2. Sells vegetables and fruits

5. SERVING AN ‘ACE’ MARKETING-II: CASE PRESENTATION

6. 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

7. “TATA ACEbears testament to the company’s 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

8. WINNER OF BBC ‘TOP GEAR DESIGN OF THE YEAR 2006’ AWARD

9. Redefining the adjectives!

10. LCV SEGMENT

12. Classified on Gross vehicle weight (GVW)

13. GCW<7.5tonnes – LCV

14. Goods 77% + passenger carriers 23%

15. 45% LCV + 55% M/HCVSource: SIAM & ICRA CV Sector Report April 2009

17. Fuel price- PBIT rises 3.5% for a 1% decline in fuel prices

18. Policy initiatives

19. Discouraging the use of old, polluting and uneconomical vehicles.

20. Supreme Court ban on overloading, Leading to incremental volumes in the last 2 yrs

21. Scrapping vehicles >15 years old; Potentially unleash a huge replacement demand.

22. 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

23. Indian Railways Freight Services- Vis-à-vis the railways, the share of road transport currently stands at about 65%.

24. Easy availability of finance at low interest rateSource: DBS Cholamandalam Securities Ltd.

25. LCV Segment Overview : FY08

26. PEST Analysis Economic

27. PEST Analysis

28. Road Infrastructure

30. Traffic in cities, entry barriers/ timing barriers for heavy vehicles

31. Poor rural road connectivity

32. Ban of 3-wheelers on flyovers due to slower speeds & safety considerations

33. Golden Quadrilateral Project

35. TATA MOTORS Mr. Ratan Tata Mr. Ravi Kant Mr. GirishWagh PEOPLE BEHIND “ACE” TATA MOTORS’ ACHIEVEMENTS

36. Product Range

37. FINANCIALS

40. Higher GDP growth positively correlated with truck penetration.

43. 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

45. MARKETRESEARCH

46. Market Research Objectives

47. Collection of Information Sampling plan: Ajudgmental sampling technique was used Contact method: Personal interview Data: Primary datawas used Research Instrument: Questionnaires 4000 truck and three wheeler drivers were interviewed!

48. 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 Ace’s 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.

49. Decision making

50. Existing Competition

51. Competition Commercial Vehicle Sector

52. Players in 3 wheeled vehicles

53. Players in 4 wheeled vehicles

54. SEGMENTATION

55. Functional Market Segmentation

56. CUSTOMER MARKET SEGMENTATION Customer Market Segmentation was done within the functional market segments

57. Customer Market Segmentation

58. Customer Market Segmentation

59. TARGETING

60. Targeting

61. Positioning

63. A symbol of power

64. A symbol of ‘mini’ product

66. Positioning Statements

67. 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

68. PRODUCT DESIGN

71. Indica model based 2 cylinder engine reduced costs

72. Rotary fuel injection pump met emissions standard and avoided use of electronic system

75. PRODUCT- TATA ACE “At the heart of any great brand lies a great product” BBC Top Gear’s Annual “Best commercial vehicle design” Award winner -2006

76. Product Specifications SPECIFICATIONS

77. Product Features

83. Seat belts & bright halogen bulbs Headlamps

84. High performance by front disc brakes & rear drum brakes

85. Large windscreen, large rear-view mirror and the large rear window

86. Easily accessible hazard warning switch for emergency

87. The frontal windshield was pasted to the steel window frame to add structural strength

89. Torque of 3.8 m kg @ 2000 rpm

90. Soft cushion seats and back support

91. Meets BS II and BS III standards

92. Lowest loading height of 675 mm, heavy loads can be conveniently placed in the load body

94. Flat faced large commercial vehicle look.

95. Lockable glove-box for keeping valuable documents

97. ACE : Product Life Cycle

98. Target Segment for TATA Magic

101. Transport 4 to 7 passengers + baggage

104. Perceived Quality higher than competing 3-wheelers

105. Priced just beyond the max price of 3-wheelers at Rs. 200000

107. Total Cost of Ownership less in the long run than three wheelers

108. Estimating Costs

109. Increasing Variable cost percentage of total costs

110. Target Costing method used to produce the whole product before at a predetermined costQuantity Demanded Price (Rs.)

112. Competitors sold at a lesser price than the target price of ACE

113. The value package of Ace was however higher than the competitors

114. Pricing Method

115. Value pricing

116. The Final Price

117. Priced at Rs. 225000

119. Is priced at Rs. 355000

120. Significant premium on the normal price of ACE

121. Increase in the value offering

122. Load Capacity of 1 ton

123. Increased driver comforts

124. Increased power at 70bhp

125. Tata Ace Magic

126. Passenger variant priced at Rs. 260000

127. Costlier than autos used for road transport

129. 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

131. Convert fixed cost to variable cost

132. Wage rates of TATA motors double of suppliers

133. Aggregate Outsourcing

134. Procurement of sub-assemblies rather than individual parts

135. Concurrent Designing

136. Suppliers involved at design & development Stage

137. e-Sourcing

138. Requirement based e-bidding from prequalified suppliers

139. Parts Commonisation

140. Cost reduction due to bulk purchases

141. Supplier Commonisation

142. Use of existing supplier base81.5%Outsourced, 20% Reduction in cost

144. A sales outlet every 40 to 50kilometers

145. ‘Only Sales’ stores compared to traditional ‘Sales, Services & Spares’

