Tata Nano, collapsing sales

INTRODUCTION

Matter of facts, the problem is serious: sales data reports continuous declines for the cheapest car on the market. 

Since the launch in 2009, Tata has sold 229.157 units of its Nano, with a month-on-month declining which has brought to a 86% loss in total sales in the India's booming economy.
Let's run through the problem.

LAUNCH STRATEGY

• Market: India (about 2.5 million cars sold per year)
• Competitors: Maruti (leader in India) M800 and Alto, mopeds, scooters
• Target: poor families 

Tata Motors started to develop this project with the final aim to bring a really low price car - about 2.000€ - to the Indian market, where most of people had just a scooter. 

Well, a sort of Fiat 500 in Italy during the 50's.

For this reason they have decided to market the Nano as "people's car" for families who cannot afford any other existent car.
Low price means low costs: this car has just what is strictly necessary, and here came the problem: how to communicate the product as a life-changing innovation?
According to the described situation, the car has been advertised as the cheapest car in the world, thanks to which everyone can now buy a real car, and not just a scooter.
The whole communication campaign has been focussed on the cheapness, and here's an example:

WHAT WENT WRONG

The first (but not the most important) problem is about communication channels: the campaign has  principally exploited radio, printed media and the web to make people perceive the car as close to them in everyday life.
Here comes the complication that the greatest part of Nano's target are families who has not the economic opportunities to have access to those medias. (And, of course, reach the target is the first step in the advertising's action).

The second and principal problem regards people's perception: people started to intend the Nano as a car which is too cheap and barren to be a real car.
Tata's positioning choice turned out to be wrong because they emphasized the low price forgetting about the qualities that make this car eligible for poor families (how competitors did), who has not get a real benefit to justify the purchase.

Even the third problem is about positioning: as we can read from The Economist, "The price crept up by around 15%, putting it out of the reach of first-time buyers with no regular employment or payslips to back an application for credit."
Furthermore, a full-optional Nano reaches a price of about 500€ less than Maruti Alto, one of the  competitors, which offers bigger engines, more habitability and better finishes.

People started to think: "I can buy a scooter with less money, with a little  more I buy another car".


WHAT NOW

Learning from mistakes, Tata is now about to relaunch its Nano improving quality, design, reliability and equipment in order to rebuilt the percieved quality, even thanks to a brand new advertising campaign.
The essential will be to show concrete benefits to consumers, supplying them a real purchase motivation.
In the next months we will see a restyling of the Nano, which will have the responsibility to pick up the sales of the cheapest car in the world.


WHAT I THINK

Since this is a blog, I would like to conclude with my own opinion.
I  think that the relaunch strategy planned by Tata Motors will be a very hard work; as I discussed before, the trickiest item is about consumer's perception, that is not something rational, coherent and linear, but is a very complex process, which is affected by different factors coming from the consumers themselves or from their frameworks.
This is the milestone they have to start from: perception is a sort of puzzle, which every single person do with their own pieces, and for this reason every puzzle will have a different picture (the product or brand image).
The most important thing is try to understand how they have obtained the single pieces in order to figure out an idea of the final picture they will obtain.
You have to consider that, if we try to develop a product (or brand) identity, the image (what people see, the reflection of the identity) is never exactly the one we'd like our consumers have, and this could seriously affect our sales.
Tata should better understand how the potential consumers select their puzzle pieces to manage its product image.
You can be sure that it will be an arduous work: it is harder to correct an already existing perception  rather than built a brand new one.

I am really looking forward to seeing ho Tata will deal with this problem. The Nano is a very ambitious project, and I am enquiring to know something more about its future.

Stay tuned!

Automotive and Fashion: Mercedes CLA

INTRODUCING

Yesterday Mercedes presented its brand new CLA in Italy, and more precisely at "Milano Moda Donna 2013", one of the most important fashion events in Milan.
The new German sedan is the special guest at the Mercedes-Benz Fashion Club (here's the Facebook page), landmark of the Milan Fashion Hub, thanks to which is going to consolidate Mercedes 5 year presence as sponsor at the event.


TWO DIFFERENT WORLDS

I just said that Mercedes has been taking its presence at this important event for the last 5 years.
Let's now see what kind of advantages could a carmaker take out of this.
Well, first of all I have to say that a partnership between brands is a sort of melting pot for their worlds of values: the most important thing is that the actors could match each others brand values in order to generate a balanced view in the consumer's perception.
If this requirement is satisfied, a brand could be correctly recognized by the target, whose mind could now be enriched with a more complex values system. 
Just remember that the brand awareness is the milestone we always start from. (Ok, we are now talking about one of the most famous brands in the world, just keep that in mind for other cases).


