Report on Marketing Strategy of Bajaj Auto

Transcription

1 Report on Marketing Strategy of Bajaj Auto

2 EXECUTIVE SUMMARY We identified Bajaj Auto as the marketing company of our choice for the following project. Bajaj Auto group was founded in the year 1945 and has been among the front-runners in the motorcycle industry ever since. This very fact talks volumes about the company since only the best of the firms survive such a long time at the top. During the 60s, 70s and 80s there was a 10-year waiting period for its products. The company only had to produce its quota. Marketing or sales was not too much of an issue for them. Also the company s owner was infamous for being part of the anti-liberalization lobby called Bombay Club. However the firm faced a major crisis in the 90s and the early years of the new century due to increased competition from both foreign and domestic markets. However Bajaj came out only stronger with the competition and hardly depended on foreign help on this account. And the product, which did this turnaround possible, was Pulsar. Pulsar is exemplifies the fighting spirit of Bajaj. It is a classic example of an Indian company of the pre-liberalization era, adapting itself to the changing scenario and coming out on tops. Another interesting fact is how liberalization and embracing the change can work wonders for a firm, which was one of the most skeptical of liberalization policies of the Indian government. Internal Purpose only Page 2

3 The following project is a detailed marketing analysis of the product Bajaj auto and its variants in the two-wheeler market. The project first of all focuses on the marketing history of Bajaj auto and its SWOT analysis. Various internal and external factors were taken into consideration while analyzing. Then we go on to analyze the consumer behavior for Pulsar regarding purchase, decision making and buying roles. The third section focuses on the competitor analysis of Bajaj auto, their various strategies, activities and status to understand Pulsar s competitive scenario. Help has been taken for analysis from some consumer surveys from prominent sites and a small survey done by us. The project gives insights into various other topics. It talks about the shift in the trend towards motorcycles in the 90s. It also talks about the process of liberalization and how it affected Bajaj as a company. The change in the marketing strategies of Bajaj according to the times, how Pulsar succeeded in achieving a turnaround for Bajaj are also discussed. The competitor analysis of Pulsar gives an understanding of the two-wheeler market as a whole, how it is full of choices for customers and how many more companies are vying to enter it. Internal Purpose only Page 3

4 Table of Contents EXECUTIVE SUMMARY...2 SECTION I HISTORY AND SWOT ANALYSIS OF BAJAJ AUTO INTRODUCTION WHY BAJAJ AUTO? SHIFTING TRENDS TOWARDS MOTORCYCLES MARKETING HISTORY SWOT MATRIX OF BAJAJ AUTO...10 SECTION II ANALYSING CONSUMER BEHAVIOUR IN TERMS OF BUYING ROLES, DECISION MAKING PROCESS AND KIND OF PURCHASE BEHAVIOR BUYING ROLES cc CC cc and 220cc CONSUMER CENTRIC STEPS BY BAJAJ...21 SECTION III COMPETITOR ANALYSIS, THEIR ACTIVITIES, STATUS AND STRATEGIES HERO HONDA & HONDA MOTORS TVS MOTORS...27 TVS motorcycles product segment includes: YAMAHA MOTORS FOREIGN COMPETITORS...31 SECTION IV...34 Internal Purpose only Page 4

5 4. Survey Analysis and Recommendations CONCLUSION REFERENCES...39 REFERENCES SECTION I 1. HISTORY AND SWOT ANALYSIS OF BAJAJ AUTO 1.1 INTRODUCTION Bajaj Auto is a major automobile manufacturer based in Pune, India. It is one of the major producers of two wheelers and three wheelers and ranks 4 th in the world in terms of two wheeler production. It is also planning a foray into the 4-wheeler market. The firm in its initial years was into manufacturing scooters and auto rickshaws. It also enjoyed the lion s share of the Indian two wheeler markets for a long duration of time. In the late Eighties and early nineties the market made a major shift in the type of vehicles on offer. New competitors like Yamaha and Hero-Honda came out with motorcycles, which were more powerful, better, looking and easier to handle. As such the consumers got attracted to motorcycles than scooters. Bajaj was slow to respond to the changing dynamics of the market and it s market share started declining quickly. Bajaj entered into a partnership with the Japanese bike manufacturer Kawasaki to produce motorcycles for the Indian market. Still, it failed to garner any major share of the market. In the year 2001, Rajiv Bajaj, the scion of the Bajaj family came up with the idea of developing a powerful, stylish, rugged motorcycle, which would be priced lower than the existing products. And thus Pulsar was born. It came out in two variants 150cc and 180cc. Internal Purpose only Page 5

