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This article is not about nano as much as it is about creating nano in other sectors, well, from the learning from the nano, the successful brand that has become a hard-sell.

 

 22 March 2013

  nano notes ...

Swipe your card and drive home a nano.

Something quite right but quite late.

 

That is by far the best marketing move by Tata Motors ever since its launch in pushing the sales of the famous car that has hardly sold so far about as much as the pre-launch bookings it had overwhelmingly attracted over three and a half years back. The little car that was expected to sell like an fmcg surprisingly turned a slow seller as it came on to the road.

 

A few weeks back nano was in the news with a positive note about its future. Respected Mr. Ratan Tata announced, rather informally, that the little car is being refreshed towards realizing its full potential. Distinguished, leader of the group said the worthy car lost the steam early on and therefore sales, citing hurdles and certain lack of marketing drive.

 

Irrespective of which way nano would move from here on, as this analysis makes it out, nano is a noble benchmark effort every manufacturer, whatever the product, should hope, plan and try to accomplish. As explained later in this article nano is a product innovation without anything really new. The innovation in nano arises out of working with known technologies, materials and processes in developing a highly optimized product - set against a tough consumer cost stipulation. I believe, every producer of whatever thing should first believe in the conviction that a nano is possible in the product set they make, even if it is, quite obviously, unlikely. The very approach is fertile to bring about multiple incremental innovations which collectively make a nano. I still remember reading the highly refined thoughts expressed by Mr. Tata in an interview in a business magazine about production efficiency and innovations; about adopting technologies and processes, about applying them and about creating new ways of working with them. I believe, anyone who runs a factory would draw a lot from that interview in reinforcing knowledge about the finer thinking about making products. This article is not about nano as much as it is about creating nano in other sectors, well, from the learning from the nano, the successful brand that has become a hard-sell.

 

nano turned a hard-sell.

nano was sold hard.

 

Nano has been a hard-sell. That's what the reports say. That's what the sales say. And, that's what the advertisements say, more blatantly than what they tell the vast sets of two wheeler riding families in India. The ads, particularly the first set of films, were all great and have even proved to be so - with hardly any impact on sales. That's awfully ironical! 'Good-but-not-ticking-sales' is a typical syndrome many advertisement campaigns cause the brands to suffer. Some great ads fail to push sales precisely because of being good and effective. And, worse, some can really hurt sales rather terribly - by being good and effective. Typically; wrong message - silly to annoying ones - and or wrongly targeted audience cause the damage in the otherwise great and well executed ad works. The ads for nano belong to that category. They mock the audience with silly suggestions - and drive it straight and quite effectively. Some luck for the ads! Sales of nano did show signs of sudden growth when the ads were tried in full force initially to spur sales which had disbelievingly turned lazy. Some coincidence! I believe, the jump in the sales happened in spite of the ads. Great car, I would say.

 

Wasnít nano a brand with brimming brand equity?

Nano in fact power-charged the brand equity of the brand TATA.

 

nano was branded in nano-time. In less than 2 days, when it was formally launched by the 'look-at-me' presentation at an auto show, years back, it belittled every big and bright brand - name any, including its gigantic creator TATA. Very, very rarely a brand can happen as overwhelmingly, as quickly as nano did. It calls for conditions impossible. A nano can happen when product, demand and competition hit limits of maturity and remain hopelessly, for a breakthrough.

 

And, nano, with its awesome proposition did in fact power-charge its parent brand TATA and literally in no time. None of the many mighty brands of Tata from steel to tea and even TCS could cause reverse flow of value for brand Tata as well and as much as nano has - certainly not, in such quick time. Innovation indeed can create overnight brand with overflowing brand equity.

 

A brand with strong drive should optimize on promotion costs.

And, nano surely didnít have a real need for advertisements.

 

While it is true that much of the ad monies rush down the drains, some even taking the brands along, my statement that nano didn't have a real need to advertise may sound weird and may even prompt many in advertising ask, as convincingly as; how can you sell a car without the wheels? But as I see it, the continuing ads for nano, flawed message apart, but by the very dose have in fact suppressed the sales of nano and that fact would be proved true should the car survive on the strength of its real consumer values or fail to survive in spite of it, in time.

