Tiago’s aggressive pricing a cue to Tata Motors’ future growth strategy

by Shourya Harwani , 07 Apr 2016

In its journey to revamp its brand image from that of a commercial vehicle maker to a serious competitor in the passenger car market, Tata Motors has taken its most important step yet by launching the much-awaited Tiago hatchback.

Dubbed a game-changer for the company and a disruptor in the hatchback market because of its aggressive pricing (starting at Rs 3.39 lakh ex-Mumbai), a lot is riding upon the Tiago as Tata Motors looks to transform itself.

According to Girish Wagh, senior vice-president (programme planning and project management), this transformation will be brought about through lower cost of ownership, better design and disruptive pricing, which the company believes are the most important characteristics of the Tiago.

The home-grown automaker embarked upon its journey three years ago when it announced the ‘Horizonext’ strategy in June 2013. Its first product under the new strategy was the Zest compact sedan, which was launched in 2014. Even as the Zest provided an instant boost to the company’s sales and created some stir in the compact sedan market, it could not sustain the initial momentum.

Next came the Bolt which was introduced in early 2015. An overambitious pricing strategy severely dented the Bolt’s prospects in the Indian market and the hatchback did very little to turn around the company’s fortunes.

Despite the fact that both the Zest and Bolt did not prove to be the game-changers that the company was hoping for, they provided valuable learnings and, according to Wagh, Tata Motors has come a long way in terms of quality, design and processes over the last few years.

“We have had a lot of learnings from the Bolt and the Zest. Some of the directions that we have taken, like the decision to launch petrol engines, improving the ride and handling of our cars, and including infotainment systems have paid us dividends,” said Wagh.

“On the pricing front, the learnings from the Bolt were to improve the way we price our products and you can clearly see that with the Tiago’s pricing. Having a number of variants and the optional safety packs is among those learnings. So we have had a good number of learnings, including doing course correction wherever necessary as well. When we launched the Zest, we were at the first level and now with the Tiago we have reached level three of our transformation. I’m sure we will continue to learn and improve from Tiago as well,” he added.

Available in five trim levels priced between Rs 3.39 lakh to Rs 5.01 lakh, the Tiago comfortably undercuts its rivals in terms of pricing like the Maruti Celerio, Chevrolet Beat and the Hyundai i10. In fact, the diesel variant of the Tiago is also the cheapest diesel hatchback in the country, alongside its sibling Tata Indica. 

Developing brand connect

Apart from reworking the design and engineering of its vehicles, another facet of its transformation is improving brand retention and the signing of football star Lionel Messi as the global brand ambassador is an important step in this direction.

“We have worked on the overall Tata Motors brand image by bringing in Lionel Messi as the global brand ambassador and the ‘Made of Great’ campaign. This has already started having a positive impact and after a very long time we have had a positive net promoter score. Generally, a brand has promoters and detractors. The net promoter score is positive when you have more promoters of a brand than detractors. So this new branding exercise has helped us improve upon this parameter of brand retention,” explained Wagh.

“Our customer satisfaction index has also improved and now we are at the third position after languishing in the bottom some years ago. Still people have the perception that Tata Motors has bad service, but now it is not the case and we are improving. Also if you see the sales satisfaction index, a few years ago we were at the bottom of the heap and now we have moved above the industry average,” he added.

While acknowledging that being the first grounds-up model since the launch of the Nano in 2008, the Tiago has a lot riding on it, Wagh believes that it is a stepping stone towards the larger goal of Tata Motors moving up on the priority list of Indian car buyers. “What everyone is looking at is immediate volumes and gains, but we know that for us it is a long-term game and we are continuously working on customer feedback to improve,” he concluded.

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