tata ace-gropup 3_b
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TATA MOTORS : THE TATA ACE
Group B-3Snigdha Chitranshi(11051)
Nachiket Vanikar(11058)Sowmya Borra(11054)
Abhishek Pal(11061)Anoop biswas (11064 )
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AGENDA Overview of the Indian commercial vehicle sector
Road transportation infrastructure Overview of Tata motors Idea for Tata Ace Gap analysis STP Design challenges for product development 4Ps Marketing and distribution Launch and response Future Marketing strategies and current scenario Learnings Answer to the case Questions
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Indian Commercial Vehicle Sector
Indian commercial vehicle sector mainly dominated by three andfour wheeled vehiclesThree wheeler market:
India was the worlds largest three -wheeler market in 2005 witha sales of 307,887 units . Cargo movement: 44% of sales Passenger movement : 56% of salesFour wheeler market( LCVs):
Sales of 119,877 in 2005 Cargo movement: 83% of sales Passenger movement: 17% of sales
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51%
33%
5%
5%6%
Three Wheelers
Tata Motors
M&M
Swaraj Mazda
Eicher Motors
Others
51%
33%
5%
5%6%
Four Wheelers
Tata Motors
M&M
Swaraj Mazda
Eicher Motors
Others
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ROAD INFRASTRUCTURE (2006)
3.32 million kms road, 2% national highways, 12% of this 2%was four lane
Narrow and congested roads near commercial and retailmarkets
Entry barriers for heavy vehicles during day time Poor rural road connectivity Ban of 3-wheelers due to safety considerations Golden Quadrilateral Project
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Overview of Tata Motors
TELCO established in 1945
In 1969 TELCO began designing and developing its own
commercial vehicle in house
TELCO changed its name to Tata Motors in 2006 and producedits 5 millionth vehicle
Tata Motors was the largest of Tata companies measured byrevenues
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Idea for Tata Ace
Due to forecasted growth in Indian GDP and infrastructure,truck penetration would increase
Need for hub to hub and lower per unit cost transport due togrowth of better highway systems
Need of last mile in transportation supply chain
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GAP Analysis
Market situation Growth plans of better highway network between major
cities and secondary road network within various states bygovernment
Improvement in the demand for large vehicles( LCVs) Higher GDP growth which may lead to higher truck
penetration in the market
Company situation Absence of larger( > 45 ton) and smaller( sub two-ton)
vehicles in the product portfolio. There was a need of a cheap and rugged vehicle to be
developed
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Demand Side Gap : LargeTrucks
Demand Side Gap : ThreeWheelers
Supply Side Gap
During day time, entry intocities was restricted
Banned in certain metrosand bigger cities to avoid
congestion
Needed immunity againstthe cyclical trends incommercial vehicles
segment
Less fuel efficient and notenvironment friendly
Not allowed on highwaysand expressways due to
speed and safety concerns
Portfolio lacking productofferings
Higher per unittransportation cost andpoor conditions of roads
makes them unsuitable forrural customers
Inability to enhance thesocial image of the user
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SEGMENTATION
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Functional Market Segmentation
Vehicles carrying high loads (2.5 ton & above)
Vehicles carrying low loads (less than 175 kg)
There was a vacant segment (750 kgs to 1 ton) whose needswere not met
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Customer Market Segmentation
Performance Sensitive (7%)
Balanced Perspective (25%)
Return on Investment (55%)
Acquisition Price Constrained (13%)
Bottom of Pyramid
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Performance sensitive Interested in status, brand image & speed Willing to pay a higher price for additional features Currently using cars & large SUVs to haul goods
Balanced Perspective Typically owner entrepreneurs Wanted ROI, comfort & convenience features Forced to purchase three wheelers since market didnt
offer products which met their demand ROI Sensitive
Purchase based on lowest cost per mile of transport Not interested in non-monetary purchase considerations Consisted of fleet owners/operators & some individual
owners
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Acquisition price constrained
Lacked credit & financial means to purchase Would go for the regular product if the new product was
even slightly expensive Preferred purchasing three wheelers
Bottom of Pyramid Could not afford motorized vehicles Size of the segment is unknown Use bullock-carts, bicycle rickshaws etc. for transportation Overtime as prosperity increases would move upwards
from lower categories
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TARGETING
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Target Market People planning for 3 wheelers First time commercial vehicle purchasers(40%) LCV purchasers & potential pick up (15%) People looking for last mile transportation
solution Target Individuals
ROI Price, fuel efficiency & easy maneuverability of 3
wheeler Safety, durability , additional payload capability &
comfort of 4 wheeler trucks
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POSITIONING
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Indias first MINI TRUCK Small is Big Last mile transportation solution Feel good of the Job Comfort & stability of the big trucks Economic Liberation
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Design Challenges
Enhancing overloading capacity- a product that couldwithstand the strain of overload
Preference for diesel engine by customer One engine option ruled out due to NVH targets Foreign made 4 cylinder engine was ruled out due to cost In spite of strict cost target, M1/N1 targets to be maintained Customers did not want Semi Forward Engine
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SWOT ANALYSISSTRENGTHS
1. First Mover Advantage2. Brand Name of TATA
3. Possession utility to buyers
4. Research & Development
WEAKNESS
1. After sales service2. Higher cost
OPPORTUNITIES
1. Increasing Growth rate of LCV segment
2. Rural Market (especially North andEast)
THREATS
1. Increase in competition
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4 Ps
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PRODUCT- TATA ACE (Differentiation Factors) Ideal for both city and rural areas. Compact size and shorter turning radius helps in Indian
narrow streets Comfortable conditions for the driver allows the ACE to travel
over 500 kms a day M1/N1 safety norms for frontal crash, roof crush etc. 700cc engine delivers a power of 16hp@3200rpm Meets BS II and BS III standards. Low operating cost and highly reliable Usage ranges from vegetable vendors to cargo pickup to
passenger transport
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PRICING
PRICING OBJECTIVE Product quality leadership Priced just beyond the max-price of 3 wheeler of Rs.2 lakhs A premium on the price of three wheelers
Analyzing competitors costs, prices and offers
Final price Priced at Rs. 225000 They priced at a premium or around 12% over the maximum price of
three wheeler in the market.