6 1.2 WHY BAJAJ AUTO? Bajaj Auto started in the year It started selling imported 2 & 3 wheeler vehicles in They subsequently obtained a license to produce 2 & 3 wheelers. During the 60s, 70s and 80s there was a 10-year waiting period for its products. The company only had to produce its quota. Marketing or sales was not too much of an issue for them. Also the company s owner was infamous for being part of the anti-liberalization lobby called Bombay Club. In the 80s and the 90s many foreign players like Honda, Yamaha etc. came into play in Indian markets and played a significant role in easing out some of the Indian brands. Bajaj is probably the only Indian brand to emerge stronger out of the competition by developing products on its own. Pulsar it exemplifies the fighting spirit of Bajaj. It is a classic example of an Indian company of the pre-liberalization era, adapting itself to the changing scenario and coming out on tops. Bajaj changed its product strategy when it started concentrating on the bike market. Pulsar was the first indigenously developed motorcycle by Bajaj for the Indian bike market and was the reason for the turnaround of Bajaj fortunes. Internal Purpose only Page 6

7 Many Indian companies, in order to acquire the technical know how entered into joint collaborations with foreign companies e.g. Hero motors with Honda, LML with Vespa, Bajaj with Kawasaki etc. Though Bajaj depended on Kawasaki for its initial forays into the Bike market, now it has disassociated itself from Kawasaki and has emerged as a truly Global Indian brand. Another interesting fact is how liberalization can work wonders for a firm, which was one of the most skeptical of liberalization policies of the Indian government. So Pulsar as a whole has been a brand, which has brought major changes not only in the Indian Motorcycle Industry but also in the Bajaj business empire. 1.3 SHIFTING TRENDS TOWARDS MOTORCYCLES First let us analyze the change in the preference of the Indian customers in the two-wheeler industry. In the 90s with growth in the average income of the Indian middle class the primary consumers of the two-wheeler market and the increasing number of choices in the motorcycle segment, there came a gradual increase in the sales of motorcycles. There were many other factors for this Advanced technologies in the bikes Larger wheel base there fore easy to navigate rough Indian roads Higher mileage, less maintenance cost, tougher. The following table shows the increasing share of motorcycles in the Indian market in the 90s. Year Total In '000 Overall Growth Scooter Motorcycle Moped No. % No. % No. % Internal Purpose only Page 7

8 1993 1, , , , , , , , , , , , , , , , Source: (SIAM). No. Number of Units (in '000) This factor also played an important role in the success of Indian bikes like Hero Honda Splendor, Bajaj auto. 1.1 MARKETING HISTORY Bajaj entrusted the responsibility of communicating the brand value of Pulsar through media campaigns to O&M who came out with the brilliant ad of DEFINITELY MALE. Pulsar was initially targeted to age group. The youth wanted powerful, stylish bikes, which would suit their pockets and give them good mileage. The higher powered bikes in the market e.g. RE, CBZ were too pricey, high on maintenance or low on mileage. What O&M needed to do was to attract attention of the youth, more so since the target market for the product was very niche. And the punch line DEFINITELY MALE did fire the youth s imagination. It was very novel of O&M to come up with the idea of associating a motorbike with Gender. Pulsar got positioned as the He- Bike of India. The product was unquestionably a success and Bajaj started increasing the breadth of its target market. Internal Purpose only Page 8

