Monday, November 11, 2013

Click- Shopping ka naya formula

Diwali- one of the biggest festivals in India was underway last week and possibly serves as the time when massive spending on shopping takes place. Amidst talks of a weak economy, slow down in terms of manufacturing and spends likely to go down, I saw a report on the fact that this festive Indian were high on shopping for high end consumer durable and smart phones and that most of this was  through online purchases. Online shopping was up by 30% this year for Diwali against last year while foot falls at malls were up by 10%.  

While I was writing about the slow death most malls in and around Mumbai were seeing, I had mentioned that the next big threat to malls was going to be a completely different form of shopping with the ‘Click to cart’ replacing the ‘Pick to cart’. While I was reading today that traditional retailers of electronic goods have filed in a petition to counter the online attack claiming online retailers selling at a loss, retail chains with spaces in malls definitely seem to be bearing the brunt of the internet savvy crowd moving away from the showroom outlets.

I have been a slow mover to the online shopping spree. My first online purchase might have been back in 2004 from (now ebay India) where I got a 256MB Sony pen drive for about 900 bucks. At that point, I had no idea of online retail and was actually wondering how the ‘Buy Now’ option worked on a site which was known for bidding. I did not even have a credit card then and the transaction was done for me by a colleague.

 As a contrast, I picked two pen drives of 4GB and 8GB with a combined cost of 600 bucks.  I reserved online book purchases only for exclusive titles which I could not get pirated on the street or ones which I did not find in Crossword. I was astonished when a recent purchase of two books online was at 50% of the bookstore cost. I have now started exploring other avenues as well. Though my experience of a pair of dark glasses or an mp3 player some years back was not too encouraging, the same with shoes and earphones has been good so far.

So will I try foods or clothing next? Traditionally, these areas have been my choice for pick off the shelf as quality for things I eat or wear is of utmost importance to me. I have still not too much faith in the online system for performance oriented items which cost more than a thousand or things where touch, feel, demonstration and replacement still matter. But I don’t see that trend to last too long by the way things are going.  

As for as I am concerned, paying for shipping is not a huge cost for items where reaching out, parking my vehicle and time spent in the activity are monetized. For all low value items; Click- is my shopping ka naya formula. 

Wednesday, October 30, 2013

Who is killing Odisha??

Though my title might suggest, this is not about any natural disaster- this is a disaster which has disturbed the socio-economic fabric of this state. I recently had an opportunity to travel through the interiors of Odisha to a place called Barbil in Keonjhar district taking my count of visiting the state from never to three in a space of ten months. Though on the last two occasions, I was restricted only to Bhubaneswar and outskirts, I did get a hint that the state was still more of an under-developed area with a high concentration of tribal population. This trip was an eye opener to the real world of sorts.

The first few hours for me till Jajpur were more of a drive through the countryside, much like Maharashtra’s Thane district in the monsoons. Scenic aspects of the countryside with lush green fields and wide highways running through the fields on both sides were refreshing. But as we approached the mineral rich areas where mining was the key activity, the picture changed drastically. Mining in India should be a profitable activity with low royalties and high rates offered in the Global markets.

But as I had read in ‘Patriots & Partisans’ by Ramchandra Guha, mining in India has always resulted in ecological and economic plunder. What came in next was like time travelling back into India 20 years earlier. The roads got bad and un-motor able, signs of iron ore on the sides and accidents involving dump trucks signifying reckless driving. The road was single lane in either direction with heavy traffic and pot holes that were representative of the lunar landscape. Traffic jams which ran for kilometers and involved at least 200 vehicles on both sides with 10 wheel trucks with 16 tonnes of ore to Paradip at the hands of drivers who were visibly under age. Highway 215 went across a landscape where there were just forests with little or no civilization. Shops by the road only catered to the truckers with dhabba food, tyres and lubes for the trucks and recharge vouchers for cell phones.  

The infrastructure was abysmal. The one vehicle width bridges across small rivers were relics from the British era- made of bricks which were never designed to carry loads of 16 tonnes on 10 wheels. The daily traffic of heavy trucks had eroded the bridges to an extent where the bricks had formed ridges under the tracks.  Like the roads, the vehicles are also badly maintained. The towns we passed through looked like the India story had never reached these places with the locals bearing the brunt of daily traffic jams. Even ambulances and local buses were stuck in the jams every day.

