The un-mystery of low Nano sales

Ratan Tata stayed true to his word of giving India the ‘1 lakh’ car and showing the world that India is not all about cost advantage but can talk and walk innovativeness. The whole world converged in India when Tata Nano was launched. Tata Nano was an embodiment of catering to the ‘bottom-of-the-pyramid’ customer. It was supposed to show that given a value proposition, no product will fail irrespective of the target segment. Technically, it isn’t a bottom-of-the-pyramid product but in the context of the car market and sub USD3000 price tag can be considered as one such product.

Nano was considered to be so much in demand even prior to its launch because it gave an India, the possibility of a four-wheeler at a price unthinkable before. However it did not result in the forecasted sales. There were many reasons for it. As obvious, consumer behaviour was the critical reason. Nano failed on this count. Nano does not, and will never be able to give the consumer the aura of buying a car. In India, when a family buys a car, it signals their arrival on the richness scale. It signifies a certain standard of living. Nano, unfortunately, does not have the snob value generally associated with buying car in India.

One of the other reasons is the negative publicity it received due to the fire mishaps in its rear engine. Rear engines are generally considered unsafe. Although a perception, it added to the frenzy with people staying away from the Nano. For Nano, publicity turned out to be a double edged sword. It got free publicity during, prior and after its launch due to its ridiculously low price tag but the same publicity turned up on its head in a negative way after the mishaps. News of some customers suing the Tatas for compromising on their safety did not do much good to the Tata brand as well.

Things though are changing now. With production volumes up and better distribution in place, we can now see the Nano TVCs running. Although not quite an outstanding ad, it is decently good. I am not sure if I am reading the minds of the Tata Brand Managers but it seems that they are targeting the Tier 1 or 2 and rural towns who have disposable incomes. The second TVC is quite obvious in tis attempt at targeting the couple to move on from two-wheelers to the four-wheeler. Here too I am slightly unhappy with the casting of the actors in the ad. The urban couple would wait till they buy a bigger car rather than a Nano. They have double incomes with both husband-wife earning and easy financing options. A middle aged couple conservative in their buying would have been a more apt audience.

The Nano indeed is picking up volumes now but the mystery behind sluggish sales isn’t a mystery anymore or is it?

Bajaj- only automobiles or more than that?

Taking on the establishment or taking risks, runs in the Bajaj family. From Rahul Bajaj championing the cause of Indian industry to stop foreign players into India to his son shifting focus from the cash cow scooters to motorbikes to take on the Japanese players in motorbikes to the radical thought of making Bajaj Auto from a ‘Branded House’ to a ‘House of Brands’, surely they are a family who think to out-maneuver competition.

Rahul Bajaj was initially averse to the idea the bikes sporting individual brand names and Bajaj Auto will be a house of independent brands like FMCG giants Unilever and P&G. The focus was to be on four brands – Pulsar, Boxer, Discover and KTM. It would not use the parent name on its identity. But with the success of Bajaj Auto as one of the leading motorbikes manufacturers and stopping the scooters with Rajiv Bajaj at the helm, the senior Bajaj has to accept it.

Now with the help of one of the leading Marketing gurus and management consultants Jack Trout of Trout and Partners who has given the positioning bible to us, Rajiv has taken an enormous step. An attempt to associate the Bajaj brand name exclusively with the motorcycles made by his company and the removal of Bajaj name from other products/ services ranging from hair oil, home appliances, insurance to financial services.

The strategy to do this is based on Trout’s thoughts that a particular brand must stand for only one thing in the mind of the consumer. Line extension is the gravest mistake any brand can do. This though not a line extension has similar areas. According to them, Bajaj should stand only for motorbikes in the consumer’s mind. All other Bajaj brands such as Bajaj-Allianz, Bajaj Electricals, and Bajaj Finserv among others should remove the brand name and try to get an individual identity. This would not only help them stand on their own accord based on brand qualities and brand values but also act as a differentiation from competition.

I tend to differ with the thought because the principle which applies to brands in the developed world is being applied to the developing world that have emerged and evolved in a different way. The consumer behavior is starkly diverse and the emotional quotient among brands in the eastern world is far more pronounced than in the west. In India, line extension has worked till now because of the trust that has been instilled in the brand. Tatas, Birlas, Godrejs, Ambanis and a host of other family have run businesses have ventured into diverse fields with using the same brand name. And they have done well and continue to do so.

These brands have evolved since the pre-liberalization days and have a trust and understanding among Indian consumers. New brands have emerged since then but these old brands have stood the test of time. The Tatas cannot even think of removing the name from their diverse offerings to make Tata a ‘House of Brands’.

Changing the automotive business and marketing it individually is one thing but doing it across industries is slightly off target I would presume. One of the biggest brands in the world GE, which has a product offering which no company, can boast of. There are into all products and services ranging from consumer goods to aviation. They have not changed their GE lineage inspite of being in the most competitive and diverse market as the US. Bajaj name is even more important in the rural and semi-rural areas of the country which are yet to be tapped. Bajaj name would give the company a head start over other foreign brands.

All said and done, this is even more difficult since some of the Bajaj businesses are run by other family members who are strictly against the name change. So such a thing happening would be highly improbable if not impossible.