Description
It talks about the marketing strategy and the business stratgey adopted by the various motorcycle manufacturers in the Indian market.
Global demand is set to grow 6% annually through 2009. Worldwide demand for motorcycles is forecast to advance 6.0 percent annually to 43 million units in 2009. Market Players in the Industry Competition within the motorcycle industry is continuously increasing. Changes in the competitive environment and increasing customer expectations regarding product quality and customer satisfaction are driving motorcycle manufacturers to place a greater amount of emphasis on understanding customer attitudes and behaviour in order to maintain and grow market share and profitability. The 2007-08 down turn in the motorcycle industry in India has been a boon for some and bane for some others. Despite a decline of 12.03% in the overall sales of motorcycles at 57,32,313 units against 65,16,816 units in 2006-07, the market share of Hero Honda Motor Ltd, Honda Motorcycle & Scooters India Ltd (HMSI) and Suzuki Motorcycle India Ltd grew substantially. This, however, had come at the cost of market shares of Bajaj Auto Ltd, TVS Motor Company and Yamaha Motor India Ltd. “The launch of 18 models, including the variants, in last 24 months has been a key building block for growth in the sluggish two-wheeler industry. The last few launches from the two-wheelers major, in the 100cc, 125cc and 150cc segments, include CD Deluxe, Glamour, CBZ Extreme and Hunk. The major players in the motorcycle segment are:
1) Bajaj Auto Ltd. It is one of India's top ten companies in terms of market capitalization and among the top five in terms of annual turnover. Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported scooters and three wheelers from Italy and sold them in India. From 1961, when the annual production was just about 4000 units, today the company has become a market leader with annual production in excess of 1.35 million units and with product offerings in all segments (mopeds & scooterettes, scooters, motorcycles, three wheelers). Bajaj dominated the scooter segment for decades before it was forced to make a foray into the motorcycle segment. The competition for them was tough as Hero Honda was market leader in motorcycle segment in all categories whether it be entry level bikes or high performance bikes. The initial bikes of Bajaj namely Bajaj 4S Champion, Bajaj KB 125 were not a big success. But the R & D wing of Bajaj named “Ahead” came with a revolutionary series of bikes and changed the market dynamics. Bajaj Pulsar hit the market hard and the sales of Hero Honda’s high performance bikes like CBZ went for a toss. This bike laid the foundation for Bajaj in motorcycle segment.
2) Hero Honda Motors Ltd. Hero Honda has a reputation of being the most fuel-efficient and the largest selling Indian motorcycle. Its commitment of providing the customer with excellence is self-evident. It was this affinity in working cultures of Honda Motor Company of Japan and the Hero Group that resulted in the setting up of Hero Honda Motors Ltd. A rich background of producing high value products at a reasonable price led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer. Tactical promotions and excellent marketing helped Hero Honda establish itself as an intelligent purchase. Its unique features like fuel conservation, safety riding courses and mobile workshops helped the group reach the interiors of the country. Finance services helped facilitate purchase, as did an efficient dealer network across the country. Well entrenched in the domestic market, Hero Honda Motors Ltd. turned its attention overseas, and exports have been steadily on the rise. Few of their notable bikes are Hero Honda CD Dawn, Hero Honda CD 100, Hero Honda Passion, Hero Honda Splendor, Hero Honda CBZ & Hero Honda Karizma. According to the figures released by the Society of Indian Automobile Manufacturers (SIAM), market share of Hero Honda went up by 6.56% in 2007-08 vis-à-vis 2006-07.
3) LML India LML just like Bajaj was long known to be a big player in the scooter segment before it made a dent in the motorcycle segment with bikes like LML Freedom, LML Graptor, LML Adreno & LML Energy FX. It tried different strategies so as to increase its customer base by introducing Adreno which was having sports bike look and by introducing 16 different colours in Freedom but to no avail. It got suppressed under the weight of high performing bikes from the stables of Hero Honda & Bajaj.
4) Royal Enfield Motors Ltd. Established in 1955, Royal Enfield Motors is now a part of the Eicher Group of Companies - a Rs.10 billion conglomerate. Royal Enfield's corporate philosophy is built around quality and unflinching loyalty to the customer, a few reasons why the legendary Bullet is not just a bike but a motorcycling icon. The ruggedness and reliability of the bike is endorsed by the army, the police, the paramilitary forces and over 500 institutions which form part of the die-hard customer base of the Bullet, dubbed the "Rajagadi", or royal vehicle. The verve of the Royal Enfield -Eicher nexus is reflected in the new line of Enfield bikes and the
global technological tie-ups. Different bikes from their stable include the Bullet 350, Bullet 500, Enfield Diesel and the Bullet Electra.
5) Honda Motorcycle and Scooters India Honda, the worldwide leader in sports bikes entered India with its 100cc ungeared Activa. People were very sceptical about whether their bikes will suit Indian conditions. But, Honda proved that there always exists a demand for quality products. The success of Activa caught Kinetic unawares. By the time they could respond, Activa had given its riders a quality experience. HMSI witnessed a jump of 1.9% in its market share. For Honda Motorcycle and Scooters India Ltd, the increase in market share was largely due to the success of its face-lifted Honda Shine and Honda Unicorn launched at the beginning of 2007-08 along with the fact that the company is completely absent from the entry-level 100cc segment that was badly hit by a year-long turmoil in the motorcycle industry.