THE VALUES

I told you how values worth, so the next step I'd like to develop regards a short Mercedes brand analysis: it could be useful to better understand what it does have with the fashion industry.

BRAND PERSONALITY	Strong, scrappy, fierce. Refined and polished, but with a young soul.
CULTURE (VALUES)	Exclusive, classic, somewhat individualist but "democratic".
CONSUMER MENTALISATION	Modernized, but it’s a status cornerstone.
REFLECTED CONSUMER	Father who cares about elegance, status and essence.
RELATIONSHIP	Exclusive, “classy”.
PHISIQUE	Harmonious.

 (Kapferer's brand identity prism)

Scanning this table, it easily comes out how "fashion-oriented" is became Mercedes' brand image during the last years. 
Indeed, it is clear how the German car maker has made so many efforts, starting roughly from the 90's (remember the economic crisis), to turn its image into a more dynamic and "democratic" one, trying to get closer to consumers and, most of all, to the potential ones.
Despite this new approach, Mercedes can't obviously lose its original way (the risk would be the one to entirely jeopardize the brand equity) so that they have built a sort of democratic luxury positioning over the original aristocratic brand personality.
It is knew how the fashion industry has realized, over the last year, a democratic luxury positioning too, due to a more attentive and careful consumer (who tends to be bargain oriented).
So, the partnership with Milan Fashion Week, in a relevant period of time, contributes to give an added value to the German brand (and, of course, to the event) thanks to a continuous circulation of values between the two brand's worlds.
So, Mercedes is affected and enriched by fashion nature, and the same thing happens for the event, which is enriched by Mercedes.
Here, we arrive to another fundamental point. Running through the brands evolution, it's possible to set different steps, defined by "cornerstones" around which the brands have to built their relationship with the customers. 

• In the 60's, this cornerstone I'm talking about, was represented by objective benefits, that the so called "hero-product" had to solve.
• During the 70's and the 80's, the consumer is not interested in tradition anymore, and is looking for brand new products, that have to be closer to people: here we find the personal benefits.
• With the new millennium, the trade-mark becomes mind-mark, and the accent over emotional values continues in a more sophisticated way.     The brand has overcame the product.
• Finally, getting straight to the point, we arrive at the present: the values and the brand's possible worlds (which are generated in consumer's mind thanks to the brand associations) are now more important than the brand itself. According to the first part of this article, an event could simplify a positive flow of values, so that the intangible (the relationship) stands out.

HOW THEY DID IT

Until now, we talked theoretically. 
Now we are going to see how they have supported this partnership, so let's "learn why the CLA is a style icon worthy of Mercedes-Benz Fashion Week in this interview with top model Karlie Kloss and photographer Ryan McGinley":

And now let's take a look at the final result of this extraordinary collaboration.
Special car, "Mind of its own":

CONCLUSIONS

To sum up, we can now easily understand why Mercedes has presented a new model exploiting a fashion event instead of a "classic" auto show.
Nowadays, expecially in Europe, automakers has extremely reduced advertising and marketing investments, but they are still looking for alternative options to reach consumer's attention through the environmental noise. 
The final aim is to generate emotional values intruding upon the everyday life to better catch the attention of distracted and brand-crowded minds.
This can help us to underline another time the importance of events in which it's possible to generate a sort of "third dimension" where the values of the different brands could live together, enforcing each others and better reaching people's perception. 

New models proliferation: a risk for the brand equity?

Executive summary

In this report, I am going to deal with the marketing in the automotive industry, and in particular we would like to explore the importance of the brand equity, which is strictly related to the range’s extension by producers.

This is a steadily increasing trend, which is implemented to cope with the enlargement of the automotive markets all over the world.

Introduction

This report will look at:

·      Car’s producers offer;

·      New models proliferation;

·      Pros and cons;

·      Crucial points;

·      Management;

·      Conclusion.

Findings

Let’s start looking at the offer’s composition of a cars producer: in general, it is structured  as follows:

·      Range: it includes every single car model in the list;

·      Models: those are the offered products;

·      Versions: specific variants of every model (engine, etc.).

The problem I’d like to deal with, is the proliferation of new models, that are often considerable just simple versions with an autonomous heading list. This consideration could bring us to consider the problems related to the importance of brand’s architecture in the marketing policies.

