The document discusses the making of the Tata Indica small car in India. Tata Motors outsourced 80% of components from over 200 vendors to develop the Indica at a low cost. It focused on vendor development and supply chain management to source components globally and locally. Through segmentation, targeting, positioning and its 4Ps, the Indica was launched in 1998 and became the number 1 car in its segment due to its affordable price and fuel efficiency.

1. Tata Indica
The Making of the
Small Car
MADE BY :
ACHYUT VITHAL AGARWAL SHADWAL HARSH
AYAN ASIF SUSHANT GUPTA
KATIYANI TOMAR TARUN KRISHNA
PRANSHUL TRIPATHI VASUNDHRA SINGH
POOJAN JAIN

2. INDEX
HISTORY
MAKING OF INDICA
OUTSOURCING OF COMPONENTS
VENDOR DEVELOPMENT
SUPPLY CHAIN
OBJECTIVE OF COST MINIMIZATION
STP ANALYSIS
BCG MATRIX
SWOT ANALYSIS
CONCLUSION

3. HISTORY
The background of Telco India's leading automobiles manufacturer
dates back to the early 1920’s , TELCO originally belong to peninsular
locomotive company & its plant was established in Tatanagar
Jamshedpur & was taken over by East India Railways in 1927.
In 1945 TATA sons purchase the plant from the govt. For
manufacturing steam locomotive boilers & other engineering product.
Tata got into the motoring business in 1954 when it starting producing
heavy trucks in a joint venture with Daimler-Benz , Daimler Benz
helped TELCO to establish strong R&D centre at PUNE, Maharashtra
in 1960

4. Over the year , the company acquired technology from several
collaborations & Co-operations agreement with international countries
.
Tata Cummins Ltd
Joint Venture Cummins Engine Co.
Business Manufacture of Cummins “B” series
engine
Tata Holset Ltd
Joint Venture Holset Engineering Co. Ltd
Business Manufacture of turbochargers
ConcordeMotors Ltd
Joint Venture Jardine International Motors Ltd
Business Retailing of Passenger Cars

5. In 1986 the company rolled out its 1st Light Commercial Vehicle – TATA
407 . In 1991 TELCO produced indigenously design, passenger car Tata
Sierra & Tata Estate
By late 1990’s Telco emerged as a leading name in commercial vehicles,
passenger vehicles etc.

6. MAKING OF INDICA
In 1990’s Telco’s chairman Ratan Tata flirting with the idea of developing
a small car & in 1994 Tata gave basic design to their car.
In 1995 Tata announced that it planed to build a car which will priced to
Maruti 800, Shape like Zen & spacious like Ambassador.
Telco was the truck maker, producing a small car - Indica represented a
different kind of challenge for Telco
As an Automaker Telco had to focus on the value chain that stretched
b/w raw materials & after sales service as well as assembling the parts
into the complete automobile.

7. Telco outsourced 80% of the components (1200 out of 1500 plus part)
from 200 odd vendors , to develop Indica. Telco had to combine learning
from its predecessor & its own unique supply chain management to
sustain low cost .
Outsourcing the part was one of the most difficult part for Telco in
producing Indica , for that Telco decided to shop globally for the best
deals & use its own experience.
Tata Indica was launched in 1998 & within a week of launching ,
company received 1,15,000 bookings & in two years Indica became no. 1
car in its segment.

8. OUT SOURCING OF
COMPONENTS
Unlike Global Automobile majors like Ford or General Motors which had
global vendor base , Telco had to start from the scratch for this Telco had to
take its primary “make or buy” decision for key inputs & Telco decided to
Shop Globally.
COMPONENTS SUPPLIER
5 Door Hatch Back I.D.E.A Italy
Engine Institute Francais Du Petrol , France
Assembly Line Nissan Plant , Australia
Presses Mercedes Benz
Piston Rings India Piston
Steering System Rano TRW Steering system
Seating System Tata Johnsons Controls

9. Radiators Tata Toyo
Rear View Mirrors Tata Ficosa
Air Conditioning Kits Subros Ltd
Wind Screen & windows Asahi Glass
Fuel Lines Imperial Auto
Differential Assemblies Sona Steering
Sheet Metal Items JBM Tools
Telco turned to the Italian & France company for design & engine
respectively & applied its engineering skills to adapt engine requirement.
Of the Rs 2.5 billion spent on designing the Indica the major share went
in buying design tools & training engineers in new skill.

