Tata ACE Group 12 –

-Ajay Norman. V (DM18202)

-Ankur Kislaya (DM18206)

-Melissa Mariam (DM18233)

-Saurabh Arora(DM18246)

-Shivam shukla (DM18248)

Overview of the Indian Commercial vehicle sector

Three wheelers in India are popular because of their ability to

maneuver through narrow roads.

Major manufacturers in the 3 wheeler segment are Bajaj, Piaggio,

Force motors and M&M.

3 Wheelers are used in both the Passenger segment and cargo

segment.

LCV has grown at 22% compound annual rate from 2000-2005.

Tata motors with a market share of 51% was the market leader in

LCV segment.

Contn.. 30%-50% of overloading of vehicle takes place.

It reduces acceleration, fuel economy. However per unit cost can be

reduced.

Road conditions are inadequate and under developed in India.

Such conditions prevent the truck to enter into ‘last mile’ vehicle category.

Consumers in India are very cost conscious.

Diesel vehicle was preferred among the consumers because of its low price

& fuel efficiency.

Overview of Tata Motors

Founded by Jamshedji Tata. Tata Indica was the first large scale passenger to replace

the Maruti 800. It is also exporting vehicles to U.K. It acquired Daewoo’s Commercial vehicle business and

acquired 21% stake in Hispano Carrocera, a Spanish bus manufacturer.

It is operated as an independent company and was the largest of the other Tata companies in terms of revenues.

Competition Analysis

In 3 wheelers, Bajaj had 51 % market share, Piaggio had 26% market share and the remaining was shared by the other small players.

In LCV,

Bajaj Piaggio Force Motors M&MHigh Market share

Good payload capacity

Loyal followers in rural areas

Focused on cargo segment

Tata M&M Swaraj Mazda Eicher

Market leader, 51% market share

33% market share

3.5-7 ton trucks

High ground clearance, gradeabiity

Contn..

Idea for the Ace & market Research

Ace was considered as a last mile delivery vehicle. Company had to commit to initial costs for each single part of

the vehicle. Market Research was done to analyze the Indian market. Customers expected the vehicle to be fuel efficient, low

priced, high maneuverability, high safety, durability, additional payload and comfort of four wheeled vehicle.

Customers are not willing to pay more than what a three wheeler costs.

So the estimated fixed price is Rs 2 lakhs.

Market segmentation

Market was segmented based on function and customers.

Customers are segmented based on performance sensitive, balanced perspective, ROI sensitive, and acquisition price constrained.

Customers in the ROI price sensitive category contribute 55% and balanced perspective consumers contribute 25%.

ROI type consumers do not place any value on non monetary purchase considerations. They want a vehicle which gives low cost per mile of transport.

Segmentation Pyramid

10Product Hierarchy

Item –

Tata Ace

Product type – 0.75 ton Payload

Product line – LCV

Product class – Commercial Vehicle

Product family – 4 wheeler

Need family – Freight Transportation

4Ps Product – Tata Ace which is low cost, fuel efficiency, high payload

capacity, and high maneuverable. It adheres to safety regulations.

Place – It is targeted towards consumers in western and southern India. Distribution Channel: Dealership would only be responsible for sales

(1S).

Existing rural mechanics to be trained free of charge to complete simple maintenance procedure.

Mobile workshop was launched to help mechanics in rural areas by providing spare parts and lubricants.

Contn…

• Promotion – Promotion of the vehicle was done in local languages like “சின்ன யானைன” (Chinna Aanai) to resonate with the minds of customers.

• Price – Acquisition cost (Rs.250.000) for consumers is higher compared to competitors offerings. However, this will be compensated by lower operating cost/km/month. It is achieved through lower EMI, and longer intervals between maintenance.

Product Hierarchy – Tata Ace SKU/Item – TATA Ace Product type – 0.75 ton payload Product line – Light commercial vehicle(LCV) Product class – Commercial vehicle Product family – 4 wheeler Need Family – Freight transportation

Product LevelsPotential Product

Augmented Product

Expected Product

Basic Product

Core Benefit

Transportation

4 Wheeler LCV

Reliable and sturdy

High status

An A/C vehicle running on CNG

Perception Map

Value Communication Local Language. Emotional appeal to the customers. Newspapers, Ads and television.

Points of Differentiation

Overloading capability Limiting high strength steel to stress points Semimonocoque body.

Engine selection 2 cylinder diesel engine Part sharing

Safety and comfort M1/N1 class safety norms

Value Delivery

Service outlets at customers’ convenience. (40 kms)

1S dealership model – Only “Sales” Existing employees to address problems. 300 new distribution points – rent /

leased sites to minimize risks Under Suvidham, local mechanics are

trained to provide service. Mobile workshops.

Market launch

Launched in May 2005 Price: ₹2.25L BSII, ₹2.35L BSIII Launched only in all southern states and

Maharashtra.

Response

Response exceeded annual target of 30,000 vehicles in less than a year

Attracted first time buyers (54%). Vehicles were being overloaded 30% above

rated capacity

Challenges & StrategyParameters Challenges /Current

statusStrategy

Line extension ACE Diesel New variants such as ACE gasoline and ACE CNG

Competition Bajaj – Service centerHyundai – Powerful variantsChangan - Low cost alternative

Build dedicated service centers

Market expansion

Southern India & Maharashtra

Wider market in India to capture market share

Exports None Emerging markets (Bangladesh)Emerging markets (China)Developed markets (Italy, U.K.)

Capacity expansion

Pune plant working at 100% capacity.Strong supplier presenceExisting facilities of Tata motors

High Capital expenditureWeakened economic conditionsGovt. road construction plansImprove the process at Pune plant

Thank You