Our airline ventures can co-exist with two separate markets: Nirmalya Kumar, Director, Tata Sons

Sonali Krishna, ET Now Oct 14, 2013, 07.06AM IST
("As an academic you learn…)

Even as the debate on whether the Tatas made the right move by tying up with two international partners for their aviation business continues, Tata Sons' newly appointed director, Nirmalya Kumar, justifies the move saying there is absolutely no conflict. Kumar spoke to ET NOW exclusively on his mandate, the Tata brand, Nano and everything in between. Excerpts:

It came as quite a shock when you decided to quit your academic life at LBS and move from London to Mumbai and become an employee of sorts of Tata. What was the motivation really?

It was an incredible opportunity that fell in my lap. I pretty much achieved whatever I had to in the academic world, and what better way than to come back than work for a company which has almost been synonymous with nation building.

What is it that you are looking to do and achieve personally at the Tata Group?

As an academic you learn about companies from the outside. By being a part of the company, you learn about the company from the inside. And that brings a different perspective than just being an external researcher. You understand how to implement a lot of ideas that you had.

With regards to the Tata- Singapore Airlines joint venture, how do you think it should be positioned?

I don't know anything about this deal and they have a management team in place. But, if I had to choose a partner in the airline industry, Singapore Airline would be my partner. They are one company in the industry that has consistently made profits, consistently delivered an amazing customer experience and they are the benchmark for all other airlines. So in a sense, we have a dream partner. I hope we have a great management team in place.

  While you are saying that Singapore Airlines is a dream partner for the full service carrier, one must not forget that they also have a significant stake in Air Asia which is a low-cost carrier. Don't you think there is an overlap?

In every industry, there are premium players and there are lowcost players.Whether it's retail, insurance, financial services or airlines, what has been demonstrated is that there is a place and segment that wants a premium experience and they are willing to pay for that and then there is another segment that just wants the cheapest flight from A to B and not want to pay for anything else and both segments exist, both can be enormously successful — a SouthWest has proved that a low-cost airline can be very successful. But a low-cost customer, who goes for low cost is a segmented value. You know in marketing, segments are very important. So two segments can co-exist without any problem.

So with different partners, you don't see an issue?

No. We are targeting different segments. They are targeting different segments and different usage also. It has been proven worldwide that there is a market for premium airlines and a market for low-cost airlines.

  There is no denying that one of the biggest innovations that came out of the Tata House is the Nano. But if you look at the Nano rollout, would you say that it got the marketing completely wrong?

All I can say is that you have to remember that the more radical the innovation is, the longer it takes to take off. Because with incremental innovations, I can test on the market, develop it and deliver it, and success is instantaneous, like a new flavour or packaging format. When you're doing a radical innovation, you can't do a test and launch, you have to launch and learn.

In your book 'Brand Break-out', you've talked about how emerging market brands are unable to break out from their country's image and perception issues. So, how do companies in India who are making big strides globally overcome this massive hurdle?

It is true that all emerging markets, when it comes to consumers in the developed, western world have a very poor image of country. When customers don't know the product quality and don't know the brand, they evaluate it on the country it comes from, the country of origin. So if you ask any western consumer what do you think of brands coming from emerging markets, the answer is always negative. They are cheap, they won't be of good quality, they won't be environment-friendly, all of these things.

Is that the reason the Tatas have been shying away from lending their name to JLR, because the moment you make it Tata JLR, its equity is diluted.

It's the question of every brand being positioned for a particular segment. You can't go around slapping your brand on everything without thinking of the image you want to build. Otherwise there is no need to have multiple brands in your portfolio. Multiple brands are meant to give a very distinctive image to each brand which reach a set of customers.