From what I understood from the driver and other people in the area was a picture created out of both: degenerative politics and opportunistic attitude of the locals. To paraphrase my driver- the situation you are witnessing is much better than 5 years ago. We had above 300 illegal mines in this area; now we down to just 15-17. Today a jam might be for a few kilometers and last us an hour or two to get across; back then we just used to camp in the car- no one wanted to take up a drive these roads. Today we have just a fraction of the truck which used to ply here and they too are permitted to run only between 8pm to 8 am. By night- they simply rule; by day the block the roads as there are no parking bays to support the numbers. End result is the two lane road is reduced to just one working lane by day.

But why are these people ready to face hardships and why does a local not protest against the plight? Why does no one seem bothered that a truck covers 300 kms over 7 days? Why do we have multi-axle trucks plying on narrow roads not designed for such traffic even when there is a railway line running from the mines to the port? The answers I got were mind boggling to how people are deep rooted to corruption, selfish interests and missing the bigger picture towards development.

In the hay days of illegal mining, just about everyone made money through every possible avenue. Anyone with money bought a truck to move the ore. Anyone of 16 became a driver and villages made money by facilitating their movement by collecting illegal tolls. No one needed to work in the fields to make a living, they survived on the revenue share from what village made through the trucks going through. If someone had the influence, one could even fill a truckload of ore by borrowing small quantities from others. Villagers even made money from the traffic jams by offering passage through private land for anyone who paid to get their vehicles ahead by a few kilometers.

Even truckers made big bucks. Labour contractors at Paradip port were given Rs 200 for every vehicle unloaded- they take Rs 50 against a receipt of Rs 200 and the truckers do it themselves and pocket the money. As the trucks moved slowly on the roads, an account of 1 km/ltr was the mileage given; the rest of the fuel sold.

When the government cracked its whip on illegal mining and made transportation via railway wagons a must, the locals, truck operators and the opposition partnered. Cornered, the government still rules with an iron fist on the mining; but gave in to the trucks coming back. But the damage has been done. A road widening project funded through PPP was on the basis of the 300 mines and the thousands of trucks on it each day. With activity limited to a fraction now, the private partners have pulled out. With no infrastructure to support, global giants like POSCO have moved out from the state.

So finally... who is really killing Odisha? The government, the politics or the people themselves? I feel it is the greed, corruption and selfish ends of all three of the above. 

Monday, October 21, 2013

Power, Trust & Responsibility

I admire the trapeze act in a circus. The idea of a trapeze that lets go of the swing takes a giant leap of faith while loosening his grip hoping the other person will be grabbing their hand on the other side defines teamwork and coordination in a lot of ways. In between the two swings is the space where the trapeze has the power to do all kinds of turns, twists and somersaults to enthrall the audience. This arrangement is completely flawless in itself as long as the two people in the act have faith in themselves, each other and are committed to their job at hand. In the rare case where there can be a failure of coordination, is the safety net which saves either from paying the ultimate price.

This arrangement is a very close analogy to the way organizations are structured and function. Like the circus manager, organization heads lay down the objectives, teams handling functions are given a target, the team leader assumes the role of playing the anchor to all activities and his team performs various tasks within the given framework to deliver results. The safety net is the organization and its top management which takes the onus of all activities done under its umbrella. Everything can function as smooth as a circus act till every unit maintains its decorum of duties and takes the responsibility for their actions.

The above arrangement basically eliminates the hierarchy structure in an organisation, empowers people within their spheres and decentralizes responsibilities to all involved. The output in true sense is built on teams and their collaboration and the credit for good work if shared can actually make work environments as fun as the circus. I can vouch for it considering I have worked at places where office strength has ranged from 30 to 300 to 500 to 1500.

The team of 30 was very well knit and this I must agree was the most enlightening phase of my professional life. Fact remains, it was more of each man for himself and if this were to go wrong, it was never more than two people who shared the blame for failure to deliver. When in a crunch scenario, it was an unwritten rule that the man at the helm of things is the man of the hour and is the one who takes the call. Results may vary as per the decision taken, but it made every person think twice and take an informed and thought out action.
Things did not change much even when I shifted to a placed that had over 300 employees, mainly because even then we functioned as an almost independent entity with our own targets, resources and at most times, decisions were always taken in a manner where every individual had to own up to the task at hand.  

