Tata Aria, India’s First Crossover: Lessons from the Market Gloss Over

Tata Motors unveiled in AutoExpo 2010 India’s first crossover vehicle, Tata Aria, combining the features of a Sports Utility Vehicle (SUV), a Multi Utility Vehicle (MUV) and a sedan car. The objective was to provide to the Indian automobile users a vehicle that meets every conceivable requirement, from weekday serious business transport to weekend holiday travels, and from highway cruising to off-road punishment. The vehicle was offered in four variants, Pure, Pleasure, Pride and Prestige, with the last two models being the high end models with all-wheel drive (4X4) capability. The vehicles had a host of electronics and safety features hitherto not offered in the Indian automobiles and provided a great combination of style and performance as well as comfort and safety. In fact, one of the campaigns of the company claimed at least thirty six features that were first in class for indigenous automobiles.

Tata Aria also benefitted from the design inputs provided by Tata Motors’ JLR team, which is reflected in the quality of trim and the various bells and whistles for driving and passenger comfort.  Clearly, the emphasis was on providing an international class vehicle to the Indian consumer. The prices ranged from Rs 15 lacs (USD 30,000) to Rs 20 lacs (USD 40,000) ex-showroom. The introduction was accompanied by a marketing campaign that emphasized the capability to seat seven passengers and conquer off-highway applications without any compromise to the feel of a premium car. Due emphasis was also placed on the several sophisticated features of the car. Despite so much going for the car, Aria failed to take off. The sales trickled to hundreds and showrooms started collecting unsold Arias. In a sense, Aria represented for Tata Motors a failure larger than that of Nano. An analysis of Aria saga teaches several lessons in competitive strategy and marketing.

Positioning, the core

The genre of utility vehicles (UVs) in India comprises, apart from Aria, Tata Motors’ Sumo, Grande Dicor and Safari, Mahindra & Mahindra’s Scorpio, Bolero and XUV 500 and Xylo, Maruti-Suzuki’s Grand Vitara and Ertiga, Force Motors’ One, Premier Rio, and Toyota’s Innova  in the largely indigenously manufactured category, and Renault’s  Duster and Koleos, Nissan’s  X-Trail and Evalia, Skoda Yeti, Toyota’s  Fortuner, Land Cruiser and Prado, Mitsubishi’s Outlander and Pajero Sport, Honda’s CRV 4, Hyundai Santa Fe, Mercedes G, GL , M and ML Audi’s Q3, Q5 and Q7, BMW’s  X3, X5 and X7, Volvo XC90, and finally, Land Rover and Range Rover in the largely imported category.  Clearly, for a few thousand vehicles, the utility vehicle model variety is mind boggling. Amongst these, Tata Aria can lay claim to be different from all the SUVs with its car like profile and performance. This has, however, failed to translate into a positioning proposition.

At one level, Aria bore a significant resemblance to Innova which has been the acknowledged king of MUVs in India. With a length of 4780 mm which is longer by 200 mm and a width of 1895 mm which is larger by 125 mm compared to Innova but with the same seven seater profile, Aria began to be positioned in the marketplace by the buyers against Innova rather than against any of the other SUVS, despite the off road capability, imposing looks (with 17” wheels), and the several comparable sophisticated features it possessed. The sophistication and awesomeness of Aria was not a match for the simplicity and friendliness of Innova for the Indian market. This is borne out by the fact that Aria’s hundreds were, in fact, better sales than those of any of the imported vehicles but were just a fraction of the numbers notched up by the indigenous simpletons like Innova, Scorpio and Bolero. M&M’s newer SUVs, Xylo and XUV with greater sophistry also did substantially better. Probably, if Aria was positioned as just a superior Innova the marketing game would have been set differently.

Entry deterrent price 

As Michael Porter theorized, entry deterrent price is a vital concept in the success of new products. The price of a product is closely linked to the positioning of a product. Tata Motors may have calculated that Aria is substantially cheaper than the imported comparables (SUVs) by 25 to 75 percent. On the other hand, given that it was positioned vis-à-vis Innova it was actually perceived to be 25 percent costlier than Innova. Although Aria was made available in a number of variants with increasing sophistication, the premium of 30 percent for the high end model relative to the base model was also seen by the market to be unattractive. Relative to the positioning, therefore, Aria suffered from the classic weight of entry deterrent pricing. The recent introduction of Pure LX as a new base model at Rs 10 lacs, at a dramatic 50 percent discount in price to the earlier base model queers the pitch even more. While the new pricing is certainly entry stimulating, clearly the problem of entry deterrent pricing for other models continues.

