TATA ACE CASE STUDY

Q.1 Describe the segments for Tata Ace? What is the primary segmentation variable for this segment and
what could be the describing variables for segmentation?

Tata had the done the following customer segmentation:

1. Performance Sensitive These were the customers to which the brand, style and image mattered a
lot. Not money but comfort and style were the primary areas on which buying decisions were made.
7% of the customers belonged to this category and mainly used cars or SUVs for transportation of
relatively lesser loads. Money was not an issue for this segment.
2. Balanced Perspective These customers were mainly entrepreneurs who wanted a vehicle which
offers a good ROI but at the same time, the vehicle must provide comfort and convenience. This
segment aimed at improving the overall quality of life. They were willing to spend relatively more
than the cheaper and less comfortable options like three wheelers available in the LCV sector. 25% of
the customers belonged to this segment.
3. ROI sensitive These customers valued ROI than anything else. The vehicle must be able to provide
them the lowest cost/Km. This segment did not look for comfort or any other added benefits. These
were mostly Fleet owners/operators.
4. Acquisition Price Constrained This segment lacked funds and would opt for a cheaper vehicle even
if a slightly expensive but better option was given to them. This was the segment that would most
likely buy an auto rickshaw.

LCV MARKET SEGMENT

Acquisition Price Performance
Constrained Sensitive
13% 7%

Balanced
Perspective
25%

ROI
Sensitive
55%

The primary segmentation variables for this segment are

1. Demographic Segmentation The describing variable for demographic segmentation is Occupation
based segment. Clearly, all the segments are formed based on the type of work of the LCV customers.
More affluent owners of businesses prefer class over money, entrepreneurs prefer value for money
and do not hesitate to shell out some extra money for comfort and convenience, fleet owners value
ROI more than anything else and very small business which lack funds may prefer a cheaper option
than an expensive one.
2. Behavioural Segmentation The describing variable for behavioural segmentation is Benefit based
segmentation. Other than occupation the segmentation also consists of the benefits that the owners
wish to derive from their vehicle. Benefits in the form of class, quality/comfort, ROI or monetary
benefits are used to segment the LCV market.

Q2. Who in your opinion should be the target audience for Ace. Why? Justify? Is there a core segment and
supporting segment?

Tata ACE is positioned in a slightly higher price segment as compared to its competitors. With a market
price of 2.25 lakh, there is a difference of Rs. 50000 from the nearest competitor and difference of Rs
100000 from the competitor offering at lowest possible price. In my opinion, the core target audience for
Tata Ace should be the Balanced Perspective segment. This is the segment that values comfort and
convenience along with ROI. Balanced Perspective segment will be willing to invest in 2.25 lakh in a 4
wheeler LCV, to get the ROI along with additional convenience features. It is evident from the stats that at a
Total Cost of Rs. 6.70/month/km/ton, Tata Ace provides the best ROI in the long run. It will hence be easier
for Tata to convince the Entrepreneurial segment to purchase the TATA Ace. Tata can also target the ROI
sensitive segment as the supporting segment. This segment values ROI than anything else. Since Tata is
price a lakh higher than the lowest price offered, Tata motors would be required to incur additional
marketing cost to pitch the Tata Ace to this segment. The total cost per month of the Tata Ace is on a
higher side, hence ROI segment may be a slightly difficult segment to bet on. However, the company may
be able to attract some market share from this segment also, if it is able to educate this segment about the
long term benefits of owning a Tata Ace.

Q3. Write the positioning statement of Tata Ace? What is the POD of this product?

The positioning statement of Tata Ace is as follows:

Our product the Tata Ace has the best return on investment among all the Light Commercial Vehicle sellers
selling three wheelers because it has lower operating costs, better comfort and carries higher payload.

The points of differentiation of this product are:

1. Lower Cost of Operation

2. More Comfort
3. Higher payload carrying capacity
4. Better manoeuvrability.
5. Drivable in rural as well urban areas.
6. Safety of the drivers in 4 wheelers.

Q4. Suggest an alternate positioning for the brand using Laddering method?
The dimensions of the brand ladder for Tata Ace are as follows:
1. Attributes It is a four wheeler which is a miniature version of the very popular Tata 407 truck. It is
robust and highly durable.
2. Functional Benefit It offers a low cost transport system. It is also comfortable, fuel efficient and can
carry payloads up to 0.75 tons.
3. Emotional Benefit People give more respect to 4 wheelers. There is a higher social status attached
to owning a 4 wheeler rather than a 3 wheeler.
4. Brand Essence The product must be able to provide family satisfaction and social status. Driving the
Tata Ace must be a rewarding experience. The Tata Ace must be able to make its drivers feel good.
They must be proud of owning a Tata Ace.