Cash-strapped Tata Motors is using unconventional tools to promote the car. Will that help build long-term equity for the brand?
It could turn out to be the next big liberator. In the next couple of years, the Tata Nano will probably do on the ground what Air Deccan did in the air. It will change forever the way families go shopping, visit friends or drop children to school. “If you could position an all-weather car that is not a glorified scooter or a stripped-down car, then I believe there would be a market potential for one million cars a year,” Ratan Tata, chairman, Tata Group of companies, had said in an interview to The McKinsey Quarterly a few years ago when the Nano was being conceived.
That’s exactly what the engineers at Tata Motors did. Challenging convention, they put the engine at the rear, fitted the petrol tank in the bonnet and opted for smaller front wheels. More spacious than the Maruti 800 or the Maruti Alto and with an engine life that’s expected to last much longer than the 624 cc would have you believe, the Nano does pack in plenty of mileage, even if it doesn’t quite make the “23 km to the litre” mark.
If the product was the first of its kind in the world, much of its appeal lay in its innovative pricing. At just Rs 100,000 (for the base version), the price point is more than affordable. The lower-end models aren’t expensive — the Tata Nano Standard BSIII, for instance, can be bought for Rs 123,360 (ex-showroom, New Delhi). The upgraded variants too should not be out of the reach of the first-time car buyer, even after taking into account the cost of borrowing, tipped to be 11.5-12 per cent.
When Tata had first talked of the car, rivals were blasé about it. “We’ll see once it is actually there,” used to be the stock answer. It was only when Tata drove the car to the podium at the 9th Auto Expo in New Delhi on January 10, 2008 that they admitted the threat was real. Small car makers scurried to the drawing board. (Did you miss the new Maruti Alto campaign that coincided with the Nano launch?) In fact, the idea behind the affordable pricing is to create a whole new customer base and many believe Tata Motors will succeed. Says Abdul Majeed, who tracks the automobile space at PricewaterhouseCoopers: “This is a brand new price point and a brand new segment that Tata Motors is reaching out to and it could well succeed.”
As Jagdish Khattar, former Maruti Suzuki managing director and now the promoter of Carnation, a multi-brand car dealership venture, observed recently, the Nano could create its own niche market and it may include other than those driving top-end bikes, the very group of people Tata Motors is hoping will aspire for more comfort and safety. Rajiv Dubey, president (passenger cars), Tata Motors, confirms his company is looking to sell to more people than just those upgrading from a two-wheeler. “We are of course targeting two-wheeler owners, but our pricing strategy should net us many more customers across socio-economic segments.”
The car was there and the price was nearly what Tata had promised (the fall in commodity prices since August 2008 seems to have helped). The next challenge was to do the right things with marketing and selling the car.
The Tata Group has always been conscious of its image. Accordingly, it did not want a black market to evolve around the Nano. Otherwise, it would become like any auction of government flats. Hence, Tata Motors decided to take bookings directly from the prospective customers. Only one booking per head was allowed. The first lot of allotment would be done through a computerised draw. Its dealers will not be able to create a shortage scenario and pocket an illegal premium, though they will still get their commission as the delivery to the customer will be made through them.
The media buzz
Whether or not customers bite that remains to be seen, it’s early days yet. In the meantime, what the Rs 100,000 price tag has done is helped create an enormous amount of buzz around the product. In fact, before the car got its name, the little machine was almost always referred to as the “Rs 1-lakh car.”
Tata Motors’ media managers caught on to it right at the beginning. Thus, a huge publicity campaign was launched through the media. Conventional marketing wisdom says the impact of a news report is 17 times stronger than an advertisement with the same message on the reader. The media lapped it up.
One newspaper asked creative heads at ad agencies to come up with a positioning and tag lines for the Nano: “A small car for people with big dreams” said one, while another felt “The smart car” was more like it because using the price to sell the car might only be a short-term advantage and, in fact, could might be detrimental to the brand in the long run.
Indeed, the saturation coverage in the media could save Tata Motors a fairly big sum on ad spends. Not that the ad spend was ever likely to be very large. As Dubey points out, the advertising budget for the Nano is going to be much like the car itself — small. Typically, car launches in the past have resulted in spends of anywhere between Rs 10 crore and Rs 50 crore. Dubey refuses to talk numbers but confirms there isn’t going to be any high-decibel advertising, no blitzkrieg. “You can already see how we’ve been going about the whole thing. We’re trying to use the word ‘nano’ instead of small wherever possible. For instance, instead of anchors saying ‘we’ll be back after a short break’ on TV channels, they’re saying, ‘We’ll be back after a nano break.’”
It’s not that Tata Motors has abandoned traditional advertising — the familiar announcement launches are visible, especially the centre spreads in a clutch of national newspapers, clearly targeting middle-class families. And there were some teasers the day before the launch. But the advertising effort has been somewhat different: The way the word ‘nano’ has been used in sentences, whether spoken or written, is new.