6) TVS Motor TVS Suzuki, a leading two wheeler company began with the vision of the founder of the Sundaram Clayton Group, the late T.S. Srinivasan - 'to design, develop and produce an affordable moped for the Indian family.' Alongside the economy two wheeler range, it has constantly worked on innovating the motorcycle segment as well. The Suzuki Samurai was launched for the time conscious urban commuter. The Max 100 R was engineered for those who demanded strength and ruggedness. The Suzuki Shogun was for those who wanted raw power. The TVS Victor stole the show with the punch line “more smiles per hour”. The year 2007 – 08 saw a decline of 4.18% the in market share of TVS Motors.
7) Yamaha Motor Yamaha Motor India Private Limited, a wholly owned subsidiary of Yamaha Motors Company Limited, Japan, has been in the Indian market for a long time. Some of its famous bikes include Yamaha RX100 and Yamaha RX135. Various bikes from the stable of Yamaha includes Yamaha RXZ, Yamaha Enticer, Yamaha Gladiator, Rajdoot Deluxe etc. Yamaha has now set up another subsidiary-Yamaha Motors India Sales Pvt. Ltd.(YMIS) that deals with the sales and after sales services for Yamaha brand of bikes. The year 2007 – 08 saw a fall of 1.28% in market share of Yamaha Motors.
Marketing strategy adopted by the competitors: Foreign collaborations have been playing a major role in the growth of the Indian two-wheeler market, and most of them are Japanese firms. In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies’ new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts. The following are the main factors that affect two-wheeler sales in India:
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Increase in credit and financing for auto vehicles - Two-wheeler loans and financing has been on the rise. Increase in consumer's salary - due to opportunities offered by multinationals the disposable incomes of salaried individuals have increased manifold. Petrol prices - Today, the government of India has been working on reducing subsidies on kerosene and diesel which will keep petrol prices at more or less the same level. But with the increase in global pressure and crude oil prices soaring it is difficult to keep the petrol prices at constant levels. Delay in initiation of Mass Transport System - Probably a future threat to the two-wheeler market, the implementation of the mass transport system has been delayed.
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However, the two-wheeler market in India is a fast growing market due to its technological advancements in product manufacturing and emphasis on design innovation.
Entry Barriers: Entry barriers are high. ? ? ? The market runs on high economies of scale and on high economies of scope. The need for technical expertise is high. Owning a strong distribution network is important and is very costly. All these make the barrier high enough to be a deterrent for new entrants.
Supplier Bargaining Power: Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.
Buyer's Bargaining Power: Buyers in the automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent. Industry Rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players. Substitutes: There is no perfect substitute to this industry. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a two-wheeler, cycles too, never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential. Summarizing the industry analysis, it can be said that the two-wheeler market is attractive as it scores well on three out of five categories.
Now we take a look at some of the marketing strategies adopted by the major players. Hero-Honda: During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. The famous 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes mainly on the commitment of increased mileage. Hero Honda values its relationship with customers. Its unique CRM initiative - Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors and a huge success story with the initiative “desh ki dhadkan”. Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India , increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly points out, "We pioneered India 's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there. India's largest two wheeler company Hero Honda Motors is striving hard to capture the commuters’ imagination in rural India, after witnessing flat sales growth in 2007-08.
The two wheeler market leader plans to cover 100,000 of the 600,000 villages in the country by the end of this financial year under a campaign named Har Gaon, Har Aangan (every village, every household). Hero Honda has 3000 dealers and service outlets in India. The rationale for this rural initiative is simple, said Dua. "The two-wheeler penetration in the urban market is 25 per cent, while it is only 10 per cent in the villages, where 70 per cent of India lives," he explained. The major success started with the model CD 100 and then came the revolutionary model “Splendor” which made the Hero Honda group a market leader in the motorcycles industry. An economic model with a punch line of “Trust” boomed the sales of Splendor. Other successful model was CBZ, in the 150cc range followed by the premium “Karizma” in the 200cc + segment. It is coming up with the latest advancements like ‘Splendor plus’ and ‘Hulk’ to give competition to other players in the market. It is clear that Hero Honda is reluctant to let go off the name ‘Splendor’. It has hence, launched a host of bikes with the Splendor tag.
Bajaj : In 1990s, the near monopolistic market structure lulled the company into being complacent and this paved the way for competitors like Hero Honda and TVS. Hero and TVS tied up with foreign majors, Honda and Suzuki respectively, to bring in the latest in terms of aesthetics and technology, and Bajaj failed to gauge the changing tastes of consumers. In 1990s, there was a marked shift in customer preference from scooters to motorcycles. Bajaj found itself at a loss here, as this was largely an unchartered territory. The focus of BAL off late has been on providing the best of the class models at competitive prices. Most of the Bajaj models come loaded with the latest features within the price band acceptable by the market. BAL has been the pioneer in stretching competition into providing latest features in the price segment by updating the low price bikes with the latest features like disc-brakes, anti-skid technology and dual suspension, DTS-i, etc. Bajaj decided to leverage technology to its advantage. This was clearly captured in its new campaign, “Naye bharat ki nayi raftar..humara bajaj ..alag andaaz” BAL adopted different marketing strategies for different models, few of them are discussed below: Kawasaki 4S – First attempt by Bajaj to make a mark in the motorcycle segment. The target customer was the father in the family but the target audience of the commercial was the son in the family. The time at which Kawasaki 4S was launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in the performance bikes. The commercial of Kawasaki 4S had the punch line "Kyun Hero" which reflected the aggressiveness in the marketing front by the company. Boxer – The target was the rural population and the price sensitive customer. Boxer was marketed as a value for money bike with great mileage. Larger wheelbase, high ground clearance and high mileage were the selling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100.
