Tata Motors, Sales slide, and Dichotomy between a cab and a car

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’.File:2000 Tata Indica.JPG

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.car-on-rent-tata-indigo

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.

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Brands, Time, Dissociative group, Core Customers and ‘It’s not for me’

Branding is an exercise in perpetuity.A good brand achieves timelessness by a transformational process by which a product is converted into a ‘construct’ of an eternal appeal.  Anything that exists in physical form or in imagination cannot afford to be a constant, for change is the only constant.  A product is pushed into obsolescence with the arrival of new products which embody superior functionality. Consumers switch to a new product for it offers better solution to their problem. Consider how long playing records gave way to cassettes which later were overtaken by compact discs. The new storage devices like pen drives are making CDs obsolete. This is due to progression of technology by which the old one is rendered inferior in solving a consumer problem (consider progression from manual typewriters to electric to electronic to computers).

Brands developed on functional identity appeal to consumers primarily for their ‘problem solution’ capability. This is particularly true in a business to business and technology centric scenario (Intel marketing its processors to different computer makers or a firm specializing in demolition of old skyscrapers).  The challenge for the brands in this category is to keep climbing up the technology ladder and updating the functionality of the brand. The latest ad of Colgate Sensitive toothpaste is built on the appeal of ‘two times faster’ relief. Apple has been moving up on the functionality dimension with its different generation of iPhones (thinner, lighter and faster). This has been true for top German cars like BMW (improvement that they introduced to make it the ‘ultimate driving machine’) and Mercedes.

There are brands which operate on emotional and expressiveness plane. This is especially true for conspicuous products which help a person express what the kind of person he or she is. In this sense brands act as conveyors of meaning. The boots of Woodland express the ‘outdoorsy and adventurous’ streak of the wearer and Nike (based on the goddess of victory in Greek Mythology) reveals a winning attitude (grit and determination).  Brands that derive their success from their expressive symbolism operate in the realm of imagination with very little connection with functionality.

Even for brands with emotional and self expressive propositions staying in sync with the socio-psychological realities is a great challenge. The ‘hip and happening’ (values in vogue) keep changing with each generation. The values that define consumers and drive their buying evolve with time. Accordingly the brands which succeed by ‘value appropriation’ need to evolve their proposition subtly. For instance Bata’s durability may not go down well with new consumers’ desire for style. HMT (‘Time keepers to the Nation’) reigned supreme for middle class for their ‘accuracy and reliability’ but Titan stole the show with ‘design’ appeal (watch became a means of expression) in eighties.

Some values appear timeless like rebellion, liberty, honor, beauty, peace and happiness. Values become timeless when people subscribe to them generation after generation. There are two challenges for managing value centric brands. First, the icon (person) used by the brand to represent its value must be changed with time. This has been very successfully done by Lux which is built on the value of ‘beauty (we have seen its endorsers changing from  actresses like Leela Chitnis to Wahida Rehman to Babita to Hema Malini to Aishwarya Rai to Kareena Kapoor). The icon representing the core value of Lux has been changing with time.

Second, social brands succeed by conspicuousness. People use them for their ability to express a given value meant to construct a social identity.   Brand’s core consumers who fuel its success can also become reasons for its failure. This happens when brand’s core consumers graduate on to a different class (non- core) but continue to use the brand or peripheral segments use the brand. This way the brand develops association with a dissociative group breeding seeds of disconnection with its core customers. Consider the following ‘the brand is not for me’ situations:

  • Fiat and Ambassador cars got inextricably linked to a group that new car buyers do not relate well with
  • Louis Vuitton’s bags with conspicuous branding encourages some customers but also discourages many
  • The aggressive marketing of a sports shoe brand like Reebok to non-sportsperson can diminish its appeal with hardcore sportsmen
  • Hawkings and Prestige pressure cookers which girls have grown seeing their mothers cooking with
  • Even a brand like Nirma is perceived to be undesirable by new generation because of its ‘Hema, Jaya, Sushma’ connotations

The latest reported disconnection like this is the case of Levis and Wrangler. Both  the brands are struggling to cut ice with Indian youth who perceive these brands to belong to ‘ fathers’ generation’ (which is obviously old and not so stylish according to their standards- dissociative group).

Symbolic brands are intended to negotiate meaning either for self construction or social signification. Two way interactions characterize this consumption:  meaning transfer from brand to consumer which is followed by a reverse transfer from consumer to brand. This renders meaning in a constant state of fluidity. The reverse transfer or pollination can alter brand meaning subtly rendering it inappropriate for the core consumer. This calls for a tight control of meaning by enforcing a stricter regime of endorsement and reach.

Symbolic brands therefore are faced with twin challenge of building acceptance and at the same time erecting barriers to consumption.