Why did Tata Nano failedThe NANOTOMY

Do you think Nano is a safe car?

• The Nano has passed EURO- NCAP. Car safety test.

• It’s 4 star rated car.http://www.youtube.com/watch?v=ahw7-KarkWw&feature=fvwrel

Surprise !!!

• Reliability. • Safety. • Running cost .• Lack of trust.• No alternative fuel option.• No resale value.

Why did Tata Nano failed?

• Trial by fire • Ratan Tata`s dream, cheapest car in the world was in

news but for all bad reasons.• Cars were catching fire every now and then.• After being tested for millions of kilometers the

NANO was launched, but all in vain people still thought the 1 lakh rupee dream was not reliable.

http://www.youtube.com/watch?v=U-tNcW51iRQ

Reliability

• Nano was always projected as alternative of two wheeler and not compared to nearest competitor.

• Tata did not show about safety features in their advertisement . They projected their car as an alternative to 2 wheelers not as a car.

Safety

Jan, 2009 40.62 ---- Feb , 2010 47.43 ---- May 2011 63.37

Considering Nano fuel efficiency at 20km/L the fuel cost back in 2009 was Rs. 2 /km . But considering todays situation when fuel prices are around Rs 72 a liter the running cost are around are around 3.5 Rs /ltr.

Running Cost

• Tata car were never considered as trust worthy.• Tata car were always considered as cheap

alternatives to precisely engineered Germans and hugely reliable Japanese cars.

• Same perception was carried forward to Tata Nano.

Lack of trust

Nano had only 650CC two cylinder petrol engine on offer.No diesel option.Being a rear engine car no way of CNG conversion.

No alternative fuel option

• When it comes to re-sale value as well, the Nano falls way behind any of the other cars that are available in India like the Chevrolet Spark and Maruti Alto.

Resale value

A marketeir Lens

Why Nano failed

• No Pride of ownership:- The “aam aadmi” read “middle and low middle class” in India. It is this group that was supposed to form the biggest customer base for the Nano. However, the cheap car propaganda has done more harm to the Nano than good. As consumer segment was believing that owning a Nano would lower their status in society.

Biggest USP have acted against it.

http://www.youtube.com/watch?v=oN_NaQQHTqI&feature=player_embedded

• You'll note that in the advertisements above there's always either a couple or family on scooters or road bikes alongside. Tata is essentially trying to convince people that the Nano is a safer, better option than these. The fact remains many owners of other road bikes consider their bikes a preferable option in terms of style and speed.

Competition -

• Scooters are not considered a style symbol for the most part in India unlike the in the US but the Nano seems to have become the 'scooter of cars' in terns of branding thus negating the advantage they were trying to gain. When people do eventually feel the need to move away from a scooter many will probably try to go for the next best option beyond the Nano.

• Ratan Tata was quoted as saying "We never really got our act together...I don't think we were adequately ready with an advertising campaign or a dealer network" . The Nano did not have a large enough dealer network in the rural areas and smaller towns where the affordability branding was more likely to work. The lack of dealer networks meant they could not capitalize on the initial enthusiasm and interest.

Inadequate dealer network

• Advertising campaign - The advertisements of the Nano had a weak theme catering again to the theme of affordability. Especially with cars people want to own something they can aspire for and be proud of. For example Case in point - I drive a smaller Chevy, I can afford a larger Honda but would love a shiny new Boxster. The closer you can make the Honda or Chevy feel like the Boxster the more likely I am to buy it. Note that by 'feel' I do not mean how exactly it drives (though I would hope it drives well) but how the branding of the car makes me feel about it when I'm in it or around it. Even the audience that can only afford a Nano wants to be sold something better. They want to feel excited about it. Here is one sample advertisement of the Nano that shows a middle class family of 4 driving through the streets with the stress being on traditional family values.

•Here's another slightly different example -

• This one talks about how the guy laments that he missed out his girlfriend/wife's singing in the years he used to drive a scooter/road bike. Result - The focus on safety and relative comfort over the scooter. Nothing exciting or incredibly desirable.

There probably is a small segment of the population that this appeals to but most small car owners are looking for campaigns that portray the car as something with style more in terms of the Volkswagen ads we see today or even the less popular Fiat 500.

Advertising campaign

• The Nano as currently marketed does not allow for that. A city like Mumbai in India has an extremely well connected public transport system. If people want to get from point A to point B this system serves them better than the Nano.

• http://www.youtube.com/watch?v=PDL52FiGd0o&feature=player_embedded

Inadequate dealer network

• The communication complacency was evident elsewhere. Once demand started to fade, Tata Motors might have helped sales had it disclosed the easy availability of the Nano (because of the cancellations and delays). The general perception was that consumers would have to wait two years for delivery. This would not have been an easy choice for the company. After the huge pre-launch hype, it would have caused public embarrassment to admit the car was not moving. But this has resulted in an ironic situation, observers have noted: New buyers are not coming forward because they feel they don't stand a chance of getting delivery until the company sets up additional capacities.

• Ray, however, defends the Tata's approach. "[The Nano] was not available off the shelf until we started open sales," he says. "There is no question of sluggish sales. Until August [2010], we were only delivering pre-booked cars. I was not selling openly because I did not have the capability to. Despite that, had I started advertising, would I not be wasting money? So in classical marketing style, I have brought in advertising only when it was required -- initially print and now, television."

• What really happened to the original 200,000 bookings? Industry observers say there are no clear answers. Some orders were cancelled initially. Others were cancelled later. But there is a large percentage that falls under "delayed delivery." Indian consumers have a lottery mentality: People apply for things they don't want, expecting to sell them at a premium when they get delivery. "Dealers expect early-bird owners [of the Nano] to command a hefty premium of Rs. 30,000 [nearly one-third the price of the car] because of the initial shortage in supply," reported economic daily Business Standard, a few days before the launch. "We cannot comment on speculative buying. There is no way for me to know what the intentions of people buying the Nano are," says Tata's Ray.

• Experts concede that part of the problem was not of the Tata's making. Because the Nano plant had to move from West Bengal to Gujarat, production timelines were difficult to maintain. With not enough cars being made, the company felt it didn't have to advertise or even set up efficient distribution channels. Butthe hype about the car died down, and the stories about the fires gained prominence.

Communication Complacency Continues

• Provide an alternative fuel option.• Repositioning of the car in the consumer

mind.• Opening of Tata Nano for commercial

market.

what can be done to revive Tata Nano?

• Tata should introduced diesel engine for Nano.• Considering the fact that Tata is a innovative

company and it has been making small capacity diesel engines for its mini trucks the R&D costs should not be high.

Tata can also consider a Hybrid option for Nano which they are already planning to launch in export markets.

Alternative fuel

• Nano was always projected as an alternative to a 2-wheeler which has to be changed if Tata has to increase the volumes of its CAR.

• Nano can be projected as a second car which can be used for day to day city commutes.

Repositioning

• To push the volumes Tata can also offer Nano to the commercial market.

• Even the cheapest auto on sale in India costs approximately the same as the Tata Nano.

The Commercial Alternative

• This is successfully done in many export markets like Sri Lanka.