To better comprehend the nature of our subject, I think that could be useful to take a look to its pros and cons:

Pros:

-       a wider offer could better respons to different needs and attract new 

   consumers;

-       it could generates scale economies thanks to a cost reduction based on

   the standardization;

-       less failure’s risk compared to the ones related to the launch of a brand

   new product;

-       opportunities to better control market trends.

Cons:

-       it’s a short-term strategy: succesfull innovations, that are long-term oriented, could take        

         economic advantages and better image results;

-       there could be productive inefficiencies;

-       it could leads to sure sales, but less than an innovative model could do;

-       problems related to the brand image’s management.

To get straight to the point, we have just seen how the choice of a wide offer could leads to increasing difficulties inherent to the brand architecture: every single additional model affects the brand positioning, taking it to a more abstract image in the consumer’s perception.

Ultimetly, he highest risk is the brand equity dilution.

Now we can try to check out how can managers deal with this problem.

Well, in my opinion, talking about the automotive industry, they can count on two main methods.

The first one is known to the main as “family feeling”, and it consists in the use of the same design identifiers in every model: this kind of expedient is useful to simplify the recognition of a car, making it possible for people to bring it back to a specific brand at a glance.

This method allows to influence the consumer’s visual perception in order to avoid the dispersion of the brand identity, which could split up itself in a plurality of parts: as above, this could also lead to a great difficulty in the brand equity management.

The second method is about advertising: it consists in the development of strongly characterized commercial campaigns, which have to be easily referable to a particular brand. In this case, a thoughtful use of redundant elements such as music, characters, colors, situations, or even more, is fundamental in order to enforce a long lasting connection with the brand.

Conclusions

To sum up, I would like to underline another time the emphasis that the launch of a plurality of new car models could have for the brand image and the brand equity: the range extension could lead a brand to several advantages, but it could also become a risk if it’s poorly managed.

For these reasons, it’s prominent to keep a punctilious control over every business choice: the ultimate aim is to meet the consumer’s needs, supporting a long term brand development at the same time.

Dodge Dart commercial: How to change cars forever.

Today I'd like to talk about another commercial: Matteo Lunari (@matteo_lunari on Twitter), who writes for Car Passion (@CarPassionIT), has showed me the new Dodge Dart commercial.

What to say about it?

Well first of all, let's take a look!

I think that the rhythm is first thing coming out from a first view: the spectator is involved since the first scenes, thanks to the soundtrack, that is perfectly followed by the voice-over and every single sound during the whole commercial.
I'd like to remember everyone that the sound is fundamental to generate emotional involvement due to its power to regulate heart's beat: to summarize, the faster the beat, the higher the involvement, the stronger the emotions.
For this reason, psychologists gives a lot of of investments in terms of time and money to study brain's reactions to sound impulsions.
Of course, the image succession nicely fits with the sound, and it contributes to give a higher dynamic level. The ensemble, in my opinion, is quite hypnotic.
Talking about "hypnosis", what greatly contributes to keep the viewer's attention, is the already mentioned voice-over: what really impressed me, was the captivating narration flow.
The speaker starts to involve us since the first seconds of the storytelling, which is characterized by the systematic repetition of words and statements to emphasize concepts and images that stands behind the realization of the car; in fact, we used to see most of the advertising which are focussed on the product, but this one is different, because it shows the "backstage". What is different from daily life, better keeps our attention.
And this is clear since the beginning, when they tell us that they're about to show us "how to change cars forever".

In addiction, the choice of tell us about the efforts made to build this car, could be appreciated in a crisis period, when the consumer feels the need of being reassured about the quality of a long lasting product.
And we can see every one of those efforts: from the first ideas and sketches, to the last decisions about finance and marketing (advertising, endorser), is like a sort of "car's gestation" that we follow step by step.
This approach (step by step) could also be seen as an attempt to make people feel attached to the model before its official presentation, contributing to better develop the brand loyalty.
What we see in this commercial is not common: they show us the backstage in a perfect mixture of passion, reliability and irony, that, in my opinion, is delicious and useful: for example, "kick out the finance guys", makes us smile, but it has the merit to explain that they would be ready to go against the fundamental business rules (just exaggerating, of course) to take premium-car's characteristics to the main.
Rhythm, passion, irony, images, flow: mix it all up in a (s)pot and you'll not be able to realize that car's benefits are showed in a quite hidden way. In facts, they do take to our minds concept like quality, reliability, advanced technology just letting us take a sneak peek of what's behind. It's like they are saying: "We're not even interested in show you our car, just look how we've done it".
This kind of commercial proves certainty, assurance and profession to the consumer (functional in building a strong brand equity), so that, at the end of the tvc, Dodge has the power to say that "Making a ground-breaking car. It's that easy".
This is maybe the last ironic sentence, because it could be read in opposition to the great efforts showed for a minute and a half, and it sounds like "Seemed it so hard to you? We're accustomed to work so hard for you!".
The path we've followed started from "How to change cars forever", and now, passing through the whole narration, has arrived to the above mentioned "Making a ground-breaking car. It's that easy".
So, what's the conclusion of the ad?
Well, it seems a rules-braking commercial, where classic schemes are questioned (remember about the finance, or the committees, etc.).
Out of schemes, far away from the status quo, no compromises ("...they lead to compromise, and compromise leads to this"): the payoff is just "New rules", with a road on the background.
New road's rules, this is the all-new Dodge Dart.