9 Bajaj also refused to rest on its laurels. It constantly kept working on upgrading the product and came up with DTSI (Digital Twin Spark Ignition) version of the Bike in the year The new technology helped the bike to give better mileage. Also the styling was changed stylized headlights, tail lights etc. This time around, Leo Burnett managed the ad campaign. They came out with the new punch line DIGITAL-BIKING keeping in consideration the new technology DTSI. The mega-successful DEFINITELY MALE slogan was given away with. This, though it communicated the introduction of the new technology to the consumers, missed the trick in positioning it as the classic HE-BIKE. We have examples from Bike Manufacturers who have developed a unique theme for their Bikes and kept their positioning constant over a long duration of time earning unparalleled Brand loyalty and exclusivity such as Harley Davidson & Royal Enfield. However Pulsar had been so well established as a Product and its pricing and distribution were so strong that even indifferent promotional campaigns could hardly make too much of a difference to sales figures. In continuation of Bajaj s strategy to come up with better products, the upgraded version of pulsar was launched in 2007 with digital console display and LED taillights, which were a novelty in the Indian market. Subsequently Bajaj came up with newer variants of Pulsar 200cc & 220 cc. The 200cc bike had a lot of innovations like oil cooled engine, twin rails etc. The bike was launched with a FREE BIKING campaign shot in Cuba by O&M. Two Bikers riding Pulsar 200cc bikes were shown zip-zapping their way through buildings and crowded streets of Havana. Bajaj tried to communicate that it does not matter where you are biking but how you are biking, when you are atop a Internal Purpose only Page 9

10 Pulsar 200cc. Though the message might have been a bit complex for the typical Indian motorcycle owner, the freshness of the ad really popularized the bikes. The latest in the series of Pulsar ads is the PULSARMANIA one, where 4 bikers perform varied stunts atop Pulsar bikes. They have been very popular and aim to extend the macho image of Pulsar bikes further. 1.2 SWOT MATRIX OF BAJAJ AUTO SWOT Analysis Let's analyze the position of Bajaj in the current market set-up, evaluating its strengths, weaknesses, threats and opportunities available. Strengths: Highly experienced management. Product design and development capabilities. Extensive R & D focus. Widespread distribution network. High performance products across all categories. High export to domestic sales ratio. Great financial support network (For financing the automobile) Internal Purpose only Page 10

11 High economies of scale. High economies of scope. Weaknesses: Hasn't employed the excess cash for long. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes. Not a globally recognizable brand (unlike the JV partner Kawasaki) Threats: The competition catches-up any new innovation in no time. Threat of cheap imported motorcycles from China. Margins getting squeezed from both the directions (Price as well as Cost) TATA Ace is a serious competition for the three-wheeler cargo segment. Opportunities: Double-digit growth in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards higher-end motorcycles. The growing gearless trendy scooters and scooterette market. Growing world demand for entry-level motorcycles especially in emerging markets SECTION II 2. ANALYSING CONSUMER BEHAVIOUR IN TERMS OF BUYING ROLES, DECISION MAKING PROCESS AND KIND OF PURCHASE BEHAVIOR Internal Purpose only Page 11

12 BAJAJ PULSAR has been one of the leading brands of motorcycles from the BAJAJ stable for the last 7 years or so. Right from its inception in the year 2001, the bike has been the market leader in its segment despite stiff competition from many others including one of the biggies who had the first mover advantage. It has strived to be ahead of its competitors, through a mix of product and marketing innovation, solid performance bikes and good marketing strategies. Throughout this it has maintained a loyal base of supporters, which have clung to it for years. Marketing management of PULSAR has been highly successful as it has been able to acquire, retain and grow its customer base every year. In this section we are going to analyze the behavior of consumers of BAJAJ AUTO in terms of their buying roles, decision-making process and kind of purchase behavior. 2.1 BUYING ROLES Internal Purpose only Page 12

13 In the 70 s and 80 s Frederick E. Webster, Yoram Wind and Thomas Bonoma developed the six buying role model of the consumer. According to them a buying centre has members who play the following role in purchase process. 1. INITIATOR: Identifies the need. 2. INFLUENCER: influences the views of buyers 3. DECIDER: the one who ultimately decides about buying 4. BUYER: holds the formal authority to select 5. USER: consumer of the product 6. GATEKEEPER: controls information or access to decision makers. Though the model involved industrial buyers, we can take it as a rough foundation for analyzing the buying roles of consumers. Internal Purpose only Page 13

