Case analysis of Tata Motors case

The problem facing Tata Motors Limited (TML) is which product it should launch under the Tata/TML brand name a cheaper more maneuverable 3 wheeler or a relatively higher priced 4 wheeler LCV. To arrive at decision, it needs to evaluate the two alternatives against the following objectives: 1. Which product is likely to be more successful in terms of sales post launch 2. Which product is more consistent with TML brand image which will be an important consideration for long term success The alternatives available to TML are mentioned in the problem itself, whether to launch its new LCV as a 3 wheeler or a 4 wheeler. Each alternative can now be examined against the objectives listed above. The 3 wheeler alternative has the following positives and negative points associated with it: a. The product competes with other three wheeler already marketed by competitive marketers such as Bajaj and Piaggio. Potential customers are therefore familiar with the product type b. This alternative has lower initial price and the difference is considerable (the loan amount will be lower) c. A three wheeler is more maneuverable which is important in intra-city driving conditions for which it is designed d. Unfortunately the Tata/TML brand is not associated with 3 wheelers, but with 4 wheelers as TML is a dominant players in such commercial vehicles e. The potential customers seem to believe that his status as 3 wheelers owner is or will be lower than that of a 4 wheeler owner f. The carrying capacity of 3 wheelers is lower (but market is used to it) The 4 wheeler alternative has the following positives and negatives associated a. Potential customers seem to be looking for a small 4 wheeler LCV to enhance their status in society as compared that of a 3 wheeler owner b. TML is a known leader in 4 wheeler LCVs and the brand association is therefore good. c. The product will be able to take somewhat higher payload than a 3 wheeler but it is not clear if the same can be filled to yield more revenue d. A 4 wheeler is 25% more expensive (loan amount will be higher) e. The category of a 1.25 ton 4 wheeler does not exist and buyers will need to be educated about the products utility which is not necessary for a 3 wheeler As regards ability to distribute or service the products etc, TML is likely to be able to do so for both products as it is an established player in the automotive sector. Finance is available for both options. It is clear that both alternatives have pluses and minus. However the 4 wheeler alternative has a special advantage that potential buyers desire such a product as it can fulfill an unmet need for status in society, while delivering the functional benefit of transport. In addition, from the branding angle, a 4 wheeler fits TML far better than a three wheeler. Therefore if TML can overcome the price difference, the chances of the product taking off are very good. TML will provide a product which has no competition in its class when it is launched leading to higher sales. Given that finance is available for purchase of commercial vehicles, the initial cost will not be such big barrier to purchase. TML will need to promote its new product among target customers. The educational need can be addresses through the promotional campaign which can also simultaneously stress the greater status a 4 wheeler owner has in society. Therefore it is recommended that TML should launch a 4 wheeler. The above analysis is just 526 words, but this is a small case. Note: A contrary view can also be taken that the 3 wheeler is the better alternative because of the following reasons .. This depends on the assumption(s) made. If proper justification is provided, the alternate answer will be treated as equally valid. For example it could be assumed that although finance is available for purchase of 3 or 4 wheel commercial vehicles, the 25% extra cost for a 4 wheeler will push up monthly installment amount will be difficult to pay back as initially the buyers may not get larger payloads for which

they can charge higher amounts. Non- payment of installments leads to vehicle seizures and the product can fail. (if properly argued the second alternative will also get full marks)