Group A5

Guru Gobind Singh ji

Aroon Sheshadari (10010) Piyush Kakkar (10030) Rahul Malhotra(10035) Vikram Arora(10057) Loma P Desai (10086) Vishwas Sharma (10119)

Strategy for sustaining momentum for Tata Ace

Brief Background of Ace

y India's first mini truck y Launched in May 2005 y Tag line Small is Big y Answer to the marketing myopia of three wheelers

Idea behind launching Tata Ace

 Market Situation
y y

Govt plans of road expansion. High GDP growth rate positively correlated with truck penetration. High probability of increased demand in LCV segment.

 Company Situation
y

Tata product portfolio lacked greater than 45 tons and sub one ton vehicles. Scope of enhancing market share

Gap Analysis based on Market Research

Demand Side Gap : Large and Medium Trucks Restrictions in entering cities during peak hours ongested and narro lanes in commercial areas Demand Side Gap : Three Wheelers Banned in certain metros and bigger cities Restrictions on high ays and express ays due to speed and safety concerns Failure in enhancing the social image of the user Supply Side Gap Portfolio lacking sub 2 ton offerings Needed immunity against the cyclical trends in commercial vehicles segment

Higher per unit transportation cost and poor conditions of roads makes them unsuitable for rural customers

Marketing Strategy- Segmentation &Target

TATA ACE S CORE MARKET

FEATURE SENSITIVE (7%) BALANCED PERSPECTIVE (25%)

PRICE CONSTRAINED CO STRAINED (13%)

ROI SENSITIVE (55%)

Tata Motors focused on capturing these two segments.

Marketing Strategy -Positioning

 POSITIONING y Ace was positioned as a vehicle that offered the

price, fuel efficiency, and maneuverability of a three wheeler

y but with the safety, durability, additional payload, and

comfort of a four-wheeled truck.

Sourcing & Production Strategy

y Aggregate Outsourcing
Sourcing complete assemblies such as rear axle frame rather than assembling these modules in-house from outsourced costs

y E-Sourcing
Company posted its requirements on intranet site where pre qualified suppliers could review specs and submit bids.

y Manufacturing Facility Location-Pune

Chose underutilized existing plant at Pune which allowed company to tap existing vendor base and savings on outbound freight costs since 70% of Ace s demand came from South and West India.

LCV Market* in 2006 post Ace s launch

3% 2% 6% Tata Motors 21% Mahindra & Mahindra Swaraj Mazda Eicher 68% Others

LCV market consists of 3 wheelers as well as 4 wheelers

Data Source: www.siamindia.com www.tatamotors.com

LCV Market* in 2010

2% 2% 4% Tata Motors 31% 61% Mahindra & Mahindra Swaraj Mazda Eicher

Data Source: www.siamindia.com www.tatamotors.com,

Clearly Tata s have lost market share to M & M

Porter s Five force Model-2006

Threat of substitutes

Power of suppliers

Rivalry Among competitors

Power of Buyers

Entry of new competitors

Porter s Five force Model-2010

Threat of substitutes

Power of suppliers

Rivalry Among competitors

Power of Buyers

Entry of new competitors

SWOT ANALYSIS

Proposed Strategies
y For regaining lost market share y Internationalization Strategies

For regaining lost market share

Marketing Strategies For North and East India
y Aggressive marketing campaign y Design local advertisements y Road shows

For South and West

Loyalty bonus or exchange offer Financing facility through Tata Finance for rural penetration

For regaining lost market share

y Leveraging strong dealership network to target fleet

owners. y Channel expansion

y Hub and Spoke Model
1S dealership

1S dealership

3S dealership

1S dealership

1S dealership

Internationalization Strategies
Resource Based View
roduct Reliability

Service Networ

hannel Reach

Sustainable competitive advantage lies not in one, but a combination of multiple resources, each of which individually complement other resources to build competitive advantage

Internationalization Strategies
Three Dimensional Recommendation Matrix
Based on resource view Dimension 1 : Tangible
Strategy National Footprint Sustaining the First Mover's Advantage of ACE Tata Motors has an unparalleled network of dealers and service stations across the country for Medium and Heavy Commercial Vehicles (M and HCV). However most of these service stations are along inter-city routes. It would need to replicate this network at intracity level for its hugely successful LCV - the Tata ACE. For this Tata Motors can liaise with small garages, train them and certify them as 'Tata Authorized Service Station'.

Product Portfolio

Tata Motors has positioned ACE as a multipurpose vehicle (MPV). Tata Motors should endeavour to move form a multi-purpose positioning to a mass customization positioning for ACE, wherein multiple variants are offered on the ACE platform, each uniquely suited for a specific application - such as tippers, long base trawlers, milk carriers.

Internationalization Strategies
Dimension 2 : Intangible
Strategy Unique Customer Experience Intangible Assets

In commercial vehicles industry, the uniqueness of customer experience is largely driven by the efficacy of the 'Support' framework. If your car breaks down, you can take a taxi to office. But that's not so for a transport operator. For him, his vehicle is at the heart of his business and hence responsive after-sales support is critical. Minimizing downtime calls for a service network that is highly responsive and easily accessible. Besides, Tata Motors should also 1. Consider introducing mobile service units for Tata ACE that can respond to customer calls anywhere within a given city. 2. Start treating "Services" as a dedicated profit center. Towards this end, the company should "productize" annual maintenance contracts.

Brand Reputation

Building a reputation will help sustain sales, without having to engage in discount sales.

Internationalization Strategies
Dimension 3 : Capabilities
Strategy Technology Appropriation Capability Acquisition

Technology Appropriation is the key to Tata Motor's ambitions to offer variety of products . As the share of light commercial vehicles grows, the company will need to face up to technologically superior players like Volvo , Diamler Chrysler. Here, Tata will have to carefully spearhead its strategy by carefully coordinating technology appropriation from its numerous international technology partners, notably Daewoo, Fiat and Hispano.

obust Chain

Supply Tata Motors has made significant investments in IT systems to network its countrywide service network. This helps them maintain very high spares parts availability at their service stations and minimize downtime. In the years to come, it would need to include their LCV service station within this framework. This will however be a big challenge, since these service stations would largely be managed by illiterate and not-so-tech-savvy repairmen.

References
y www.tatamotors.com (annual reports) y www.siamindia.com y www.wikipedia.com y HBR case study Tata Motors: The Tata Ace by Krishna

G. Palepu, Vishnu Srinivasan 21 pages. Publication date: Sep 18, 2007. Prod. #: 108011-PDF-ENG y http://www.business-standard.com/india/news/tatasace-mini-truck-suddenly-gets-competition/396000/