete the talks of this so-called Unreliable Car. It was not able to give a strong bounceback. This even worsened the positioning of the car. Normally, negative news spreads faster than a piece of positive news. Tata Nano's marketing team was not able to establish a positive news platform for Nano. But the 'By-default' advertising created a monument of negative news of Nano. 

The Market in a Village

Tata Nano's main target customers were the people living in Tier 2 and Tier 3 cities i.e. small towns and villages. But a problem occurred. In cities, families are leaner and roads are cleaner but in a village, families are bigger and roads are in a pathetic condition. And the average persons per family in a Village is approx 6 people!! And Nano couldn't accommodate 6 people in it. To its addition, Nano is not easy to handle on uneven roads. This also posed a problem. 

Aspirational Value

At that time, a normal bike costed about Rs 65,000. And Nano's price was Rs 1 Lakh. New talks started that bikes could become extinct in Indian roads as everyone one will buy Nano by adding a little more money in their budget. This sounded good. But it's effect was disastrous. Nano was compared to a bike. And we shouldn't forget that a car is still considered as an aspirational value. In India, Car is a Critical Success Factor for a man's proof to be successful. A man's success was judged by his car. Neighbours Envy is Owners Pride.  Suppose you see a person riding a bike of Rs 1 Lakh. You will think that the person is dashing, hero, rich, etc. But at the same time, if you see a man driving a Nano with the same price of Rs 1 Lakh. You will think that his financial conditions are not good, he is driving an unsafe vehicle, there must be some compulsion, etc. This is the difference. Two vehicles were of the same cost, but a car was used as a factor of the person's standard. Nano was not able to create its aspirational value. Even Nano's aspirational value was so down that people preferred second hand Alto, Santro, Ritz in place of Nano just because of its looks. Alto's looks were better than Nano. Second-hand car's aspirational value was far better than Nano. The tagline Cheap was its strength but the talks of its cheapness were its weakness. 

Summary: In A Nutshell

Basically, the Failure of Nano can be easily understood by four quadrants.

• Emotional Value 

This quadrant normally creates a bond between the product and the customer. These can be aspirational value, luxury, religious beliefs or social beliefs. Automobile Industry in India is largely influenced by Emotional Value. Car is used more for show and less for use. Tata Nano failed dramatically in this quadrant

• Financial Value

This quadrant includes discount, best price, low cost, policy etc. Although India is a price-sensitive market, it is not the same in the case of an automobile. The emotional value is greater than the financial value. But Nano also failed in financial value. The car was promised for a cost of Rs 1 Lakh. The plant was initially set up in Singur, West Bengal. But due to political conflicts, the plant was destroyed. The plant was shifted to Gujarat. This delayed production. At this stage, inflation occurred. The car which was of 1 Lakh rupees had now become of Rs 1.25 to Rs 1.50 Lakh. The amount was not large but was enough to worsen the situation. People now shifted to Alto which was nearly 2 Lakhs or sometimes, even a bike also suited people. Tata Nano was crushed in between. 

•  Performance Value

This includes innovative features, fashion, Style, quality etc. Nano was criticised for its looks. Moreover, the hype of the burning of 2 cars raised a question of its performance value. Nano also failed in this quadrant.

• Relational Value.

This includes service, timeline, customisation, rapid customer response etc. The delay in production also created a delay in the delivery of the cars. It took approximately 22 months to deliver their first bookings. People waited a lot which worsened their relational Value. In this time other manufacturers lowered their prices and attracted the customers. 

Conclusion / My Opinion

Tata Nano was a low cost innovative. Although Nano failed, we shouldn't forget that low-cost initiatives are very dangerous in the fast-growing market. And there are various examples. 

Suppose JIO was a low-cost initiative, it quickly made a short share in the market, and gradually expanded and destroyed its competitors. Patanjali was also a low-cost initiative but it quickly entered the market and made its presence. This always provides a threat to established companies. 

It isn't forgettable that usually, low-cost initiatives come with low quality.  For this threat, large companies always prepare themselves by answering only two questions. The first question is, Where is your target audience? Always review your target audience. Nano also made a mistake in its target audience. It was not able to produce its car following the need in its target audience. The second question is, What is Your Value Proposition? It means- Through which quadrant are you selling your product? Is it Aspirational, Financial or Relational Performance? All large companies have a set platform in any of the quadrants. Nano also failed in this question. If the company has to answer to either of the questions, then it can be truly termed as an established company.

I hope you would have liked the post. Do mention your views in the comments sections. If any of our facts presented, seems wrong, then we welcome your suggestion/s. You can suggest us in the comments section. We reply to all of them. 

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