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Group members:-

Kanika khurana
Monil panchamia
Satyanshu sharma
Bansi khunt
THE IDEA FOR THE ACE
• In 2001, Tata motors recorded the largest loss of Rs. of 5 billion.
• They faced loss due to cyclical downturn in the commercial vehicle
segment and economic recession.
• Kant , head of Tata motors realized that they have to focus on the 3
major areas:
 Cost reduction
 Quality improvement
 New product introduction
• The construction of highways connecting rural areas
(where 72% of the population resides) would create a
shift in the movement of goods and people.
• The growth of highways (golden quadrilateral)
between major cities states would demand for larger
vehicles that could carry bulk of 45 tons with
lowering the unit cost
• The company realized that to overcome the loss they
have to add smaller ton and larger ton vehicle in their
product portfolio.
• During a strategic review session of senior Tata
Motors executives with Lord Kumar Bhattacharya of
Warwick Manufacturing Group, the idea of a “cheap,
nasty and rugged vehicle for India” came into
existence.
• They thought a new small commercial vehicle, would
help fill the gap in the company’s product portfolio
which they eventually named ACE.
INTRODUCION OF ACE
• Kant selected Girish Wagh, a 30-year- old engineer, to head the Ace
project team.
• It was based on a 3Psystem (production preparation process ) allowed
the team to involve stakeholders
• It was a strict cost control project.
• The total development budget was not to exceed Rs. 2.2 billion.
• To keep product costs low, the team had to adjust it from savings so as to meet
the total cost target, if any component came in higher than budgeted.
MARKET RESEARCH

• The idea of Tata group while introducing ace was a product “from the customer, for
the customer.”
• The team interviewed more than 4,000 truck and three-wheeler operators in rural and
urban areas of India as part of its voice-of-the- customer analysis.
• The customer wanted a scaled-down version of Tata’s four-ton 407 truck.
• But with the safety, durability, additional payload, and comfort of a four-wheeled
truck.
• one rural interviewee said , “If I drove a four wheeler, I would receive better marriage
proposals in my village.”
FINDINGS THROUGH ANALYSIS

• Creating a vehicle that made the driver “feel good” became an


important parameter.
• They found that customers will not be able to pay more than three
wheeler having price range of Rs. 1,00,000-2,00,000 so, team had
to set a price target of Rs. 2,00,000 for the Ace.
• The team had to offer truck like features at minimum cost.
FUNCTIONAL MARKET SEGMENTATION

The Ace’s core market would be customers looking to transport


750 to 1,500 kilograms over a distance of 100 to 200 kilometers.

45% 15% 40%

• Planning to • Light • First time


purchase commercial vehicle
three vehicle purchaser.
wheelers purchaser
CUSTOMER MARKET SEGMENTATION

performance balanced acquisition price ROI sensitive


sensitive (7%) perspective (25%) constrained (13%) (55%)

• interested in • entrepreneurs • who lacked credit • would buy a vehicle


wanted comfort and and the financial based on the lowest
status, brand convenience means to purchase cost per mile of
image, and features that would an even slightly transport
speed. improve their more expensive
quality of life vehicle.
DESIGN CHALLENGES

The ace team faced three major challenges in creating vehicle that met customer need and the price target
(A) Overloading capability
(B) Engine selection
(C) Safety,comfort and aesthetic considerations
OVERLOADING CAPABILITY

• So as part of market , the team conducted tests to see how three wheeled vehicles were
being used in the field.
• The data suggested that the vehicle would be overloaded, since quick acceleration was not
of prime importance on India’s slow-moving roads and speed considerations were
outweighed by the desire to reduce the per unit cost of transportation through large loads.
As a result, the team focused on how to design a product that could withstand the strain of
overloading.
• Overloading considerations also determined the selection of a rigid front-axle design and
rear-wheel drive. While most Indian vehicles, including three wheelers, offered body-on-
frame construction , the Ace would offer a semimonocoque body that would provide the ride
quality of a car or Japanese minitruck but prevent the cracks that typically resulted when
monocoque vehicles were overloaded.
ENGINE SELECTION

• Customers had indicated a preference for a diesel-engined vehicle due to the fuel’s greater
efficiency and lower per gallon cost in India
• One option would be to offer a one- cylinder engine similar to that found in a three wheeler.
However, this engine would not be powerful enough for the contemplated payloads and
desired speed and would also fail in meeting the stringent emissions and noise, vibration,
and harshness (NVH) targets for four wheelers
• At the other end of the spectrum, the company considered sourcing a four-cylinder diesel
engine from a multinational company. Using an existing engine would save time and would
already be proven in the field. However, even the smallest foreign-made engines were 40–50
horsepower, which was more than twice the level needed in the Ace, as well as double the
cost target.
• The team then altered this engine to fix the excessive noise and vibration levels and worked
with a supplier to develop a rotary fuel-injection pump that could meet emissions standards
without electronic systems, thereby reducing costs and after-sales service complexity.
SAFETY,COMFORT AND AESTHETIC
CONSIDERATIONS