 

In fact, after the launch and as it became a popular brand overnight I expected Tata Motors would prove a few truths about advertising by using it objectively and quite judiciously. Truth one; that advertisements are not primary generators of sales, two; that advertisements pile up as dead costs when brand knowledge is widespread, and three; when media is after the brand advertisements are simply unnecessary spill of cash.

 

nano is a very rare phenomenon. nano the brand happened many months before nano the car came on the road. Once the car was on the show, the reality of owning a car for a hundred thousand rupees ignited a huge demand - awaiting supply - which was set to start about seven months later then. With demand belittling supply, at the time of launch though, nano seemed to have presented a task of managing demand, and not about creating it.

 

Nano, clearly, had two compelling reasons to rule out promoting nano with advertisements. One is right in line with the very spirit and conviction behind it, of creating an all-weather car at an unbelievable price point, accomplishment of which could have only, and as it did, set it against huge demand, negating any need to push sales. nano the innovation was engineered from a price stipulation which only warrants the stipulation - against advertisements in containing costs that was ever pushing the limit in shrinking its demand potential. And, two; nano as it eventually showed-up against all the disbeliefs created an uproar of applause which filled all kinds of media and in fact buried the absolutely unwanted full-page launch ads of the company. Stories about nano hit everyone with all that they wanted to know about it. If anything - any info about it critical enough to hold back sales had to be communicated, Tata Motors had only to ask the media-men to gather for a hear-out, which I believe nano has the pulling power to get them to comer over, even today.

 

A car at half the price of a car - well almost!

Doesnít push-hard advertising subdue nanoís real selling proposition?

 

A car at half the price of a car - well almost! That is indisputably a breakthrough proposition which indeed made nano a demand-ready brand, months before it could be delivered. nano is an innovation in the whole sense of the word. It looks it (a car) and it is as good on the basic needs. It is built out of nothing really new. It is developed on a seemingly impossible stipulation Ė 'a car, nothing less, and for about a hundred thousand rupees'. From the point of that thought to being on the show - ready to be driven, nano took no more than 4 years - traversing disbelief to reality, systematically answering many a no-ways in the cost-led engineering process. Thatís indeed explaining theory by practice - about evolving innovations, and, is simply a classic example for any company in any sector to seriously work on.

 

Advertising can charge sales by creating and reinforcing awareness about the brand. In evolving markets, it can create demand. In markets with mature competition it can even create secondary demand with superficial connects with matters of interest and even emotions. True, a product innovation, of the kind of nano would need ads to take it till the situation where demand takes-on. But, for nano with the kind of absolute awareness and the overwhelming demand it could readily generate, advertising would only tell the consumers to be guarded about what the advertisements say, and more truly so when they donít like what is said.

 

For any brand, critical Brand value essentially arises from product values.

But, for nano, all of the brand value can only arise from the product.

 

Checking out the nano story to know marketing better can be terribly misleading. It can surcharge the innovation efforts with greater risk. It can prove the saying - advertising is marketing - as indeed true. It may undermine the need for strategy in communication.

 

It looks quite obvious that in choosing to advertise for getting nano out of the scary pit which it probably never expected to hit, Tata Motors missed its rhythm with nano's proclaimed product values so meticulously it had built into a demand-biting price tag. For products that are absolute innovations the demand potential squarely depends on product performance - on factors of consumer value which includes psychological aspects. Nano is an another car but happens to be an absolute innovation by the price that is amazingly lower than the least for a car.

 

Typically, due to consumers' normal risk aversion, even very worthy absolute innovation products pass through the testing spell before demand can turn steady and strong. The demand during that phase remains by and large inelastic to promotion efforts, with only early adopters causing sales. However, with absolute innovation products performance and acceptance cannot be taken for granted in spite of convincing tests and trials, a fact which Tata Motors know, by hard experience, by their first passenger car, Indica, notably a non-innovation, which drove steadily only after V2. That tells about the imperative to work with early buyers on absolute innovation products as an essential marketing task. I believe nano had not run even half the test time when it tried to drive volumes with ads.

