Tata Ace-gropup 3_b

7/28/2019 Tata Ace-gropup 3_b

1/39

TATA MOTORS : THE TATA ACE

Group B-3Snigdha Chitranshi(11051)

Nachiket Vanikar(11058)Sowmya Borra(11054)

Abhishek Pal(11061)Anoop biswas (11064 )


2/39

AGENDA Overview of the Indian commercial vehicle sector

Road transportation infrastructure Overview of Tata motors Idea for Tata Ace Gap analysis STP Design challenges for product development 4Ps Marketing and distribution Launch and response Future Marketing strategies and current scenario Learnings Answer to the case Questions


3/39

Indian Commercial Vehicle Sector

Indian commercial vehicle sector mainly dominated by three andfour wheeled vehiclesThree wheeler market:

India was the worlds largest three -wheeler market in 2005 witha sales of 307,887 units . Cargo movement: 44% of sales Passenger movement : 56% of salesFour wheeler market( LCVs):

Sales of 119,877 in 2005 Cargo movement: 83% of sales Passenger movement: 17% of sales


4/39

51%

33%

5%

5%6%

Three Wheelers

Tata Motors

M&M

Swaraj Mazda

Eicher Motors

Others

51%

33%

5%

5%6%

Four Wheelers

Tata Motors

M&M

Swaraj Mazda

Eicher Motors

Others


5/39

ROAD INFRASTRUCTURE (2006)

3.32 million kms road, 2% national highways, 12% of this 2%was four lane

Narrow and congested roads near commercial and retailmarkets

Entry barriers for heavy vehicles during day time Poor rural road connectivity Ban of 3-wheelers due to safety considerations Golden Quadrilateral Project


6/39

Overview of Tata Motors

TELCO established in 1945

In 1969 TELCO began designing and developing its own

commercial vehicle in house

TELCO changed its name to Tata Motors in 2006 and producedits 5 millionth vehicle

Tata Motors was the largest of Tata companies measured byrevenues


7/39

Idea for Tata Ace

Due to forecasted growth in Indian GDP and infrastructure,truck penetration would increase

Need for hub to hub and lower per unit cost transport due togrowth of better highway systems

Need of last mile in transportation supply chain


8/39

GAP Analysis

Market situation Growth plans of better highway network between major

cities and secondary road network within various states bygovernment

Improvement in the demand for large vehicles( LCVs) Higher GDP growth which may lead to higher truck

penetration in the market

Company situation Absence of larger( > 45 ton) and smaller( sub two-ton)

vehicles in the product portfolio. There was a need of a cheap and rugged vehicle to be

developed


9/39

Demand Side Gap : LargeTrucks

Demand Side Gap : ThreeWheelers

Supply Side Gap

During day time, entry intocities was restricted

Banned in certain metrosand bigger cities to avoid

congestion

Needed immunity againstthe cyclical trends incommercial vehicles

segment

Less fuel efficient and notenvironment friendly

Not allowed on highwaysand expressways due to

speed and safety concerns

Portfolio lacking productofferings

Higher per unittransportation cost andpoor conditions of roads

makes them unsuitable forrural customers

Inability to enhance thesocial image of the user


10/39

SEGMENTATION


11/39

Functional Market Segmentation

Vehicles carrying high loads (2.5 ton & above)

Vehicles carrying low loads (less than 175 kg)

There was a vacant segment (750 kgs to 1 ton) whose needswere not met


12/39

Customer Market Segmentation

Performance Sensitive (7%)

Balanced Perspective (25%)

Return on Investment (55%)

Acquisition Price Constrained (13%)

Bottom of Pyramid


13/39

Performance sensitive Interested in status, brand image & speed Willing to pay a higher price for additional features Currently using cars & large SUVs to haul goods

Balanced Perspective Typically owner entrepreneurs Wanted ROI, comfort & convenience features Forced to purchase three wheelers since market didnt

offer products which met their demand ROI Sensitive

Purchase based on lowest cost per mile of transport Not interested in non-monetary purchase considerations Consisted of fleet owners/operators & some individual

owners


14/39

Acquisition price constrained

Lacked credit & financial means to purchase Would go for the regular product if the new product was

even slightly expensive Preferred purchasing three wheelers

Bottom of Pyramid Could not afford motorized vehicles Size of the segment is unknown Use bullock-carts, bicycle rickshaws etc. for transportation Overtime as prosperity increases would move upwards

from lower categories


15/39

TARGETING


16/39

Target Market People planning for 3 wheelers First time commercial vehicle purchasers(40%) LCV purchasers & potential pick up (15%) People looking for last mile transportation

solution Target Individuals

ROI Price, fuel efficiency & easy maneuverability of 3

wheeler Safety, durability , additional payload capability &

comfort of 4 wheeler trucks


17/39

POSITIONING


18/39

Indias first MINI TRUCK Small is Big Last mile transportation solution Feel good of the Job Comfort & stability of the big trucks Economic Liberation


19/39

Design Challenges

Enhancing overloading capacity- a product that couldwithstand the strain of overload

Preference for diesel engine by customer One engine option ruled out due to NVH targets Foreign made 4 cylinder engine was ruled out due to cost In spite of strict cost target, M1/N1 targets to be maintained Customers did not want Semi Forward Engine