10. VENDOR DEVELOPMENT
Next Step was to identify the vendor , most of the parts that went into
making Telco were sourced locally except for some sheet metal parts,
cylindrical gaskets, and belts –which amounted 2% of the components
value, The Indica was totally indigenous.
Telco employed a simple yardstick for selecting suppliers ; the ability to
supply components at negotiated cost with good quality and quantity.
In the first stage of selection , an initial assessment team from Telco
evaluated the suppliers, this was followed by self- evaluation of the
suppliers, based on format provided by Telco.

11. Then there was a quality system survey, carried out by a Telco quality audit
team & it applied a 13 steps Quality improvement programs, covering
suppliers self-evaluation, through design evaluation & audit of supplier
quality .
Another key to Telco’s successful vendor-base was a modern system of
process management.
Telco’s target-costing was broken up into vendor-wise cost target & the
suppliers to carry out their own value-engineering exercises to lower cost &
improve quality
Telco even involved its vendors in the design-process to give suppliers more
lead time to innovate, and for better supply chain coordination

12. T.K. Balaji, CEO, Lucas-TVS, which supplied electrical components and
fuel-injection systems for the Indica, “By making vendors its partner early,
TELCO ensured both quality and price-conformity. Late involvement would
have yielded different results.”
M.S. Kumar, Director & CEO, Rane TRW Steering Systems (Rane), which
supplied the steering systems for the Indica, added, “TELCO has been
extremely supportive, making available its entire R&D resources to our
engineers. It is one of the best experiences we have had in product-development.”

13. SUPPLY CHAIN
Supply chain management is a process to provide the product or service
from suppliers to manufactures to wholesaler to retailer to customers. The
ultimate goal of any supply chain management system is to reduce inventory
cost & provide their goals & service very effective way.
Supplier
Manufac
turer
Wholesal
er
Retailer customer
Telco Chosen the supply chain management because they want to provide
their product & service immediately to their client & customer, supply chain
also reduced the cost of logistics.

14. Tata make joint venture with manufacturers & the transporters for
improving their supply chain, Transportation cost alone accounted to 45%
of the total logistics cost for company.
They wanted to create a positive image in the mind of customer through
their proper supply chain & supply chain also created the reliability of the
product in the customer mind.
All high value components were delivered daily & in case of near by
suppliers , twice a day & vendors who were located far away from pune set
up local warehouse near the plant.
The material was centred to the factory where it was checked whether the
material was scheduled to arrive or not, if the material was not scheduled
the truck was not allowed to enter the factory premises .

15. Once the material was unloaded & unpacked it moved to the transit area &
from there they went into the Super Market
The Super Market was close to assembly line , in super market material
were arranged in such a way that workers could easily access all the
material without wasting much time and effort.
The benefit of this just in time inventory system was that the inventories
were low & so interest cost was also low ,again the manpower required to
handle the inventories was also low.

16. OBJECTIVE OF MINIMIZING
THE COST
The supply infrastructure would become economical as the volume of the
business that Telco offered its vendor increased.
The volume of business will increase with a large number of cars.
The learning that it was extracting from Indica supply chain would also be
available to the company as it moves into other products
There seemed to be a distinct opportunity for a smaller, cheaper car,
positioned as an entry level for the first time buyer.

17. STP ANALYSIS OF TATA
INDICA
STP Marketing is 3 steps approach to build a targeted marketing plan . The
‘S’ stands for Segmentation , ‘T’ for targeting & ‘P’ for positioning. Going
through this process allows a business owner to formulate a marketing
strategy that ties company, brand & product benefit to specific customer
market segment.
 SEGMENTATION
The Segmentation step is the brainstorming activity. You list out all the
potential market segments you could target in marketing campaign

18. 
TATA MOTORS HAS SEGMENTED ITS CUSTOMER IN
FOLLOWING WAYS
 DEMOGRAPHIC VARIABLE
AGE - Anybody of age b/w 18 to 50 years
INCOME - Anybody with income of 4 lakhs p.a
OCCUPATION - Employed as professional, manager & those who want
to buy their 1st car.
SOCIAL CLASS - Middle Class, Upper Middle, Lower Upper & Upper
Upper
 PSYCHOGRAPHIC
PERSONALITY – Dreamers those who want to achieve big , Ambitious ,
Price conscious .