 

Nano's 'sales' was expected to zoom on its own. But it failed to even creep-up for quite a while in the beginning and recurrently later. Ideal marketing analysis on such situation should have been about; 'what is holding-up sales?' than to think-out; 'how to prop-up sales'?. In marketing, fundamental questions are important because wrong question can fail even the best solution evolved out of it. For nano, advertising and even the advertisements, in spite of the immediate jump in sales initially, are in fact among the reasons for failing sales.

 

Delay caused by the Singur conflict only raises the capital cost.

Nano's sales are depressed owing to misplaced strategies and wrong messaging.

 

The Singur conflict was indeed nasty and could have easily turned any project with a normal product including any other car - financially not feasible - irrespective of brand clout. That nano was active and was rearing to speed up in spite of the delay is proof enough that nano's sales potential was so strong that the cost on account of project disruption could have been insignificant in the long run  - if only it could have been set right on its growth path early. Even the consequential delay in delivery can hardly be an issue to harm sales in any way.

 

nano's current predicament is not really hard to understand. Its strategies on marketing are not consistent with the convictions that created the product. Its initial approach to sales was inept, insensitive and quite in contrast to the image of the group. Its response to crisis brought about by a few incidences of fire in the running car was not forthright and not convincing too.

 

It is not the fire!

It is about handling fire that held back nano from picking up pace.

 

And, when nano finally arrived the consumers' interest in it was intact in spite of the delay and the stories in the papers about some booking cancellations. Deliveries did rekindle enthusiasm but as nano was all set to flourish it was hit with a nasty marketing challenge with reports of fire in running cars and not more than six such incidences but in quick succession.

 

That marketing challenge simply called for convincing explanation in reasonable quick time and an equally fast engineering fix if at all required on complete recall terms. The fact that the fire in the limited incidences still continues to remain a mystery is reason enough for the consumers to have a certain worry in taking the Ďbuyí decision. nanoís hitting an absolute dead end with that was otherwise averted by the fact of just six incidences within that short span and none later and the time that has lapsed since then in blunting the consumers' memory. I believe, the gossip mill about the wicked hand of competition also helped a bit. In the middle of the night, if there is sound in the house, unless it is known that it is the cat, or the rat the fear of ghost lurks. When a critical response expected in the manner expected of a company as reputed as Tata Motors is missing it can only hit sales pretty hard.

 

The truth that a certain brand power primarily supports sales irrespective of positive demand for the product is only more true of products in highly mature markets and in such a situation decisions and actions uncharacteristic of the brand image will directly hit sales, harder with silly ones relatively with the level of reputation of the brand. Tata Motorsís response with a solution to douse the scare of fire happened pretty late and after inept handling of the queries with defensive statements persistently and worse, the proposition was awfully short of class and substance fitting the brand image of Tata Motors - as an auto major that had become a mnc with big acquisitions including one in the sector too. A recall which Tata Motors wrongly insisted it was not one, suggesting; "you may bring the car for the fix (free of cost) if you may wish", is awfully not consistent with the global practice in the auto sector and with the kind of offer Tata Motors did not just loose a chunk of the reputation in the brand equity of Tata as corporate brand and a certain salability criterion for the stranded nano but also a good opportunity to augment the power and value of brand Tata and thus also give a good push for the sales of nano. That decision understandably was forced by nasty and distressing cost additions but that recall could have been on-cost basis considering the fact that initial deliveries were offered by the company at lesser than the cost of production. With a good communication program Tata Motors could have indeed got the cash and importantly brand and marketing advantage too instead of loosing them.

 

When big and famous, being humble is a great trait.

Brands of superior value happen to be resilient and Tata Motors too survived.

 

Making good of the situation, in the narrow sense of it, is an act of social irresponsibility and amounts to unethical practice on the part of a reputed company such as Tata Motors. Being sure of the demand rush, decision to charge for booking forms and letting SBI go to the press about exclusive lending rights are all negative moves that has undeniably hurt brand Tata Motors and compounded the difficulties in selling nano, however insignificantly though.

 

Whom to talk? What to talk? How to talk?

Kick the scooter! Thatís awfully short of a strategy!

