Tata Motors, a key player in the Indian automotive industry, has significantly increased its market share over the past several years. In 2016, Tata Motors held about 4.6% share of the Indian passenger vehicle market. By FY’24, this figure had grown to approximately 14%, making Tata Motors the third-largest passenger vehicle seller in India. This impressive growth is largely due to the strategic expansion of its product line, effectively catering to various market segments and consumer preferences. The case study of Tata Motors provides an excellent example for studying product lines for several reasons cited in the rest of this article.

Source: Forbes India

Understanding Product Line and Its Importance

A product line is a group of related products offered by a single company under a single brand. These products share common characteristics, target similar customer segments, or fulfil related needs. Companies often develop multiple product lines to appeal to different market segments or cover a range of price points within a single market segment.

Understanding Product Line Depth, Width, and Length

1. Product Line Depth: Product line depth refers to the number of variations offered within a single product line. This includes different models, sizes, colours, features, or other attributes that cater to different customer preferences and needs. Increasing product line depth helps in market segmentation by allowing companies to target specific sub-segments of the market more effectively.
2. Product Line Width: Product line width, also known as product mix width or breadth, refers to the number of different product lines a company offers. A broader product line width allows a company to cover a wider market by offering a variety of products that cater to different customer needs and preferences.
3. Product Line Length: Product line length refers to the total number of items or products within a single product line. It indicates how many variations of a particular product a company offers.

How Product Line Depth Helps Increase Market Share

1. Catering to Diverse Customer Segments: Tata Motors’ diverse product line has allowed it to cater to various customer segments, from entry-level buyers to premium customers. This inclusivity has helped the company capture a larger share of the market. For example, the Tiago caters to budget-conscious consumers, while the Harrier appeals to those looking for a premium SUV experience.
2. Addressing Various Price Points: By offering products at different price points, Tata Motors has been able to attract a broader customer base. The affordable Tiago and Tigor cater to entry-level buyers, while the premium Harrier and Safari target higher-income groups, ensuring that Tata Motors has a presence across multiple market segments.
3. Meeting Specific Consumer Needs: Different customer segments have unique needs and preferences. By providing a wide range of product variations, Tata Motors can effectively address these diverse requirements. For instance, the Nexon EV targets environmentally conscious consumers seeking an electric vehicle, while the Punch appeals to urban buyers desiring a compact and stylish micro-SUV.
4. Enhancing Brand Loyalty and Retention: Offering a broad spectrum of options within a product line can significantly enhance brand loyalty and customer retention. When customers find a product that meets their exact needs, they are more likely to remain loyal to the brand for future purchases. Tata Motors’ focus on safety, innovation, and addressing specific consumer preferences has helped build a loyal customer base.

How Product Line Length Helps in Market Share

1. Market Segmentation: A longer product line allows a company to target different segments within a market by offering various options that cater to specific needs, preferences, or price points. Tata Motors, for example, offers multiple variants within each product line to meet diverse customer needs.
2. Customer Satisfaction: Offering multiple variations of a product can enhance customer satisfaction by providing more choices, enabling customers to find products that closely match their requirements.
3. Competitive Advantage: A well-structured product line length can give a company a competitive edge by better meeting the diverse needs of its target market.

Key Product Line Expansions and Their Impact

1. 2016: Introduction of Tiago: Launched in April 2016, the Tiago marked a significant turnaround for Tata Motors. Its modern design, affordability, and fuel efficiency quickly made it popular among budget-conscious consumers, boosting Tata’s market share from 5% to approximately 6.2% in 2017.
2. 2017: Launch of Tigor and Hexa: The Tigor, a compact sedan, and the Hexa, a premium SUV, were introduced in 2017. These models helped Tata Motors cater to different market segments, contributing to an increase in market share to 7% by 2018.
3. 2018: Introduction of Nexon: The Nexon compact SUV, launched in September 2017, became a hit due to its design, safety features, and affordability. This model significantly boosted Tata’s presence in the SUV segment, increasing its market share to 8% by 2019.
4. 2019: Launch of Harrier: Introduced in January 2019, the Harrier appealed to mid-size SUV buyers with its modern design and advanced features, further increasing Tata’s market share to 9% by 2020.
5. 2020: Expansion with Altroz and Nexon EV: The Altroz premium hatchback and Nexon EV, launched in January 2020, entered the premium hatchback and electric vehicle segments, respectively. These models helped Tata Motors’ market share grow to 11% by 2021.
6. 2021: Introduction of Punch and Tigor EV: The Punch micro-SUV and Tigor EV, launched in 2021, targeted urban buyers and the affordable EV market, respectively. These introductions helped increase Tata’s market share to 12% by 2022.
7. 2022: Launch of Altroz DCA: In 2022, Tata introduced the dual-clutch automatic version of Altroz, appealing to consumers who prefer automatic transmissions. This addition further increased Tata’s market share to 13% by 2023.
8. 2024: Continued Growth and Innovation: By FY24, Tata Motors’ market share had grown to approximately 14%, driven by continuous innovation and the introduction of models like the Nexon EV Max and new variants of existing models. This strategic expansion has solidified Tata Motors’ position as a leading player in the Indian passenger vehicle market.

Key Takeaways

Tata Motors’ strategic expansion of its product line has been instrumental in its impressive market share growth from 2016 to FY’24. By catering to diverse consumer preferences, addressing various price points, and continuously innovating, Tata Motors has successfully positioned itself as a major player in the Indian passenger vehicle market.