19.  BEHVIOURAL VARIABLE
BENEFITS – Quality, Style
USER STATUS – Potential User & First time user
READINESS STAGE – Those who are aware , informed , interested &
intending to buy.
 The Research team of TATA Indica spend time in :
Understanding the needs & preferences of the customer
Grouping customer based on their need & preferences
Targeting the segment that the company can best meet the needs &
preferences
Branding the commodity

20.  TARGETING
When you have multiple, distinct market segments, you typically need to
customize marketing campaign that appeals to each. As you go through STP
process you select which segment to target with your upcoming campaign . Tata
motors has full market coverage in vehicle market as they cover market through
differentiated marketing.
For Ex. Using The Cell Phone example , you decide to launch new campaign to
promote advance new mobile feature ,media, apps etc.
For this Campaign you would develop messages & use media tailored to that
targeted market.
 POSITIONING
Positioning is how you align your brand or product in the target market . The
goal is to offer something that is bigger , better or more valuable than your
competitors to a particular market segment. Your marketing serves as your big
picture guide in building your marketing campaign.

21. Tata Indica position itself as:
• Slogan “ The Big ... Small car” & “ More car per car”
• Position as an affordable car.
• As the 1st passenger car develop in India
• As a fuel efficient car providing a comfortable drive.
STP
Segment Hatchback for families and taxi
segment
Target Group Targeted towards the Families
belonging to middle class segment,
Cab Operators.
Positioning Positioning as fuel efficient,
affordable car, 1st passenger car
develop in India .

22. BCG MATRIX OF TATA MOTORS
Safari Dicor , Indica Vista
, Star bus , Manza ,
Winger, Magic
???
Nano, versa & other
new inventions
Safari, Sumo, Indigo CS Indigo Sedan, Sierra,
Estate
HIGH
LOW
HIGH LOW
BUSINESS
GROWTH
RATE

23. Indica was one of the 1st Indian hatchback to provide space , comfort
and economy in one package . It had the monopoly in diesel segment ;
this coupled with low maintenance cost resulted in making the car
preferred choice of taxi operator and middle class .
This is the reason why Tata Indica is put in the STAR as star are the
units with high market share in Fast growing industry ; show the best
profits and great opportunities in the organization and generates high
revenues

24. SWOT ANALYSIS OF TATA
INDICA
SWOT
STRENGTH
• Fuel efficient
• Good presence in taxi segment
• Strong distribution and Service network
• Strong backing by Tata brand
WEAKNES
• No strong product differentiation when
compared to competitors
• Brand dilution due to strong presence of
taxi segment

25. OPPORTUNITY
• Increasing per capita income &
purchasing capability of customer
• Increasing the customer engagement
programme
• Augmenting distribution & service
network in various countries
THREAT
• Increasing Fuel cost
• Competitors from other Automobile
giants
• Competitive product offering same
level feature at a lesser price

26. 4 P’S OF TATA INDICA
PRODUCT - Until 1998 India was not different from other less
developed countries in one crucial aspect; it had not produced the car
indigenously . That situation changed with the launched of Tata indica in
December 1998. The vision of the TELCO was to give an Indian car which
price to Maruti 800 , Shape like Zen and Spacious like Ambassador
PRICING - TATA motors have always have followed a strategy of value
based pricing in the Indian car segment. The prices were fixed keeping few
factors in mind – Market conditions , cost incurred , Profit % desired &
Dealer profit . Tata follows the same strategy for Tata indica as well ,
different variant s of model are priced suitably , keeping the factors in
mind.

27. PLACE - Tata focused on its channel of distribution to provide good
service , Tata distributed the product at the right time & right place .
Effective & Efficient distribution was important for organization to meet
its overall marketing objective.
PROMOTION - To reach its promotional goals, Tata developed an
effective promotional mix of advertising & sale promotion strategy . Tata
develop a promotional mix for each segment of the distribution channel. To
promote Indica ,to large retailers that sell its products .

28. CONCLUSION
TATA Indica is a milestone model in Tata's journey in the Indian
automotive .
Tata Motors through Indica has demonstrated how to manage product
lifecycle effectively. The brand which was launched in 1998 has passed
through many hurdles.
The brand successfully transcended the initial flaws, bad customer /expert
reviews and brickbats to become one of the largest selling cars in the Indian
auto industry.
The brand survived and thrived because of the constant focus of Tata
Motors to improve the product continuously.
More than the product innovation, it was the value proposition that forced
customers to choose Indica despite all those nagging troubles.
You cannot get a diesel car with that much space at the price at which
Indica is selling ( so far).