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Tata Ace Serving An Ace - Presentation Transcript
1. We begin with a story!!o Name: RavindraSalukheo Sells vegetables and fruitso Upmarket Cuffe Parade in
South Mumbai
o A shop area of 1.5X2.2 sq. mtrs.o Borrowed Rs 1 lakh from his
brother & balance from ICICI
o Pays an EMI of Rs 6,500
The reason: his mobile grocery unit, a TATA ACE, earns him a monthly income much higher than his EMI payout.Source: Business Standard Article : Serving a ‘super’ ace 05.11.2009
2. SERVING AN ‘ACE’MARKETING-II: CASE PRESENTATION
3. AgendaLCV Segment & Road Infrastructure (India)TATA MotorsGap Analysis & Market ResearchExisting CompetitionSTPNew Product Design4PsServicing MixCRMLaunch & ResponseBrandingThe Way Ahead
4. “TATA ACEbears testament to the company’s efforts to identifynew categories & develop logistic solutions that will improve the lives of the people.”Ravi Kant, Vice Chairman, Tata Motors Source: THE HINDU: Making Inroads Serving a ‘super’ ace 06.05.2005
5. WINNER OF BBC ‘TOP GEAR DESIGN OF THE YEAR 2006’ AWARD6. Redefining the adjectives!7. LCV
SEGMENT 8. Segment Overview
o Structure of Indian CV Segmento Classified on Gross vehicle weight (GVW)
o GCW<7.5tonnes – LCVo Goods 77% + passenger carriers 23%o 45% LCV + 55% M/HCV
Source: SIAM & ICRA CV Sector Report April 2009
9. Demand Driverso GDP/IIP & Freight Outlook- High degree of correlation o Fuel price- PBIT rises 3.5% for a 1% decline in fuel priceso Policy initiativeso Discouraging the use of old, polluting and uneconomical vehicles.o Supreme Court ban on overloading, Leading to incremental volumes in the
last 2 yrs o Scrapping vehicles >15 years old; Potentially unleash a huge replacement
demand.o Replacement cycle- Declining from about 12 years to nearly 7 years now.
The proportion of trucks under five years of age rose from about 34% in FY02 to nearly 45% in FY06
o Indian Railways Freight Services- Vis-à-vis the railways, the share of road transport currently stands at about 65%.
o Easy availability of finance at low interest rate
Source: DBS Cholamandalam Securities Ltd.
10. LCV Segment Overview : FY0811. PEST Analysis
Economic12. PEST Analysis13. Road
Infrastructure14. Facts & Figures
o 3.32 million kms road, 2% Highways, 12% of this 2% four lane o Traffic in cities, entry barriers/ timing barriers for heavy vehicleso Poor rural road connectivityo Ban of 3-wheelers on flyovers due to slower speeds & safety
considerationso Golden Quadrilateral Projecto PradhanMantriGraminSadakYojana
15. TATAMOTORS16. TATA MOTORS
Mr. Ratan TataMr. Ravi KantMr. GirishWaghPEOPLE BEHIND “ACE”TATA MOTORS’ ACHIEVEMENTS
17. Product Range
18. FINANCIALS19. TATA Motors-Financials for FY 09
o Basic Earning Per Share (EPS) decreased to Rs. 22.70 as compared to Rs. 52.64 last year for Ordinary Shares.
20. GAP ANALYSIS21. The idea of a vehicle called Ace: GAP analysis
Market Situationo Government plans of road network expansion.o Higher GDP growth positively correlated with truck penetration.o High probability of increased demand in LCV segment.
Company Situation
o Tata product portfolio lacked greater than 45tons and sub 2 ton vehicles.o Scope of enhancing the market share was there
22. GAP Analysis23. GAP Analysis: Value Net Model
Customers: Balanced perspective and ROI sensitive customers would buy the productSuppliers: TATA could utilize its existing supplier baseCompetitors: There was no competition in the identified product segmentComplementors: The Government road network improvement schemes and high GDP growth rate of the countrySOURCE: 12manage.com
24. GAP Analysis: Company strategyBasis of Strategy
o Value Net Model
Strategy Adopted
o New Product Development
Company Decision
o AddTata Ace, “The Last Mile” distribution vehicle to the Product Portfolio
25. ANSOFF Matrix26. MARKETRESEARCH27. Market Research Objectives28. Collection of Information
Sampling plan: Ajudgmental sampling technique was used Contact method: Personal interviewData: Primary datawas usedResearch Instrument:
Questionnaires4000 truck and three wheeler drivers were interviewed!
