strategic memo - tata ace
TRANSCRIPT
Tata Ace
Group A5 – Guru Gobind Singh jiAroon 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 AceIndia's first mini truck
Launched in May 2005
Tag line ‘Small is Big’
Answer to the marketing myopia of three wheelers
Idea behind launching Tata AceMarket Situation
Govt plans of road expansion. High GDP growth rate positively correlated with
truck penetration. High probability of increased demand in LCV
segment.
Company Situation Tata product portfolio lacked greater than 45 tons
and sub one ton vehicles. Scope of enhancing market share
Gap Analysis based on Market ResearchDemand Side Gap : Large and Medium
Trucks
Demand Side Gap : Three Wheelers
Supply Side Gap
Restrictions in entering cities during
peak hours
Banned in certain metros and bigger
cities
Portfolio lacking sub 2 ton offerings
Congested and narrow lanes in commercial
areas
Restrictions on highways and
expressways due to speed and safety
concerns
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
Failure in enhancing the social image of the
user
Marketing Strategy- Segmentation &Target
TATA ACE’S CORE MARKET
PRICE CONSTRAINED (13%)
ROI SENSITIVE (55%)
BALANCED PERSPECTIVE (25%)
FEATURE SENSITIVE (7%)
Tata Motors focused on capturing these two
segments.
Marketing Strategy -Positioning
POSITIONING Ace was positioned as 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.
Sourcing & Production Strategy
Aggregate Outsourcing Sourcing complete assemblies such as rear axle frame rather
than assembling these modules in-house from outsourced costs
E-Sourcing Company posted its requirements on intranet site where pre
qualified suppliers could review specs and submit bids.
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
• LCV market consists of 3 wheelers as well as 4 wheelers Data Source: www.siamindia.com
www.tatamotors.com
68%
21%
3%2%
6%
Tata MotorsMahindra & MahindraSwaraj MazdaEicherOthers
LCV Market* in 2010
Data Source: www.siamindia.com www.tatamotors.com,
Clearly Tata’s have lost market share to M & M
61%
31%
2% 2% 4%
Tata MotorsMahindra & MahindraSwaraj MazdaEicherOthers
Porter’s Five force Model-2006
Rivalry Among competitors
Threat of substitutes
Power of Buyers
Entry of new competitors
Power of suppliers
Porter’s Five force Model-2010
Rivalry Among competitors
Threat of substitutes
Power of Buyers
Entry of new competitors
Power of suppliers
SWOT ANALYSIS
Proposed Strategies For regaining lost market share
Internationalization Strategies
For regaining lost market share Marketing Strategies For North and East India
Aggressive marketing campaign Design local advertisements Road shows
For South and West – Loyalty bonus or exchange offer– Financing facility through Tata Finance for
rural penetration
For regaining lost market shareLeveraging strong dealership network to
target fleet owners.Channel expansion
Hub and Spoke Model
3 S dealership
1 S dealership
1 S dealership
1 S dealership
1 S dealership
Internationalization StrategiesResource Based View
Sustainable competitive advantage lies not in one, but a combination of multiple resources, each of which individually complement other resources to build competitive advantage
Product Reliabilit
y
Channel
Reach
Service Networ
k
Internationalization StrategiesThree Dimensional Recommendation Matrix Based on resource viewDimension 1 : Tangible
Strategy Sustaining the First Mover's Advantage of ACE National Footprint 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 intra-city 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 StrategiesDimension 2 : Intangible
Strategy Intangible Assets
Unique Customer Experience
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 StrategiesDimension 3 : Capabilities
Strategy Capability Acquisition
Technology Appropriation
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.
Robust Supply Chain
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.
Referenceswww.tatamotors.com (annual reports)www.siamindia.comwww.wikipedia.com 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
http://www.business-standard.com/india/news/tatas-ace-mini-truck-suddenly-gets-competition/396000/
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