14 Let s do the analysis on the basis of the models or variants in which PULSAR is available cc The target customer base of the PULSAR has always been the age group of The 150cc model costs about 60,000 INR and is the cheapest of all PULSAR models. So its target base is also the college going kids and young office going people mostly. In the case of the college public, the INITIATOR & USER becomes the college going kid. But the final BUYER & DECIDER in most of the cases are the parents of the college going kids. Since Pulsar is a brand which gets very good publicity by word of mouth, the INFLUENCER in this case is the kid s friends, social circle, magazines, girlfriends etc. In the case of the office going people, the person using it only plays most of the roles. Only the co-workers, friend circles to a large extent and family to a small extent plays the role of INFLUENCER. Let us now look at the factors which generally influence the decision making process of consumers in buying 150cc pulsar. For the college going student, the major factors, which influence him in buying a PULSAR, are The looks and styling very international and contemporary according to many. It brings about a macho image people feel it heightens their esteems among the group especially girls. Internal Purpose only Page 14

15 Peer influence Power & acceleration higher than the entry segment bikes. For the parents, who are the final buyers, the factors, which have been observed to be influencing, are BAJAJ Its Brand name, the feeling of stability and reliability associated with it. Extensive service center network and dealership locations across the country, so less maintenance worries. Could be used as a family bike also. There have also been instances when the parents might have owned a Bajaj scooter earlier and is loyal to brand Bajaj in his own right. For the office going people the major factors which help in decision making, have been observed to be Sense of style and power along with highest mileage in the segment. Low maintenance. High resale value etc. One of the recent factors influencing the buying has been observed to be The initiation of BAJAJ into auto-finance through its company BAJAJ AUTO FINANCE LTD. (BAFL). It has been coming up with some very innovative offers like very little down payment and 0% interest loans. There has been observed, an increase or spurt in the sales figures in general during College starting months June- August. Internal Purpose only Page 15

16 Launch of a new improved version e.g. when the DTSI model was launched. As concerned, buying intervals, most of the bikes are used for an average of 3-4 years and many purchases are repeat purchases. The sale of the 150cc bikes has been observed to be the most among all brand offerings (e.g. 180 cc, 200 cc) of PULSAR not only due to its pricing but also due to the mileage factor. Entry of good competitor products e.g. UNICORN, HUNK etc. has had temporarily reduced the sales of PULSAR 150CC in the past but none has been able to give a long hard competition to PULSAR. A greater portion of the buying payments has been met through EMI Loans, so the rise of interest rates has affected the sales a bit. Also Bajaj might need to come up with new strategies to counter the dual challenge posed by rising inflation and interest rates to sustain sales of Pulsar 150 cc CC It is a higher end bike in terms of features and powers. Accordingly the cost also increases to about INR. The fuel costs also increase proportionately. So the target customers of BAJAJ for this level of motorcycles are the people a little higher in the income level E.g. Managers, executives, rich college kids etc. Thus the DECIDER, BUYER, USER, INITIATOR roles are played by the end user himself. The people who prefer the 180cc over the 150cc are mostly those with a passion for biking, power lovers, bike enthusiasts etc. BAJAJ also targets this section of customer through its ads focusing on the joy of riding like PULSARMANIA, Free Biking etc. Internal Purpose only Page 16

17 Let us look at the factors influencing the decision making of this group of customers. They are This segment is relatively new with very less competitors. So prospective buyers more or less gravitate to the available choices PULSAR being the prominent among them. Influence from the peer group and friends. Brand equity of PULSAR and word of mouth publicity. People buying in these segments also tend to get influenced by online reviews available on the Internet. Also since people buying in this category plan their purchase over a longer period of time and are relatively better off financially, this section of bikes has observed lesser proportion of EMI based purchases cc and 220cc These bikes have been recent introductions to the Pulsar Brand. Their popularity is also steadily increasing at par with their other counterparts. They are oil-cooled models, which give better performance especially when the bike is run over longer periods of time. They are sold at a heavier price range of 72 to85 thousand. They are intended mainly for biking enthusiasts and act as an alternative for those who cannot afford high power costly imported bikes. In terms of buying roles, the peer group of the biker etc. may play the role of INFLUENCER. Other than that the end user himself plays most of the roles. Various sources of secondary data establish these facts as mentioned. Also our survey points to similar facts. Internal Purpose only Page 17