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PLACE
Location close to target market Plant located in Pune at the time of launch Target markets: Southern and Western regions
A sales outlet every 40 to 50 kilometer
Only sales stores as compared to early sales, service & spare
Existing dealership acted as a hubs and set up 1S dealership
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PROMOTION
TARGET AUDIENCE Three wheeler audience Owners of truck Trucking fleet owners First time LCV purchasers
To communicate the benefits of the product-ACETo develop a positive brand attitude among the target customergroup
The Chota Haathi AdvertisementGenerated a lot of positive press in the launch period1st LCV brand used extensive ad on TV
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DISTRIBUTION NETWORK:HUB AND SPOKE MODEL
3S to 1S Approach A sales outlet every 40 to 50 kilometer.
Only sales stores as compared to traditional Sales, Service& Spares Existing dealership acted as hubs and set up 1s dealership Each dealer can set new 1S stores
This will help to set new distribution point for TATA ACE
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Launch & Response
Launched in May 2005 with the price of Rs. 225000 Exceeded Tata Motors expectations Sold its annual production target of 30000 units in
less than a year 54% by first time buyers 30% by LCV owned customers 33% by previously owned three wheelers Customers overloaded the vehicle approximately by
30% above rated capacity
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Current scenario
&
Recommendations
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Competition
Mahindras Maxximo and ALLs Dost are eatingaway into Tata Motors ACE market share
TML: ACEM&M:
MaxximoALL: Dost
Pricing 2.84-3.99 Lacs 2.79-3.99 Lacs 3.79-4.37 Lacs
Engine 700 cc 1400 cc 909 cc 1478 cc
Mileage 20 kmpl (700cc) 17 kmpl 17 kmpl
Market share68% (2011)60 (2012)
22% (2011)29% (2012)
NA
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Tata ACE Distribution
Many of the Aces cost -conscious potential customers in ruralareas might not be willing to travel long distances to see thevehicle, so Tata Motors deployed a new bare-bonesdealership format
Bring Ace closer to these customers without incurring theexpense of a new network of full-service dealerships
Instead of building an expensive new network of servicecenters, the company trained local mechanics and gave them
tools to take care of common problems. Vehicles would be sent to larger service centers only for
major repairs or accidents.
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Tata Motors: Sales transformation for ACE
Change in process - $45 million in additional revenue andsignificantly boosted market share in all states
3 areas of focus were identified -1. Aligning their sales programs to the needs of customer
segments. Making sure the dealer network was running assmoothly and effectively as possible
2. Set new processes in place to optimize sales pipelineactivities from lead generation to prospect acquisition tosale conversion
3. Sales process enablement
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IDENTIFYING THE NEEDS OF DEVELOPINGONES DEALERS
Understanding of and focus on the customer'sbuying process
Understanding of and appreciation of the world in
which the buyer lives Being an information provider for the members of
the buying committee
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METHODS AVAILABLE FOR DEVELOPING THE DEALEREFFECTIVENESS
Training
Providing the adequate support required
Showing belief in their capabilities
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FACTORS LEADING TO THE SUCCESS OR FAILURE INDEALER DEVELOPMENT
SUCCESS Adequate ownership to the dealer Maintain transparency Incentives Cash and credit support
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FAILURE
Inadequate training
Technical inefficiency
Demotivated dealers
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How to replicate the Distribution Strategy of TATA ACE?
A sustainable competitive advantage is a combination of multiple resources & not any individual resource
Tata ACE became successful because of following: Product Reliability Service Network Channel Reach
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Product Reliability Tata ACE was a product which met high quality standards Provided Last mile transportation
Service Network Extensive & dependable service network across India
Channel Reach Sales & service outlay which the customers can reach
easily
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LEARNINGS
Work in your core competent area Balance between quality, cost and time Focus on outsourcing Coming up with innovative methods to serve
customer needs
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THANK YOU