In the book , ‘differentiate or die’, the author points out being first to the market can be a differentiating idea. This was proven very well by Fevicol, a white glue company who had the additional task of making the white glue acceptable before making their own product accepted by the rural consumers. Here is the success story of Tata Ace who used the principles of preference, being first in the market and their strong heritage of the parent company to differentiate the product and thereby sow and reap success in the rural market. They also owned the attribute of the product ie 4 wheeled commercial vehicle to differentiate the product.
Till the launch of TATA ACE, LCV (Light Commercial Vehicles)segment was mainly dominated by 3 wheelers. The players in this segment were very complacent. They were mainly playing on volume, and demand had risen at the annual rate for more than 7% between 1994 and 2005. There was no innovation in the segment. The 3 wheelers wore a rustic look, was uncomfortable and not very safe for carrying load at high speed. Though the price was less, ranging from INR 1.2 Lakhs to INR 1.8 Lakhs, the operating cost was very high.
Before the launch of its LCV, TATA motors conducted market research to identify the customer needs. Customers were asked about the basic attributes which they seek in an LCV. Some of the findings of this exercise were related to basic needs of transporters, while some were completely surprising for TATA motors team. The market research team realized that the customers in rural areas attached prestige to their transport vehicles. People in rural areas told the research team that people who drive 3 wheelers are not held in high regard in their social circles. They expressed a desire that if they can afford to drive a 4 wheeler LCV, they will gain prestige in their social circle. The other attributes desired by the users were safety, comfort to the driver, speed, ability to drive in the narrow lanes of urban areas, and uneven terrain of villages and low operating costs.
Most of the customers inputs went into the design of LCV, which TATA motors was planning to introduce in the market. Major revolutionary change was shift from the 3 wheeler to a 4 wheeler for a LCV. This was done to meet the basic demands of customers, such as the prestige aspect which customers attribute to their LCV and the safety desired in an LCV. Thus Tata Ace used the urban principles of product differentiation and successfully won the rustic indian market.