Tata Ace Serving An Ace - Presentation Transcript

1. We begin with a story!! o Name: RavindraSalukhe o Sells vegetables and fruits o Upmarket Cuffe Parade in South Mumbai
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A shop area of 1.5X2.2 sq. mtrs. Borrowed Rs 1 lakh from his

brother & balance from ICICI

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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 companys 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)

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GCW<7.5tonnes LCV Goods 77% + passenger carriers 23% 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--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 Tata product portfolio lacked greater than 45tons and sub 2 ton vehicles. 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
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Strategy Adopted
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New Product Development

Company Decision 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:
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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 Aces 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
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Overloading stress points identified using CAD Higher strength steel used only there to come out with

low cost yet durable product.

o Semi-monocoque frame 49. Designing the ACE ENGINE SELECTION o Customer preference Diesel engine and 1 engine

option ruled out due to NVH targets

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Foreign made 4 cylinder engine would double cost and HP Indica model based 2 cylinder engine reduced costs Rotary fuel injection pump met emissions standard and

avoided use of electronic system 50. Designing the ACE SAFETY AND COMFORT o In spite of strict cost target, M1/N1 standard adhered to .
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Customers were not for Semi forward engine Flat faced model adhered to which gave it a large

commercial vehicle look and better space utilization. Full frontal crash requirement 51. Product 52. PRODUCT- TATA ACE At the heart of any great brand lies a great product BBC Top Gears 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
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higher loading capacity

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Rigid front axle for Indian conditions & a turning radius of 8.6m The truck-like strength of the front and rear leaf spring

suspensions provide a smooth riding experience

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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

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Electronic start and stop increases mileage by 6-10

Kmpl.
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Flat, large loading area gives a fantastic opportunity to

earn higher business revenue

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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
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Control pedals, gear shift and parking brake

ergonomically positioned for comfort

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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

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
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tray and clearly visible instrument cluster Smooth external finish - exquisite look Flat faced large commercial vehicle look. Lockable glove-box for keeping valuable documents 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
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solution for rural commuter

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Passenger version of Tata Ace Customer insight -ACE being used for

passenger transportation
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Separate marketing strategy adopted Transport 4 to 7 passengers + baggage 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

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Suppliers involved at design & development Stage e-Sourcing Requirement based e-bidding from prequalified suppliers Parts Commonisation Cost reduction due to bulk purchases Supplier Commonisation 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

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Indias first Mini Truck Use of local languages for communication

Creative Strategy
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Tata - a trusted source of information No other endorsers were used Informational appeal of the product i.e. the load capacity, power etc. 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
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Dedicated dealers Well trained mechanics

People
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SUVIDHA Mobile workshops 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

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Effective measurement of campaigns CRM Implementation CRM-DMS (Dealer Management System) Launched in 2003 Now supports 15000 users Covers 1000 locations Real time customer data Purchase Cycle Intimacy 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 Motorss 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
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ACE 26%YoY growth rate FY09 MAGIC37%YoY growth rate FY09 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 & Mahindras 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
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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 June07 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-electricin-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 &quot;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.&quot; 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 countrys freight traffic through roads

40% of villages(825000) have no access to all

weather roads
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Poor quality Access cut off during rains Under funded road maintenance Northern and North-eastern states - poorly

linked to the countrys major economic centres 98. Rural India Road transportation Common modes of transport in villages o Bullock carts o Human labour o Three wheelers Disadvantages Longer lead times Shrinkage Poor transportation Longer cash conversion cycle 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
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Benefits offered
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Training of rural mechanics free of cost Free tool set and display at garage 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. 101.
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The Way Ahead Stepping Stone for Nano Involving customers in product development Strict cost constraints Market Research

Systematise and institutionalise the cost down efforts during the design and development phase to make the product more cost competitive. ~ GirishWagh 102.
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103.
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New Competition Mahindra is working on a mass-market cargo and passenger vehicle The Rajkot-based Atul Auto Ltd new launch Hyundai Motor Corporation, Korea, plans to set up a LCV manufacturing plant in India. Though Hyundai denied it may launch it LCV porter. Bajaj Auto working on a 4-wheeled goods carrier Other major players such as TVS, Hindustan Motors, Ashok Leyland and Suzuki are seriously mulling their foray in to this segment. PIAGGIO APE APEING the ACE Success? Offers 20 kplcompared to 14 kpl offered by Tata Ace 6 speed gear box as opposed to 5 speed gear box of Tata Ace Better design and styling Maximum gradeability of 17 to woo hill station commuters Lower turning radius 7.7 m High ground clearance of 185 mm Aggressive price tag of Rs 215,000 1 year , 36000 km warranty 8 free services 104. New manufacturing facility in Uttarkhand250000 units Industry specific incentives, free land & tax benefits Entry into US market After market accessories opportunities (attachments etc.) Concentrate on after sales services to make competitive

advantage sustainable (like extended warranty)

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Focus on MAGIC design to make it appealing to a broader

section The Way Ahead. 105. THANK YOU