The Hindu Business Line : The selling of the Nano

Not many cars in automotive history have generated the pre-launch hysteria that the so called “Rs 1 lakh-car” has generated. The Google search of Nano throws up close to two million entries and two million images in nano seconds! A fact that left even the Chairman of the Tata group, Ratan Tata, rather nonplussed. At the launch of the Nano in Mumbai, Tata said as much on the global attention the car has drawn, “We had no idea that we would attract so much attention in India and abroad.”

Those in the communications agency of Tata Motors say that since the unveiling of the car at the Auto Expo in Delhi in January 2008 to the actual launch this week, more than 50,000 articles have been written about Nano in newspapers worldwide. Thanks to an engineering revolution that the Nano sparked within its large base of suppliers of components, the publicity for the Nano was, by and large, fuelled by the media. Nano is hot not only on traditional media but also on the Web as evidenced by 378 Nano communities on Orkut and their tens of thousands of members. The official Nano Web site had received more than 30 million hits till the launch and hung following the heavy traffic immediately after that!

Clearly, Nano has been a mega success in generating public interest. Now, the big question is will it translate into a marketing success? Will Tata Motors be able to cash in on the initial hype around Nano?

Given its on road price ranging from Rs 1.23 lakh to Rs 1.85 lakh (albeit it being slightly above expectation), the car has robust potential of being a marketing success. According to Crisil Research estimates, the new price point reduces the cost of ownership of an entry-level car in India by 30 per cent. This will make the car affordable to an additional 14 million families, including a section of the 58 million two-wheeler owners.

“At present, an estimated 27 million people can afford a car while the actual number of car owners is nine million. With the introduction of Nano, the number of potential customers will rise to 41 million,” says Sachin Mathur, Head of Research, Crisil.

“Nano will capture share from the two-wheeler market. If it captures just five per cent of the two-wheeler sales, which is 80 lakh per year, four lakh units will be the annual sales,” explains Vaishali Jajoo, auto analyst with Angel Broking Ltd. “If it performs well, it can also cannibalise from the small car market. Typical Maruti 800 and Alto customers are not looking for power or performance. They are generally utility-oriented and Nano may fit the bill,” she adds.

However, it throws up huge challenges as well. The production constraints which restricts the first year volume to around 50,000 units means a huge demand-supply gap. “The target group would be typical two-wheeler buyers who traditionally show higher rate of delinquency. Till an exact profile of a Nano customer becomes clear, banks will be a bit cautious in lending and it will take time,” elaborates Mathur. “The real challenge for the company is to generate significant volume in the second and third years, he said. Experts say the company should sell at least 5 lakh units annually in the medium term if Nano is to be rated a marketing success.

It is still not clear how competition is shaping up in the newly-created ultra low-cost segment as rival automobile manufacturers keep their fingers crossed. Rajiv Bajaj, Managing Director, Bajaj Auto, has already made it clear that mileage will be the USP for the upcoming Renault-Bajaj small car. Maruti Suzuki, the Indian car market leader, has denied any plans to come out with an ultra low-cost car or a stripped-down version of its cheapest model M800. “Let’s wait and see,” was the response of Mayank Pareek, Executive Officer (Sales & Marketing), Maruti Suzuki.

“I would imagine that there would be some reaction when we enter the market,” said Ratan Tata at the launch conference. The company expects that two-wheeler companies may introduce price incentives and four-wheeler companies may lower the prices.

In the run-up to the much-awaited commercial launch of Nano, Tata Motors has put in place its sales strategy for Nano. In the last one month alone the company has tied up with a dozen public sector banks to finance its range of passenger cars. As most of the prospective Nano buyers, middle and lower middle income groups, live in semi-urban and rural India where PSU banks have greater presence this move will pay rich dividends.

A few weeks earlier, Tata Motors dealers were asked to conduct local surveys to gauge the sales prospects and to increase staff strength to deal with the huge customer response. “We have created an exclusive Nano sales team. We have a sales manager and four field executives exclusively for Nano,” said a dealer.

Expecting huge customer demand, way above what it can meet in the near term, the company has entered into an exclusive tie-up with State Bank of India to manage the booking process. There is a 15-day window for booking the Nano, from April 9-25. The application forms will be sold at over 30,000 locations and in about 1,000 cities through Tata Motors dealerships, SBI branches, other preferred financiers as well as outlets of Westside, Croma, the ‘World of Titan’ and Tata Indicom exclusive stores. In addition, the company offers an option to submit bookings online at www.tatanano.com. The first one lakh customers will be chosen through a computerised random selection method.

The marketing of the Nano will see a wide range of merchandise that no Indian car in the recent history has seen. The company is ready with a Nano phone, Nano watches as well as T-shirts which will be available at dealerships and Croma and Westside outlets. The idea is to create a buzz for the car all around.

While micro-targeting Nano customers, Tata Motors could well have a problem of handling multiple target groups. “We have got response from a wide range of sections. It is actually breaking all class barriers, age, gender and psychographic profiles,” said Ravi Kant, Managing Director, Tata Motors, at the launch. The company has adopted a tagline ‘Tata Nano: Now within Reach,’ indicating the affordability of the car as well as the fact that it’s finally arrived. Tata Motors’ ad agency Rediffusion Y&R and media agency Lodestar are responsible for Nano’s communication campaign and advertising. The emphasis is clearly on print media, especially the regional language press, and radio to reach out to the masses. A double-spread ad announcing ‘Now we can,’ quite similar to Barack Obama’s presidential campaign which struck a chord with the US voting public, is already out.

“Unlike a classical product launch, Nano has got so much unpaid coverage. In normal media buying terms the unpaid coverage for the launch day would be worth Rs 100 crore. Going forward, we would be using different forms of communication at different stages. Online is a fairly big medium for us,” says Mahesh Chauhan, Group CEO, Rediffusion Y&R.

And, a more subtle strategy is to make Nano part of everyday lingo through word-of-mouth publicity. “Newspapers are now calling brief news items ‘nano news’ and news anchors on television say ‘We will come back after a nano break’,” says Rajiv Dube, President, Passenger Car, Tata Motors.

“Nano is not just a disruptive innovation in manufacturing. The way it is marketed is equally innovative. No other car might have generated such a huge customer interest online as well as offline the way Nano has generated,” says Mohit Dubey, Managing Director of the online car portal Carwale. Clearly, the little car will have to live up to some big expectations of it.

Related Stories:
The ‘Now you can’ campaign gets bigger
Nano wait is over
How customers can book their Nano

More Stories on : Outlook | Cars | Tata Motors Ltd

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