Falling share in CV market shifts Tata Motors' focus to new age entrepreneurs

Tata Motors, which has witnessed its market share slump by 14% in the commercial vehicle (CV) category, is banking on new age entrepreneurs and logistics start-ups to stem the loss in the segment.

Holding 49 per cent share in the medium and heavy CV market, the company is seeing a flurry of a new set of audience, where its products can have high penetration.

Earlier, the company had a simple task of just reaching out to people who were individual truck owners and drivers or fleet owners. However, with this new set of audience-dubbed as the ‘captive segment’–active on social media and are a lot different from their traditional customers–the company is facing the twin challenge of dealing with two different sets of consumers.

Anurag Dubey

“The captive segment is the segment that uses our products to facilitate their business. For example, take a baker. His main business is to sell the bakery products but to sell these products and to ensure delivery he needs a vehicle. It is a support function for his business. With the government supporting small businesses and with the whole start-up culture coming into play, this is a growing segment. Today, even housewives who think they are good cooks are becoming entrepreneurs. This was not possible a few years ago,” said Anurag Dubey, Head-Sales and Marketing, Small Commercial Vehicles, Commercial Vehicle Business, Tata Motors Ltd.

“This segment is active on platforms like Facebook, Twitter, WhatsApp and so these channels have become very important to reach out to them. This segment is on the growth path and it is important for us to tap this medium and be aggressive here,” added Dubey.

The company is facing intense headwinds in the CV category and has been under tremendous pressure with the continuous slump in demand for trucks and buses, especially during the last two years. It lost 14 per cent share in the commercial vehicle space in the last five years. The company has lost market to players such as Mahindra & Mahindra, Daimler, VE Commercial Vehicles and also to old rival Ashok Leyland. This hurt Tata Motors the most since it heavily relies on the CV category for its revenue.

According to Dubey, earlier the company's target audience was only the regular struggler who was working hard to make ends meet. And the advertising and brand reach for that consumer was also very easy as the company knew how and where to catch them. The challenge now is to reach out to new age entrepreneurs and retain the old costumers.

“Our target audience earlier was someone who was the sole earner of the family and they had very limited free time on hand. The only time they had to indulge in any media was when they were waiting for the freight to come during, when they read the local newspaper or when they reached home. That is when they surfed news channels to get an idea as to what was happening around them,” said Dubey.

However, with the new set of consumers that depends on India's bustling start-up scene for the growth, the company is now putting in a lot of resources in digital. This space hardly got any marketing budget a year or two ago.

UT Ramprasad

"Digital marketing is growing big even among the audience that is semi-urban and rural. Also, with increasing smartphone penetration and competitive prices being offered by telecom companies, accessibility has increased. It is definitely a growing media and very relevant to us but how much do we use it is entirely dependent on the category. We sell pick-ups to buses to SUVs and a lot of other vehicles. For example, school buses do not require a television or print campaign but for an Ace or a pick-up, you can’t measure the reach of digital. Print and TVCs will still play an important role in the marketing of these products as of now,” said UT Ramprasad, Head Marketing Communications, Commercial Vehicles Business Unit, Tata Motors Ltd.

According to Ramprasad, apart from the budget another challenge of marketing in this category is the fact customers here are making more crucial decisions and therefore taking a much bigger risk.

“The commercial vehicles business has high involvement products. For the person buying our product, it is their livelihood and therefore the risk he is taking is also huge. So, word of mouth becomes an important aspect of the purchasing decision. The second part is the rational and emotional conflict. Irrespective of things there will be an emotional aspect to the purchase decision. So, while we have to talk about fuel efficiency and things like that we also have to strike an emotional chord. We have to talk in the language of money but guide with an emotional promise,” said Ramprasad.

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