Caliber - The focus for the Caliber 115 was youth and though Bajaj made the bike look bigger and feel more powerful than its predecessor (characteristics that will attract the average, 25-plus, executive segment bike buyer), its approach towards advertising was even more radically different this time around. Going by the initial market response, the campaign was clearly a hit in the 5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber 115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college-goers and the 25 plus executives both at the same time. Pulsar - Pulsar was launched to compete with Hero Honda's 'CBZ' in the 150 cc plus segment. The campaign bore an innovative punch line of "Definitely Male" positioning Pulsar to be a masculinelooking model with an appeal to the performance sensitive youth. The Pulsar went one step ahead of Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model. The model since has been the biggest success story in the Indian motorcycle market. As of 2008, the Bajaj Pulsars arguably are the most popular motorbikes in the newly emerging 150+ cc class of Indian two wheeler market. Bajaj has been regularly making alterations to it to make the motorbike look fresh at all times. The second generation Pulsars featured Bajaj Auto's newly developed DTSi technology, which increased the power rating of both versions. New continuous upgradation has been the strategy for pulsar.
Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was a great success. With this, Bajaj could realize its success riding on the back of technological innovation rather than the joint venture way followed by competitors to gain market share.
TVS : Victor TVS created a wave in the market by Roping in Sachin Tendulkar for its Victor Model. This campaign itself with a motto of “More smiles per hour” tremendously increased the sales of Victor in the market. An economic bike with high fuel mileage and style attracted the customers in the market. Apache has done to TVS what Pulsar has done to Bajaj. TVS which was struggling to get hold of the motorcycle market has found its balance with Apache. The brand which was launched three years back has become a best seller. Apache is now second to the market leader Pulsar. The brand has won rave reviews for its performance and it provided an alternative to those who managed not to like Pulsar. Meanwhile the company has been running various campaigns for the brand. After the first ad, the brand had two campaigns. It is very clear from their ads that their target customers are the college going guys. Earlier TVS had a tie up with Suzuki motors of Japan in which they introduced various models in the market but weren’t much successful
Strategies adopted by other players in the market: Yahama, one of the leading motorcycle brands worldwide failed to make a mark in Indian industry even after the success story of RX100 which had to be closed due to polluting norms in India. It failed to bring a model of such caliber in the future years. A couple of years back, Yamaha launched yet another bike branded Alba 106. Surprisingly this bike is a 100cc bike which is an absolute contra strategy because almost all bike marketers are moving away from the 100cc segment. Alba was launched after the reasonably successful run of Gladiator. But according to reports, Yamaha India is in deep trouble and time is running out for them to give a winner. Alba 106 again is a mass market brand. The brand is once again going to dampen the brand equity of Yamaha which went down the drains with the failures of Crux, Frazer and YBX. What was needed for this brand was a superbike. To top it, Alba's campaign is one of the worse media campaign seen in recent times. The ad surprisingly does not feature the brand ambassador John Abraham. The brand uses the tagline "Got It?" which does not mean anything which the consumer can relate to.
Royal Enfield has recently launched Machismo LB 500, a regenerated version of Bullet 500. The new launch is interesting because it is a part of long term brand building strategy for this iconic brand. Machismo is a famous variant of Enfield with a distinct style from the classic Enfield. Machismo is available in the popular 350cc engine. The new bike is powered with a 500cc engine simply making it one of the most powerful two wheelers in India. The brand gives a motorcycling experience rather than a pure transporting vehicle. Infact, Enfield had never targeted the commuting consumer. Within the niche that the brand commands, Machismo 500 aims to create another niche: for pure bikers. Machismo is not for everyone, like all iconic brands, exclusivity is the main differentiator.
Honda motors has its strategy all worked out. It will provide motorcycles with quality engineering for those who are willing to pay a little extra. There is absolutely no stress on styling or features which is opposite of what Bajaj is doing. Though there is currently a tussle between HHML and Honda motors for the launch of Honda’s own bikes in India, Honda motors is still thinking of increasing its market share by launching more models in different category across various segments.
Emerging Players in the Motor Cycle Market:The Motor Cycle market in India has been dominated by the following three players which is evident from the sales and the models being introduced by the companies every year.
BAJAJ AUTO
HERO HONDA
TVS MOTOR
Apart from the above mentioned we also have some players which have been rolling out new models in the motor cycle market on regular basis.
