More than half the global population now lives in urban environments, and that number will only grow: By 2050, an estimated 80% will live in cities. This means that in the next 40 years we will need to build the same amount of urban infrastructure as we have in the last 4,000 years. This trend will also have an impact on global warming: Between 1990 and 2007, transportation-related emissions increased by a third, while emissions from other sectors decreased. Regardless of our political views, we can’t afford to perpetuate the car-centric model. It’s time to brand alternative forms of transportation in a way that convinces consumers to opt for higher-efficiency modes over the traditional automobile.
It’s widely accepted and understood that consumer decisions are as much influenced by emotional attachments to a product or service as by the hard facts such as price and performance. So why is it that when it comes to most aspects of human transportation, the world still seems to believe people are rational machines?
Take the spectacular failure of Tata’s ambitious low-cost car, the Nano. In many ways, the Nano seemed like a real game-changer—a car that would do for the auto industry what Ikea did for furniture, Amazon for book retail, and Netflix for video rentals. The vision for the car, as articulated by Ratan Tata, the chairman of the hugely successful Tata Group, was inspiring: Make a luxury car available to the average Indian (and eventually everyone in the world) for about $2,500.
Tata followed the disruptive innovation script to a T. The company innovated all aspects of the value chain to slash the cost of production, building a car with fewer components of less expensive materials while maintaining fantastic fuel efficiency. Even the distribution model was upended: The Nano was to be sold at large supermarkets and electronics stores. On top of that, Tata had devised a contemporary launch plan leveraging social media instead of the expensive TV ads most other car brands adhere to.
With more than a billion people, a hugely growing middle class, and one of the fastest growing car markets in the world, India seemed like the ideal place to make this vision fly. But things haven’t gone as planned. Nano sales never met even its most conservative sales targets and is far from the 20,000 cars it needs to sell per month to break even. The failure of the Nano stands in stark contrast to Tata’s other brands, especially their premium brands such as Land Rover and Jaguar.
So what went wrong with the Nano? An Indian consumer study by a brand strategist from Venturethree, Sandeep Dighe, came to a clear conclusion: Indian consumers don’t want a cheap car; they want a car to flaunt. For Indians, as for people in all other countries, a car is as much about status and identity as it is about transport. Positioning the Nano as the world’s cheapest car was, in other words, a dramatic mistake and a startling reminder that transport is as much an emotional decision as buying soap, maybe even more so.
Other car manufacturers looking to capture the low-end car market better take note. Unfortunately, Tata’s mistake isn’t unique in the world of transportation. When it comes to devising urban mobility schemes, engineers and planners rule. Most collective transport schemes are based on a false assumption that if given a cheap and effective option, people will use it.
Urban mobility is a massive global challenge. The world needs people to shift from big, heavy, fuel-consuming cars to collective transport, including bikes and other low-energy forms of mass transportation. But as the Tata example shows, the challenge is as much emotional as functional. Taking the bus, riding a bike, or driving a cheap lightweight electric car must be perceived as cool, a symbol of status even in places like China and India, where buying a Mercedes is seen as almost a life goal in itself. Here, brands like Tesla and Biomega have shown a way to create aspirational change rather than a functionalistic approach to building more infrastructure.
Actually, in many cases there is plenty of infrastructure already in place; it’s just poorly designed and relatively unbranded compared to cars. Despite an adequate interstate network, traveling by bus is considered in itself deplorable in the U.S. at large, whereas buses in the U.K. have been well-branded.
This is an area where the right design, branding, and marketing could make a huge difference to the world and future generations. These changes might even be one of the huge opportunities out there. Together, cities are already bigger than any individual market or alliance. And urban populations are becoming increasingly uniform as a consequence of globalization. The rise of a large urban market and the need to reduce CO2 emissions is an opportunity ripe for new urban-mobility solutions.
Written by Jens Martin Skibsted and Rasmus Bech Hansen.
Rasmus Bech Hansen is London-based strategy director at Venturethree, a global brand consultancy. He writes on how brands can do well by doing good and has helped to relaunch the United Nations Global Compact brand, the world’s most successful CSR initiative.