The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Gourav Bhattacharjee, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
Tata Motors had been aspiring to rejuvenate its car sale in India by launch of its hatchback ‘Zica’- meaning Zippy car. But all didn’t go well for Tata motors. Recently, more than 20 countries had witnessed the outbreak of Mosquito-borne virus ‘Zika’ and the entire world had been struggling to control the situation. Tata Group, popular for its social quotient have planned to rename its much awaited car and thus all the strategies and the marketing implemented to establish the ‘Zica’ brand will be a waste. Moreover, this will also deter Tata motors from launching the same car by two-three months. Therefore, this decision will not only make an immediate impact on the performance of Tata Motors but they also have to carry its dead weight in the immediate future. Now the question arises, Are they correct in taking up such a decision?
Tata Motors are not the only ones facing this kind of problem. If we turn few leaves of history, we shall find that numerous companies that have been plagued by similar issues, namely due to ISIS, Aids, Gay rights, etc. These companies had reacted differently, some of them changed their name immediately & were able to sustain and some failed to sustain. Some companies resisted the rebranding process but in-spite of that, were forced to change their name. Research say that rebranding usually plummet the sale by 5-20% for companies. And if a company resists negative publicity (like being synonymous to something negative), the sale usually drops by 12%.
Thus we can clearly see that in both the scenarios, Tata Motors are bound to face losses. In addition to this, there are high chances that their technology advancements gets leaked to their competitors and they lose their first mover advantage. Then, what should Tata Motors do?
According to me, rather than waiting and investing on marketing of their renamed product, Tata Motors should use the R&D done for ‘Zica’ as an upgrade for its established hatchback products like Tata Bolt, Tata Vista, etc. Being an established brand, the extent of investment required for marketing the new product would be much lesser. My reason behind this conception is that, there are already an established marketing channels for these brands and thus we can avoid from starting up something from scratch. Ultimately, the sale of these products will bring in more profit for the production house and hence help negate the losses incurred recently. In addition to this, they can also emphasis upon the ‘Zica’ rebranding in positive sense to enhance the brand name of Tata motors as a whole.