LML INDIA KINETIC MOTOR MONTO MOTORS
SUZUKI MOTOR ROYAL ENFIELD
YAMAHA MOTORS HMSIL
BAJAJ AUTO › Bajaj Avenger › Bajaj CT 100 › Bajaj Discover › Bajaj Platina › Bajaj Pulsar DTSi › Bajaj Pulsar 200CC* › Bajaj Wind 125 › Bajaj XCD › Sonic DTSi
HERO HONDA › Hero Honda Achiever › Hero Honda CD Dawn › Hero Honda CD Deluxe › Hero Honda Glamour › Hero Honda Karizma * › Hero Honda Passion Plus › Hero Honda Splendor › Hero Honda Splendor NXG* › Hero Honda CBZ X-Treme*
KINETIC MOTOR › Kinetic Aquila › Kinetic Boss › Kinetic Challenger › Kinetic Comet › Kinetic GF › Kinetic Stryker › Kinetic Velocity -
LML INDIA
ROYAL ENFIELD
TVS MOTOR
› LML Adreno FX › LML Beamer › LML Energy FX › LML Freedom › LML Graptor -
› Bullet 350 › Bullet 500 › Bullet Electra › Bullet Machismo › Bullet Machismo 500* › Thunderbird Twinspark -
› TVS Apache RTR* › TVS Apache RTR FI * › TVS Centra › TVS Fiero › TVS Flame › TVS Taurus Fiero F3* › TVS Star › TVS Victor
HMSIL › Honda Shine › Honda Unicorn -
SUZUKI MOTOR › Suzuki Access 125 › Suzuki Heat › Suzuki Zeus -
YAMAHA MOTOR › Yamaha Crux › Yamaha Enticer › Yamaha Gladiator › Yamaha Libero G5 › Yamaha Gladiator Type JA › Yamaha Alba 106 › Yamaha YZF R1* › Yamaha MT 01* › Yamaha YZF-R15*
Electric bikes, the way forward? Indus Elec-trans, a division of Ahmedabad's well known established company, Electrotherm (ET) India ltd., has successfully carved a niche for its two wheeler products in India's booming auto sector. Ever since its establishment, Electrotherm's auto division has gained its due respect among the two wheeler connoisseurs. The unmatched technological inputs applied for quality production of electric & hybrid electric vehicles, has helped it to stand out. Currently involved in producing hi-tech electric two wheelers, YO bykes, the division is working hard towards aiming an eco friendly future for the Indian commuter. Being a part of an acknowledged company, Indus has got a boost and has earned a trusted clientele. Using innovative ideas, electrical technology and backed by expertise and technical know-how, the motoring venture of Indus Elec-trans till now has been smooth and constant. Further forays into the development of three wheelers, four wheelers and hybrid electric low floor buses are on the anvil.
Nature of future competition and future strategies The motorcycle market in India is all set to change rapidly in the coming years. The per capita income steadily rising and cars fast becoming a necessity, rather than a luxury, is bound to affect motorcycle sales. There are positives and negatives to this changing scenario. Let us take a look at the negatives first. The market for entry level motorcycles is fast declining. The consumer who a decade ago was of the opinion that Bajaj Chetak was the best thing that he could ever ride is now not satisfied with a 100cc bike! The average user wants more power to go, along with hitherto unheard of demands like style and safety (ever heard of any scooter talking about style??)! Advanced technology has brought a gamut of choices for the buyer to choose from. Add to this the fact that cars now are more buyable than ever. The impending launch of Tata Nano can only spell doom to the motorcycle industry. A ridiculously cheap car, with ultra low maintenance, Nano will surely cause a dent in the motorcycle market. The major players have not much to worry about. They seem to have found a niche market elsewhere. The sport biking segment! Honda, Yamaha and Suzuki, worldwide leaders in biking, have a huge, untapped sport biking market in India, in its nascent stages. They can introduce their line of bikes (available only in western countries until now) with maybe just a tweak of the suspension and a bit of tuning to return better mileage. Bajaj, cleverest of the lot, has tied up with Renault and Nissan to launch a small car to compete with the Nano! Bajaj seems to have taken the cue from Honda and Suzuki who are giants in both 2 wheelers and 4 wheelers. The motorcycle segment now ranges from a 100cc 7.5bhp Splendor to a 220cc 21bhp Pulsar, oil cooled and, hold your breath, without a kick-starter! Pulsar apparently is a brand in itself, having 4 variants. Motorcycle majors in India are promoting what they call ‘Sport Biking’. Raw power, oodles of style and a host of safety features are the order of the day.
Suzuki recently entered the Indian market in the cluttered and confused 125cc segment. Excess of choices and dwindling customer base best describes this segment. Bajaj again, seems to be the leader in this category with its XCD DTS-Si. Yamaha has made a very brave move by launching a 150cc, 18bhp sports bike, priced at a whopping 1.13lakhs! Following the launch, Honda announced that they are all set to introduce their very famous CBR 250 in India. The gist from all this is that there is a shift in the market. People now are willing to pay more for 2 wheels, but demand much more in between. Good roads, improved safety, both on the bikes as well as on the roads are major contributors towards this shift. Biking is fast becoming a pleasure ride than a mode of commuting. Add to this, the fact that the average age of the buyer is fast decreasing. The main focus of the players will be on the college going guys and gals whose parents have the money and are willing to spend on their kids. One strategy for two wheeler manufacturers could be to target the rural commuter. The rural sector is relatively untapped and has huge potential for growth. With the urban population being wooed by car makers, it is time the villages got their due. A serious challenge could be posed to the two wheeler market by the development of mass rapid transport systems in major metros. This will provide a much safer and hassle free way of commuting to the consumer. The pricing of MRTS will be such as to lure the commuter-by-bike segment. This again emphasises the importance of looking at smaller towns and villages for growth.
doc_483144948.docx
It talks about the marketing strategy and the business stratgey adopted by the various motorcycle manufacturers in the Indian market.
