Tata Ace Serving An Ace

Tata Ace Serving An Ace - Presentation Transcript
We begin with a story!!
o Name: RavindraSalukhe
o Sells vegetables and fruits
o 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. Agenda
LCV Segment & Road Infrastructure (India)
TATA Motors
Gap Analysis & Market Research
Existing Competition
STP
New Product Design
4Ps
Servicing Mix
CRM
Launch & Response
Branding
The 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’ AWARD
6. Redefining the adjectives!
7. LCV
SEGMENT
8. Segment Overview
o Structure of Indian CV Segment

o Classified on Gross vehicle weight (GVW)
o GCW<7.5tonnes – LCV
o Goods 77% + passenger carriers 23%
o 45% LCV + 55% M/HCV
Source: SIAM & ICRA CV Sector Report April 2009

9. Demand Drivers
o GDP/IIP & Freight Outlook- High degree of correlation
o Fuel price- PBIT rises 3.5% for a 1% decline in fuel prices
o Policy initiatives
o 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 : FY08
11. PEST Analysis
Economic
12. PEST Analysis
13. Road
Infrastructure
14. 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 vehicles
o Poor rural road connectivity
o Ban of 3-wheelers on flyovers due to slower speeds & safety considerations
o Golden Quadrilateral Project
o PradhanMantriGraminSadakYojana
15. TATAMOTORS
16. TATA MOTORS
Mr. Ratan Tata
Mr. Ravi Kant
Mr. GirishWagh
PEOPLE BEHIND “ACE”
TATA MOTORS’ ACHIEVEMENTS
17. Product Range
18. FINANCIALS
19. 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 ANALYSIS

21. The idea of a vehicle called Ace: GAP analysis
Market Situation
o 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 Analysis

23. GAP Analysis: Value Net Model
Customers: Balanced perspective and ROI sensitive customers would buy the product
Suppliers: TATA could utilize its existing supplier base
Competitors: There was no competition in the identified product segment
Complementors: The Government road network improvement schemes and high GDP growth rate of the country
SOURCE: 12manage.com
24. GAP Analysis: Company strategy
Basis 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 Matrix

26. MARKETRESEARCH
27. Market Research Objectives
28. Collection of Information
Sampling plan: Ajudgmental sampling technique was used
Contact method: Personal interview
Data:
Primary datawas used
Research Instrument:
Questionnaires
4000 truck and three wheeler drivers were interviewed!
29. Information analysis and findings
There 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 making
31. Existing
Competition
32. Competition
Commercial Vehicle Sector
33. Players in 3 wheeled vehicles
34. Players in 4 wheeled vehicles
35. SEGMENTATION
36. Functional Market Segmentation
37. CUSTOMER MARKET SEGMENTATION
Customer Market Segmentation was done within the functional market segments
38. Customer Market Segmentation
39. Customer Market Segmentation
40. TARGETING
41. Targeting
42. Positioning
43. Positioning
Safaltakinayisawari – jo do lakhzindagibadalchukahai – aapkachotahathi
o Positioned as ChotaHathi
o A symbol of power
o A symbol of ‘mini’ product
o A symbol of reliability
44. Positioning
A PRODUCT
FOR
ALL YOUR NEEDS
Boy rushing to school
Off to work in Tata ACE
Wife seeing husband off for the day
To school in Tata ACE
45. Positioning Statements
46. Competitive Positioning
Savings
Savings
Force Motors Minidor
Bajaj GC Max
Bajaj GC Max
M & M Champion
M & M Champion
Tata ACE
Tata ACE
M & M Maxx
Piaggio Ape Truck
Piaggio Ape Truck
Tata SFC 407
Eicher 10.xx
Eicher 10.xx
Swaraj Mazda Cosmo
Swaraj Mazda Cosmo
Performance
Style & Comfort
Performance
Style & Comfort
Piaggio Ape Truck
Tata ACE
Tata ACE
Tata SFC 407
M & M Maxx
Service
Service
47. PRODUCT
DESIGN
48. Designing the ACE
ENHANCING 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 frame
ENGINE SELECTION
o Customer preference – Diesel engine and 1 engine
option ruled out due to NVH targets
o Foreign made 4 cylinder engine would double cost and HP
o Indica model based 2 cylinder engine reduced costs
o Rotary fuel injection pump met emissions standard and
avoided use of electronic system

