Wednesday, October 12, 2011

WHEN IT IS BEST NOT TO TALK ABOUT the most innovative feature of your product

When Tata Nano was being conceptualized and talked about in the media, all of us thought that this is a revolution. It was indeed a revolution in technology, and entire world acknowledged it, however the buyer in the market is not impressed, here is why …

For most of the middle class Indians, owning a car is a status symbol, Tata nano does not help in creating a status symbol. The car itself has no issues, it has everything to become a proud owner of, but the Tatas and the media have ruined the image by calling it a car for the poor. It’s a no brainer that the middle class do not want to be categorized as poor or middle class, even if they are one.

At the other extreme are Apple products, where the technology being sold is a bit over hyped, and the price for them in some cases cannot be justified, but I know many who buy an apple product as a status symbol.

The core of Tata Nano’s innovation was in having a vision for a unique car, partnering with SMEs, pushing its engineering staff to “do more with less” and in making the engine more efficient.  All these also contributed in achieving a significantly less manufacturing cost – a first of its kind cost innovation, however sometimes, the most innovative feature of your solution is best kept hidden from your customers.

Imagine one of following three scenarios …

1)    If Tata had never used the word ‘Cheap car’ in any of their communications. If they had simply put this car at par with all other entry level cars, and provide incredible free goodies or discount or best of all - free petrol for years! They could as well afford to replace the whole car after 5 years!
2)    If they would have used their technology advancements to provide C class/ sedan features at hatchback/ entry level prices. You might argue that the purpose of making a car affordable won’t be achieved, I agree.
3)    If their PR was based on a concept of - finally a nano (small) car has arrived, or having a message “why spend more” instead of “spend less coz your are poor”

So how did the low cost airlines pull it off? Low cost airlines worked because the flights didn’t taxi into your garage. No one really had to exhibit their boarding passes.

In the already crowded tablet market in India, the Government of India is talking about launching a tablet for $35 for students and maybe $50 for others.  Question is – how are they going to position it?  Hope they don’t launch it as a tablet for the poor man!

The message for corporate innovation leaders is - Technology Innovation must go in hand with Design, Business and Marketing innovation. Market research is not the best way to feel the pulse of your customers, and innovation also needs a cultural touch.

In addition to a) Product & Technology challenges, ideaken will soon launch collaborative innovation for b) Process, service & business, and c) Design, brand & usability category of innovation challenges.


  1. Very good article. Clear and correct vision.

  2. Hi,

    This is a fantastic post. I agree with you 100%.

    In fact, any good marketer will tell you the significance of pricing. Pricing makes a statement every single time. So you need to think through carefully and determine what statement you wish to make with your product.

    Cost-plus pricing strategy is a poor strategy. Pricing should be driven by customers' willingness to pay.

    My last comment is about positioning. It has to do with desirability of the product. Who is your target segment? If it is two wheeler and rickshaw drivers, then thats what you will need to target. In that case, you are not competing with the average car buyer. How has Nano facilitated this positioning with its communications? I do not know, but that is something worth looking into.

    Its a shame that the Tata's are not able to commercialize their true innovation to the extent they should have.

  3. Thank you all for sharing your thoughts, really appreciate it.

  4. Overall a good read and compliments well deserved. It opened my eyes to what happened.

  5. Absolutely right . It is the narrow vision which results in such catastrophes and I will even doubt is technical superiority, there is nothing in it except being cheap. Interesting it is now showcased with another similar product line,

    " The Tata Nano was an innovation designed to bring affordable cars to the Indian masses across rural and small-town India. Titan Industries-owned Goldplus has made an unaffordable car designed to appeal to the masses with its conspicuous use of gold and jewelry.................."

  6. Low price is never a pricing strategy, it is actually a lack of pricing strategy. A strategy will allow you to maximize price on different market circumstances and different product hierarchy.

  7. Pricing strategies must always come together with the other 3 marketing P's... Never set a pricing strategy without proper communication.