Why did the most affordable car (tagged as “Cheapest car”) not succeed in the Indian Market?

The answer to this puzzle lies in the “Pricing strategy” of Tata Nano.

Tata Nano was a dream project and for a considerable amount of time, the most talked about project in the automobile industry. It was even hard to imagine that one can buy a brand new car for 1 Lakh rupees (roughly $2500 USD at that time).

Experts predicted that the car would be a hot-selling product and that the middle-class customer segment in India would buy the product in hoards. Contrary to this prediction, the product had to be closed in 2018 due to no demand.

So what really went wrong?

Yes, there were quality issues, and there were delays in rolling out the cars due to issues in the factories, but which new project of this kind did not have these glitches.

The major contributor to the project failure can be linked to the “Pricing strategy” that the team adopted. By branding it as the “Cheapest car” and an alternative for the middle-class family which barely fitted in a 2-wheeler, the team killed the “Aspiration” quotient of the product.

The “aspiration quotient” of Luxury products (cars fit into this category as it is not a basic need) usually depends on their pricing. If you get the price incorrect, you will end up killing the product.

Customers who were looking to upgrade to a car usually look at it as a way to showcase their social status and hence started to overlook Tata Nano because of its pricing strategy.

So next time around when you think about pricing your product, please bear in mind the impact “Pricing” can have on your growth story – both in a positive and negative way