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    Categories: Auto

Ratan Tata Reveals The Reason Why Nano Failed!

Ratan Tata has finally revealed the reason behind sluggish sales volume of Nano: It is none other than the term which is synonymous with Nano – “The cheapest car”.

Buying a car in India is associated with social status and prestige; if a person owns a car, he is assumed to be successful and settled. It differs hugely from the Western market, where cars are more of a necessity rather than luxury. If a person buys a car in US, no one gives a damn unless it’s a Ferrari or Lamborghini.

Indian market is different, and a different marketing strategy was required for selling Nano, which is arguably world’s cheapest car. But the word ‘cheap’ in its marketing campaigns spoiled everything. It had to be subtle yet hidden from the promotional messages.

Something terribly went wrong here.

He said during an interview with CNBC,

“It (Nano) became termed as a cheapest car by the public and, I am sorry to say, by ourselves, not by me, but the company when it was marketing it. I think that is unfortunate.”

This single statement sums up everything which went wrong with Nano. It was a huge PR and Marketing mistake by Tata.

Nano was launched in the year 2009, and it has never witnessed a positive growth in its overall sales. Last quarter ending September, 2013, its sale plunged 74% compared to last year, as only 10,202 units were sold in this period. And previous quarter ending June, 2013, the sales went down 88% as only 948 units were sold in the month of April, 2013. Last month, in October, its sales were down 28% compared to last year and the trend will unfortunately continue.

It is not that they are not trying. They tried to highlight the feel good factor by introducing awesome videos and started exporting to Sri Lanka, Indonesia, Thailand and Africa. But the results were again dismal. In fact, in the month of April, 2013, they couldn’t even export one single car!

After Cyrus Mistry took over the reins of Tata, he tried to reintroduce Nano as a Smart City Car, for enticing young urban population and those with less space for parking. They even invested a fresh capital of Rs 3000 crore into this loss making product. But the results aren’t suggesting that the sale will pick up anytime soon, especially as the whole automobile sector in India is witnessing a negative growth.

What is the solution?

Branding guru Jack Trout suggests, “Kill it, shut it, forget it”.

He said, “People don’t want a ‘cheap’ car, which their neighbors can see. Especially in India, there’s a prestige there’s a prestige thing about buying a car. Tata Nano is hard to save, I would kill the brand”.

But Ratan Tata as of now is still hopeful that Nano will revive and will become the best selling Indian car in near future. No doubt his intention and ambition to provide low cost, affordable and functioning car for the mass middle class is appreciable, but the strategy he adapted to implement his dream backfired. He must realize that India is now very close to shed its ‘developing country’ mode and Indians want a class associated with anything they buy.

As of now, he plans to re-launch the car in some other country, and then bring it back to India under some other name or brand.

As he shared in the interview, “Maybe it (Nano) gets launched in another country like Indonesia, where it doesn’t have the stigma and the new image comes back to India. Or maybe as a changed product that gets marketed in Europe. There’s a lot of interest in Nano outside India.”

We hope that this latest branding technique works for Nano, and people actually embrace the idea. But for time being, it seems that Nano is still way too far from success.

What do you think of Tata Nano?

Is “cheap car” stigma affecting your decision to buy the car or some other reason is forcing you to ignore it? Please share your views right here!

Mohul Ghosh: Mohul keenly observes the nuances of Indian startup world; and tries to demystify the secrets behind Technology, Marketing, Mobile and Internet. He is a Writer by passion, Marketer by choice and Entrepreneur by compulsion. Follow him on Twitter here: @_mohul
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