29. Information analysis and findingsThere was market for 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.Customers also viewed four wheelers as a higher-status vehicle.Customers wanted a product that would travel across the length and breadth of the country and would withstand overloading.People wanted a vehicle with a feel good factor for the driver.In order to convert the prospective consumers into potential consumers the price had to be below 2lacs. 45% of the Ace’s customer base would come from people planning to purchase three wheelers, 15% from potential pickup and light-commercial-vehicle purchasers, and 40% from first-time commercial-vehicle purchasers.
30. Decision making31. Existing
Competition32. Competition
Commercial Vehicle Sector33. Players in 3 wheeled vehicles34. Players in 4 wheeled vehicles35. SEGMENTATION36. Functional Market Segmentation37. CUSTOMER MARKET SEGMENTATION
Customer Market Segmentation was done within the functional market segments38. Customer Market Segmentation39. Customer Market Segmentation40. TARGETING41. Targeting42. Positioning43. Positioning
Safaltakinayisawari – jo do lakhzindagibadalchukahai – aapkachotahathio Positioned as ChotaHathio A symbol of powero A symbol of ‘mini’ producto A symbol of reliability
44. PositioningA PRODUCT FORALL YOUR NEEDSBoy rushing to schoolOff to work in Tata ACEWife seeing husband off for the dayTo school in Tata ACE
45. Positioning Statements
46. Competitive PositioningSavingsSavingsForce Motors MinidorBajaj GC MaxBajaj GC MaxM & M ChampionM & M ChampionTata ACETata ACEM & M MaxxPiaggio Ape TruckPiaggio Ape TruckTata SFC 407Eicher 10.xxEicher 10.xxSwaraj Mazda CosmoSwaraj Mazda CosmoPerformanceStyle & ComfortPerformanceStyle & ComfortPiaggio Ape TruckTata ACETata ACETata SFC 407M & M MaxxServiceService
47. PRODUCTDESIGN
48. Designing the ACEENHANCING OVERLOADING CAPACITY
o Per unit cost of transportation perceived as a much
desired quality. Acceleration not of much importance
o Overloading stress points identified using CAD o Higher strength steel used only there to come out with
low cost yet durable product.
o Semi-monocoque frame49. Designing the ACE
ENGINE SELECTIONo Customer preference – Diesel engine and 1 engine
option ruled out due to NVH targets
o Foreign made 4 cylinder engine would double cost and HPo Indica model based 2 cylinder engine reduced costso Rotary fuel injection pump met emissions standard and
avoided use of electronic system
50. Designing the ACESAFETY AND COMFORT
o In spite of strict cost target, M1/N1 standard
adhered to .
o Customers were not for Semi forward engineo Flat faced model adhered to which gave it a large
commercial vehicle look and better space utilization.
o Full frontal crash requirement51. Product52. PRODUCT- TATA ACE
“At the heart of any great brand lies a great product”BBC Top Gear’s Annual “Best commercial vehicle design” Award winner -2006
53. Product SpecificationsSPECIFICATIONS
54. Product Features55. Tata Ace differentiation - Versatility
o Ideal for both City and rural areas.o 12” tyres give higher ground clearance and
higher loading capacity
o Rigid front axle for Indian conditions & a turning radius of 8.6m o The truck-like strength of the front and rear leaf spring
suspensions provide a smooth riding experience
o Usages range from vegetable vendors to cargo pickup to
passenger transport.