18 Out of 53 participants a majority of 38 respondents either owned a pulsar or indicated that they prefer owning one in future. 13 of them had consulted reviews on websites before going for Pulsar. Also an amazing 16 out of the 19 pulsar owners were very satisfied with the product and said they would/do recommend the product to their friends. E.g. in a survey conducted in existing BAJAJ AUTO 150cc users were asked to rate PULSAR on various features on a scale of 5. The results are as follows. Additionally 83% respondents recommended the buying of a PULSAR. In another survey conducted by the respondents were asked questions regarding their buying behavior. Their responses were as follows. Why did you buy a Bajaj auto? Its masculine looks % (110) Performance % (134) Internal Purpose only Page 18

19 Mileage % (15) Resale Value % (3) by Envy % (15) Total Votes: 277 Who was influential in choosing Bajaj auto? Your Wife 4.83% (10) Your Kids 1.45% (3) Your Girlfriend(s) 23.19% (48) You Yourself 66.67% (138) Dealer pushed you very few choices 3.86% (8) Total Votes: CONSUMER CENTRIC STEPS BY BAJAJ Now, let us look at some of the measures taken by Bajaj to influence consumer behavior in the increasingly competitive market. 1. DEALERSHIP AND SERVICE NETWORK: Bajaj Auto has an extensive network of about 485 dealers and 1500 service centers around the country. Lately it has been concentrating on the rural front which has largely been an untapped, growing market in terms of performance segment bikes. Bajaj has identified a segment of customers 'Probikers', who are knowledgeable, appreciative of contemporary technology, they are trendsetters and very choosy about what they ride. Hence, Probikers need to be addressed in a meaningful way that goes beyond the product. Bajaj Auto is in the process of expanding it s chain of retail stores across the country exclusively for high-end, Internal Purpose only Page 19

20 performance bikes. These stores are called "Bajaj Probiking". Many such stores have been opened throughout major cities in India. A BAJAJ PROBIKING SHOWROOM The Probiking stores have features like attractive spare parts display, a trial room which is fully air-conditioned etc. The bikes are displayed in standing position which is in itself a very novel way of attracting attention of the youngsters. Bajaj Auto has come up with new initiative called e-biking to facilitate online booking of bikes. It s the first and only kind of online bike booking in India and expected to woo the prospective customers. After bike has been booked, bike would be delivered at the doorstep of the customer with attractive financing schemes made available to the customer. Bajaj Auto is expecting that it would gain significant customer base from people in cities like Bangalore, Hyderabad and Chennai, which are IT hubs of India and where people are internet savvy. Internal Purpose only Page 20

21 2. CUSTOMER RETENTION Lifecycle of bike is relatively large (compared to other products like grocery items, clothes, etc.) and it is not that sort of product that people will buy twice a year or even once every year. So customer retention is not limited to the act of customers coming back to buy the same product again and again. Here, it takes a broad meaning and encompasses customer satisfaction with its usage; service by the vendors and service centres; and as a result customers who have already bought the product recommending the same to other prospective customers, users forming clubs to support the brand and also helping in testing etc of any new launches. We must say Bajaj has done extremely well in this area also. Sales of Pulsar as well as its popularity have been leading those of other bikes. Also in cities like Pune there are bikers clubs, which owe serious allegiance to the brand Bajaj. People who had bought it and were happy with it started a Website This all is testimony to the successful customer retention for Pulsar by the Bajaj Auto. Another initiative taken by Bajaj Auto is Bajaj Confidence Extended Warranty Plans, which extends basic 2-year/30000km warranty coming with the purchase of new Bajaj Bike at a very nominal price. This extended warranty gets activated as soon as the basic warranty expires. This initiative has been taken to provide better service to the existing customers and hence focuses on customer retention and better customer relationship management. It needs to be seen how this new initiative does in achieving goals of customer retention. Marketing management is often described as the art and science of choosing target markets and getting, keeping and growing customers through creating, Internal Purpose only Page 21

