31 Aug 2015 19:50 IST

Winners' Analysis

Tata Motors needs to change the game

Focussed actions can make Nano the entry-level choice

When launched in 2009, the Tata Nano caught the world’s imagination and was widely expected to revolutionise the automobile industry in India by redefining the product price point. Today, even after four years of existence the Nano continues to fall short of customer expectations.

Shvetabh Mahajan and Umang Garg

Here's our analysis:

While this is primarily due to reports of inferior product quality and poor product safety, it has been compounded by unimaginative marketing which pitched the car as a low-cost vehicle for people looking to migrate from a two-wheeler to a car. It is also clear that some of the commentary on quality and safety is a perception. But, as any successful marketer knows — perception is the most important attribute that influences customers’ purchase decisions.

During this time, Tata Motors has made numerous attempts to bring changes to the product and improve the marketing campaign to stem the decline in the sales of Nano. Some of these attempts have resulted in partial success, temporarily lifting sales of the Nano, but none of them has created a sustained sales impact.

Due to numerous features additions, Nano is now 50 per cent more costly than its launch price and yet the public continues to view it as an inferior product with no aspiration value. The latest advertisement campaign — Awesomeness Unveiled — is an example of continued confusion in marketing of Nano. The campaign is a mixture of random colours, an asymmetric crowd and an incoherent message that is somehow expected to relate to youth. In order to convert Nano from a fledgling product into a product that will describe a new market segment, radical actions have to be taken. These actions comprise six steps.

In the first step, Nano should be discontinued as a product because no amount of advertising can change four years of negative public perception. The name Nano is now, unfortunately, associated with a history of low quality perceptions and a failed product.

In the second step, a new car called Symbol should be launched. This car should be an upgraded version of Nano. It should have a better product styling through more aerodynamic exteriors. It should have new safety features such as front air bags as these features are not available in any entry-level car in India and hence this can be a game changer in enhancing customer safety.

In its third step the new car, Symbol, should initially come with a warranty of three years or 75,000 KM. This will provide confidence to customers on the strength of conviction of Tata Motors on its product.

The fourth step should be to ensure that the marketing campaign for Symbol targets three market segments: Young professionals who want an entry-level car, customers who want to upgrade and customers who want to buy a second car.

After-market segmentation, the fifth step should consist of the marketing campaign theme based on ‘Independence’. The Independence campaign should consist of three messages. The first marketing message should be to communicate the independence from risk of driving a vehicle such as a two-wheeler and relish the enjoyment associated with the safety of a car with advanced safety features such as air bags. The second message should be independence from standing in queues for taking public transport. The third message should be independence from depending on just one car in the family and thus improve mobility.

In the final step, the marketing channels for this campaign should consist of traditional media such as television, print and billboards along with digital media such as Facebook, YouTube and Twitter. The campaign should be organised simultaneously across all media. The campaign should be augmented with real customers featuring in television commercials and YouTube videos. Customers who help secure additional customers should be further incentivised through free gifts.

A successful execution of these steps will ensure that Tata Symbol becomes an entry-level car of choice for India.

(Umang Garg and Shvetabh Mahajan are pursuing a PGP in management in the Indian School of Business, Hyderabad)