Of Tata Nano and why the customer is always right

TATA NANO

The Tata Nano car was launched with great fanfare in January 2008, more than eight and a half years back. In fact, given its low price point, the car was supposed to disrupt the automobile market in India.

One of the fears on which many columns were written was that the traffic on the roads would increase dramatically. The assumption was that way too many Tata Nanos would be sold. Nothing of that sort happened. This was also a point of discussion among people who already had bigger cars. They were worried, now that everyone would be able to afford a car, the traffic on the roads would simply explode. In that scenario, how would they drive their cars?

But nothing of that sort happened.

In fact, over the last one year (between September 2015 and August 2016), the Tata Nano Gen X has sold 15,949 units. In comparison, the Maruti Suzuki Alto 800, the bestselling car in this category has sold more than 1.69 lakh units.

More than eight years after it was first launched, it is safe to say that the Tata Nano is nowhere near the success it was expected to be. Many reasons
been offered for it. One reason offered is that by talking about the Rs 1 lakh price point, over and over again, the Nano was projected as a “cheap” car.

As brand guru Jack Trout told The Economic Times a few years back: “People don’t want a ‘cheap’ car, which their neighbours can see. Especially in India, there’s a prestige thing about buying a car.”

Another reason offered was that with all the hype around the car, people were expecting something out of this world. What they got was a normal car.

Still others felt that the launch should have been small instead of the big bang launch that was carried out at the 9th Delhi Auto-Expo in January 2008. The press from the entire world descended on Delhi to cover the launch of the Tata Nano.

Nevertheless, as marketing professor Nirmalya Kumar put it: “When the product development is radical you always do a small launch. They did a huge launch for Nano. They should have done a smaller launch.” The idea was that any innovation which as radical in nature as the Tata Nano was, needs to be tinkered with and it gradually needs to be figured out what the customer really wants.

But with a big bang launch, the tinkering that Kumar talks about was no longer possible. Another reason offered for Nano’s failure was that the negative publicity that the company faced in the aftermath of some cars catching fire in 2010.

The one thing common with all these reasons is that they were all offered after the car did not meet the expectations that it was supposed to. Hence, there is a huge hindsight bias built into these reasons. Further, some of the reasons offered could have been offered even before the launch.

Take the case of the Nano being projected as a cheap car. This was a reason that could have been offered even before the car was launched because everyone knew what the likely price point of the car was to be.

The point is that in retrospect many reasons can be offered for a product not doing as well as it was expected to do. Nevertheless, there is only one valid reason. As Yuval Noah Harari writes in Homo Deus—A Brief History of Tomorrow: “In a free market, the customer is always right. If the customers don’t want it, it means that it is not a good car. It doesn’t matter if all the university professors and all the priests and mullahs cry out from every pulpit that this is a wonderful car – if the customers reject, it is a bad car.”

And when it comes to the Nano, that is the only truth. The customers rejected it. We can keep figuring out the other reasons till kingdom come.

The column originally appeared in the Bangalore Mirror on October 12, 2016

 

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About vivekkaul
Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis(DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System , the latest book in the trilogy has just been published. The first two books in the trilogy were published in November 2013 and July 2014 respectively. Both the books were bestsellers on Amazon.com and Amazon.in. Currently he works as an economic commentator and writes regular columns for www.firstpost.com. He is also the India editor of The Daily Reckoning newsletter published by www.equitymaster.com. His writing has appeared across various other publications in India. These include The Times of India, Business Standard,Business Today, Business World, The Hindu, The Hindu Business Line, Indian Management, The Asian Age, Deccan Chronicle, Forbes India, Mutual Fund Insight, The Free Press Journal, Quartz.com, DailyO.in, Business World, Huffington Post and Wealth Insight. In the past he has also been a regular columnist for www.rediff.com. He has lectured at IIM Bangalore, IIM Indore, TA PAI Institute of Management and the Alliance University (Bangalore). He has also taught a course titled Indian Economy to the PGPMX batch of IIM Indore. His areas of interest are the intersection between politics and economics, the international financial crisis, personal finance, marketing and branding, and anything to do with cinema and music. He can be reached at vivek.kaul@gmail.com

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