As I have seen organisations of a bigger size, the chain of coordination has grown and strangely enough the equation of responsibility against decision making power has got greatly reduced. It was surprising that while a department comprised of about ten people, only about two or three had authority- the rest were merely a chain of execution. What came as a big surprise was that when I worked at a placed with 3000 people, authority is so very centralized that it was a cause of bottlenecks.

Image a scenario where a quick decision is required: the first person in the chain gets to understand the problem, escalate it to the next person and then gets through to the last person who takes the call. The urgency has to be firstly understood by two levels of gate keepers prior to it reaching the decision-makers. Not to forget, there is filtration of information at every level which in the end can be inaccurate. So not only I see delayed calls but also calls based on half burnt information. Also, the concentration of power at the apex has ruled the lower rungs happy to slip out of responsibility. All you have now are robots that follow orders.
I see this as a breakdown of the team structure. Responsibility and authority resides at the apex and the people below have no powers to take decisions neither the inclination for taking it either. The charm of power for the people at the top, at times don’t feel the need to delegate authority along with responsibility. With no power or freedom to take a decision, the people below are just means of execution and a channel to the top.

I find this absurd. How will people grow in an organisation? What happens to the high risk high dividend act which people should be encouraged to shoulder to fast pace the company? How will achievement be seen? It hardly surprising I see many people who have the romance with the companies of such sort and end up with 25 years in the same place with little or no aspirations. Not to mention, change is never going to come in a place like here as there is never a need felt for it. 

In an age when we feel that customers are low on patience and response time is the key, such attitude is actually building doom. I have heard that giant companies are like giants- they take time to get of their inertia but gather pace in giant steps. I really am not sure how valid this will be now as by the time the giant catches pace, the smaller bunnies make the dough- and when the giant comes at par, technology changes! Giant have to function as independent units with greater responsibility, authority delegated down the line if they wish to survive competition. Else the blades of grass will survive the storm and the giant oak will be uprooted.

Saturday, September 7, 2013

The KISS that works...

Advertising and Marketing Communication often is expected to do wonders like we see in fairy tales. It is like the true loves kiss that breaks the evil spell and changes the life for the prince or princess or ogre in a way only imagined. It works much the same way with brands and their consumers. Brands are constantly in the search for those loyal customers who swear by their name and will never defect to competition no matter what. For consumers, from the wide variety of options at hand, is the basic need for the brand to serve its purpose as well as satisfy the need for association at a social level.
Like people, brands have personalities and much alike is also the fact that the less layered and complicated the brand personality; people tend to adapt to it faster are more closely associated. This is the reason why when we plan for the branding or communication for any brand, the governing fact has to be KISS (Keep It Short n Simple). The simplicity is a key here since layers not only distort the message but increase the number of time something has to be conveyed before the right meaning comes through. Shortness- well it is possible at times and most brands do manage to talk about their personality through a phrase and in around 3 words or less.
The basic purpose of branding was to differentiate one from another and somehow each time we talk about branding opportunities or brand manuals; it somehow seems dominated by visual aids.  I will not deny that the moment I think branding, my mind starts working on use of shapes, fonts, colours and trying to figure out a unique arrangement for talking about the brands persona. One possible reason I see is that an organisation needs to have an identity to start with business and the logo becomes the first point of establishing this. Another that shapes and colours are usually easy to identify. But once the brand has reached a level where it looks to hold a unique place in the minds of its consumers, other aspects like catch word phrases or audio mnemonics make more impact.
One problem I see with visual identities is the overcrowding of the space leaving very little scope for anything innovative. Indian or multinational large corporate groups seem to have sided with blue as a colour of choice. GE, Philips, Samsung, AT&T, Infosys, Tata, Ashok Leyland are just a few examples. Close on the heels is red. Coca Cola, 3M, Honeywell, Cannon, Virgin, ESPN, LG, Mahindra are just some who make this space. Not to mention how many use a combination of Red and Blue. So unless you have a yellow like DHL or the brown of UPS; the colour palette is running out fast. For symbols, the ‘H’ can be for Honda or Hyundai; the ‘T’ can be Toyota or Tata. The call is to make a breakthrough at some level.
If we look globally, most companies have picked up on catch phrases. The simplicity being that use of small words can have multiple meanings and endless possibilities to apply across the domain.  For instance Nike- They use the swoosh and ‘N’ as the identity on the shoes, but what the brand will today stand for is - ‘Just do it’. So what would be ‘Impossible is nothing’- the biggest competitor with the 3 stripes or 3 petal flower, Adidas. So why do brands so successful in their visual look for words as a part of its identity? I feel these simple words add in value. As much it works for brands abroad, it works in India as well. Things like ‘Utterly, butterly, delicious’, ‘Fill it, shut it, forget it’, ‘Taste the thunder’, all have a unique association in our minds.
Another sense which has been successful in terms of brand association is sound. Each time we switch on or turn off a Windows based PC, we hear a sound which we are so familiar with. We know what PC has an Intel inside it even on a radio ad. Nokia sound in a unique way; so does Samsung. It works so well that major phone networks in India like Airtel, !dea, DoCoMo all have a unique mnemonic sound to identify itself. Even Britannia and the corporate house like Reliance ADAG have an audio identity.
I guess these are a few brands where I felt it was just small and simple ways where brands have done things to just stand apart and make their presence felt. I’m sure there are many more- but then again; what works in my opinion is the simplicity in messaging to represent the brand in the most unique of ways and cut down the clutter. And more often than not the KISS works.

