How not to talk to your target market!
No matter what business you are in, understanding your target market is key. You can’t hope to have success on any scale until you do that.
Tata Motors is one of the world’s biggest car manufacturers, and yet most people won’t have heard of them. They’re Indian-led and have manufacturing plants all over India. They now also have plants in Argentina, South Africa, here in Britain (the company own Jaguar Land Rover) and in Thailand.
Soon after we all finished celebrating the new millennium in 2000, Tata turned it’s attention to its home Indian market. Most people in India struggled to afford a car, and instead rode motorcycles or used public transport. The Indian economy was starting to take off, but most people just couldn’t justify the expense of owning a car.
A HUGE OPPORTUNITY FOR TATA
Tata saw its chance. With a population of 1.3 billion people, a rapidly expanding middle class (their target market), and an economy that was starting to build momentum, profits were there to be made if a car manufacturer could produce a cost-effective vehicle.
They undertook a lot of expensive research, streamlined their technology and attempted to drive costs down while still preserving quality. Tata needed to make the car lightweight but safe, small but practical, and attractive, yet low cost. They had their work cut out for them.
THE CAR FOR THE MASS MARKET
But they did it. And the Tata Nano was born. They did a fantastic job in building interest throughout the country. On March 23rd 2008, the day the car was to be launched, the Tata website crashed, such was the interest in the new car. The site received 40 million hits and just couldn’t cope. Ordinarily, this is a bad sign… but in Tata’s case, it showed the owners that the interest and excitement was there. Their target market was ready. They started rubbing their hands.
Such was the excitement, that rival car companies were forced into releasing plans for their versions of the Nano. Tata even released plans for world domination for the Nano – A European version, an American version, and others.
It had been a difficult couple of years for Tata. Violent protests forced the company to abandon it’s manufacturing site in Singur. There were other difficulties across the business, with a report just days before the Nano’s launch showing that Tata would end the current financial year US$20 billion in debt. But all eyes were now turned towards the Nano, and Tata’s future. Nothing could stop them now.
PROMISING START FOR THE NANO
The Nano was to be priced at around £1,500 – low cost indeed. “We just had no idea (the Nano) would attract to much attention,” said company Chairman Ratan Tat just before the formal launch.
Amit Mookerjee, associate professor of marketing and Chairman of the Working |Managers Program at the Indian Institute of Management Lucknow, added “The launch has captured people’s imagination, not just their attention.”
Many speculated that the Nano would become the most popular car in the second-most populated country in the world.
Indeed, they were off to a good start before the launch even took place – there were some 200,000 pre orders of the car. It won a host of awards for its design, fuel efficiencies and weight. This was all music to the ears of the Nano’s target market.
But that’s where the good news stops. From tens of thousands of orders per month, sales very quickly dried up to the mere hundreds. Soon, sales struggled to reach low double figures.
TEETHING PROBLEMS FOR TATA
The Nano had been positioned as safe. It was agile, It was fuel efficient and it was small – great for busy and chaotic streets in Indian cities.
But just weeks after the launch, a number of the cars simply burst into flames. This brought a lot of negative press and media attention. All of a sudden, the car was on the front pages of the newspapers for all the wrong reasons.
The company beavered away, increasing safety standards and improving a number of issues with the car.
Then came the “affordability” question. The Nano was promoted as costing just £1,500. Which was only partially true – this was the cost for those making pre orders only. The actual cost was much more.
WHAT WENT SO WRONG FOR THE NANO?
And then, the biggest blunder reared its ugly head. Marketing got it all wrong.
Despite being based in India, being Indian owned, and employing thousands of Indian people, Tata’s marketing team got it all wrong. They somehow lost sight of cultural factors in their own country.
The car was positioned in marketing campaigns as “the cheapest car in the world”. Now anywhere else in the world, this is a pretty good sales and marketing tactic. But not in India. While consumers were indeed cost conscious, the phrase “cheapest car in the world” just turned people off.
Indian society suffers from pressure around class and status. If you were seen to be buying “the cheapest car in the world”, then surely you must be poor? You can’t afford anything better. Consumers (particularly those in the booming middle class) were prepared to spend more on cars and other consumer goods, demonstrating that they were beyond “cheap”. The mere word “cheap” became an insult. Ambitious middle-class Indians were prepared to overlook minor safety flaws, but not the perception of being low-income.
HOW COULD THEY IGNORE THEIR TARGET MARKET?
It’s hard to understand where Tata were coming from with this. They were ingrained in Indian society – how could they get things so wrong? This wasn’t a European car manufacturer who just didn’t understand the Indian market. Surely they knew better? It’s not just poor market research, it’s failing to have your finger on the pulse of the nation. It’s not understanding your target market of consumers (I bet they wish they understood “buyer personas” back in 2008!).
Today, the Nano has disappeared. Production officially stopped in 2018, though the car was dead long before. Along with the terrible sales numbers came hundreds of millions in lost R&D, production and in marketing spend. Their brand and Tata’s reputation took a massive hit across the board.
After you’ve made a mistake like this, it’s hard to come back from it. You can throw all the money you like at SEO, flashy TV campaigns and other equally expensive tactics. The damage has already been done. The brand is damaged.
And all because they didn’t understand who they were selling the car too.
Before you make a similar mistake, have a look through our magazines. Here, a number of authors have already written helpful articles about the importance of understanding buyer personas properly.