22 delivering, and communicating superior customer value. While DEALERSHIP AND SERVICE NETWORK is focusing on getting and growing customers, CUSTOMER RETENTION focuses on keeping customers through superior customer value. Internal Purpose only Page 22

23 SECTION III 3. COMPETITOR ANALYSIS, THEIR ACTIVITIES, STATUS AND STRATEGIES Bajaj Pulsar has been in the market for about 7 years now. It has revolutionized the Indian bike market with its innovative offerings both in terms of product quality as well as style. Consumers now have the choice of bikes which are high both on quality i.e. mileage and performance as well as style. Pulsar commands about 60% of the market share in the 150cc plus category. This figure was higher initially, but with increased competition from other bike manufacturers in the same category; its market share has decreased. Hereon we will try to identify and analyze the status, strategies and activities of major competitors of Pulsar to understand its competitive scenario. Some of the major competitors of Bajaj with bikes in the 150cc + category which are a competition to Pulsar are Hero Honda TVS Yamaha Foreign Competitors Internal Purpose only Page 23

24 1.1 HERO HONDA & HONDA MOTORS Hero Honda is the largest Bike manufacturer in the world. In India also, it leads in the overall bike market, but in the 150cc plus category its models are lagging Bajaj auto in the overall market share. Bajaj auto s main competitors from the Hero Honda stable are CBZ, Achiever, Hunk and Karizma. CBZ was an established and famous brand when Pulsar made its entry into the market. Though CBZ had a better engine; Pulsar forged ahead with its styling, performance and innovative features. Demand for CBZ began to gradually decrease as it was mainly positioned as a sports bike whereas Pulsar was not enclosed in any such bracket. Hero Honda came out with CBZ EXTREME the new version of CBZ in It was positioned as a bike for Extreme adventure lovers with advertisements on the similar lines. Though this bike helped in improving sales, but it was not as well received as the original one, with complaints about its looks. Internal Purpose only Page 24

25 HERO-HONDA KARIZMA AND CBZ XTREME KARIZMA has been a major competitor for Pulsar in the 180cc, 200cc category. It is a sports bike with a niche market. Hero Honda has adopted a different marketing strategy to promote it. Since it is a bike primarily targeted for the youth, they used mediums, which were frequented by youth. They have Hrithik Roshan as their brand ambassador. Hero Honda constantly sponsors adventure rallies through Karizma brand name. The popular TV show MTV Roadies sponsored by Karizma has elevated its status as a brand and increased its popularity. A separate site for the Bike with forums for consumers to discuss the bike has been an innovative marketing strategy. Hero Honda has recently come up with another bike Hero Honda Hunk in the 150cc category. It is being positioned as a bike with macho looks and for the hunks. Honda through its separate venture has come up with many bikes. It has Unicorn in its stable, which is a significant competitor of Pulsar. It has found many supporters due to its better handling and gearshifts than Pulsar. Honda has always positioned it as its main bike. Other Bikes from the Hero Honda stable have not been able to create a sufficient impact on the market. The major advantage with Hero Honda is its wide service and dealership network of about 3000 outlets throughout the country, which is larger than all its competitors. Hero Honda also has a CRM initiative called Passport which is a major success having a membership of about 3 million customers. Through it the customers get a series of discounts and benefits for a period of 3 years. Hero Honda lately has been on a massive drive of penetrating the rural market through its Har Gaon Har Aangan initiative. Thus Bajaj has to Internal Purpose only Page 25

26 take note of this fact and try to expand more into the rural market to counter the competition from Hero Honda. 1.2 TVS MOTORS The Indian automotive industry is increasingly getting competitive and the twowheeler segment within it is also facing its own share of challenges. As part of the industry, TVS Motors, the country s third largest manufacturer of twowheelers, is also giving a stiff competition to Bajaj products. TVS Group of companies engaged in the manufacturing of almost all kinds of automotive components, two wheelers and a few other industrial products. They are also into the financial services sector. The turnover of the entire group was close to $2 billion in The company has launched its latest bike Flame and has got some big plans up its sleeves. The year was a milestone for TVS Motor as it is likely to achieve sales one million motorcycles. Last year, the company sold a little over 800,000 motorcycles. There was a Digital Twin Spark Plug Ignition [DTS-i] technology debate between the two-wheeler manufacturing giants Bajaj Auto and TVS Motors. The patent war reached the Supreme Court with Bajaj seeking a restrain on the manufacturing and selling of TVS two-wheeler Flame. Bajaj has sought a revocation of the Madras High Court order allowing TVS to go ahead with receiving bookings for and selling its new motorcycle. TVS motorcycles product segment includes: TVS MAX 100 TVS Suzuki Samurai TVS Fiero Internal Purpose only Page 26