56. Tata Ace differentiation - Savingso Comfortable conditions for the driver allow the ACE to
travel over 500 kms a day
o Electronic start and stop increases mileage by 6-10
Kmpl.
o Flat, large loading area gives a fantastic opportunity to
earn higher business revenue
o Low operating costs and highly reliable – an
altogether safe investment for small time businessmenAmple load space with three side panels
57. Tata Ace differentiation - Safetyo M1/N1 safety norms for frontal crash, roof crush etco Seat belts & bright halogen bulbs Headlampso High performance by front disc brakes & rear drum brakeso Large windscreen, large rear-view mirror and the large rear windowo Easily accessible hazard warning switch for emergencyo The frontal windshield was pasted to the steel window frame to add
structural strength
58. Tata Ace differentiation - Comforto Sheet metal cab with doors, roof lining, floor mat
protect from rain, heat and cold
o Control pedals, gear shift and parking brake
ergonomically positioned for comfort
o Higher door opening angle and low floor height for
easy boarding
o Sun visor for protection from direct glare59. Tata Ace differentiation - Performance
o 700cc engine delivers a power of 16 HP @ 3200 rpm o Torque of 3.8 m kg @ 2000 rpmo Soft cushion seats and back supporto Meets BS II and BS III standards
o Lowest loading height of 675 mm, heavy loads can be conveniently placed in the load body
o The 4-forward synchromesh +1 gear box gives smooth shifting60. Tata Ace differentiation - Style
o Styled dashboard with tray, digital clock, radio fitment provision, utility
tray and clearly visible instrument cluster
o Smooth external finish - exquisite looko Flat faced large commercial vehicle look.o Lockable glove-box for keeping valuable documentso A spare wheel attached to the lockable swing frame at the rear
61. Tata Ace variants62. ACE : Product Life Cycle63. Target Segment for TATA Magic64. Tata Ace Magic
o A frills-free, affordable transportation
solution for rural commuter
o Passenger version of Tata Aceo Customer insight -ACE being used for
passenger transportation
o Separate marketing strategy adoptedo Transport 4 to 7 passengers + baggageo Tubular construction, Rexene windows
65. Pricing66. ACE Pricing
Pricing Objectiveo Product- Quality Leadershipo Perceived Quality higher than competing 3-wheelerso Priced just beyond the max price of 3-wheelers at Rs. 200000o A premium on the price of three wheelers
67. ACE Pricingo Determining Demando Total Cost of Ownership less in the long run than three wheelerso Estimating Costso Increasing Variable cost percentage of total costso Target Costing method used to produce the whole product before at a
predetermined cost
Quantity DemandedPrice (Rs.)
68. ACE Pricingo Analyzing competitors costs, prices and offerso Competitors sold at a lesser price than the target price of ACEo The value package of Ace was however higher than the competitorso Pricing Methodo Value pricingo The Final Priceo Priced at Rs. 225000o Priced at a premium of 12.5% over the maximum price of three wheelers
in the market69. VARIANT Pricing Strategy
o Tata Super Aceo Is priced at Rs. 355000o Significant premium on the normal price of ACEo Increase in the value offeringo Load Capacity of 1 tono Increased driver comfortso Increased power at 70bhpo Tata Ace Magico Passenger variant priced at Rs. 260000o Costlier than autos used for road transporto Priced higher than Maruti Omni van
70. Place71. Inbound
LogisticsMarketingServiceOutbound LogisticsValue Chain : TATA MotorsTransporters, Convoy Drivers AssociationDealer Network, Marketing Research Firms, Vehicle FinancingSAP , VCMOperationsSAP , CRM - DMSSuppliers , ContractorsRegional Warehouses, Dealer Workshops, Distributors, TASSStrategic Alliances71
72. Supplier Network : ACEo Outsource most of the partso Convert fixed cost to variable costo Wage rates of TATA motors double of supplierso Aggregate Outsourcingo Procurement of sub-assemblies rather than individual partso Concurrent Designing
o Suppliers involved at design & development Stageo e-Sourcingo Requirement based e-bidding from prequalified supplierso Parts Commonisationo Cost reduction due to bulk purchaseso Supplier Commonisationo Use of existing supplier base
