Tata Ace

Group A5 – Guru Gobind Singh jiAroon Sheshadari (10010)

Piyush Kakkar (10030)Rahul Malhotra(10035)

Vikram Arora(10057)Loma P Desai (10086)

Vishwas Sharma (10119)

Strategy for sustaining momentum for

Tata Ace

Brief Background of AceIndia's first mini truck

Launched in May 2005

Tag line ‘Small is Big’

Answer to the marketing myopia of three wheelers

Idea behind launching Tata AceMarket Situation

Govt plans of road expansion. High GDP growth rate positively correlated with

truck penetration. High probability of increased demand in LCV

segment.

Company Situation Tata product portfolio lacked greater than 45 tons

and sub one ton vehicles. Scope of enhancing market share

Gap Analysis based on Market ResearchDemand Side Gap : Large and Medium

Trucks

Demand Side Gap : Three Wheelers

Supply Side Gap

Restrictions in entering cities during

peak hours

Banned in certain metros and bigger

cities

Portfolio lacking sub 2 ton offerings

Congested and narrow lanes in commercial

areas

Restrictions on highways and

expressways due to speed and safety

concerns

Needed immunity against the cyclical

trends in commercial vehicles segment

Higher per unit transportation cost

and poor conditions of roads makes them unsuitable for rural

customers

Failure in enhancing the social image of the

user

Marketing Strategy- Segmentation &Target

TATA ACE’S CORE MARKET

PRICE CONSTRAINED (13%)

ROI SENSITIVE (55%)

BALANCED PERSPECTIVE (25%)

FEATURE SENSITIVE (7%)

Tata Motors focused on capturing these two

segments.

Marketing Strategy -Positioning

POSITIONING Ace was positioned as a vehicle that offered

the price, fuel efficiency, and maneuverability of a three wheeler

but with the safety, durability, additional payload, and comfort of a four-wheeled truck.

Sourcing & Production Strategy

Aggregate Outsourcing Sourcing complete assemblies such as rear axle frame rather

than assembling these modules in-house from outsourced costs

E-Sourcing Company posted its requirements on intranet site where pre

qualified suppliers could review specs and submit bids.

Manufacturing Facility Location-Pune Chose underutilized existing plant at Pune which allowed

company to tap existing vendor base and savings on outbound freight costs since 70% of Ace’s demand came from South and West India.

LCV Market* in 2006 – post Ace’s launch

• LCV market consists of 3 wheelers as well as 4 wheelers Data Source: www.siamindia.com

www.tatamotors.com

68%

21%

3%2%

6%

Tata MotorsMahindra & MahindraSwaraj MazdaEicherOthers

LCV Market* in 2010

Data Source: www.siamindia.com www.tatamotors.com,

Clearly Tata’s have lost market share to M & M

61%

31%

2% 2% 4%

Tata MotorsMahindra & MahindraSwaraj MazdaEicherOthers

Porter’s Five force Model-2006

Rivalry Among competitors

Threat of substitutes

Power of Buyers

Entry of new competitors

Power of suppliers

Porter’s Five force Model-2010

Rivalry Among competitors

Threat of substitutes

Power of Buyers

Entry of new competitors

Power of suppliers

SWOT ANALYSIS

Proposed Strategies For regaining lost market share

Internationalization Strategies

For regaining lost market share Marketing Strategies For North and East India

Aggressive marketing campaign Design local advertisements Road shows

For South and West – Loyalty bonus or exchange offer– Financing facility through Tata Finance for

rural penetration

For regaining lost market shareLeveraging strong dealership network to

target fleet owners.Channel expansion

Hub and Spoke Model

3 S dealership

1 S dealership

1 S dealership

1 S dealership

1 S dealership

Internationalization StrategiesResource Based View

Sustainable competitive advantage lies not in one, but a combination of multiple resources, each of which individually complement other resources to build competitive advantage

Product Reliabilit

y

Channel

Reach

Service Networ

k

Internationalization StrategiesThree Dimensional Recommendation Matrix Based on resource viewDimension 1 : Tangible

Strategy Sustaining the First Mover's Advantage of ACE National Footprint Tata Motors has an unparalleled network of dealers and service

stations across the country for Medium and Heavy Commercial Vehicles (M and HCV). However most of these service stations are along inter-city routes. It would need to replicate this network at intra-city level for its hugely successful LCV - the Tata ACE. For this Tata Motors can liaise with small garages, train them and certify them as 'Tata Authorized Service Station'.

Product Portfolio Tata Motors has positioned ACE as a multipurpose vehicle (MPV). Tata Motors should endeavour to move form a multi-purpose positioning to a mass customization positioning for ACE, wherein multiple variants are offered on the ACE platform, each uniquely suited for a specific application - such as tippers, long base trawlers, milk carriers.

Internationalization StrategiesDimension 2 : Intangible

Strategy Intangible Assets

Unique Customer Experience

In commercial vehicles industry, the uniqueness of customer experience is largely driven by the efficacy of the 'Support' framework. If your car breaks down, you can take a taxi to office. But that's not so for a transport operator. For him, his vehicle is at the heart of his business and hence responsive after-sales support is critical. Minimizing downtime calls for a service network that is highly responsive and easily accessible. Besides, Tata Motors should also

1. Consider introducing mobile service units for Tata ACE that can respond to customer calls anywhere within a given city.

2. Start treating "Services" as a dedicated profit center. Towards this end, the company should "productize" annual maintenance contracts.

Brand Reputation

Building a reputation will help sustain sales, without having to engage in discount sales.

Internationalization StrategiesDimension 3 : Capabilities

Strategy Capability Acquisition

Technology Appropriation

Technology Appropriation is the key to Tata Motor's ambitions to offer variety of products . As the share of light commercial vehicles grows, the company will need to face up to technologically superior players like Volvo , Diamler Chrysler. Here, Tata will have to carefully spearhead its strategy by carefully coordinating technology appropriation from its numerous international technology partners, notably Daewoo, Fiat and Hispano.

Robust Supply Chain

Tata Motors has made significant investments in IT systems to network its countrywide service network. This helps them maintain very high spares parts availability at their service stations and minimize downtime. In the years to come, it would need to include their LCV service station within this framework. This will however be a big challenge, since these service stations would largely be managed by illiterate and not-so-tech-savvy repairmen.

Referenceswww.tatamotors.com (annual reports)www.siamindia.comwww.wikipedia.com HBR case study “Tata Motors: The Tata

Ace”by Krishna G. Palepu, Vishnu Srinivasan 21 pages.  Publication date: Sep 18, 2007. Prod. #: 108011-PDF-ENG

http://www.business-standard.com/india/news/tatas-ace-mini-truck-suddenly-gets-competition/396000/

Thank You