Global demand is set to grow 6% annually through 2009. Worldwide demand for motorcycles is forecast to advance 6.0 percent annually to 43 million units in 2009. Market Players in the Industry Competition within the motorcycle industry is continuously increasing. Changes in the competitive environment and increasing customer expectations regarding product quality and customer satisfaction are driving motorcycle manufacturers to place a greater amount of emphasis on understanding customer attitudes and behaviour in order to maintain and grow market share and profitability. The 2007-08 down turn in the motorcycle industry in India has been a boon for some and bane for some others. Despite a decline of 12.03% in the overall sales of motorcycles at 57,32,313 units against 65,16,816 units in 2006-07, the market share of Hero Honda Motor Ltd, Honda Motorcycle & Scooters India Ltd (HMSI) and Suzuki Motorcycle India Ltd grew substantially. This, however, had come at the cost of market shares of Bajaj Auto Ltd, TVS Motor Company and Yamaha Motor India Ltd. “The launch of 18 models, including the variants, in last 24 months has been a key building block for growth in the sluggish two-wheeler industry. The last few launches from the two-wheelers major, in the 100cc, 125cc and 150cc segments, include CD Deluxe, Glamour, CBZ Extreme and Hunk. The major players in the motorcycle segment are:
1) Bajaj Auto Ltd. It is one of India's top ten companies in terms of market capitalization and among the top five in terms of annual turnover. Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported scooters and three wheelers from Italy and sold them in India. From 1961, when the annual production was just about 4000 units, today the company has become a market leader with annual production in excess of 1.35 million units and with product offerings in all segments (mopeds & scooterettes, scooters, motorcycles, three wheelers). Bajaj dominated the scooter segment for decades before it was forced to make a foray into the motorcycle segment. The competition for them was tough as Hero Honda was market leader in motorcycle segment in all categories whether it be entry level bikes or high performance bikes. The initial bikes of Bajaj namely Bajaj 4S Champion, Bajaj KB 125 were not a big success. But the R & D wing of Bajaj named “Ahead” came with a revolutionary series of bikes and changed the market dynamics. Bajaj Pulsar hit the market hard and the sales of Hero Honda’s high performance bikes like CBZ went for a toss. This bike laid the foundation for Bajaj in motorcycle segment.
2) Hero Honda Motors Ltd. Hero Honda has a reputation of being the most fuel-efficient and the largest selling Indian motorcycle. Its commitment of providing the customer with excellence is self-evident. It was this affinity in working cultures of Honda Motor Company of Japan and the Hero Group that resulted in the setting up of Hero Honda Motors Ltd. A rich background of producing high value products at a reasonable price led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer. Tactical promotions and excellent marketing helped Hero Honda establish itself as an intelligent purchase. Its unique features like fuel conservation, safety riding courses and mobile workshops helped the group reach the interiors of the country. Finance services helped facilitate purchase, as did an efficient dealer network across the country. Well entrenched in the domestic market, Hero Honda Motors Ltd. turned its attention overseas, and exports have been steadily on the rise. Few of their notable bikes are Hero Honda CD Dawn, Hero Honda CD 100, Hero Honda Passion, Hero Honda Splendor, Hero Honda CBZ & Hero Honda Karizma. According to the figures released by the Society of Indian Automobile Manufacturers (SIAM), market share of Hero Honda went up by 6.56% in 2007-08 vis-à-vis 2006-07.
3) LML India LML just like Bajaj was long known to be a big player in the scooter segment before it made a dent in the motorcycle segment with bikes like LML Freedom, LML Graptor, LML Adreno & LML Energy FX. It tried different strategies so as to increase its customer base by introducing Adreno which was having sports bike look and by introducing 16 different colours in Freedom but to no avail. It got suppressed under the weight of high performing bikes from the stables of Hero Honda & Bajaj.
4) Royal Enfield Motors Ltd. Established in 1955, Royal Enfield Motors is now a part of the Eicher Group of Companies - a Rs.10 billion conglomerate. Royal Enfield's corporate philosophy is built around quality and unflinching loyalty to the customer, a few reasons why the legendary Bullet is not just a bike but a motorcycling icon. The ruggedness and reliability of the bike is endorsed by the army, the police, the paramilitary forces and over 500 institutions which form part of the die-hard customer base of the Bullet, dubbed the "Rajagadi", or royal vehicle. The verve of the Royal Enfield -Eicher nexus is reflected in the new line of Enfield bikes and the
global technological tie-ups. Different bikes from their stable include the Bullet 350, Bullet 500, Enfield Diesel and the Bullet Electra.
5) Honda Motorcycle and Scooters India Honda, the worldwide leader in sports bikes entered India with its 100cc ungeared Activa. People were very sceptical about whether their bikes will suit Indian conditions. But, Honda proved that there always exists a demand for quality products. The success of Activa caught Kinetic unawares. By the time they could respond, Activa had given its riders a quality experience. HMSI witnessed a jump of 1.9% in its market share. For Honda Motorcycle and Scooters India Ltd, the increase in market share was largely due to the success of its face-lifted Honda Shine and Honda Unicorn launched at the beginning of 2007-08 along with the fact that the company is completely absent from the entry-level 100cc segment that was badly hit by a year-long turmoil in the motorcycle industry.