81.5%Outsourced, 20% Reduction in cost
73. Distribution Network : Hub & Spoke Modelo 3S to IS Approacho A sales outlet every 40 to 50kilometerso ‘Only Sales’ stores compared to traditional ‘Sales, Services & Spares’o Existing dealerships acted as hubs and set up 1S dealershipso Each dealer set up 15 to 20 1S storeso 300 new distribution points set up in 3 monthso Location close to target marketo Plant located in Pune at the time of launcho Target Markets : Southern & Western Regions
3S1S1S1S1S1S
74. PROMOTION75. The Target Audience
o Three Wheeler Ownerso Owners of truckso Trucking Fleet Ownerso First time LCV purchasers
76. Communication Objectiveo Good Brand awareness of the umbrella brand, TATAo To communicate the benefits of the product, ACEo To develop a positive brand attitude among the target customer groupo To translate the positive brand attitude into sales
77. Design the CommunicationsMessage Strategy
o Dealers were educated in the benefits of Ace versus the competitiono The core message was created around new opportunities that Ace would
provide its customerso The dissatisfied three wheeler owners were targeted with the message of
“feeling good about your job”
o India’s first Mini Trucko Use of local languages for communication
Creative Strategy
o Tata - a trusted source of informationo No other endorsers were usedo Informational appeal of the product i.e. the load capacity, power etc.o Emotional benefits of the product i.e. better social status
Message
78. Communication Channels79. Marketing Communication Budget
o Tata Motors did not have enough money to spend on the advertising budget
o Affordable method was used in the launch phase to decide the advertising budget
80. SERVICING MIX81. 3 Ps of service
o Free training to rural mechanicso Free tool set and signboard o Provision of spare parts and lubricants to mechanics and customerso Necessary help in case of major accident
Process
o Dedicated dealerso Well trained mechanics
People
o “SUVIDHA”o Mobile workshopso Service outlet every
40- 50 kmPhysical Evidence
82. CRM83. CRM : Giving TATA an edge
o Why CRM?o Low rating in Sales Satisfaction o Needed a centralized customer databaseo Respond promptly to customer requestso Required better feedback on product quality
o Effective measurement of campaignso CRM Implementationo CRM-DMS (Dealer Management System)o Launched in 2003o Now supports 15000 userso Covers 1000 locationso Real time customer datao Purchase Cycle Intimacyo Individual Ownership Experience
JD Power SSI ScoresSource: www.jdpower.com/corporate/india/ www.tata.com/company/releases/inside.aspx?artid=6nnOgmCs8lc=
84. CRM : Giving TATA ACE an edge85. LAUNCH
&RESPONSE
86. Launch & Responseo Launcho Launched in May 2005o Major 3-wheeler users in south & westo Priced at Rs. 225,000o Pune production facility close to target marketo 25% of the country covered for initial launcho Responseo Exceeded Tata Motors’s expectationso Sold its annual production target of 30,000 vehicles in less than a yearo Increase sales by 13.1%o Market share increased by 13.6% pointso Contributed 15 % companies volume in 1st yearo 54% First time buyers, 33% Previously owned 3-wheelers, 30% owned
LCV87.o ACE sold 90000 units in FY08o Rolled out 1,00,000th ACEwithin
22 months of launch
o ACE 26%YoY growth rate FY09 o MAGIC37%YoY growth rate FY09 o Has 90% market share against
competitive launches from Piaggio& Force Motors
BCG MatrixSource: TATA Motors Business Review 2008
88. SWOT Analysiso Strong brand name of TATAo First mover advantageo Good Consumer relationshipo Continuous innovationo Good logistic managemento Provision of finance to buyerso Higher costo After sales serviceo Complaints on gear shiftingo Rural marketo Export Segmento High growth rate of LCV segmento Further fragmentation of marketo Increased competitiono Creation of a new segment by
Mahindra & Mahindra’s GIO
89. Branding90. ACE : Making of a Brand
LEADING EDGE INDICATORFOR FUTURE MARKET SHARE & PROFITABILITYSource: The Blake Project: Brand Equity Measurement – Brand Insistence Model
91. ACE : Making of a Brando Umbrella Branding : The TATA Legacyo ‘Pride of India’o Emotional attachmento Trustworthyo TATA Motors brand – taking a hit (2001)o Arroganto Slow to respond to customer needso Unreliable productso Researcho Demand for scaled down version of TATA