SAFETY AND COMFORT
o In spite of strict cost target, M1/N1 standard
adhered to .
o Customers were not for Semi forward engine
o Flat faced model adhered to which gave it a large
commercial vehicle look and better space

utilization.
o Full frontal crash requirement
51. Product
52. 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 Specifications
SPECIFICATIONS
54. Product Features
55. 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 - Savings
o 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

businessmen
Ample load space with three side panels
57. Tata Ace differentiation - Safety
o M1/N1 safety norms for frontal crash, roof crush etc
o Seat belts & bright halogen bulbs Headlamps
o High performance by front disc brakes & rear drum brakes
o Large windscreen, large rear-view mirror and the large rear window
o Easily accessible hazard warning switch for emergency
o The frontal windshield was pasted to the steel window frame to add
structural strength
58. Tata Ace differentiation - Comfort
o 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 glare
59. Tata Ace differentiation - Performance

o 700cc engine delivers a power of 16 HP @ 3200 rpm
o Torque of 3.8 m kg @ 2000 rpm
o Soft cushion seats and back support
o 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 shifting
60. 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 look
o Flat faced large commercial vehicle look.
o Lockable glove-box for keeping valuable documents
o A spare wheel attached to the lockable swing frame at the rear
61. Tata Ace variants

62. ACE : Product Life Cycle
63. Target Segment for TATA Magic
64. Tata Ace Magic
o A frills-free, affordable transportation
solution for rural commuter
o Passenger version of Tata Ace
o Customer insight -ACE being used for
passenger transportation
o Separate marketing strategy adopted
o Transport 4 to 7 passengers + baggage
o Tubular construction, Rexene windows
65. Pricing
66. ACE Pricing
Pricing Objective
o Product- Quality Leadership
o Perceived Quality higher than competing 3-wheelers

o Priced just beyond the max price of 3-wheelers at Rs. 200000
o A premium on the price of three wheelers
67. ACE Pricing
o Determining Demand
o Total Cost of Ownership less in the long run than three wheelers
o Estimating Costs
o Increasing Variable cost percentage of total costs
o Target Costing method used to produce the whole product before at a predetermined cost
Quantity Demanded
Price (Rs.)
68. ACE Pricing
o Analyzing competitors costs, prices and offers
o Competitors sold at a lesser price than the target price of ACE
o The value package of Ace was however higher than the competitors
o Pricing Method
o Value pricing
o The Final Price
o Priced at Rs. 225000
o Priced at a premium of 12.5% over the maximum price of three wheelers in the market
69. VARIANT Pricing Strategy
o Tata Super Ace
o Is priced at Rs. 355000
o Significant premium on the normal price of ACE
o Increase in the value offering
o Load Capacity of 1 ton
o Increased driver comforts
o Increased power at 70bhp
o Tata Ace Magic
o Passenger variant priced at Rs. 260000
o Costlier than autos used for road transport

o Priced higher than Maruti Omni van
70. Place
71. Inbound
Logistics
Marketing
Service
Outbound
Logistics
Value Chain : TATA Motors
Transporters, Convoy Drivers Association
Dealer Network, Marketing Research Firms, Vehicle Financing
SAP , VCM
Operations
SAP , CRM - DMS
Suppliers , Contractors
Regional Warehouses, Dealer Workshops, Distributors, TASS
Strategic Alliances
71
72. Supplier Network : ACE
o Outsource most of the parts
o Convert fixed cost to variable cost
o Wage rates of TATA motors double of suppliers
o Aggregate Outsourcing
o Procurement of sub-assemblies rather than individual parts
o Concurrent Designing
o Suppliers involved at design & development Stage
o e-Sourcing
o Requirement based e-bidding from prequalified suppliers
o Parts Commonisation
o Cost reduction due to bulk purchases
o Supplier Commonisation
o Use of existing supplier base
81.5%Outsourced, 20% Reduction in cost