6) TVS Motor TVS Suzuki, a leading two wheeler company began with the vision of the founder of the Sundaram Clayton Group, the late T.S. Srinivasan - 'to design, develop and produce an affordable moped for the Indian family.' Alongside the economy two wheeler range, it has constantly worked on innovating the motorcycle segment as well. The Suzuki Samurai was launched for the time conscious urban commuter. The Max 100 R was engineered for those who demanded strength and ruggedness. The Suzuki Shogun was for those who wanted raw power. The TVS Victor stole the show with the punch line “more smiles per hour”. The year 2007 – 08 saw a decline of 4.18% the in market share of TVS Motors.
7) Yamaha Motor Yamaha Motor India Private Limited, a wholly owned subsidiary of Yamaha Motors Company Limited, Japan, has been in the Indian market for a long time. Some of its famous bikes include Yamaha RX100 and Yamaha RX135. Various bikes from the stable of Yamaha includes Yamaha RXZ, Yamaha Enticer, Yamaha Gladiator, Rajdoot Deluxe etc. Yamaha has now set up another subsidiary-Yamaha Motors India Sales Pvt. Ltd.(YMIS) that deals with the sales and after sales services for Yamaha brand of bikes. The year 2007 – 08 saw a fall of 1.28% in market share of Yamaha Motors.
Marketing strategy adopted by the competitors: Foreign collaborations have been playing a major role in the growth of the Indian two-wheeler market, and most of them are Japanese firms. In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies’ new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts. The following are the main factors that affect two-wheeler sales in India:
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Increase in credit and financing for auto vehicles - Two-wheeler loans and financing has been on the rise. Increase in consumer's salary - due to opportunities offered by multinationals the disposable incomes of salaried individuals have increased manifold. Petrol prices - Today, the government of India has been working on reducing subsidies on kerosene and diesel which will keep petrol prices at more or less the same level. But with the increase in global pressure and crude oil prices soaring it is difficult to keep the petrol prices at constant levels. Delay in initiation of Mass Transport System - Probably a future threat to the two-wheeler market, the implementation of the mass transport system has been delayed.
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However, the two-wheeler market in India is a fast growing market due to its technological advancements in product manufacturing and emphasis on design innovation.
Entry Barriers: Entry barriers are high. ? ? ? The market runs on high economies of scale and on high economies of scope. The need for technical expertise is high. Owning a strong distribution network is important and is very costly. All these make the barrier high enough to be a deterrent for new entrants.
Supplier Bargaining Power: Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.
Buyer's Bargaining Power: Buyers in the automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent. Industry Rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players. Substitutes: There is no perfect substitute to this industry. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a two-wheeler, cycles too, never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential. Summarizing the industry analysis, it can be said that the two-wheeler market is attractive as it scores well on three out of five categories.
Now we take a look at some of the marketing strategies adopted by the major players. Hero-Honda: During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. The famous 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes mainly on the commitment of increased mileage. Hero Honda values its relationship with customers. Its unique CRM initiative - Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors and a huge success story with the initiative “desh ki dhadkan”. Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India , increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly points out, "We pioneered India 's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there. India's largest two wheeler company Hero Honda Motors is striving hard to capture the commuters’ imagination in rural India, after witnessing flat sales growth in 2007-08.
The two wheeler market leader plans to cover 100,000 of the 600,000 villages in the country by the end of this financial year under a campaign named Har Gaon, Har Aangan (every village, every household). Hero Honda has 3000 dealers and service outlets in India. The rationale for this rural initiative is simple, said Dua. "The two-wheeler penetration in the urban market is 25 per cent, while it is only 10 per cent in the villages, where 70 per cent of India lives," he explained. The major success started with the model CD 100 and then came the revolutionary model “Splendor” which made the Hero Honda group a market leader in the motorcycles industry. An economic model with a punch line of “Trust” boomed the sales of Splendor. Other successful model was CBZ, in the 150cc range followed by the premium “Karizma” in the 200cc + segment. It is coming up with the latest advancements like ‘Splendor plus’ and ‘Hulk’ to give competition to other players in the market. It is clear that Hero Honda is reluctant to let go off the name ‘Splendor’. It has hence, launched a host of bikes with the Splendor tag.
Bajaj : In 1990s, the near monopolistic market structure lulled the company into being complacent and this paved the way for competitors like Hero Honda and TVS. Hero and TVS tied up with foreign majors, Honda and Suzuki respectively, to bring in the latest in terms of aesthetics and technology, and Bajaj failed to gauge the changing tastes of consumers. In 1990s, there was a marked shift in customer preference from scooters to motorcycles. Bajaj found itself at a loss here, as this was largely an unchartered territory. The focus of BAL off late has been on providing the best of the class models at competitive prices. Most of the Bajaj models come loaded with the latest features within the price band acceptable by the market. BAL has been the pioneer in stretching competition into providing latest features in the price segment by updating the low price bikes with the latest features like disc-brakes, anti-skid technology and dual suspension, DTS-i, etc. Bajaj decided to leverage technology to its advantage. This was clearly captured in its new campaign, “Naye bharat ki nayi raftar..humara bajaj ..alag andaaz” BAL adopted different marketing strategies for different models, few of them are discussed below: Kawasaki 4S – First attempt by Bajaj to make a mark in the motorcycle segment. The target customer was the father in the family but the target audience of the commercial was the son in the family. The time at which Kawasaki 4S was launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in the performance bikes. The commercial of Kawasaki 4S had the punch line "Kyun Hero" which reflected the aggressiveness in the marketing front by the company. Boxer – The target was the rural population and the price sensitive customer. Boxer was marketed as a value for money bike with great mileage. Larger wheelbase, high ground clearance and high mileage were the selling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100.