• Early in the design process, the team decided that the Ace should meet the higher M1/N1
class safety norms instead of the less stringent quadricycle norms on which most of the
European minitrucks were based.
• Since the Ace would be a Tata-brand vehicle, it was decided early on that it should conform to
the highest safety standards. Furthermore, if Tata Motors could offer a safer product to the
consumer, the Indian government would have no reason to adopt the quadricycle norms for
its highways and could take a positive step in vehicle-safety standards.
• The most straightforward way to meet these safety norms would be to design a vehicle with a
semiforward face (engine in front of the cabin akin to a passenger car). However, market
research indicated that customers preferred a flat-face vehicle that looked more like a large
commercial vehicle and allowed a greater percentage of the length of the vehicle to be used
for goods transport without “wasted” space.
SOURCING AND PRODUCTION

• With the designing stage nearing completion in mid-2003, General Managers V.N. Bedekar
and Zackria Sait began evaluating sourcing options for production. Given the project’s
objective to reshape traditional thinking within the organization, several new initiatives were
undertaken. While the typical Tata Motors commercial vehicle had 70% outsourced parts
with 250–400 vendors supplying parts for each truck, the Ace team sought to increase the
outsourced content percentage while lowering the number of vendors.
• In order to control costs, the team decided to manufacture the Ace at an existing
underutilized Tata Motors plant in the western city of Pune. Locating in Pune would also allow
the Ace to tap into Tata Motors’s existing vendor base and save on outbound freight costs,
since it was estimated that 70% of the demand for the Ace would come from the western and
southern states of India. The entire Ace production line would be built within the existing
commercial-vehicle plant.
• Through creative design, using existing facilities and aggregate outsourcing, the team was
able to meet the Rs. 2.2 billion ($49 million) budget.
MARKETING

• In order to convince buyer of the functionality, dealers were educated in the


operating –economic analysis.
• In addition, ACE could carry more loads than a three wheelers.
• Based on these rational and emotional consideration, marketing team
developed few massages like
“ India’s first minitruck”.
• Team also made Adv. On wall painting, television, newspaper for ACE.
• Ad campaign that was selected has a picture of two elephants
walking together and said “small is big”.
• T.V. Adv. Was created for the south Indian state of Tamil Nadu,
where people called ACE ”chinne annai”.
DISTRIBUTION
• Beginning with 5 states in western and southern part of India. Region was selected
because of high 3 wheelers demand.
• In order to avoid the cost of providing service bays at its dealerships, the company created a program
called “Suvidham,” which means “convenience” in Hindi. Through this program, Tata Motors trained
existing rural mechanics free of charge on how to complete simple maintenance procedures on the Ace.
• In addition, each mechanic received a free set of tools and a sign to display at their garage.
• The company also launched a “mobile workshop” that would travel to small villages and construction
sites on a predetermined schedule to provide spare parts and lubricants to mechanics and customers. In
the event of a major accident or repair, the vehicle would be sent to a Tata Motors dealer in a larger
city.
CONSUMER FINANCE
• While customers would be educated about the Ace’s operating economics and financial advantages in
the long run.
• Given the durability of the Ace’s design, third-party financiers were willing to offer five-year loans
compared with the three-year loans offered on three wheelers. As a result, monthly payments for the
Ace were lower than those for three wheelers.
MARKET LAUNCH AND RESPONSE
• Launch at the Price of 225000
• Launched in 2005
• 25% market has been covered for initial launch
Response
• Exceeds Tata Motors expectation
• Sold its annual production target of 30000 vehicles in less than a year
• Increase sales 15.1%
• Market share increased by 13.6%
• Contributed 15 companies volume in in 1st year
• 54% first time buyers, 33% previously owned 3-wheelers, 30% owened LCV
INDIAN MARKET STRATEGY

• New model and variant multiple engine variant (CNG)

• Multiple acceryscery production dumper and water tanker


• New regional market
EXPORT MARKET STRATEGY
• Emerging market similar to India
 Sri lanka
 Bangladesha
 pakistan
• Emerging market more developed than india
 China
 Russia
 South Africa
 Thailand

Electric version for US and UK markets


POTENTIAL COMPETITOR RESPONSE
ADDITIONAL CONSIDERATION

• New factory in another city or resizing the pune factory.