Hbr Case- Tata Ace

In the light commercial vehicle industry, India was dominated by three wheelers and four wheeled vehicles with carrying capacity of 0. 5 to 1. 5 tons. Vehicles like passenger cars and SUVs are also being used a mode of transport to carry goods from one place to another. Rural areas are still dominated by conventional mode of transport like bullock carts, bicycle rikshaws, horse driven carriages and manual pull carts. The majority being the three wheelers segment, India had largest sales in three wheelers for carrying cargo.

Lately, four wheeled vehicles were introduced in Indian markets which had a carrying capacity of 7 tons. The four wheeled vehicles were already being used at a global scale. Realising the needs of Indian consumers, Tata came up with its four wheeled vehicle named Tata Ace. Q2 Justify the logic behind launching a product like Tata Ace by Tata Motors? Justify the gap that existed in the market based on the research outcome as explained in the case. Ans. : Tata Motors suffered a huge loss in 2001 due to downturn in commercial vehicle segment and economic recession.

After a research the company realized that there was a huge gap between larger (greater than 45 ton) and smaller (sub two-ton) vehicles in its product portfolio. After a strategic review session the idea of a cheap, sturdy and reliable vehicle emerged. The research proved the requirement of such a vehicle. The research revealed after interviewing more than 4000 truck and three wheeler operators that there was a gap between heavy vehicles and light commercial vehicles. Also there were personal and emotional values attached with the decision of using the vehicle.

People were growing uncomfortable using three wheeled vehicle and wanted a four wheeled vehicle which would also reflect their status. Also there were safety concerns among the users about the three wheeled vehicles. Tata Motors realized that creating a vehicle which will provide a ‘feel good factor’ as well as safety features is essential to gain the market share. Also, keeping in mind the price of three wheeled vehicles, Tata had a challenge to keep the price of Tata Ace as low as possible. Q3. What are the different types of benefits or gratifications that consumers can draw from a product or a service?

Discuss with respect to the case? Ans. : The consumers essentially look for performance, status, ROI maintenance etc in such kind of products. Performance sensitive customers were those who are interested in status, brand image and speed. Consumers also look at Return on investment is such kind of products. Consumers want to buy a vehicle with lowest cost per mile of transport. Acquisition price is one such thing which consumers expect to be low due to lack of financial resources. Consumers also expected additional features like comfort, water cooled engine, long intervals between maintenance.

Long distance travel and easy mobility were the features some consumers wanted. Q4 Explain the various Marketing Strategy aspects used for Tata Ace: •Segmentation and Targeting strategy •Marketing Mix (4P) Strategy •Positioning Strategy Ans. : The market was segmented based on different aspects. Functional Market segmentation: The market was segmented according to the functional needs of the customers. Example being, one could track the distance traveled versus the height of goods transported based on a lead/load matrix.

The target consumers for Tata Ace would be looking to transport 750 to 1500 kgs over a distance of 100 to 200 kms. According to this segmentation the team estimated that 45% of the Ace’s customers would come from people planning to purchase 3 wheelers, 15% from potential pick up and light commercial vehicle purchasers and 40% from first time commercial vehicle purchasers. According to customer needs like Performance, Balanced-perspective, Return on investment, price of acquisition. The company needed to keep the vehicle more economical than three- wheeler to target prospective customers.

Marketing strategies were based on various aspects including emotional values. Product: The product was designed according to the needs of customers. Interviews of three wheeler operators revealed the type of product they would expect to ply on Indian roads. Accordingly, the team designed a product which was best considering the requirements of customers as well as it was according to government rules and guidelines. Price: The price of Tata Ace was decided upon after considering various factors like consumer expectation and to compete with the low priced three wheelers.

Place: Tata Ace was initially launched in limited parts of India, mostly southern and western parts as the plant was located in Pune. Various ad campaigns in local languages were created in various regions. People: The ‘people’ aspect has been considered very minutely in marketing the product. Various emotional and personal factor of consumers were considered, like the emotional factors being, the status in society and personal factors being comfort and safety. Q5 how does the competition responded to Tata Ace from the time of launch till now? Ans. :

Tata Ace was a successful launch and gained a lot of market share in light commercial vehicle market. The competitors responded by launching similar projects. Piaggio, an Italian company already had four wheeler vehicle in their home market which they planned to launch in India. Bajaj launched a new project to make a new four wheeled vehicle to exploit the newly created market opportunity. Even Maruti relaunched its passenger cum commercial vehicle, Omni with some new features to give a competition to Tata Ace. Q6 Suggest Marketing Strategies and initiatives you would like to think for the future growth of Tata Ace? Ans.

: Tata Ace despite being a successful launch is yet to reach out to many customers who would like to switch from three wheelers to four wheeled vehicles. The company should target new markets which are yet to be reached. Given the success of the vehicle new plants can be opened in new areas. New variants of the model and constant innovation will ensure the market share. New financing methods should be adopted to enable financially weak customers to buy the vehicle. More exports can add to the revenue. The company should focus on exports through marketing Tata Ace in those countries with similar requirements like India.