Caliber - The focus for the Caliber 115 was youth and though Bajaj made the bike look bigger and feel more powerful than its predecessor (characteristics that will attract the average, 25-plus, executive segment bike buyer), its approach towards advertising was even more radically different this time around. Going by the initial market response, the campaign was clearly a hit in the 5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber 115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college-goers and the 25 plus executives both at the same time. Pulsar - Pulsar was launched to compete with Hero Honda's 'CBZ' in the 150 cc plus segment. The campaign bore an innovative punch line of "Definitely Male" positioning Pulsar to be a masculinelooking model with an appeal to the performance sensitive youth. The Pulsar went one step ahead of Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model. The model since has been the biggest success story in the Indian motorcycle market. As of 2008, the Bajaj Pulsars arguably are the most popular motorbikes in the newly emerging 150+ cc class of Indian two wheeler market. Bajaj has been regularly making alterations to it to make the motorbike look fresh at all times. The second generation Pulsars featured Bajaj Auto's newly developed DTSi technology, which increased the power rating of both versions. New continuous upgradation has been the strategy for pulsar.
Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was a great success. With this, Bajaj could realize its success riding on the back of technological innovation rather than the joint venture way followed by competitors to gain market share.
TVS : Victor TVS created a wave in the market by Roping in Sachin Tendulkar for its Victor Model. This campaign itself with a motto of “More smiles per hour” tremendously increased the sales of Victor in the market. An economic bike with high fuel mileage and style attracted the customers in the market. Apache has done to TVS what Pulsar has done to Bajaj. TVS which was struggling to get hold of the motorcycle market has found its balance with Apache. The brand which was launched three years back has become a best seller. Apache is now second to the market leader Pulsar. The brand has won rave reviews for its performance and it provided an alternative to those who managed not to like Pulsar. Meanwhile the company has been running various campaigns for the brand. After the first ad, the brand had two campaigns. It is very clear from their ads that their target customers are the college going guys. Earlier TVS had a tie up with Suzuki motors of Japan in which they introduced various models in the market but weren’t much successful
Strategies adopted by other players in the market: Yahama, one of the leading motorcycle brands worldwide failed to make a mark in Indian industry even after the success story of RX100 which had to be closed due to polluting norms in India. It failed to bring a model of such caliber in the future years. A couple of years back, Yamaha launched yet another bike branded Alba 106. Surprisingly this bike is a 100cc bike which is an absolute contra strategy because almost all bike marketers are moving away from the 100cc segment. Alba was launched after the reasonably successful run of Gladiator. But according to reports, Yamaha India is in deep trouble and time is running out for them to give a winner. Alba 106 again is a mass market brand. The brand is once again going to dampen the brand equity of Yamaha which went down the drains with the failures of Crux, Frazer and YBX. What was needed for this brand was a superbike. To top it, Alba's campaign is one of the worse media campaign seen in recent times. The ad surprisingly does not feature the brand ambassador John Abraham. The brand uses the tagline "Got It?" which does not mean anything which the consumer can relate to.
Royal Enfield has recently launched Machismo LB 500, a regenerated version of Bullet 500. The new launch is interesting because it is a part of long term brand building strategy for this iconic brand. Machismo is a famous variant of Enfield with a distinct style from the classic Enfield. Machismo is available in the popular 350cc engine. The new bike is powered with a 500cc engine simply making it one of the most powerful two wheelers in India. The brand gives a motorcycling experience rather than a pure transporting vehicle. Infact, Enfield had never targeted the commuting consumer. Within the niche that the brand commands, Machismo 500 aims to create another niche: for pure bikers. Machismo is not for everyone, like all iconic brands, exclusivity is the main differentiator.
Honda motors has its strategy all worked out. It will provide motorcycles with quality engineering for those who are willing to pay a little extra. There is absolutely no stress on styling or features which is opposite of what Bajaj is doing. Though there is currently a tussle between HHML and Honda motors for the launch of Honda’s own bikes in India, Honda motors is still thinking of increasing its market share by launching more models in different category across various segments.
Emerging Players in the Motor Cycle Market:The Motor Cycle market in India has been dominated by the following three players which is evident from the sales and the models being introduced by the companies every year.
BAJAJ AUTO
HERO HONDA
TVS MOTOR
Apart from the above mentioned we also have some players which have been rolling out new models in the motor cycle market on regular basis.