Saturday, August 24, 2013


 The Independence Day week just went by and I was compelled to start thinking what a great tradition has now set in to the retail system to offer great deals to boost sales. While reading ‘It Happened in India’ by Kishore Biyani, I was highly impressed by the business acumen of this person to come up with ideas to drive footfalls by attractive offers.  Today just about everyone has joined the bandwagon- most noteworthy this year was a car rental ‘Cars-on-rent’ offering discounted fares for cars booked on 16th August (named National Bunk day) to cash on the long weekend that we had this year. 
Discounts, offers, deals have always been a part of our lives but their presence has now become much more pronounced. Prior to the retail revolution hitting India in the last 90s-2000s; a discount clearance sale was an annual feature which ran around July to August each year. One of the key reasons was the festive shopping is predominant in India runs and from October to January for most people. The July to August was also the time for rains which always pose the threat of stocks getting damaged.  Clearance sale met two objectives; people shopped in a non-festive season as well as got the shelves ready for fresh stocks during the festive buying.
The retail revolution brought about a change in terms that shopping was now a weekend affair. What this created was a lean period in the middle of the week. Big Bazaar’s ‘Big Bachat Wednesday’, bridged this gap with price driven shoppers flocking the outlets with shopping carts full with groceries. But Biyani’s master stroke was the Republic Day sale- creating an opportunity within a month after the festive season rush to get people back in stores. The unprecedented success was replicated with the Independence Day sale.
The success of the day specific deals has caught up like a wild fire today. Festive offers now run not only for big festive occasions like Dusshera- Diwali, Christmas and Eid but smaller occasions like raksha bandhan, holi are in the ring. High value purchases like gold and jewellery are also now offered with deals of no making charges to boost sales. There are deals on hotels, holidays, air tickets, spa therapies, medical procedures- just about everything.
I was always under the feeling that brands by definition are supposed to make people exclusive. Brands mark the line separating the ‘have’s’ from the ‘have not’s’. But in recent times, I have seen even iconic brands like apple entering the deals arena. ‘Get an i-phone 5 in exchange for your old smart phone and save X’ and there was a herd of people heading into grab the deal.  What this does at times is dilutes the value of the product for an early adaptor who spent a good amount to buy the phone for its exclusivity.
While discounts, exchanges, bundled deals, extra at the same cost all have seen the hay days, one thing that has actually caught up in India has been coupons. I remember my grandfather in the pre-1991 day used to wait for the 15% discount coupons of Raymonds to redeem against purchases of suit lengths. This was a prized possession as the brand was exclusive and not everyone except select employees and share holders got the coupons. Yes, there are fast food chains that run coupons through news papers and delivery boxes; but I am yet to see anyone buy a pizza because they had a coupon.
But yes, coupons are still around and have changed form and now come as an e-code. While online travel booking sites or online stores are using this at present, it has a limited impact. Firstly, they are given out as loyalty benefits and secondly, the kinds of discounts they offer have a very low impact in the larger scheme of things. For me as a user, 20% off on a hotel booking with a cap of maximum discount amount of Rs 500 makes an impact only if my hotel room was priced under Rs 2500. Beyond this my discount percentage falls down and has no meaning.
But as I gather, chunk of buyers today come from our strong and growing middle class population in India. The mass consumerism and buying will go on and once the buying decision is made- deal or no deal; it actually doesn’t matter.