 

Costs and drowning in that apart, advertising can hardly hurt a brand unless it is damned for something really wrong. If nothing, the brand noise advertising creates, if it is not really abysmal, would charge brand recall which can be useful in some way even for a struggling brand for whatever it is worth. Almost all big budget advertisements achieve that. Ads for nano too have, because of nano! Nothing can get more ironical than that. While they may have pushed a few obvious sales, it would be grossly wrong to presume that the ads have caused nano to pick-up pace. It could be true the other way round as this analysis suggests. The fact is that the sales shot up and rolled down in just two months against enhanced charge with advertisements.

 

Clearly, advertisements that miss the right message befitting the brand situation are a terrible waste however brilliantly executed. Those wide off the mark can even plug demand! The overbearing message in the Nano's ads is elementary, labeling and mocking - to have any potential to trigger sales let alone sustaining nano's brand equity. It speaks of the influence of poor insights on the brand situation and marketing imperatives. In promoting product innovations it is essential to work with finer elements of consumer thinking with carefully planned strategies so as to cut the risk of consumer hesitation. Kick the scooter! Thatís awfully short of a strategy!

 

Positioning Ė also requires strategies.

A low cost brand should not be - positioned as such.

 

Positioning, the famous word about branding may have undermined quite a few brands in India in spite of being the main grind in the subject at management institutes and seemingly the only branding weapon with advertising agencies. Or, is it because of that, brands in India are positioned and re-positioned and re-positioned rather hopelessly. Kingfisher Airlines is a classic example.

 

Nano is a classic case of faulty positioning and thus becomes a good case to explain brand positioning. A low cost brand should not be positioned on the underlying reason it gets largely sold for. Low cost is an ever present market opportunity, even in developed countries, that relates to huge demand, certainly so in developing countries. Low cost is grossly misunderstood, particularly in India where it is mostly perceived as cheap and inferior, even by those who provide things which makes consumers by and large know it as just that. All Airlines in India lost a lot of money flying low cost at high cost. For property developers in India low cost is 300 sqft.

 

On the contrary, low cost proposition is a highly mature concept which is essentially evolved out of objectively focusing on the core product values for considerable cost saving chances without compromising on the quality in any way. A low cost feasibility can arise out of materials and technology used in making the product as also by bringing about major cost efficiencies in the supply and delivery chains. Low-cost development is research driven and requires a certain level of competencies and resources to work it out and also to work with it which makes it simply beyond the capabilities of smaller enterprises. And, nano, by thought and efforts is a classic example of successful cost-set product engineering, and now with thousands of nanos on the road without the killer technical threat, I believe, it is well on course to be proven as such.

 

But 'sales' is demand driven and it is critical to understand the demand in evolving the marketing logic and the programs to be able to cultivate the demand for the product or even a brand. Low cost need not necessarily be targeted on the factor of affordability. Demand for low cost things is typically sensitive and can vanish altogether in spite of product values and the low cost if the low cost proposition is not presented right. More importantly, apart from core product values it is critical to create a sense of esteem around a low cost product.

 

Nano is a Pride of India.

And, Tata Motors missed to drive nano with that.

 

Nano mesmerized the world with the price tag that's too good for all the basic virtues of a car it is packed with, without a compromise and in great style too. The cost-led engineering effort that created nano was sung in the world media which power charged the brand Tata Motors and, the brand India as well along with. It made many renowned car makers say nay but made them think hard in hush and hurry, about making one against, out of their brand.

 

That element of pride in nano had all the potential to move tens of thousands of Indians get their nano as their second or third car which would have easily moved hundreds of thousands to get nano as their first car with no hesitation. Huge demand for nano would only get reinforced if the company can get the affluent also to buy, for the values of the product, of which nano has a very worthy set.

 

In that sense, in India, to say low cost is not cheap by the slang sense of it is by itself a task, of creating certain awareness. And it calls for working with fine strategies to be able to achieve that with a product and in its sales.

 

Absolutely relevant societal issues can be used as marketing strategies.

Nano took it all without making good from it.