LML INDIA KINETIC MOTOR MONTO MOTORS
SUZUKI MOTOR ROYAL ENFIELD
YAMAHA MOTORS HMSIL
BAJAJ AUTO › Bajaj Avenger › Bajaj CT 100 › Bajaj Discover › Bajaj Platina › Bajaj Pulsar DTSi › Bajaj Pulsar 200CC* › Bajaj Wind 125 › Bajaj XCD › Sonic DTSi
HERO HONDA › Hero Honda Achiever › Hero Honda CD Dawn › Hero Honda CD Deluxe › Hero Honda Glamour › Hero Honda Karizma * › Hero Honda Passion Plus › Hero Honda Splendor › Hero Honda Splendor NXG* › Hero Honda CBZ X-Treme*
KINETIC MOTOR › Kinetic Aquila › Kinetic Boss › Kinetic Challenger › Kinetic Comet › Kinetic GF › Kinetic Stryker › Kinetic Velocity -
LML INDIA
ROYAL ENFIELD
TVS MOTOR
› LML Adreno FX › LML Beamer › LML Energy FX › LML Freedom › LML Graptor -
› Bullet 350 › Bullet 500 › Bullet Electra › Bullet Machismo › Bullet Machismo 500* › Thunderbird Twinspark -
› TVS Apache RTR* › TVS Apache RTR FI * › TVS Centra › TVS Fiero › TVS Flame › TVS Taurus Fiero F3* › TVS Star › TVS Victor
HMSIL › Honda Shine › Honda Unicorn -
SUZUKI MOTOR › Suzuki Access 125 › Suzuki Heat › Suzuki Zeus -
YAMAHA MOTOR › Yamaha Crux › Yamaha Enticer › Yamaha Gladiator › Yamaha Libero G5 › Yamaha Gladiator Type JA › Yamaha Alba 106 › Yamaha YZF R1* › Yamaha MT 01* › Yamaha YZF-R15*
Electric bikes, the way forward? Indus Elec-trans, a division of Ahmedabad's well known established company, Electrotherm (ET) India ltd., has successfully carved a niche for its two wheeler products in India's booming auto sector. Ever since its establishment, Electrotherm's auto division has gained its due respect among the two wheeler connoisseurs. The unmatched technological inputs applied for quality production of electric & hybrid electric vehicles, has helped it to stand out. Currently involved in producing hi-tech electric two wheelers, YO bykes, the division is working hard towards aiming an eco friendly future for the Indian commuter. Being a part of an acknowledged company, Indus has got a boost and has earned a trusted clientele. Using innovative ideas, electrical technology and backed by expertise and technical know-how, the motoring venture of Indus Elec-trans till now has been smooth and constant. Further forays into the development of three wheelers, four wheelers and hybrid electric low floor buses are on the anvil.
Nature of future competition and future strategies The motorcycle market in India is all set to change rapidly in the coming years. The per capita income steadily rising and cars fast becoming a necessity, rather than a luxury, is bound to affect motorcycle sales. There are positives and negatives to this changing scenario. Let us take a look at the negatives first. The market for entry level motorcycles is fast declining. The consumer who a decade ago was of the opinion that Bajaj Chetak was the best thing that he could ever ride is now not satisfied with a 100cc bike! The average user wants more power to go, along with hitherto unheard of demands like style and safety (ever heard of any scooter talking about style??)! Advanced technology has brought a gamut of choices for the buyer to choose from. Add to this the fact that cars now are more buyable than ever. The impending launch of Tata Nano can only spell doom to the motorcycle industry. A ridiculously cheap car, with ultra low maintenance, Nano will surely cause a dent in the motorcycle market. The major players have not much to worry about. They seem to have found a niche market elsewhere. The sport biking segment! Honda, Yamaha and Suzuki, worldwide leaders in biking, have a huge, untapped sport biking market in India, in its nascent stages. They can introduce their line of bikes (available only in western countries until now) with maybe just a tweak of the suspension and a bit of tuning to return better mileage. Bajaj, cleverest of the lot, has tied up with Renault and Nissan to launch a small car to compete with the Nano! Bajaj seems to have taken the cue from Honda and Suzuki who are giants in both 2 wheelers and 4 wheelers. The motorcycle segment now ranges from a 100cc 7.5bhp Splendor to a 220cc 21bhp Pulsar, oil cooled and, hold your breath, without a kick-starter! Pulsar apparently is a brand in itself, having 4 variants. Motorcycle majors in India are promoting what they call ‘Sport Biking’. Raw power, oodles of style and a host of safety features are the order of the day.
Suzuki recently entered the Indian market in the cluttered and confused 125cc segment. Excess of choices and dwindling customer base best describes this segment. Bajaj again, seems to be the leader in this category with its XCD DTS-Si. Yamaha has made a very brave move by launching a 150cc, 18bhp sports bike, priced at a whopping 1.13lakhs! Following the launch, Honda announced that they are all set to introduce their very famous CBR 250 in India. The gist from all this is that there is a shift in the market. People now are willing to pay more for 2 wheels, but demand much more in between. Good roads, improved safety, both on the bikes as well as on the roads are major contributors towards this shift. Biking is fast becoming a pleasure ride than a mode of commuting. Add to this, the fact that the average age of the buyer is fast decreasing. The main focus of the players will be on the college going guys and gals whose parents have the money and are willing to spend on their kids. One strategy for two wheeler manufacturers could be to target the rural commuter. The rural sector is relatively untapped and has huge potential for growth. With the urban population being wooed by car makers, it is time the villages got their due. A serious challenge could be posed to the two wheeler market by the development of mass rapid transport systems in major metros. This will provide a much safer and hassle free way of commuting to the consumer. The pricing of MRTS will be such as to lure the commuter-by-bike segment. This again emphasises the importance of looking at smaller towns and villages for growth.
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