BIG THINGS COME IN

SMALL PACKAGES

Jegadeesan Priyatharisini R Sriram BSK Uthra G Vivekh

y Launched in May 2005 y Inspired from Highly successful Japanese Minitruck Kei

Truck (introduced 1977) and Korean Kia Bonga (1980) y Tata Ace is priced in the range
y y

Rs 2.25 lakh for BS II (ex-showroom NCR) Rs 2.35 lakh for BS III (ex-showroom NCR)

y Tata Ace is powered by a small and efficient 16bhp 700cc

IDI diesel engine y Suitable for both rural and urban use y Tata Ace sets the trend as the country s first
y y y

high performance, low maintenance safe and reliable mini-truck sporty car-like features to ensure comfort in ride and handling
Tata ACE - Team 10-Thiagarajar School of Management 8/21/2011

FY
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-Nov11

Sales Figures
30,000 70,000 89,000 81,000 110,032 (With Tata Magic 160,000) 160,000 (upto 30-Nov-2010) Aiming -for 250,000 this year Tata ACE Team 10-Thiagarajar School of
Management

8/21/2011

Ref: http://www.wheelosphere.org/little-elephant-tata-ace-sales-cross-100000-in-fy-2010/

y The 3 wheelers had the following issues

y wore a rustic look y uncomfortable y not very safe for carrying load at high speed

y Though the price was less, the operating cost was very

high y Need for company: blue ocean strategy

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

y Quadrilateral project -led to creation of large number

of expressways and widened many of the existing highways y A portion of traffic moved from railways to roads and pushed the demand for heavy and light commercial vehicles y Urbanization- cities pushed their geographical boundaries

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

y Increasing population and growth in the organized y y y y

retail sector with the entry of large players Social status for Users Last mile distribution vehicle TATA motors identified these macroeconomic trends Realized that there will be an increased demand for LCVs in urban areas

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

y TATA motors wanted to reduce their dependence

on the MCV and HCV segments y They started losing their market share in these segments in the late 90s y TATA motors wanted to diversify y The launch of their LCV, TATA ACE helped in achieving these goals y During the financial meltdown (2008-09), even as the MCV &HCV segments in India shrank by 33% compared to the previous year, Ace in the LCV segment fell by just 12%.
Tata ACE - Team 10-Thiagarajar School of Management 8/21/2011

Honda Acty

Subaru Sambar

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

Mitsubishi Minicab

Suzuki Carry

y Basic needs of small scale transporters y Customers in rural areas attached prestige to their

transport vehicles y Safety y Comfort to the driver y Speed y Ability to drive in the narrow lanes y Tight Turning Radius y Low operating costs
Tata ACE - Team 10-Thiagarajar School of Management 8/21/2011

65 64 63 62 61 60 59 58 57 56

Trend in Market Share Source: Tata Motors Financials Reports

2005

Tata ACE - Team 10-Thiagarajar School of Management

2007

8/21/2011

2009

10

140 120 100 80 60 40 20 0 -20

8/21/2011

Sales Growth Achieved Source: Tata Motors Financials Reports

2007

Tata ACE - Team 10-Thiagarajar School of Management

2009

11 2011

y Target segment

Individual Customers y Target customers: who expect a high Return On Investment (ROI) along with safety, comfort, and status y 136,000 Three wheeler SCVs were sold in 2005 y With 20% attrition towards ACE and attracting another 25,000 customers, market is very attractive to enter

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

12

y Value proposition y High Performance with car-like features in safety,

comfort

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

13

y Price was higher as compared to competitors but the

company supported it on the basis of the value provided y Initially a discount of 4000 Rs was given y 80% of the vehicle has been outsourced to keep costs low without

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

14

y Initial Launch y Company launched ACE in the south first through its Dealers and Dealer Branches y Distribution network: Hub & Spoke model y Existing dealership acted as hubs & set up IS dealerships y Location close to target markets y Plant located in Pune at the time of launch y Target markets (southern and western regions) y Current Availability y 26 Commercial vehicle dealers in Tamilnadu y Available in all 28 states y 1700 Tata Ace specific dealers all over India

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

15

y Value proposition
y High performance with car like features y Advertisement with Tag Line Kutti Yanai y A symbol power y A symbol of reliability

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

16

y Benefit sought Behavioral Segmentation y Need based y Focus on comfort and safety y Demographic Customer profile Segmentation y Individual Vehicle owners y Fleet Owners y Institutional Customers

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

17

Strength
1. Strong brand name 2. Leverage of First mover advantage 3. Good logistic management 4. Continuous innovation

Opportunities
1. Rural market 2. High growth rate of LCV segment

Weakness
1. High product cost 2. After sales service 3. Complaints on gear shifting

Threats
1. Increased competition due to new entrants

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

18

y Piaggio - Ape, Quargo y Bajaj - Tempo, Max series, RE600 y Mahindra & Mahindra - MN 25 & MN 31 trucks,

MN40, 49 trucks (Navistar Inc USA), Maxximo & GIO y Force motors - Trump Trax, Kargo king y Hyundai motor Porter

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

19

y Model
1. 2.

T product development was based on Traditional Physical Process Sequence

Design product, procure and make Price, sell, promote, distribute and service

While Tata ACE product development was based on the latest marketing strategy, Value Creation and Delivery Sequence
Customer Segmentation, product focus, value positioning 2. Product development, service development, pricing, sourcing/making, distribution, servicing 3. Sales force, sales promotion, advertising
1.
Tata ACE - Team 10-Thiagarajar School of Management 8/21/2011

20

1.

Market sensing process

y

Identified the needs of potential customers like Traders, Truck drivers and Farmers Tie-up with Godrej Aadhar and other rural dealers

2.
1.

Blue ocean strategy and Rural marketing activities

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

21

Functional gratifications
1. 2. 3. 4. 5.

Speed Capacity Service points Easy navigation in roads Low maintenance and operating costs Sleek appearance Position as truck in mini size Comfort

Sensory gratifications
1. 2. 3.

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

22

y Extended as passenger vehicle as Tata Magic y Designed to larger tyres to acquire greater speed y Improved fuel efficiency by 6-10% y Mileage 25kmpl y Smaller model of Tata Penquin for Rural market y Reference:

www.tatamotors.com 2. www.moneycontrol.com 3. www.rediff.com

1.
Tata ACE - Team 10-Thiagarajar School of Management 8/21/2011

23

Tata ACE - Team 10-Thiagarajar School of Management

8/21/2011

24