Wednesday, August 14, 2013

Time to shape up the Economy???

The words seem to echo in every quarter of the business world- industry is in a slowdown, there is no money and there are no new projects to latch on to.  India is marking its 67th independence day and the mood around is nothing close to rejoicing. The days of double digit growth that we enjoyed in the late 90s and early 2000s is no longer the case. Today, very few companies are posting strong profits, most stocks are falling and rupee against dollar has gone through the roof. Expectations rely highly on speculation that the government will call for some reforms and announce new projects and policies in the walk up to the elections next year. But it is disturbing to know that hope is riding speculation and nothing hard core in the pipeline.
So how are we still holding on? What is driving the country today is predominantly is the Indian Middle Class, the strong workforce India possesses which is skilled and competitive in terms of cost on the global sourcing front. Even in these trying times, IT/ITES is surviving as the back office development hot shop to the world. The consumerism and the ‘want more’ attitude of the middle class are driving the sales for FMCG, pharma and retail finance. It is more on consumer led confidence than industry drive which is maintaining the money cycle.
I remember I had studied an economic model known as the circular flow of income; a symbiotic relation between industries and people.  People produce for industries, industries pay wages to people; people buy goods and services from industries and industries make money. There was another angle to this relation, the government. They collected money in the form of taxes from people on their income, buying of services as well as from industries as they manufactured or sold goods to people. This income for the government was then invested in infrastructure and welfare which boosted growth. At times, industries themselves invested their profits or used funding tools to facilitate growth by themselves. Also, banks which hold saving for people also finance governments and industries and propel growth.
The above scenario is still valid but has a new element called the overseas sector which is altering the balance. The post-1991 India attracted an influx of overseas companies into India as the country held immense potential waiting to be tapped. Possibility of joint ventures with Indian companies, the SPVs for investments into infrastructure projects was all seen as the perfect growth platform. But the government is still very much in control as the facilitator for driving this structure and the lack of clarity on policies and slow response is today choking the country’s growth.
I read in a report on ease of doing business index, India is at the bottom of the heap. Clearing the hurdles and seeking the permission to set up something has become such a task that Indian companies today prefer to go and set up or buy companies abroad rather than invest in our own country. While projects in India are stuck in the long chain of approvals, companies from India are setting up businesses in Africa or East Asia as their next big market. It is amazing to see that an industry flagship like Tata Motors is bleeding in India and its growth is actually coming in from sales from its JLR division which is boosting heavy profits in China. 
Not to mention, the interest for private partnerships in infrastructure projects like the trans-harbour link in Mumbai just talks of the faith in partnering governments in long term. Delays in approvals, clearances from various ministries, changing policies and political intervention have more often run into project cost overruns which reduce its profitability as well as putting a strain on the financial machinery behind the project. Energy, Telecom, Retail, Airports- all sectors which actually build the infrastructure to rise have seen either delays or misdealing.
I do not wish to get into the favourite past time of government bashing- but I do feel that the system of governance has broken down somewhere. Why should a bureaucrat take any strong decision which might be industry friendly but against a political promise of the government or likely to unsettle his position? Irrespective of which political party rules, governments are corrupt and the common man in India has accepted this at par with a direct sermon from god.   
Political willingness can make a difference and there are states in India which have demonstrated its success in many ways. 22 years after India opened its doors to the world economy; the growth potential as well as the advantage of its mass consumer market is still intact. What is required is the government to clear its hurdles and put the house in order. Governments have no business to be in business- but they do need to clear the path of progress. Else, I don’t see the rupee devalue further and the balance of trade drive us back into the pre 1991 situation.