Lancia: Moving Emotions

This morning I was looking, as I love to do, for automotive news, when I came across a lovely case that I'd like to talk about with you all because, in my opinion, is a very interesting marketing action.

First of all, let's describe what I'm talking about:
MOVINGEMOTIONS (project developed by Bitmama), an online travel's configurator developed by the partnership between Lancia and ViaMichelin to promote the new Voyager, that allows to plan a personal week end in 4 easy steps:

1. WHERE? first of all you have to specify where are you planning to start from;
2. WHEN? the second step is to decide when do you want to leave;
3. WHO? thirdly, you can choose to go with your friends or with your family. And....how many passengers?
4. WHAT? concluding, you have to decide what you'd like to do. 

The result of those 4 steps will be a very complete travel suggestion: the site will show you the proposed destination, a road map with direction to reach it, tips about hotels (with address and contacts) and other useful things.

Not convinced? Of course, you have the possibility to see another destination or to restart the configuration!

The most interesting thing, in the interest of this blog, is that this site will show you even the Voyager's characteristics that better can help you depending on the travel kind that you have selected (art and culture, food or nature and outdoor): to take an example, if you love outdoor activities, "Voyager has everything you need: Stow'n Go ® system, to accommodate even the bulkiest equipment, roof fitted as standard, longitudinal and transverse bars........etc.".

This last note is the one that leads us to consider specific marketing and communication themes.

We are talking about a partnership: this kind of arrangement is focussed on relation and values exchange in order to generate engagement, faith and a strong alliance between the partners.

To get straight to the point, when you are about to develop a partnership with another firm, coherence is the most important thing to looking for, because it will represent the pivot around which we could develop economic, social and competitive value in a long term prospective. 

In today's case, we can find:

• a strong values' concordance between a travel company and the kind of promoted car (a MPV): who's interested in buying a spacious car is probably interested in journeys; 
• a trip is a very emotional activity, but it's normally meticulously planned, especially in a crisis period: the idea of being entrusted to a trip's configurator brings a new kind of though, which is able to increase the emotional level (it's named 'Moving Emotions'). Of course, this can help to build the new product image (which will contribute to create the product identity in a long period horizon), that is trying to be more characterized (starting from the name) than the model before (Lancia Phedra): do not forget, every single detail we are talking about is going to affect the whole brand equity;
• still talking about product identity, Lancia Voyager is a faithful traveling companion, that could drive you everywhere that you want, and this is functional to the concept of brand loyalty: Lancia's consumer feel protected and pampered by a fair friend;
• a general attention to assistance: "not satisfied by the proposed trip? Never mind, we're here with other suggestions.". In the same way, Lancia's trying to make consumers "relaxed", because they are present for them for the whole car's life. Such as they're saying "have a problem with your Voyager? Here we are"; 
• this philosophy is reflected even in the configurator's design: at the left of the screen, you can find a pop-up window where is possible to find informations about how the site works (remember the assistance), statistics regarding other consumer's preferences (this is important to make everyone feels to belong to a big family - Lancia), and a section where you can book a test drive or find a dealer.

In conclusion, this partnership between Lancia and ViaMichelin seems to be a strong arrangement, thanks to the coherence created to generate the values that we have talked about.

Without doubts, this kind of action is part of a corporate strategy that is aimed to build a long lasting product identity in order to positive affect the brand equity: too often, Lancia's identity has been negative influenced, and nowadays the Italian brand has lost its sixties' strong and sophisticated image. In the last years they are trying to get it back to the old splendor. 

Will it be the right way?