 

Serious communication programs other than advertisements and usual promotions can settle core marketing issues with telling impact on brand equity and of course sales. nano's opportunities for such programs were right in the void arguments raised against it. It looks imminent that road space could be rationed in Indian cities well before fuel gets sold on card. Yet, raising alarms and suggestions to load taxes on nano to restrict demand stinks of social injustice considering the amount of fuel consumed in fat cars mostly carrying the lone driver-passenger. Being small in size and price and better on mileage and in meeting pollution norms nano can find vast opportunities to sell by turning the blame right back with credible solutions on the whole issue. nano could have stretched the arguments towards creating a certain marketing advantage, in being able to target affluent set too which would have had big impact on the vast set who are largely expected buy it for the cost and value proposition.

 

I believe nano can become harder-to-sell.

I believe nano has in it to win.

 

To tell the future of nano, from its slow past and the slower present which I read, in another window as I write this, is easy. Nano would become harder-to-sell, show its distress in the finances of the company and throw up toughest challenge ever to Tata Motors.

 

I believe nano has in it to win.

 

nano is a typical case of market hardness owing to conflicts between the brand and the product as perceived by the consumers. Therefore identifying and understanding such elements of conflicts to be able to bring about the balance should result in unhindered flow of sales matching reset consumer values of the product which includes brand values too. Typically, the flaws of the conflicts arise from issues with both product and the brand calling for correction with both.

 

nano's core product values as put across to the consumers though sound convincing to expect the big expected sales, actual sales have not come about owing to consumer aversion on issues of deficient values which include those that are downright critical functionally and also those that sound simple but very critical from the consumers sense of personal and societal values. nano's elements of aversion seem to stem mostly from the later. Such issues of consumer wishes being stubborn obviously hit sales and hard it does, as they have for nano. Often, as is true of nano such issues take the product back to the research and engineering desks.

 

nano surely has some unavoidable technical research and engineering work on hand reasons for which happen to be the underlying causes for low sales. The revival strategies, as suggested in the talks to the media, however do not seem to address them. The thoughts are worthy and relevant but are hardly connected to the issues that are holding up sales. Use of composite materials is highly relevant but can be useful only a little late with sales crossing distress threshold. CNG adoption too would enhance salability but only provided issues that are currently withholding them are convincingly settled. While the talk of diesel version sounds a bit misfit, the idea of having a big nano can only hurt nano the small car without delivering any brand advantage for bigger car.

 

Nonetheless, variants of nano in the same size and shape are however needed to settle consumer aversion factors arising from branding perspectives. Whom to sell which of the nano is a very critical question to work with in cultivating mass demand which is over 70% for the nano in the lower end. In that sense, thinking about higher power engine, for a particular variant, is dead right and absolutely in line.

 

nano as a brand would hold value for the mass car as long as the price remains significantly lesser than the prices of comparable brands on net value terms excluding of course those variants of strategic relevance targeted against certain sets regardless of the cost to the consumer. In Augmenting sales potential, nano needs to connect effectively with values it delivers against environmental and social concerns which can create a worthy segment by value and would vastly influence the mass segment as well. More importantly, nano must be driven on the pride and sense of a very worthy innovation which indeed it is and complement that with incremental to major innovations in distribution and promotion with structural and application variations which contribute to the low cost attribute by real value.

 

Nano has both brand and branding opportunities though both have become thinner and far less practical over the years with diminishing consumer acceptance. Brand equity can be enhanced by trading it selectively. Sounds strange? Disney earns by lending Mickey and fellows for a fee. nano as a brand is still a celebrity thing and has sustained some potential to work with options in trading brand value with suitable partners essentially for driving up its own sales. Options can be many. Thatís some loud thinking to say it is possible. Success of such initiatives depends on what and how they are done.

 

To push a mass market car stranded in the middle of the market and for a long time wonít be easy. Unnecessary advertisements played with wrong messages and used excessively have obviously hurt the chances of nanoís sales. Now, to cut advertisements drastically, particularly those that advice consumers with silly and annoying ideas, calls for working with strategies. Functional ads like, swipe the card will help accomplish that with gains in sales, without the damage. All said, Tata Motors clearly has to work with the task of digging out sharper insights by talking in depth to those who have been using nano and thinking beyond that before taking the next step.

 

Time is a critical factor for brands that get stuck with hard times. nano too in spite of its high brand equity is exposed to the risk of the phenomenon called 'vanishing brand equity' if it fails to work with right questions now.

 

Adve Srinivasa Bhat

Management Consultant

 
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