TATA ACEWhat led to the idea of TATA ACE ?

Growth of improved highway system eg. Golden quadilateral

Better secondary roads and construction of all weather roads connecting the rural market with the urban markets

Company recorded the highest loss of $5 billion in the year 2001

Absence of smaller transportation vehicles Company felt the core business could be threaten without any product in the smaller and the larger commercial vehicles

What company found in the Market research ?

Customers wanted a scaled down version of TATA 407

4 wheeler truck gave more sense of status in the society Families of drivers wanted more safety for their family members

Market is not ready to pay more than Rs 2,00,000

People wanted to get rid of the limitations of the 3 wheeler vehicles

Strategic Decision

Kant, appointed Girish Wagh,30 year old engineer, to head the TATA ACE project team. Under Wagh, the ACE team implemented cross functional team for product development and production prepration process (3P) which allowed involving suppliers, customers, marketing team and dealers at the intitial stage of development. The ACE team was assigned $2.2 billion for the complete development stage.Challenges faced under designing of the product Overloading Capability

Engine Selection

Safety, comfort and aesthetic considerations

Sourcing and Production

Tata Motors was getting 70% of the parts from the outsourced vendors and it wanted to increase this share dues to 2 reasons

Higher wages being paid at TATA Motors

Conversion of fixed costs of production to variable costs which would help the company during downturn in the market

The company used the under utilized Pune plant for productions. Pune gave the company a locational advantage as the company was expecting 70% of its sales from the western and the southern region.Marketing

From the emotional perspective, the marketing team wanted to create a sense of liberation and feeling good about your job. The team wanted the customer to sense the new opportunities that would come with the 4 wheeler TATA ACE. Indias First Minitruck was the tagline assigned to TATA ACE. Ad having 2 elephants walking together suggested customers a sense of stability and trust of big truck ina small package. The dealers were trained to communicate the functionality and operating-economics analysis to the customer.Distribution

The company started distribution in 5 states with the 1S model. 1 S model meant only sales stores having just 400 square foot building, 1 or 2 vehicles, one desk and a phone. In order to avoid providing service bays at its dealership, the company provided training to the local mechanics along with free tools under the program Suvidham.Launch and Next steps

The product was well appreciated in the markets as the company was able to sell 30,000 products in less than ayear. Kant wanted to take this idea forward on the following lines

New model varients

New Regional markets

Export to foreign markets