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Case Study 2 1. Discuss the critical factors which led to the success of Tata Ace.

Ace, India’s first indigenously developed sub –one ton mini truck, was launched in May 2005. Tata motors decided to develop Ace, after a study it conducted found that customers wanted a last mile distribution vehicle that had low maintenance costs, higher driver safety, and better driving comfort. In 2001, Tata Motors experienced a different phase with severe losses due to the decline in vehicle sales, spiraling manufacturing costs and a capacities expansion plan that cost Rs 13 billion. The difficult phase prompted the company to completely re-examine the market and customer requirements. This re-examination threw up several interesting findings. The important finding was that continuous improvement of highways and other road infrastructure in India would lead to the plying of larger numbers of heavier and faster vehicles along the highways. This increase in traffic would encourage transporters to store heavier goods in convenient depots or warehouse along the highways, from which smaller loads would be transported through feeder routes to cities and towns. Before commencing the design of the vehicle, the project team conducted a study in various parts of India to understand the exact needs of the potential customer, so these would keep in the forefront at the design stage. The study found that the customer needed a vehicle that would provide fuel efficiency, overall comfort, less emission, and reduced noise and vibrations. The study also found that customers gave highest priority to safety, and were ready to compromise on power in favor of fuel efficiency. The choice of engine for the vehicle was also a critical one. The team conducted a worldwide search for an appropriate engine and finally decided to modify the engine of its own passenger car Indica. The decision in favor of modification was taken after it was found that the Ace project had exceeded the allotted budget, and a modification of the Indica’s engine would suit the new vehicle. Various cost reduction measures were adopted to decrease the cost of the vehicle for the low cost strategy initiatives. The team identified measures such as value engineering, use of carryover items, single sourcing of parts in all possible areas, even involved the vendors in the cost reduction efforts. The capital expenditure targets were also determined in such a way

had parts outsourced from vendors right from the initial stages. attractive finishing. Apart from being the first indigenously developed sub-one ton mini truck. Various value enhancers such as car-like features in the driver’s cabin. and even Ganesha idols. 16 bhp. made use of e-sourcing. Ace had many firsts to its credits. The success of Ace was that customers were given a product that looked and performed better than the existing alternatives. and 700cc IDI diesel engine. 2. utility trays. the company planned to increase the number of sales points from 22 to 51 in the same period. Ace had a full steel cabin with a display of carlike features including elegant two toned seats. clear instrument cluster.20Km per liter of diesel with a maximum payload capacity of 745 kg . Ace was powered by a twin-cylinder. The company also planned to set up 238 Tata-certified garages capable of servicing the Ace. music systems. The company also said that in order to boost the sales.It sporty car-like interiors: its noise and vibration levels were on par with passenger cars. service and spares centers from 88 to 160 by October 2005. In addition to this. The fuel efficiency of Ace was estimated at 18. for Tata Motors it was the first product in the company’s portfolio that made extensive use of plastic. Tata Motors also mentioned that the dealership and service strategy of Ace was developed on similar lines as two-wheeler dealerships.that the break –even point remained low. twin-blade twin-speed wipers. The company planned to set up dealer points at district headquarters and at locations that were less than 2Km (1. etc helped improve the value perceived by customers. etc. so that the customers did not have to travel long distances for service or repair. . and not at the high levels found in trucks. Critically examine the targeting and positioning of Tata Ace and comment on its Marketing Mix and the appropriateness of the marketing mix in the target segment. and combination switches. magazine pockets.25 miles) from key landmarks such as agri-commodity markets and General Post Offices. The company also offered a range of additional accessories such as vehicle protection system. Tata Motors also relied entirely on its in-house expertise in the development of tooling designs.

. and status. style. The buyers are classified on the basis of personality traits. The main focused part was on the mileage of the vehicle. They also felt that improved road infrastructure definitely called for a good last mile distribution vehicle like the Ace. comfort. it has divided into age group. Segmentation Tata Ace has focused on geographical. safety. It also segmented the user by the first time 4-wheeler users and the existing 3-wheeler users. flatbeds or rickshaws and public transport vehicles. small trade etc. gender. Targeting The target segment of Tata Ace was focused on the customer who expects a high Return on Investment (ROI) along with safety. After the segmentation was made the targeting includes the drivers who ferry passengers between hub towns and villages. demographic. comfort. it has divided into rural areas and urban areas. farmers.The main targeted customer of Tata Ace were those who were willing to pay higher price for extra value provided to them and also vehicle is designed to reduced the operating cost. it has define benefits given by the 4-wheeler i. values and lifestyle. In the demographic segmentation. Even though Tata Motors knew that they will face tough competition from 3wheeler. it has used the science of using psychology and demographics to better understand consumers. psychographic and behavioral segmentation. occupation which contains truck owner. In geographic segmentation. The marketing strategy of “Small is Big” with elephant cover has been success in positioning the Tata Ace in the market. In behavioral segmentation. working class level. . It targeted the people who could not afford to own motorized vehicle. they were confident Ace’s features and value addition would definitely attract many three –wheeler customers. In psychological segmentation. who commute in tractors. Is has the stability and the trust as of the big truck.e. Positioning Tata Ace has positioned itself as the India’s first mini-truck.

Price: The main targeted customer of Tata Ace were those who were willing to pay higher price for extra value provided to them and also vehicle is designed to reduced the operating cost. The 3-wheelers were not allowed on express highways which was additional advantages of being 4-wheeler. Place: Tata Ace is made available at right place at right time. Andhra Pradesh. as they were considered as key markets for small tonnage vehicles. the company did not focus on the looks of Ace lest there be a danger of it being perceived as a delicate vehicle that could not carry heavy loads. pricing and efficiency. In the advertisement. Tamil Nadu. standing beside the big mother elephant. Ace was initially launched only in the southern states of India. which were lacking in the light commercial vehicle segment so far. The number of components used was kept low. to imply that it was a sturdy mini truck. and the Union Territory of Pondicherry. The capacity of the Ace is 1. It has . The engine is innovative two cylinder diesel engine which can give speed up to 100km/hr. It is safer and much comfortable than the 3 wheeler. Moreover it can easily travel in rural areas. Instead. Kerala. namely Karnataka. it was promoted as a mini truck and advertised with the caption. 'Small is Big'. The advertisement projected Ace as an elephant calf. Tata ACE was a winning concept with 4 Wheeler Functionality and Price close to that of 3 Wheelers. the assembly line was made short and around 80% of TATA ACE component were outsourced. Promotion: Various communication channels were used for promoting the product. when the development of road infrastructure was being emphasized and goods distribution movement.5 tons with stylish look. 4Ps Product: Tata Ace has factors such as looks.The deliberate positioning of Ace as a 'mini truck' was also an important marketing strategy adopted by Tata Motors. The print media “Chota Hathi” advertisement has become the success in promoting the product.

maintained good public relations from lots of positive press in the launch period and also by gaining International Awards. .