As emerging markets like India and Brazil continue to grow, more and more of their citizens will enter the middle class. This relatively untapped consumer group presents plenty of lucrative opportunities for companies across the globe. However, finding the right products to sell to this expanding class is not so simple, even for companies operating in their home countries. For instance, Tata Motors launched its ultra-cheap Nano model as an introductory vehicle for Indian consumers. But with a price tag of just $2,000, the Nano appeared almost too inexpensive and failed to catch on.
With Tata’s mistakes in mind, Ford is attempting to break into the subcompact market with its upcoming Ka model. The Detroit automaker discovered that while consumers certainly want an affordable car, they’re not interested in a bottom-market vehicle that’s only one step up from a scooter. Although the Ka doesn’t have a price tag yet, Ford plans to sell the subcompact in India and South America for less than $10,000. That’s cheap enough to fall within most people’s price range while still ensuring that costs are covered for basic amenities. Unlike the Tata Nano, the Ka includes chrome detailing and a wider base. The car also comes equipped with Sync, Ford’s system for pairing the vehicle with a mobile phone.
The company still hasn’t announced whether or not the Ka will have safety features like anti-lock breaks, airbags or traction control. While these items are necessary to meet safety requirements in the U.S. and Europe, the added cost and weight could increase the sticker price. Nevertheless, Ford expects big things from this ultra-compact car. The company hopes the Ka will boost annual global sales from six million to eight million units. Experts estimate that sales of cars in the Ka’s class will increase 35 percent by 2017, driven primarily by consumers in Asia and South America. Meanwhile, Tata plans to meet this growing demand by revamping the Nano with features like a stereo, hubcaps and chrome trim.
- What’s the major problem with pricing a product too low?
- What seems to be the key to succeeding in growing global markets?
Source: Mike Ramsey, “It’s Not a Car, It’s a Ford ‘Ka,’” The Wall Street Journal, November 14, 2013. Photo by Rob MacEwen.