Tata Nano and some forgotten “As”

This week, we were further acquainted with people who are reaching new markets at the “bottom of the pyramid” through business instead of NGO or governmental structures. In their article “Strategic Innovation at the Base of the Pyramid,” Jamie Anderson and Costas Markides introduce us to four “As” of social innovation in these emerging markets: affordability, acceptability, availability and awareness. Affordability stresses the important of realizing and addressing just how little discretionary spending is possible with this new market. Acceptability addresses whether products are made for the specific markets they are being presented to and whether they match socio-economic needs and desires as well as cultural ideas. Availability, how much access customers and providers actually have to products, is huge given the low levels of classical infrastructure in and between many “bottom of the pyramid” communities. And finally, what seems obvious, awareness, or customers actually knowing about the project forces business leaders to go beyond traditional marketing avenues to reach customers within the patterns of their daily lives.

Tata Nano reemerges as an example. But Anderson and Markides were writing in 2007; in 2011, Tata isn’t fulfilling its hype. Some are questioning the safety of the cars due to fires, but many acknowledge what the Tata team has realized: they forgot their As, acceptability, availability and awareness, and also affordability. “Stuck in low gear: A brilliant, cheap little car has been a marketing disaster” an article from The Economist this past August reveals where some As were missed.

First, while the business world eagerly awaited the Tata’s arrival, many potential customers had no way to know about it. The article claims “Carl-Peter Forster, a former boss of General Motors Europe who took over as head of Tata Motors in February 2010, admitted earlier this year that he was having to reinvent the Nano business model. There was no real national distribution scheme, very little marketing and advertising, and no effective system of consumer finance.” To deal with these awareness and availability issues, Tata has started advertising country wide on TV and setting up “drop in centres” in cities and villages for people to check out the Nano’s (reminiscent of the marketing in the Kenyan water pump video).

But another major problem with marketing seems to fall into the “acceptability” framework, where companies need to “respond to specific national or regional cultural or socioeconomic issues”. What Tata failed to realize while focusing on the low cost of the Nano was that a move from 2-wheel transport to 4-wheel transport was a major move for many families, one that marked scaling the social ladder. Many feel that had Tata focused on the other great qualities of the car along with emphasizing the cost, they could have captured their actual market—those who are on their way up from the bottom of the pyramid. At 2,500 the very bottom of the pyramid can’t afford cars. Tata missed the opportunity to capture this emotional and symbolic moment of social advancement. This was a failure to connect to the cultural and value based reception of the Nano.

Finally, the affordability went up from their targeted goal. To deal with this problem, Tata is working with local banks to create access to loans and alternative car payment plans.

Tata is a true pioneer and the Nano is a project that musters an emotional response for people within and outside of India. People are excited over what Nano represents: innovation for the rgeater good and increasing opportunity accessibility. Still, after our previous weeks readings I feel that a lot of these problems could have been avoided had Tata considered a fundamental part of Human Centered Design—designing with people. I want to search for more information on how Tata consulted with their potential customers before the release of the car. Given the need to keep the car’s cost as low as possible (while still be safe/ worthwhile for transportation needs) how much of consumer opinion could Tata possibly work into their Nano design, especially if those opinions were asking for expensive features like power steering? Now that we’ve seen to obstacles Tata has encountered, how else might they benefit from an HCD approach? It will be interesting to see if Tata can turn this marketing failure around or will head back to the drawing board with lessons learned.

http://www.economist.com/node/21526374