73. Distribution Network : Hub & Spoke Model
o 3S to IS Approach
o A sales outlet every 40 to 50kilometers

o ‘Only Sales’ stores compared to traditional ‘Sales, Services & Spares’
o Existing dealerships acted as hubs and set up 1S dealerships
o Each dealer set up 15 to 20 1S stores
o 300 new distribution points set up in 3 months
o Location close to target market
o Plant located in Pune at the time of launch
o Target Markets : Southern & Western Regions
3S
1S
1S
1S
1S
1S
74. PROMOTION
75. The Target Audience
o Three Wheeler Owners
o Owners of trucks
o Trucking Fleet Owners
o First time LCV purchasers
76. Communication Objective
o Good Brand awareness of the umbrella brand, TATA
o To communicate the benefits of the product, ACE
o To develop a positive brand attitude among the target customer group
o To translate the positive brand attitude into sales
77. Design the Communications

Message Strategy
o Dealers were educated in the benefits of Ace versus the competition
o The core message was created around new opportunities that Ace would provide its customers
o The dissatisfied three wheeler owners were targeted with the message of “feeling good about your job”
o India’s first Mini Truck
o Use of local languages for communication

Creative Strategy
o Tata - a trusted source of information
o No other endorsers were used
o 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 Channels
79. 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 MIX

81. 3 Ps of service
o Free training to rural mechanics
o Free tool set and signboard
o Provision of spare parts and lubricants to mechanics and customers
o Necessary help in case of major accident
Process
o Dedicated dealers
o Well trained mechanics
People
o “SUVIDHA”
o Mobile workshops
o Service outlet every
40- 50 km
Physical Evidence
82. CRM
83. CRM : Giving TATA an edge
o Why CRM?
o Low rating in Sales Satisfaction
o Needed a centralized customer database

o Respond promptly to customer requests
o Required better feedback on product quality
o Effective measurement of campaigns
o CRM Implementation
o CRM-DMS (Dealer Management System)
o Launched in 2003
o Now supports 15000 users
o Covers 1000 locations
o Real time customer data
o Purchase Cycle Intimacy
o Individual Ownership Experience
JD Power SSI Scores

Source: www.jdpower.com/corporate/india/
www.tata.com/company/releases/inside.aspx?artid=6nnOgmCs8lc=
84. CRM : Giving TATA ACE an edge
85. LAUNCH
&
RESPONSE
86. Launch & Response
o Launch
o Launched in May 2005
o Major 3-wheeler users in south & west
o Priced at Rs. 225,000
o Pune production facility close to target market
o 25% of the country covered for initial launch
o Response
o Exceeded Tata Motors’s expectations
o Sold its annual production target of 30,000 vehicles in less than a year
o Increase sales by 13.1%
o Market share increased by 13.6% points
o Contributed 15 % companies volume in 1st year
o 54% First time buyers, 33% Previously owned 3-wheelers, 30% owned LCV
87.
o ACE sold 90000 units in FY08
o 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 Matrix
Source: TATA Motors Business Review 2008
88. SWOT Analysis
o Strong brand name of TATA
o First mover advantage
o Good Consumer relationship
o Continuous innovation
o Good logistic management
o Provision of finance to buyers
o Higher cost
o After sales service
o Complaints on gear shifting
o Rural market
o Export Segment
o High growth rate of LCV segment
o Further fragmentation of market
o Increased competition
o Creation of a new segment by
Mahindra & Mahindra’s GIO