Wednesday, August 7, 2013

‘Mall’ed no longer

I’m not sure if I can pin point- but somewhere in 1999-2000 was when Crossroads came up at Tardeo in Mumbai as a product of the ‘Retail Revolution’ India was about to embark on. The earliest I recall is a cartoon in the papers with a motorist stating “Now I know why they chose this name, it has made it easier to cross roads here”- a statement marking the ocean of people who turned up to witness the mall.
It was a novelty. Where would you get the best brands, entertainment options and food under one roof? Soon there were malls and retail chains mushrooming across the city with each one bringing in its own speciality. For people like me, it was a quantum leap to look beyond Heera-Panna or other shopping centres. Indeed, a place to shop, watch a movie, have great food and not to forget plenty of parking space to give up worrying about the car- they were like a dream come true for all.
With floor spaces sprawling 1000s of sqft, these spaces offered the perfect platform for the brand invasion in India. Malls even got specialized to attract every section of the society- from the super rich to the one’s who saw the mid week low prices to their liking. A family weekend now was all the members in the family going out together to a mall which could keep them busy the whole day with fun filled activities, shopping for novelties to groceries, food courts with everything under the sun to offer along with a multiplex to make every weekend big.
Old mills in central Mumbai turned high streets and almost every realty developer in Mumbai who has the space at his disposal made sure a mall was a part of their project. One after the other, every mall was trying to outbid each other in terms of space and facilities. Retailers like Future group were in the media for opening up across the country, even in tier II markets.
But what all this development was doing was creating the classic imbalance between demand and supply with supply out running demand by miles. Adding to it was the economic slowdown in 2008-09 and the real estate market going bust adding in to the problems. Warning signs started showing up when shops in malls started to close down. I guess the first amongst them was the Citi Mall at Andheri which never came anywhere close to the high street shopping of Lokhandwala or the brands of Infinity Mall a few hundred meters ahead.
Today the retail revolution has gone from boom to doom in a matter of 15 years. No longer is Future group expanding with 10 stores in a month, as a matter of fact I see them consolidate the existing assets by redesigning their offering. Citi mall and Milan mall have closed down and K- Star and Kohinoor mall have unoccupied spaces outnumber the ones with business.
Which brings me to the question- how do some malls survive while some run out of steam even at times when consumerism is at its peak and fuelled strongly by our population force?
The answer lies in what we call the ‘Bubble’ in economics. In the early days of the retail revolution, the novelty of the concept attracted an avalanche of people interest to be a part of the wave paying premium for land and location. Retail survives on the two pillars of margins earned through bulk buying complimented by footfalls to turn the margins to profit. Footfalls come in depending on the kind of offerings and what differentiates one mall from the other. Also, malls attract a lot of window shoppers who do add to the footfalls but not always contribute to revenue. Besides as the number of options increases, the repeat customers go down.
Porter’s 5 forces model also comes into the play. While malls competed amongst themselves, they did not overthrow the traditional business methods of standalone shops in market areas. External threat also came in from online shopping portals. I read recently that an online shopping portal has revenues greater than Shopper’s Stop. Prime reason- bulk buying and the fact that shipping costs never come close to the establishment cost for a store in a mall.
Bottom line- much like Darwin’s theory, the survival of any mall will lie completely on how well it can manage their profitability through high rental costs, running costs, margins and the competition from online space.

