When symptoms of a downcycle became apparent in early 1997-98 after an impressive 1996-97, ALL realised that it needed a marketing strategy which would not only help it maintain its position as an undisputed leader in its stronghold-the South market-but also prise open other markets and improve volumes. The solution: product segmentation, or the development of customised products for particular applications, for opening up new niche markets.

In order to implement this strategy, ALL formed a product management team comprising of managers from the market development department. For starters, the team was entrusted with the job of identifying user segments. This was first done through a deskstudy of sectoral freight demand, based on micro and macro economic factors.

Studied strategy

Today, the result of such studies are routinely fed to regional managers and dealers on a regular basis, who then identify user segments in their respective geographical area and send in their inputs to the product management team. The study can be for customised trucks for transporting vegetables, cement, couriers, oil tankers, or sophisticated cargo-just about anything which needs special specifications.

Once the segment is identified, the market is studied to find out the exact requirements of the customer. The outcome of the study is then used to arrive at a product concept.

From this stage the product planning committee (PPC), comprising of managing director, executive directors of marketing, product development, project and quality departments along with other senior officials from related departments -- a total of 12 team members -- takes over and looks at the technical feasibility andcommercial viability of the proposed product and the time frame required to accomplish it.

Once approved by the PPC, the product development group works on developing the prototypes, which are then test-marketed before being cleared for bulk production. The entire process, from identification of the user segment to bulk marketing of the vehicle, takes 12 months in cases where an existing product requires some modifications. In case the engine has be changed or a new cabin developed, it could take anywhere between 18 to 36 months.

``By this concept we are giving the customer what he wants thereby telling him that we care for him and help him to get the maximum out of his investment,'' says Amol J Sandil, executive director, marketing. The strategy has started to produce results.

Truckin' along

Ashok Leyland, which had a negligible market in the East, has established a strong presence after it offered a vehicle designed for vegetable transportation -- which studies showed, constitutes thedominant traffic in the region.

``When the load movement was studied we found that it was invariably not more than six tonne, and the trucks were loaded very early in the morning. The ability of the vehicle to start in cold temperature, ease and speed in loading and unloading, rust-proof storage area, higher speed and a good suspension to avoid damage to the agricultural produce were thus essential,'' Sandil said.

ALL then offered Cargo 909 into the East market in July 1997 as against Telco's 10-tonne vehicle. The Cargo 909 had a load-carrying capacity of just 6-tonne, a flat low floor, and a three-side loading facility for easy loading and unloading. It was faster but at the same time more fuel efficient and more importantly, cheaper by Rs 1-1.50 lakh.

The vehicle was an instant hit and the company sold 400 vehicles in 1998-99 with a market share of over 50 per cent in the 909 segment. Since last year, the same product is now being offered to poultry and egg transporters in Andhra Pradesh.

Similarly,a study of the requirements of cement transporters revealed that they wanted higher tonnage, lower variable cost and a cheaper vehicle. ALL's 2516 and Telco's 2213 did not measure up to their expectations. So ALL introduced the 2514-I with an Iveco engine which had one live axle and one dead axle in the rear, instead of two live axles.

This straight-away brought down the cost: The basic price of the 2514-I is Rs 5.84 lakh whereas ALL's 2516 was Rs 6.60 lakh and Telco's truck was for Rs 5.60 (for a lower capacity). Moreover, fuel economy was better by 20 to 30 per cent due to lower horsepower.

The pay-back? In 1998-99 the company sold 135 vehicles in Andhra Pradesh-but in the first quarter of 1999-2000 it has already sold 110 more vehicles. ALL is planning to introduce the product in states like Rajasthan and Gujarat shortly.

In the North, where overloading abuse is prevalent, the company has increased its presence by offering the CG-1611 with a front-end structure for general haulage. Similarly, basedon a study which revealed that transportation of high value and hi-tech items are increasing with the change in Indian consumers' pattern of consumption, ALL has introduced the Cargo 1512 for carrying sophisticated cargo such as electronic items, pharmaceutical products etc.

This vehicle, according to Sandil, has good suspension and offers better fuel economy and can be closed completely, apart from driving comfort. ALL has already sold 100 vehicles in the first quarter compared to 200 in the whole of last year. ALL also has specialised vehicles for the fire service department, mines operations, and oil transport. Now, the study is also being applied to the company's passenger vehicle segment.

``This strategy would, to an extent, cannibalise our existing product range but we are keeping the customer happy by giving him what he wants. Moreover, it keeps us on our toes as we constantly study the freight market which helps us to change according to the change in the preference of customers,'' says Sandil.The company is currently studying the requirements of project transportation, construction input segment etc.

Consider how much ALL's product range has evolved. Earlier its range consisted of: Cargo 759; Cargo 709; Cargo 2214; Cargo 2516; Comet 1611; Comet 2614; Comet Super; Comet Minor; Tractor Trailer 2614; Tractor Trailer 3516; Rhino 40 tonner; and the Hippo range. Now, it looks at its product range more in terms of target users.

The product customisation strategy has been particularly fortuitous for ALL, for staving off the rigours of the downturn experienced by the auto sector. Recession in the commercial vehicle sector has resulted in the industry size declining from 1,43,023 vehicles in 1996-97 to 77,355 vehicles in 1998-99, a reduction of 46 per cent. Turnover of the truck majors Telco and ALL took a hit and were stranded with stocks.

ALL's turnover declined from Rs 2,482 crore in 1996-97 to Rs 2,052 crore. The product segmentation strategy and other efforts by ALL-such as entering into newermarkets-has enabled it to increase its market share from 28.2 per cent in 1996-97 to 35 per cent in 1998-99 at the expense of its competitor Telco. All comeback's are meticulously planned-but ALL's resurgence was totally by design.