- Image via Wikipedia
Remember the company that created the $2,000 new car? Tata Group of India has unveiled its newest brilliant innovation – the $8,000 new home.
The bad news is, Tata won’t be bringing its $8,000 homes to the United States any time soon. Shubh Griha, the company’s new housing development, is located in Boisar, about 100 miles from Mumbai, and more than 10,000 miles from the United States. But it is brilliant – and it makes me wonder what we can learn from Tata’s example.
Well-built, comfortable and very small
All of the units at Shubh Griha are quite small. The biggest are only 474 square feet and run about $15,000 (the $8,000 units are only 283 square feet). While these would be uncomfortably cramped for most Americans, they’re pretty comfortable for many Indians. Remember that India has more than a billion people. In fact, an Indian friend of mine once told me she felt more comfortable in New York City than anywhere else in the US because she liked having lots of people around. These units are aimed at India’s fast-growing middle class, people who earn perhaps $5,000 to $10,000 per year.
While they are tiny, the Shubh Griha homes are going to be well-made, with high-quality construction and fittings. And the surroundings are pretty pleasant. Shubh Griha will have 75% open space, schools, a hospital, jogging paths and so on.
Shubh Griha looks especially nice when you consider the horrible quality of much Indian housing. Perhaps a third of all Indians live in dilapidated buildings which might or might not have running water and electricity. Many others live on the street in a box, or under a tarp.
The extraordinary value and 21-st century marketing techniques behind Shubh Griha have already proven very successful, with Tata getting 3,500 applications in the first two days since it began taking applications over the Internet. This is three times the total number of units in the first phase of the project. My guess is that with the success of Shubh Griha, many of those applicants will wind up buying a unit in a different Tata development.
The company behind the project
Tata Group has been in business since the 1860s and might be considered India’s General Electric or 3M. The company owns Jaguar Cars, Land Rover and Tetley Tea. It produces much of India’s electrical power. However, Tata first made news in the US with the announcement of the Tata Nano, the $2,000 car. The Nano is expected to actually sell for $2,200, but that’s still pretty cheap. It will lead the way in getting Indians to upgrade from bicycles and scooters to cars. Like Shubh Griha, the Nano is a huge success. More than 200,000 people committed to buying the Nano during a 16-day period in April.
The Tata Nano reminds me of the Model T – a decent car for regular people. Shubh Griha is reminiscent of Levittown, New York – a decent community for regular people. Both the Model T and Levittown came along at times when regular folks wanted the lifestyle they saw wealthy people enjoy, and visionary companies headed by Henry Ford and William Levitt figured out ways to provide it at a profit.
Learning from Tata
I doubt we’ll ever see $8,000 new homes in the United States, but we can still be inspired by, and learn from, Tata’s efforts. I’ve written before that I think hard work and innovation, not bailouts and whining, will get us out of the current economic slowdown. Obviously the people of Tata believe this as well.
So what can we take from their experience? One lesson is that people still want new quality products, even if they have to buy fewer of them. I’m not referring to luxury products, which aren’t selling at all these days. There’s certainly a difference between luxury and quality. Consider that a shirt doesn’t have to come from Neiman-Marcus to be well-made.
Another lesson is that making a splash can help you make a profit. There are many other housing developments in India, and there’s even another car model in a similar price range to the Nano. Tata gets all the press, however, because it knows how to create news with its products. There’s always a hook to grab the attention of reporters – the $2,000 car, the $8,000 home.
Finally, Tata is a trusted company. You absolutely must gain a reputation for keeping your promises to be successful in business. Tata Group is the 11th most reputable large company in the world, according to a poll conducted by Forbes.