Thursday, August 1, 2013

A disaster of Nano proportions

I just saw an episode of ‘The Men who built America’ on TV where the US courts broke down the empire of Andrew Rockefeller’s Standard Oil into smaller fragments under the anti-trust law and paved the way for competitive markets to replace the oil monopoly. The same also coincided with the rise of Henry Ford and the model T becoming the first car people from the American middle class could buy. This changed the whole landscape for the automobile sector in the US in the 1900’s.
India saw a similar shift when Maruti & Suzuki launched the Maruti Suzuki 800 (the Indian version of the Suzuki Fronte) hit the Indian roads in 1983. Beating the long waiting periods and the virtual dearth of India to think beyond the Ambassador, Premier Padmini, Jeeps and an odd Standard Gazelle or Herald, Maruti 800 forged the way for the Indian middle class to realize the Car dream. The parallel progress was the 2-wheeler market which moved from the age old Bajaj 150 Super to sleeker motorcycles built most by Indo-Japanese collaborations with Suzuki, Honda, Kawasaki etc. All of a sudden, the Indian families found mobility.
The globalization of the Indian economy in 1991 saw an avalanche of car manufacturers flood the Indian markets. Asian giants from Japan like Toyota, Honda, Mitsubishi, South Koreans with Hyundai and Daewoo and the Europeans like Peugeot, Mercedes, FIAT saw India as the hot bed. Some perished, some survived- but their success was all due to the revolution started off by Maruti; which survived every new entrant. It was only a matter of time before Indian heavy vehicle giant TATA stepped into the ring with passenger cars. Success came to TATA when the Sumo picked up in the rental segment and the Indica V2delivered in the family car.
While the affluent and middle class migrated from the small Maruti 800 to sedans from Honda, the gap between the 50K motorcycle to a 250K Maruti 800 still kept most of India in search of the 4 wheels. This was the gap which the Tata Nano was out to bridge since 2006; a car which costs just about 100K to appeal to the large volume of smaller Indian pockets. I can vouch for the excitement it created; there were so many designs floating on the net to claim to be the Indian people’s car.
The buzz was so high that the chief of the Nano team; Girish Wagh found his way into my General Awareness exam papers in MBA. Not to mention, Nano was formally launched on my birthday in 2009. People I remember spent hours to get a test drive of the new car and interest levels were so high that the car allotment had to be done through a lottery method by filling out forms through State Bank of India branches across India. It was spacious beyond imagination and gave driving comfort which small cars usually cannot offer. Yes, it was a little under powered for some; but perfect for city driving.
So why after 4 years of its launch, there are less than 800 Nano’s hitting Indian roads each month with sales dipping every month. Why is a car offering over 20kmpl not ringing the registers for TATA? Experts cite a lot of possible errors ranging from their marketing to the Singur issue. But what really is it? I feel it was a lot of factors coming together.

Promises a little too long: The initial buzz that caught the frenzy of the Indian market was the fact that Nano was going to be a car with space for a family at a price tag of INR 100K.  The initial offer from the TATA’s on the base model was just a fraction above the promised pricing. But the promise soon faded away amidst global pressures arising due to higher costs for steel. As prices went higher and reached closer to the 2nd hand car market, Nano was o longer the 1st choice. Why will anyone go for a car which has no frills when a decent 2nd hand can come in the same price?
Positioning: I don’t think you need to take a lot of marketing effort for a car that is so much in buzz, positive vibe through test drives and booking rush that you had to go in for a lottery system. You can’t buy that kind of PR and buzz that Nano lost its relevance with iPod for some. Not to mention the advertising which showed even a BEST bus driver going to work in a Nano, the joy of the child when a Nano reached a far off village in Ladakh did its job of creating the awareness.
Now the demand was high, but where was this demand coming from? Was it the urban middle class looking for its 2nd car; or it was in fact serving as the means to someone meeting his dream of 4 wheels? I believe it was more of the first and this was one area where the market started to deviate from the vision of TATA. Though the ads positioned it in one way, the market attracted was a different one.
Time to Market: So let us call this a case of a car that was wrongly positioned- but that hardly discounts the kind of interest and numbers reflected in the participation of the lottery. So was the lottery a bad idea?
Honestly, it was not the first time it was happening in India. The first Maruti 800 customer was an Indian Airlines employee who got the privilege by a lottery, while the rest with the moughals of the 80’s with money and even political power had to wait. What was different now was that there were options for the customers who did not wish to wait and try a hand with lottery. The exit barrier was low and it actually did not matter much to just let go.
Teething trouble: Once bitten, twice shy- Indian markets today are ruthless in this regard. While the world was waiting to hear how the Nano performed in the real, sporadic cases of the car catching fire sank the interests even more. ‘Nano should be offered with a fire extinguisher’ spread like a wild fire and didn’t help the cause. In any category, it takes ten times the effort to win back a customer. While the competition was cutting down prices, offering warranties and making the markets tough, the hazards of fire was damaging.
When I see the new ad from Nano with the youthful feel, all I wish for is that let this one click and the fortunes of the Nano move in the right direction. I also read that Girish Wagh after a small disappearing act is back on the job. Let the new management divert the future of this car to greater heights and away from which is closer to its name.