Monday, February 21, 2011

Tata Nano - Fizz or Fizzle?

I love the ABCD model of analyzing a product.

A - stands for Added Value.

Definitely the NANO scores very high here, in terms of functionality for a 2-wheeler owner. Comfort from the elements, ability to transport 4 adults.

B - behavioral change

This refers to the changes required to use the product. Since NANO targeted 2-wheeler owners, this is a big change. They have to pay more for fuel, and can’t zip around the way they used to on a bike. In cities, bikes are actually faster than cars. But here’s the biggest behavioral change - they need to learn how to drive a car! That requires time, money, and effort - not always easy to find. And perhaps, some potential buyers feel that it is too late to learn driving? (Yes, anecdotal, but we all know folks who buy a car and never learn to drive, relying on drivers and spouses)

C - Complexity

The product is quite simple and scores high here too.

D - Diffusion

This is where everyone can see you using the product and therefore gets inspired to buy one too. Cars tend to do pretty well on diffusion - you see a person zipping around in a fancy car and you’d like one too. On the other hand if you see a car breaking down or, as in the case of NANO, going up in flames, you wouldn’t want to buy one. Thanks to the internet and mobile phones it is very easy now to diffuse both positive and negative images.

Now all the above are assuming that the primary market is a 2-wheeler owner seeking to buy a car. If we move it to any person in the market for a small car ie students, first-time car-buyers, second-car owners, second-hand car upgrades, the ABCD model changes a bit.

A - Added Value - Price becomes the big differentiator, and it’s always a very compelling one. Unlike in the case of a 2-wheeler owner where price was actually considered a bit steep and financing became a problem, if we look at this new, larger audience, price is a big positive

B - Behavioral Change - None required. These are people who are either using a car or who are determined to learn.

C & D remain the same.

Given this, Tata NANO should probably invest in building relationships with Driving Schools and offering weekend driving lessons. Or perhaps just reposition to target a broader market.

I wrote this post because I think this model is useful for analyzing the market-worthiness of a range of products. Product Marketers can fix the value, complexity and diffusion aspects. But behavioral change, that’s not in our control. Like they say you can take a horse to the water but you can’t make him drink! One of the business phenomenons of our times - Apple - is built on exactly that premise - the product should be intuitive to use.

The ABCD model was taught in a workshop conducted by David Bell of Harvard Business School.

Jessie Paul is the CEO of Paul Writer a marketing-focused firm offering advisory, training and community. She is the author of No Money Marketing which distills her learnings across a decade in the IT industry in roles such as CMO - Wipro IT, Global Brand Manager - Infosys and Head - Marketing, iGATE Global.

10 comments:

Rahul D said...

The Tata Nano scores quite well if you only consider the functional value it provides to its target market (Two wheeler Owners in this case).
However for a High involvement product we also need to consider the aspirational value of the product(Even more important for the Indian Market where car is an indicator of an individual's social class). In Marketing parlance this would mean analyzing the Influence of Reference Group on Consumer Behavior.
This is where Tata Nano under performs as it has always been associated with a Lower Income reference group.This contradicts with an Indian car buyer's psychology of being associated with an aspirational reference group.

Int_Mann said...

Another thing to consider is the build quality in which Nano scored quite low in J D Power surveys.

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