tata ace assignment

8/11/2019 Tata Ace Assignment

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Question 2:

Critically examine the trageting and positioning of Tata Ace and comment on its

Marketing Mix and the appropriateness of the marketing mix in the trget segment.

Answer:

In 2001, Tata Motors experienced a difficult phase with severe losses due to the decline in vehicle sales; spiralingmanufacturing costs and a capacities expansion plan that cost IRs 13 billion. The difficult phase prompted the

company to completely r e- examine the market and customer requirements. This re-examination threw up

sever al interesting findings and concluded Tata to develop ACE. Tata Motors decided to develop Ace, after

a market study it conducted found that customers wanted a last mile distribution vehicle that had low

maintenance costs, higher driver safety, and better driving comfort. Tata Motors developed this vehicle using

their in- house expertise. Ace created a completely new market segment and became a huge success in the

Indian mar ket.

On May 5, 2005, Tata Motors commercially launched the Ace in Bangalore. At the launch function, the

company said that Ace was being introduced at the right time, when the development of road infrastructure

was being emphasized and goods distribution movement was increasing. Tata Motors was convinced with the

fact that the development of r oad infrastructure would led to an increase in the distribution of goods across the

country, based on the hub-and-spoke model. Recognizing the growth trend and anticipating the need for a last-

mile distribution vehicle, Tata had developed Tata Ace. They also anticipated the opportunity in the one ton

payload segment, which witnessed significant growth and being serviced by 3-wheelers. Ace is being

positioned at this market." Ace was initially launched only in the Southern states of India, namely Karnataka,

Tamil Nadu, Andhra Pradesh, Kerala, and the Union Territory of Pondicherr y, as they were considered as key

markets for small tonnage vehicles. The marketing mix used by Tata was very effective. They fixed their target

o n the individuals such as three-wheeler owners, the truck owners and trucking fleet owners and the first

time LCV purchasers. Tata wanted these people to have Tata Ace as their next vehicle. They targeted the

southern part of India initially. They said the product is small for the transportation of goods up to the last mile

and the same time they claimed it to be powerful enough to load one ton and can give higher driver safety and

better driving comfort with low maintenance cost. They compared their product with a baby elephant and said

it to be‘Chotta Hatti’.

The product was also designed in a way to have a commercial look and better space utilization. It was

places in the segment where three-wheel vehicles were operating and it had 4th wheel up gradation. It was

ideal for both the city and rural areas. It could be used for the transportation from vegetable to cargo. It gave

comfortable conditions for the dr iver allow the ACE to travel over 500 km a day with low operating costs and

highly r elia bility. It was a truck with better interiors such as styled dashboard with tray, digital clock, r adio

fitment provision, utility tray and clearly visible instrument cluster ; smooth external finish, flat faced large

commercial vehicle look, lockable glove-box for keeping valuable documents, etc.

For the pricing, they anticipated their product to be of leadership quality and perceived quality higher thancompeting 3-wheelers. Their initial price was just beyond the max price of 3-wheelers. They analyzed the

competitor ’s costs, prices and offers and found that the competitors sold at a lesser price than the target price

of ACE. Since, the value package of Ace was higher than the competitors. The Final Price was around 12%

over the maximum price of three wheelers in the market that was costlier than autos used for road trans por t. The

placement of the product was also important. They made the product available at r ight place and time. In doing

so, they had a sales outlet at every 40 to 50kilometers. Existing dealers were to act as hubs and set up

dealerships. Again each dealer was asked to have 15 to 20 stores. They set up more than 300 new distribution

points in 3 months. They also preferred to have stores close to the target market. As they targeted the

southern part of India, located the plant in Pune. Pune was the nearest plant of Tata to the southern part of

India. With such a marketing mix, Ace rapidly emerged as the first choice for transporters and single truck

owners for city and rural transport. LCV sales of Tata Motors had grown by36.6 percent due to the rising

demand for Ace. Ace has changed the dynamics of the LCV market in India by creating a new market segment

termed the SCV segment.

Above all the main reason for the success of Ace was that customers were given a pr oduct that looked and

performed better than the existing alternatives. Various value enhancer s such as car-like features in the drivers

cabin, attractive finishing, etc. helped improve the value perceive



The placement of the product was also important. They made the product available at r ight place and time. In

doing so, they had a sales outlet at every 40 to 50kilometers. Existing dealers were to act as hubs and set up

dealerships. Again each dealer was asked to have 15 to 20 stores. They set up more than 300 new distribution

points in 3 months. They also preferred to have stores close to the target market. As they targeted the

southern part of India, located the plant in Pune. Pune was the nearest plant of Tata to the southern part ofIndia. With such a marketing mix, Ace rapidly emerged as the first choice for transporters and single truck

owners for city and rural transport. LCV sales of Tata Motors had grown by36.6 percent due to the rising

demand for Ace. Ace has changed the dynamics of the LCV market in India by creating a new market segment

termed the SCV segment.

Above all the main reason for the success of Ace was that customers were given a pr oduct that looked and

performed better than the existing alternatives. Various value enhancer s such as car-like features in the drivers

cabin, attractive finishing, etc. helped improve the value perceive

tata ace assignment

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