Aria’s inflexibility with positioning and experimentations with pricing illustrate that a successful product entry requires both these factors to be properly benchmarked ab initio, failing which they are to be at least dynamically aligned as the market evolves. Had the vehicle been promoted with a clear crossover niche and in comparison with imported vehicles the positioning-pricing equation would have been more positive. Just as the new Camry of Toyota is successfully positioned for corporate leaders, Aria should have been positioned for business leaders with long commutes and who could at times be required to have colleagues to travel with them too. Organizationally, positioning and pricing decisions need to be taken by a highly analytical group of senior leaders well supported by market analytics on the positioning and price elasticity of demand. Internal and external test marketing of positioning and pricing concepts helps companies identify hidden dangers of imperfect decisions.

Service, makes or mars

If right positioning and pricing are the strategic enablers of product success in the automobile industry, satisfying after-sales service is the tactical assurance of product sustainability and customer delight in the marketplace. Ideally, a well designed and manufactured automobile should not require any servicing. Unfortunately in the case of Aria it appears that the incorporation of new generation of electronics caused considerable service issues. The lack of preparedness of the service infrastructure to handle a new generation automobile in the vehicle family has been a concern. This could have been obviated through extensive road testing on one hand and intensive training of service engineers in the new generation electronics on the other. Many of the observations made in the author’s previous blog on Tata Nano in terms of exclusive dealerships for passenger cars apply equally well to Aria. The typical sedan customer expects to have his or her high cost automobiles to be sold and serviced with exclusivity and timeliness.

The post-design and post-manufacturing value chain comprising distribution, sales and service chain (DSS chain) is a significant tactical enabler of successful new product introduction. Pre-certification of this vital DSS chain and the infrastructure is rarely done by companies to the same scale it is done in respect of design and manufacture. Pre-certification of the DSS chain helps a company make important tactical choices in respect of regional versus national launch, pilot marketing versus full scale marketing, flexible positioning versus harmonized positioning. Service part of value chain is also an important part which lets the company know how several of the add-on features that are offered in the new model are effective in practice and also are perceived by the customers. Even a limited period regional launch provides a great opportunity for a perfect national launch. Aria would have certainly benefitted from such an approach.

Options unexplored

Tata Aria crossover vehicle is yet another testimony that Tata Motors and its team of dedicated and innovative engineers can develop, manufacture and commercialize pioneering automobile concepts. In an effort to straddle all the segments, Aria probably was stuck in the middle as a people carrier, pitted in the process against the most popular vehicle in that class, Innova. Innova has been a utilitarian combination of form, performance, price, reliability and service providing the best value for money. Innova has been an excellent traffic manager as its form profile of a sedan helped navigate city traffic more effortlessly compared to the larger Aria. Aria’s off-road and highway superiority probably did not overcome the disadvantages of city traffic negotiation. An option Tata Motors could have explored with considerable probability of success was a shorter and less awesome 5 seater variant for the city traffic and the larger 7 seater variant for the long distance cruise. With most aggregates and components as well as trim remaining common, the economies of scope on a larger volume base would have been significant.

The other option would have been to connect each variant of Aria as launched to different customer segments with appropriate add-on features, in a pick and choose manner. A whole new consumer experience could have been provided to build and order a crossover of one’s preferences. That would have been a great way to align the features and users, given the vehicle’s unique profile of multiple features and multiple usages. The third option could have been to accept all the criticisms, refresh the models to new standards and launch a new Aria series with a suitably upgraded DSS system. To facilitate this, all Arias on stock should have been liquidated with aggressive discounts rather than allowed to linger on. In Aria, Tata Motors, as it has in respect of Nano, a technology winner that has not been completely tested to perfection and supported in the field with commitment. Now that the evaluation and correction phase is over, it is incumbent on the part of the company to convert a technology promise into a positioning success in the marketplace with the right performance, price and service. As with Nano, the stakes are high not merely for Aria and Tata Motors but also for Indian technology and marketing in the overall.

Posted by Dr CB Rao on October 28, 2012