89. Branding
90. ACE : Making of a Brand
LEADING EDGE INDICATOR
FOR FUTURE MARKET SHARE
& PROFITABILITY
Source: The Blake Project: Brand Equity Measurement – Brand Insistence Model
91. ACE : Making of a Brand
o Umbrella Branding : The TATA Legacy
o ‘Pride of India’
o Emotional attachment
o Trustworthy
o TATA Motors brand – taking a hit (2001)
o Arrogant
o Slow to respond to customer needs
o Unreliable products
o Research
o 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’07
o Variants
o Super ‘ACE’ 1 tonner
o Multiple engine variants
o Gasoline & CNG
o Accessory-production opportunities
o Dumper attachment , Water tanker , Elevated platform
o Green & Global : ACE Electric Variant (EV)
o Joint development with Global Electric Motorcars
o 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. EXPORTFOCUS
94. Exports
o Emerging markets similar to India
o Emerging markets more developed than India
o Developed Markets
o Countries for Expansion
o Sri Lanka
o Nepal (Specially for hilly terrains)
o Bangladesh (CNG Variant)
o Electric version for US market
o South Korea
o Africa
o Gulf Countries
95. RURAL
FOCUS
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 Income
o 64% of the Total Expenditure
o Predicted to be Rs. 16 Trillion by 2012-13
o Needed for transporting agricultural yields
o To deliver small lots of CPGs
97. Roads in Indian villages
o 65% of country’s freight traffic through roads
o 40% of villages(825000) have no access to all
weather roads
o Poor quality
o Access cut off during rains

o Under funded road maintenance
o Northern and North-eastern states - poorly
linked to the country’s major economic centres

98. Rural India – Road transportation
Common modes of transport in villages -
o Bullock carts
o Human labour
o Three wheelers
Disadvantages –
o Longer lead times
o Shrinkage
o Poor transportation – Longer cash conversion cycle
o Hinder a high standard of living
99. Tata Ace - Rural markets focus

Demand for
o Small trucks delivering on full truck load basis
o Cost effective transport for last mile delivery in supply chain
o Safe transport for low income group
o Emotional quotient
Benefits offered
o Training of rural mechanics free of cost
o Free tool set and display at garage
o 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 development
o Strict cost constraints
o 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 Competition
o Mahindra is working on a mass-market cargo and passenger vehicle
o The Rajkot-based Atul Auto Ltd new launch
o 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 carrier
o 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 Ace
o Better design and styling
o Maximum gradeability of 17 to woo hill station commuters
o Lower turning radius – 7.7 m
o High ground clearance of 185 mm
o Aggressive price tag of Rs 215,000
o 1 year , 36000 km warranty
o 8 free services
104.
o New manufacturing facility in Uttarkhand250000 units
o Industry specific incentives, free land & tax benefits
o Entry into US market
o 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

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Tata Ace Serving An Ace - Presentation Transcript

We begin with a story!!

o Sells vegetables and fruits

o Upmarket Cuffe Parade in

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

o Structure of Indian CV Segment

o Goods 77% + passenger carriers 23%

o 45% LCV + 55% M/HCV

Source: SIAM & ICRA CV Sector Report April 2009

o GDP/IIP & Freight Outlook- High degree of correlation

o Fuel price- PBIT rises 3.5% for a 1% decline in fuel prices

o Discouraging the use of old, polluting and uneconomical vehicles.

o Easy availability of finance at low interest rate

Source: DBS Cholamandalam Securities Ltd.

o 3.32 million kms road, 2% Highways, 12% of this 2% four lane

o Traffic in cities, entry barriers/ timing barriers for heavy vehicles

o Poor rural road connectivity

o Ban of 3-wheelers on flyovers due to slower speeds & safety considerations

o Golden Quadrilateral Project

20. GAP ANALYSIS

o Government plans of road network expansion.

o Higher GDP growth positively correlated with truck penetration.

o High probability of increased demand in LCV segment.

o Scope of enhancing the market share was there

22. GAP Analysis

o Value Net Model

o New Product Development

25. ANSOFF Matrix

o A symbol of ‘mini’ product

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 Customer preference – Diesel engine and 1 engine

option ruled out due to NVH targets

o Foreign made 4 cylinder engine would double cost and HP

o Indica model based 2 cylinder engine reduced costs

o Rotary fuel injection pump met emissions standard and

avoided use of electronic system

o In spite of strict cost target, M1/N1 standard

o Customers were not for Semi forward engine

o Flat faced model adhered to which gave it a large

commercial vehicle look and better space

o Full frontal crash requirement

o Ideal for both City and rural areas.

o 12” tyres give higher ground clearance and

higher loading capacity

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

o 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

o Flat, large loading area gives a fantastic opportunity to

earn higher business revenue