407 truck
o Good brand image in LCV segment
Source: JD Power Customer Satisfaction Ranking 2001
92. ACE : Leveraging the Brand…o Making ‘MAGIC’o Launch of ACE MAGIC in June’07o Variantso Super ‘ACE’ 1 tonner o Multiple engine variants o Gasoline & CNGo Accessory-production opportunitieso Dumper attachment , Water tanker , Elevated platform o Green & Global : ACE Electric Variant (EV)o Joint development with Global Electric Motorcarso To be retailed in US market by Chrysler Corp.o 250 units US postal department
Source: http://www.vicky.in/straightfrmtheheart/chrysler-to-sell-tata-ace-electric-in-us-2/
93. EXPORTFOCUS94. Exports
o Emerging markets similar to Indiao Emerging markets more developed than Indiao Developed Marketso Countries for Expansiono Sri Lankao Nepal (Specially for hilly terrains)o Bangladesh (CNG Variant)o Electric version for US marketo South Koreao Africao Gulf Countries
95. RURALFOCUS
96. Rural markets – a huge potential"It has always been our desire to anticipate demand and develop products to meet that need. We perceived that there would be a growing demand for a safe, reliable and versatile 4-wheel very light commercial vehicle for carrying goods and people. It would facilitate inter-city transport and extensively connect town and villages in rural India. I believe the Tata Ace will deliver excellent value to its owners and operators."
o 56% of the National Incomeo 64% of the Total Expenditureo Predicted to be Rs. 16 Trillion by 2012-13o Needed for transporting agricultural yieldso To deliver small lots of CPGs
97. Roads in Indian villageso 65% of country’s freight traffic through roads
o 40% of villages(825000) have no access to all
weather roads
o Poor qualityo Access cut off during rainso Under funded road maintenanceo Northern and North-eastern states - poorly
linked to the country’s major economic centres
98. Rural India – Road transportationCommon modes of transport in villages -
o Bullock carts o Human labouro Three wheelers
Disadvantages –
o Longer lead timeso Shrinkageo Poor transportation – Longer cash conversion cycleo Hinder a high standard of living
99. Tata Ace - Rural markets focusDemand for
o Small trucks delivering on full truck load basiso Cost effective transport for last mile delivery in supply chaino Safe transport for low income group o Emotional quotient
Benefits offered
o Training of rural mechanics free of costo Free tool set and display at garageo Mobile Workshop
Introduced Ace Magic targeted at rural population“If I drove a four wheeler, I would receive better marriage proposals in my village.”
100. The Way Ahead…101. Stepping Stone for Nano
o Involving customers in product developmento Strict cost constraintso Market Research
“Systematise and institutionalise the cost down efforts during the design and development phase to make the product more cost competitive.” ~ GirishWagh
102. New Competitiono Mahindra is working on a mass-market cargo and passenger vehicleo The Rajkot-based Atul Auto Ltd new launcho Hyundai Motor Corporation, Korea, plans to set up a LCV manufacturing
plant in India. Though Hyundai denied it may launch it LCV porter.o Bajaj Auto working on a 4-wheeled goods carriero Other major players such as TVS, Hindustan Motors, Ashok Leyland and
Suzuki are seriously mulling their foray in to this segment.103. PIAGGIO APE – ‘APE’ING the ACE Success?
o Offers 20 kplcompared to 14 kpl offered by Tata Ace o 6 speed gear box as opposed to 5 speed gear box of Tata Aceo Better design and styling o Maximum gradeability of 17 to woo hill station commuterso Lower turning radius – 7.7 m o High ground clearance of 185 mm o Aggressive price tag of Rs 215,000o 1 year , 36000 km warrantyo 8 free services104.o New manufacturing facility in Uttarkhand250000 unitso Industry specific incentives, free land & tax benefitso Entry into US marketo After market accessories opportunities (attachments etc.)o Concentrate on after sales services to make competitive
advantage sustainable (like extended warranty)
o Focus on MAGIC design to make it appealing to a broader
section The Way Ahead….
105. THANK YOU