27 TVS Star TVS Star City TVS Star Sport TVS Centra TVS Apache TVS Flame Marketing Strategies of Bajaj auto Strategies to stay competitive: 1. Constant Quality Improvement : Significant efforts have gone silently into quality improvement. Today, Star has the best warranty record in the Indian two-wheeler industry. It took at least two products worth of efforts to get TVS quality up to that standard, where it is equal or better than the best. The new offerings are targeted at different segments of the two- and three-wheeler customers with emphasis on superior technology, styling and engine capabilities 2. Thrust on Research and development: TVS Motor Company has decided to double its R&D (research and development) spending this year. Over 300 personnel are deployed for product development. The company will strive to set out a new benchmark in this area. There was a discontinuity and break in cadence of its products. After Victor it came with Scooty Pep which has done well; Apache which has got a good record in the market; and then Star. Now, it has got Flame, which will be a worthy rival to Pulsar. Internal Purpose only Page 27

28 3. Product for every pocket : TVS Motors has just launched seven products in a first-of-its-kind rollout in the Indian automobile industry. The seven products include a completely new 125 cc motorcycle FLAME, an all new 110 cc Star City, an Apache variant with fuel injection technology and the electric variant of a Scooty. The new offerings are targeted at different segments of the two- and three-wheeler customers with emphasis on superior technology, styling and engine capabilities. 3.3 YAMAHA MOTORS Yamaha was one of the first foreign companies to enter into India. It began operations with a JV with Escorts India. By the turn of the century, the JV between Escorts and Yamaha broke off. With the relaxation of FDI norms to 100%, Yamaha was in Indian markets as a fully owned subsidiary of Yamaha Motors, Japan. This was advantageous in many ways. Firstly Yamaha had now full control of its operations, it could decide the strategies. Secondly it could bring world-class technologies from Japan to India, which could act as its competitive advantage. From 2002 onwards Yamaha started a process of rebuilding by concentrating more on 100cc plus deluxe category of motorcycles with bikes like Libero. These set of two wheelers come with international style, cutting edge technology, fuel efficiency, power delivery, and stylized graphics. The present stable of Yamaha includes bikes like Crux (100cc), Alba (106cc) and Gladiator (125cc). Internal Purpose only Page 28

29 As far as the 150 cc segment is concerned, Yamaha was not much of a competitor for Bajaj auto until now. It has some bikes in the premium category above 500cc but then they too have their niche customers, which would not clash with those of pulsar. Gladiator though not in the same category as Pulsar, has been a competitor for Pulsar. The main factors that work in favor of Gladiator is the huge price difference of about 12,000 between Gladiator and Pulsar, the higher mileage of Gladiator and durability. The company is riding on the popularity of Bollywood heartthrob John Abraham for marketing its two wheelers. These campaigns focus on Yamaha as a brand for the youth with emphasis on style, performance and technology. These campaigns have been successful in denting the share of Pulsar a little. YAMAHA GLADIATOR JOHN ABRAHAM Internal Purpose only Page 29

30 But the year 2008 appears to be a bright one for Yamaha. It is coming out with two bikes in the 150cc plus category, which have been very popular abroad. They are Yamaha R15 (150cc, water cooled) and FZ (150cc, air cooled). R15 has technology from R1 bikes and has six-speed transmission and has received excellent initial reviews. FZ is a toned down version of the original FZ 1000cc bikes. Both these bikes have been predicted by Industry experts to be a rage in their initial period and may eat into the share of Pulsar in the market. Yamaha is planning to improve on its weak-point no. of service centers. It is going to increase it to 500 from its present 350. It also plans to open about 10 direct shops in main metros for its new offerings and is coming out with aggressive marketing strategies for their launch. The company is also planning to come out with two new variants of the Gladiator. Thus Bajaj has to come out with new strategies to handle this new deluge of models which could affect the sales of Pulsar in the coming few months. YAMAHA FZ (150CC) & YAMAHA R15 (150CC) Internal Purpose only Page 30

