SCHOOL OF BUSINESS

BACHELOR OF BUSINESS ADMINISTRATION

(2017-2020)

INDIVIDUAL ASSIGNMENT

Rural Marketing

SUBMITTED TO
Dr. Rohit Singh

SUBMITTED BY
ADITI AGARWAL
Tata Motors successful launched Tata Ace to grow, think creatively, and offering unique
products. Highlight the growth and uniqueness which Tata brought through product like Ace.
You may consider segmentation strategy, competitors offering strategy, and bringing
uniqueness by studying the market scenario.

Tata Motors suffered a huge loss in 2001 due to down turn in commercial vehicle segment and
economic recession.

After a research the company realised 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 realised 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.

Growth of Tata Ace:

• TATA Ace exceeded the expectations of TATA Motors and its annual production target of
30,000 vehicles was sold in less than one year

• 54% of the customers were first time buyers, 33% previously owned 3-wheelers customers
and 30% had LCV suggesting that the launch was successful

• Customers in the age group 25-35 were the first time buyers suggesting that Ace was
successful in attracting first time buyers

• 56% of customers were using Ace for intracity transport, 35% for intercity transport, 7% for
village to city transport and 2% for intervillage transport

• In Jan 2006 TATA Ace won BBC Top Gear's annual "Best Commercial Vehicle Design”
award.

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.
Vehicles carrying high load - This segment typically consisted of vehicles such as pickup trucks that
transported loads of 2500 kilograms traveling 300 kilometres.

Vacant Segment - This segment consisted of Ace's core market which were the customers looking to
transport 750 to 1000 kilograms over a distance of 100 to 200 kilometres.

Vehicles carrying low load - This segment consisted of Manual rickshaws and carts that transported
loads weighing less than 75 kilograms.

Pick-Up/LCV First Time Purchasers Three Wheelers

15%

45%

40%

Customer Market Segmentation

Customer Market Segmentation was done within the functional marker segments wherein the
customers could be further segmented into 4 groups (estimated percentage of the market) :

Performance Sensitive Customers (7%)

• Interested in Status, Brand Image and Speed

• Willing to pay higher price for better features

• Currently using cars or large Subs to haul goods

Balanced Perspective Customers(25%)

• Wanted Return on Investment

• Mainly Owner-Entrepreneurs

• Wanted comfort and convenience features

• Forced to purchaser wheelers as other products were above budget

ROI Sensitive Customers(55%)

• Not interested in non-monetary purchase considerations

• Included fleet owners/operators and some individual owners

Acquisition - price-constrained Customers (13%)

• Lacked credit

• No financial means to purchase even slightly expensive vehicle

Performance Sensitive Balanced Perspective

ROI Sensitive Acquisition Price Constrained

13% 7%

25%

55%
Competitors Strategy

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.

• Piaggio - Ape, Quargo

• Bajaj - Tempo, Max series, RE600
• Mahindra & Mahindra - MN 25 & MN 31 trucks, MN40, 49 trucks (Navistar Inc USA),
Maxximo & GIO
• Force motors - Trump Trax, Kargo king
• Hyundai Motor - Porter