What’s also been different with the campaign, as Mahesh Chauhan, Group CEO, Rediffusion, Dentsu, Young and Rubicam, points out, is that unlike a classic product launch where the tangibles, in terms of what the product is all about, are announced first and the emotional connect with the consumer built up thereafter, here it’s been just the reverse. “People already enjoyed a strong emotional rapport with the Nano because of the hype that has been created, there is a lot of national pride associated with it. Now, all we’re doing is spelling out the salient features. So the order, in this case, has been reversed.”
It may be innovative, but some experts feel the real test will come in the long run. “Right now, the demand is far in excess of what Tata Motors can sell. So, the car doesn’t require much of a support. The real test will happen when the supply catches up with the demand,” says an industry source. Some car makers are known to deliberately keep their supplies about 10-15 per cent below demand so that huge ad spends are not incurred to clear the stocks with the dealers. Will Tata Motors need to do something similar, given the current campaign size?
New media initiatives
Chauhan admits that advertising really has a minimal role right now because the brand is already well known. That’s because for some time now, Tata Motors has tried to create excitement by reaching out to the youth on a special Nano website as also on popular social media sites such as Facebook and Orkut. In fact, it’s the online initiative that has really helped build much of the excitement around the car.
Dubey had said in January 2008 that since the commercial launch was still some time away, the company would like to use some innovative means to reach out, “which are not conventional because this car, in terms of its concept, is not conventional.” And so www.tatanano.com was born. Senior members of the management team, including Subodh Marathe, head (marketing sales), started putting out their views on the Nano site, and without any prompting the discussions followed. Pictures and continuous updates were posted by the Tata Motors team, but it was the interaction with the management that seems to have been a big hit with youngsters.
Nitin Seth, general manager, Tata Motors, asked for suggestions on how the car can be made more attractive for women drivers triggering a discussion on “will an Indian family buy a car with feminine touches only for the female in the family though every family has males?” In fact, the idea of online bookings, which will probably be a first for the car industry in the country, is believed to have originated during discussions on the Net. And almost everyone seems to have had a shot at designing one’s own Nano — among the more popular features on the site.
Siddharth Rao of Webchutney, which handles the online account for Tata Motors, says: “The web is a great catchment area for the Nano because people between the age of 25 and 35 are most likely to buy the car. And that’s the age group which flocks to sites such as Facebook or Orkut.” What Tata Motors has done, according to Rao, is to simply tap the buzz effectively through social networking sites. “Blogging pays off these days, it’s an inexpensive way to seed content, get publicity and engage prospective buyers,” he observes pointing out that there are 30,000 members in the Nano fan clubs. On the Nano page on Facebook, there are messages from all over the world. They may not be of much use to Tata Motors right now because the launch in Europe is at least two years away and the US market will be tapped only after that. But the impact of the digital drive back home could be high.
As PwC’s Majeed points out, the idea is to reach out to younger people. “Even if they are not the buyers themselves, youngsters, who are hooked on to the Net and frequent social networking sites, will pressure their parents to buy the car,” he points out. Yezdi Nagporewala, executive director, KPMG, too endorses the digital marketing campaign saying it was a wonderful idea that fitted in perfectly with the low-cost model. But like many others he too believes that transactions on the web are unlikely to happen in a hurry. Tata Motors believes the time may not be too far off when car deals will happen online. Talking about the company’s sales strategy, Marathe wrote on the site: “Conventional automobile wisdom says that if a car dealer is anyway required to complete the transaction, a web-based operation is a mere information window. It can never really be an alternative to a ‘brick and mortar’ dealer. But in this age of e-commerce, when you can even buy a house online, selling a car online cannot be ruled out. The option of online car sales is certainly worth exploring.”
Tata Motors isn’t offering online discounts just yet. Instead, it’s focusing on showing off the Nano wherever possible — even in Westside stores. And it’s leveraging the Tata group’s retail presence to hawk Nano merchandise — T-shirts can be picked up at showrooms of Tata Indicom, Titan and Croma. Forms too can be filled out at these stores and, of course, they will be available at bank counters. Tata Indicom is offering a money-back offer with every application form. To make it easier on the customer’s pocket, Tata Motors has roped in State Bank of India as also a couple of others who will loan money at interest rates of between 11.5 and 12 per cent; the equated monthly instalments for a seven-year loan are estimated to be about Rs 1,700.
Dubey says he would like to “bring after sales service as close to the customer as possible” but doesn’t say whether there will be exclusive service outlets for the Nano. Indeed, Tata Motors seems to have taken care of the 4As of marketing as set out by Jagdish Sheth and Rajendra Sisodia. The two management experts had pointed out that “there is an intermediate step between the deployment of marketing tools and the achievement of marketing objectives, represented by acceptability, affordability, accessibility and awareness.” These seem to have been adequately addressed by Tata Motors. In fact, the level of awareness has been unbelievable, prompting observations that the hype surrounding the launch of the Nano may have matched or even beaten the excitement at the launch of the Apple iPhone in June 2007.
