Last week one of the news dailies published a news item titled ‘Tata Motors struggling to reverse sales slide: aggressive marketing and deep discounts not enough’.
The car industry is passing through a rough patch. A variety of macroeconomic factors and buyer sentiments are working simultaneously against the industry. The data released (Jan 2013) by the industry body revealed that auto industry has gone down to its lowest growth rate (close to 3%) since 2002-03. Inflationary pressures, economic uncertainty and customer sentiments are externally imposed constraints which seem to be discouraging people to indulge in big ticket buys. Industry leader Maruti reported clocked in almost similar unit sales this Jan (compared to last year), Hyundai registered 1.45 % increase. But Tata Motors experienced a huge slide by a massive 61% against the previous year’s figure.
This kind of situation elicits two kinds of responses. It is not uncommon for managers to search and use tools of immediate sales revival. Consequently marketing aggression degenerates into excessive use of sales incentives aimed to trigger impulses in favor of promoted brand. Common to car industry are tactics like free insurance, music systems, interest free loans and service package. But the reality of competition is harsh. Any attempt to disturb the market equilibrium by use of tangible or economic value manipulation is quickly copied and neutralized by other participants in the industry. This brings us to the question why Tata Motors’ decline is disproportionate to overall industry and other players there in?
Tata Motors created a huge splash at the time when Indica was launched (1989). It’s punch line ‘More car per car’ said a lot about the vehicle. Here was product which packed everything more-space, price (less), mileage, trust- to appeal to value sensitive middle car buyers. The measure of trust that potential buyers reposed in Tata brand can be gauged by huge booking figure (over a lac) which Indica received within weeks of its announcement. Soon after its launch Indica went on to become one of the top selling hatchbacks in India. Later Tata Motors moved up the product spectrum by launching other models like Indigo (three box sedan), Indigo CS(compact sedan), Indigo Marina, Manza, and Aria.
At the heart of Indica’s appeal was trust which flowed from identity that this brand drew straight from company name TELCO. Tata Motors was previously named as Telco which produced commercial vehicles, primarily trucks. The engine of Indica was developed internally which was based on the engine used by the company for its pickups and SUVs. It was a logical extension of the company to move into technologically adjacent market by derivation and modification of what moves the vehicle. Externally, to customers, the Tata name allowed this off spring to tap into huge equity reservoir developed over the decades. So the name (market assets) and engine (internal capability/ asset) combination created an irresistible offering. So strong has been the link between the offspring and the mother brand, that even now the brand is called ‘Tata Indica’.
Tata being a strong player in commercial segment wanted to move into burgeoning car market. At the heart of this move were synergies which could be harnessed. Car enjoys a lot of engineering commonalities with commercial vehicles. So to an automotive engineer, a move from commercial vehicle to private vehicle is incremental. The reality in customer mind may not be the same. The customer point of reference to perceive a car (Tata’s car) is likely to be radically different. The term car evokes a very different normative frame, which is created by other brands in the category. A car in customer’s imagination is everything but not anything associated with commercial vehicle. A car is an identity expression device; it is an instrument of indulgence. What appears to be a smooth transition internally is not so externally in the mental world of customers. Hence Indica made a lot of sense to commercial segment (cabs) but fails to excite a typical car/sedan buyer. A quick car ownership survey can establish this fact.
In the world of marketing the idea of creating a brand that appeals to all is very un-marketing. It is counter to the concept of segmentation and targeting. It for this reason, brands especially with the symbolic core have to erect barriers which prevent it from going to non-customers. Consider how car Audi, Skoda and Volkswagen are strategically positioned which may share internal commonalities but are very different from one another in terms of appeal and appealed.