TATA ACE sales and distribution channel strategies

7/27/2019 TATA ACE sales and distribution channel strategies

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TATA ACEPRESENTED BY GROUP 7


2/19

OVERVIEW OF INDIAN COMMERCIALVEHICHLES

Three wheeler Largest three wheeler market

Compound annual growth 14% Usage

Cargo (44% of sales)

Passenger (56% of sales)

Price range Rs 1,00,000 to 2,00,000

Weight handling - 0.5 to 1 Ton

Mileage 18 to 30 Km/L ,

Top Speed 50 Km/Hr

51%

26%

8%

7%8%

MARKET SHARE - 3 WHEELER

BAJAJ PIAGGIO FORCE MOTORS M&M OTHERS


3/19

LCVs

Compound annual growth 22%

Usage

Cargo (83% of sales)

Passenger (17% of sales)

Price range started from Rs 3,50,000

Weight handling 1.2 to 7.5 Ton

Mileage 9 to 10 Km/L ,

Top Speed 100 Km/Hr

51%

33%

5%5%6%

MARKET SHARE - 4 WHEELER

TATA MOTORS M&M SWARAJ MAZDA

EICHER MOTORS OTHERS


4/19

Tata Ace

Light commercial goods carrier

A smaller 4 wheeled vehicle

Launched by Tata Motors in May 2005

Entirely new product category

Pay load capacity of 0.75 ton

Priced at Rs 2,25,000

Annual Target 30,000 - 25 % product availability across country

Niche vehicle satisfying unique demands of Indian Transportation with a

comparatively low price than auto rickshaws


5/19

Need for change

Truck penetration to increase due to :

Growth in road infrastructure

Highways connecting major cities

Secondary road networks within state

All weather tertiary road network connecting rural towns

72% India's population

Threat to core business due to absence of

> 45 ton vehicle

< 2 ton vehicle

Leading to the idea for Ace Cheap , nasty, rugged vehicle for India

Market research to gain insights of potential customers


6/19

Market Research - findings

No additional demand in three wheeler segment

Need for a four wheeler with:

price, fuel efficiency and maneuverability of a three wheeler

Safety, durability, additional payload and comfort of a wheeled truck

Four wheelers viewed as higher status vehicle

Price range of Rs 1,00,000 to 2,00,000


7/19

Segmentation

Functional Market segmentation based on the functional needs

Manual rickshaws and Carts 175 Kg 5km

Free segment Tata ace (750 kg 1500 kg over a distance of 100 to 200 km)

Pick up trucks 2500 kg 300 Km

Target Market : 45 % potential 3 wheeler buyer

15 % potential 4 wheeler buyer

40 % first time buyer


8/19

Segmentation- cont.

Customer market segmentation

Divided into 4 categories

Performance sensitive 7 %

Performance and Brand Image

Balanced Perspective 25 %

Convenience, ROI, $ wheeler above budget ROI sensitive 55 %

ROI, Lowest cost per mile

Acquisition price constrained 13 %

Lacking financial means


9/19

Challenges faced

Budget

Overloading Capability

Engine Selection

Safety, comfort and Aesthetic consideration

Sourcing and Production

Marketing

Distribution

Consumer Finance


10/19

Distribution of Ace

Phased introduction approach

Dealership format 1S

Only sales (no service and spares)

400 sq. ft. showroom

1-2 vehicles

Each dealer to set up 8 to 20 - 1S centers Rented sites with 1- 2 years contract Low risk and cost for dealers

Suvidham :

trained rural mechanics on maintenance procedures on ace for free

Free tool kits to mechanics

Mobile work shops


11/19

How does one identify the needs of

developing ones dealers ?


12/19


13/19


14/19

Alternate method available for developing the

dealer

Define criteria for appointment of channel partners

Document channel objectives for sales people and channel partners

Define the profile of the customers to be serviced

List down all the customer service outputs in detail

List the task in sequence which will drive the service outputs

Get benchmark of good practices from knowledge of competition


15/19

Define channel structure and channel partners who constitute it

Allocate the task among the channel partners

Work out cost of delivering CS outputs and prepare a budget

Advice the channel partners on the task and their benefits

Define channel partner performance appraisal system and share it

List down reports records and frequency from each channel partner


16/19

what factors lead to the success or

failures in dealer development ?


17/19

Break Even Unit Volume = Fixed costs

Unit Contribution

Unit contribution = Selling price Variable costs

Target Volume= Fixed Cost + Profit

Unit Contribution

Pay back period= Initial Investment

Annual Profit


18/19


19/19

The way forward

Build a new manufacturing plant in the north.

Plan to introduce the TATA Nano

Meeting production requirements of Tata Nano

Common parts and facility can be used to manufacture both Nano and Ace

Both products are low cost products on similar platform

Help in bring down cost. Export opportunities

Documents

TATA ACE sales and distribution channel strategies