20/39

SWOT ANALYSISSTRENGTHS

1. First Mover Advantage2. Brand Name of TATA

3. Possession utility to buyers

4. Research & Development

WEAKNESS

1. After sales service2. Higher cost

OPPORTUNITIES

1. Increasing Growth rate of LCV segment

2. Rural Market (especially North andEast)

THREATS

1. Increase in competition


21/39

4 Ps


22/39

PRODUCT- TATA ACE (Differentiation Factors) Ideal for both city and rural areas. Compact size and shorter turning radius helps in Indian

narrow streets Comfortable conditions for the driver allows the ACE to travel

over 500 kms a day M1/N1 safety norms for frontal crash, roof crush etc. 700cc engine delivers a power of 16hp@3200rpm Meets BS II and BS III standards. Low operating cost and highly reliable Usage ranges from vegetable vendors to cargo pickup to

passenger transport


23/39

PRICING

PRICING OBJECTIVE Product quality leadership Priced just beyond the max-price of 3 wheeler of Rs.2 lakhs A premium on the price of three wheelers

Analyzing competitors costs, prices and offers

Final price Priced at Rs. 225000 They priced at a premium or around 12% over the maximum price of

three wheeler in the market.


24/39

PLACE

Location close to target market Plant located in Pune at the time of launch Target markets: Southern and Western regions

A sales outlet every 40 to 50 kilometer

Only sales stores as compared to early sales, service & spare

Existing dealership acted as a hubs and set up 1S dealership


25/39

PROMOTION

TARGET AUDIENCE Three wheeler audience Owners of truck Trucking fleet owners First time LCV purchasers

To communicate the benefits of the product-ACETo develop a positive brand attitude among the target customergroup

The Chota Haathi AdvertisementGenerated a lot of positive press in the launch period1st LCV brand used extensive ad on TV


26/39

DISTRIBUTION NETWORK:HUB AND SPOKE MODEL

3S to 1S Approach A sales outlet every 40 to 50 kilometer.

Only sales stores as compared to traditional Sales, Service& Spares Existing dealership acted as hubs and set up 1s dealership Each dealer can set new 1S stores

This will help to set new distribution point for TATA ACE


27/39

Launch & Response

Launched in May 2005 with the price of Rs. 225000 Exceeded Tata Motors expectations Sold its annual production target of 30000 units in

less than a year 54% by first time buyers 30% by LCV owned customers 33% by previously owned three wheelers Customers overloaded the vehicle approximately by

30% above rated capacity


28/39

Current scenario

&

Recommendations


29/39

Competition

Mahindras Maxximo and ALLs Dost are eatingaway into Tata Motors ACE market share

TML: ACEM&M:

MaxximoALL: Dost

Pricing 2.84-3.99 Lacs 2.79-3.99 Lacs 3.79-4.37 Lacs

Engine 700 cc 1400 cc 909 cc 1478 cc

Mileage 20 kmpl (700cc) 17 kmpl 17 kmpl

Market share68% (2011)60 (2012)

22% (2011)29% (2012)

NA


30/39

Tata ACE Distribution

Many of the Aces cost -conscious potential customers in ruralareas might not be willing to travel long distances to see thevehicle, so Tata Motors deployed a new bare-bonesdealership format

Bring Ace closer to these customers without incurring theexpense of a new network of full-service dealerships

Instead of building an expensive new network of servicecenters, the company trained local mechanics and gave them

tools to take care of common problems. Vehicles would be sent to larger service centers only for

major repairs or accidents.


31/39

Tata Motors: Sales transformation for ACE

Change in process - $45 million in additional revenue andsignificantly boosted market share in all states

3 areas of focus were identified -1. Aligning their sales programs to the needs of customer

segments. Making sure the dealer network was running assmoothly and effectively as possible

2. Set new processes in place to optimize sales pipelineactivities from lead generation to prospect acquisition tosale conversion

3. Sales process enablement


32/39

IDENTIFYING THE NEEDS OF DEVELOPINGONES DEALERS

Understanding of and focus on the customer'sbuying process

Understanding of and appreciation of the world in

which the buyer lives Being an information provider for the members of

the buying committee


33/39

METHODS AVAILABLE FOR DEVELOPING THE DEALEREFFECTIVENESS

Training

Providing the adequate support required

Showing belief in their capabilities


34/39

FACTORS LEADING TO THE SUCCESS OR FAILURE INDEALER DEVELOPMENT

SUCCESS Adequate ownership to the dealer Maintain transparency Incentives Cash and credit support


35/39

FAILURE

Inadequate training

Technical inefficiency

Demotivated dealers


36/39

How to replicate the Distribution Strategy of TATA ACE?

A sustainable competitive advantage is a combination of multiple resources & not any individual resource

Tata ACE became successful because of following: Product Reliability Service Network Channel Reach


37/39

Product Reliability Tata ACE was a product which met high quality standards Provided Last mile transportation

Service Network Extensive & dependable service network across India

Channel Reach Sales & service outlay which the customers can reach

easily


38/39

LEARNINGS

Work in your core competent area Balance between quality, cost and time Focus on outsourcing Coming up with innovative methods to serve

customer needs


39/39

THANK YOU

Documents

Tata Ace-gropup 3_b