146. Existing dealerships acted as hubs and set up 1S dealerships

147. Each dealer set up 15 to 20 1S stores

148. 300 new distribution points set up in 3 months

149. Location close to target market

150. Plant located in Pune at the time of launch

151. Target Markets : Southern & Western Regions3S 1S 1S 1S 1S 1S

152. PROMOTION

154. Owners of trucks

155. Trucking Fleet Owners

157. To communicate the benefits of the product, ACE

158. To develop a positive brand attitude among the target customer group

160. The core message was created around new opportunities that Ace would provide its customers

161. The dissatisfied three wheeler owners were targeted with the message of “feeling good about your job”

162. India’s first Mini Truck

164. No other endorsers were used

165. Informational appeal of the product i.e. the load capacity, power etc.

166. Emotional benefits of the product i.e. better social statusMessage

167. Communication Channels

171. Free tool set and signboard

172. Provision of spare parts and lubricants to mechanics and customers

175. Mobile workshops

176. Service outlet every 40- 50 km Physical Evidence

177. CRM

179. Low rating in Sales Satisfaction

180. Needed a centralized customer database

181. Respond promptly to customer requests

182. Required better feedback on product quality

183. Effective measurement of campaigns

184. CRM Implementation

185. CRM-DMS (Dealer Management System)

186. Launched in 2003

187. Now supports 15000 users

188. Covers 1000 locations

189. Real time customer data

190. Purchase Cycle Intimacy

191. Individual Ownership ExperienceJD Power SSI Scores Source: www.jdpower.com/corporate/india/ www.tata.com/company/releases/inside.aspx?artid=6nnOgmCs8lc=

192. CRM : Giving TATA ACE an edge

193. LAUNCH & RESPONSE

195. Launched in May 2005

196. Major 3-wheeler users in south & west

197. Priced at Rs. 225,000

198. Pune production facility close to target market

199. 25% of the country covered for initial launch

200. Response

201. Exceeded Tata Motors’s expectations

202. Sold its annual production target of 30,000 vehicles in less than a year

203. Increase sales by 13.1%

204. Market share increased by 13.6% points

205. Contributed 15 % companies volume in 1st year

208. MAGIC37%YoY growth rate FY09

209. Has 90% market share against competitive launches from Piaggio & Force Motors BCG Matrix Source: TATA Motors Business Review 2008

211. First mover advantage

212. Good Consumer relationship

213. Continuous innovation

214. Good logistic management

215. Provision of finance to buyers

216. Higher cost

217. After sales service

218. Complaints on gear shifting

219. Rural market

220. Export Segment

221. High growth rate of LCV segment

222. Further fragmentation of market

223. Increased competition

224. Creation of a new segment by Mahindra & Mahindra’s GIO

225. Branding

226. ACE : Making of a Brand LEADING EDGE INDICATOR FOR FUTURE MARKET SHARE & PROFITABILITY Source: The Blake Project: Brand Equity Measurement – Brand Insistence Model

228. ‘Pride of India’

229. Emotional attachment

230. Trustworthy

231. TATA Motors brand – taking a hit (2001)

232. Arrogant

233. Slow to respond to customer needs

234. Unreliable products

235. Research

238. Launch of ACE MAGIC in June’07

239. Variants

240. Super ‘ACE’ 1 tonner

241. Multiple engine variants

242. Gasoline & CNG

243. Accessory-production opportunities

244. Dumper attachment , Water tanker , Elevated platform

245. Green & Global : ACE Electric Variant (EV)

246. Joint development with Global Electric Motorcars

247. To be retailed in US market by Chrysler Corp.

248. 250 units US postal departmentSource: http://www.vicky.in/straightfrmtheheart/chrysler-to-sell-tata-ace-electric-in-us-2/

249. EXPORTFOCUS

251. Emerging markets more developed than India

252. Developed Markets

253. Countries for Expansion

254. Sri Lanka

255. Nepal (Specially for hilly terrains)

256. Bangladesh (CNG Variant)

257. Electric version for US market

258. South Korea

259. Africa

262. 64% of the Total Expenditure

263. Predicted to be Rs. 16 Trillion by 2012-13

264. Needed for transporting agricultural yields

267. Access cut off during rains

268. Under funded road maintenance

269. Northern and North-eastern states - poorly linked to the country’s major economic centres

271. Human labour

273. Shrinkage

274. Poor transportation – Longer cash conversion cycle

276. Cost effective transport for last mile delivery in supply chain

277. Safe transport for low income group

279. Free tool set and display at garage

280. Mobile WorkshopIntroduced Ace Magic targeted at rural population “If I drove a four wheeler, I would receive better marriage proposals in my village.”

281. The Way Ahead…

283. Strict cost constraints

284. Market Research “Systematise and institutionalise the cost down efforts during the design and development phase to make the product more cost competitive.” ~ GirishWagh

286. The Rajkot-based Atul Auto Ltd new launch

287. Hyundai Motor Corporation, Korea, plans to set up a LCV manufacturing plant in India. Though Hyundai denied it may launch it LCV porter.

288. Bajaj Auto working on a 4-wheeled goods carrier

290. 6 speed gear box as opposed to 5 speed gear box of Tata Ace

291. Better design and styling

292. Maximum gradeability of 17 to woo hill station commuters

293. Lower turning radius – 7.7 m

294. High ground clearance of 185 mm

295. Aggressive price tag of Rs 215,000

296. 1 year , 36000 km warranty

298. Industry specific incentives, free land & tax benefits

299. Entry into US market

300. After market accessories opportunities (attachments etc.)

302. THANK YOU