31 3.4 FOREIGN COMPETITORS Foreign players have been an integral part of the Indian auto market since long. It was the foreign players expertise that brought cutting edge technology into motorbikes and scooters went out for a toss. Post liberalization some of them have come out with bikes form their own stables. Also we have bike manufacturers in china who are a major threat to Indian bike makers. Chinese manufacturers produce at very cost and sell the products at low margins. They concentrate on production rather than marketing their products. It is very evident from their strategy that they target markets like India, Africa and Latin America and not developed markets like US or Europe. With increasing globalization and reduction of trade barriers they will be a major threat. Also there have been incidents when the Chinese have been found not to be very keen on conforming to IPRs or patents etc., a blatant case being a Chinese duplicate of Bajaj auto, called GULSAR and sold in the South American market. It may well very easily gnaw into Indian bike producers share. Also with the Indian economy growing at a much bigger rate then the developed countries markets and with a sixth of world population, which is growing richer by the day, it is evident that the market of the future is here. As a result all big bike manufacturers will make for the Indian market in the near future. Internal Purpose only Page 31

32 CHINA MADE GULSAR One point of note is that there is no minimum investment limit for foreign companies in India and as a result the threat from the Chinese producers all but intensifies. Japanese producers like KTM and Kawasaki (which has prior experience of the Indian motorcycle market) are coming out with their higher end products once again. Also it is rumored that Harley Davidson and BMW intend to start exporting bikes to India. This is possibly an attempt to gauge the size of the market given that the import duty on bikes is a staggering 60%. The major threats posed are from the high cost-high performance bikes and the low costlow mileage bikes (from china etc.). Let s see how Bajaj might be planning to counter the twin threats. Threat 1- High cost-performance segment: This segment can be expected to be a niche segment in the near future. However Bajaj is already doing R&D on coming out with 350cc and 500cc pulsars. Also with local manufacturing capability and given the time frame Bajaj auto should be able to compete against them successfully given they come out Internal Purpose only Page 32

33 with consistent products. One more thing we need to keep in mind is that business India is not without its quirks, Yamaha when it was expanding worldwide suffered losses in the Indian market and now was on the verge of closing operations few months back. Threat 2 - Low cost-low mileage-non-performance segment: With increasing fuel costs the consumers are getting more and more mileage conscious, also initial cost and maintenance cost are major factors that influence buyer s choice in India. We can safely assume that Bajaj auto is going to find it hard to ward off competition from this sector in near future. As such Bajaj needs to constantly innovate on its lower end product 150cc pulsar, Increase its mileage and probably try to cut costs by introducing economies of scale. SECTION IV 4. Survey Analysis and Recommendations Internal Purpose only Page 33

34 A primary survey has been conducted for customer behavior towards the bikes and their likes and dislikes on Survey Questionnaire and their respective interpretations Q1: Which is your preferred brand? As we can see, most of the users have their preferred brand as Bajaj (52%) in a sample of 600 responses. Other half percentage comes under other brands. Q2: How much power do you like in a bike? It can be seen that almost half of the people said that they like bike with 150 cc engine. It can be dependent on the price range because liking of high power Internal Purpose only Page 34

35 bikes is less as compared to 150 cc. More interpretations can be derived from next few questions. Q3: Price segment of the bike? 58% people say, they would like to go with the bike, which is in between 40k and 60k. This also goes in parallel with Q2 that people like 150cc bikes. It implies that price factor comes into mind of most consumers when they purchase a bike and that s why they are more diverted towards 150cc bikes. Q4: How much fuel-efficient your bike should be? 54% people say that they like bikes, which have a mileage between 40kmpl to 50kmpl. They do not like the bikes, which has a higher fuel consumption, which implies people are not ready to buy high power (180cc and above) bikes, as they are low on fuel efficiency and high on price. Internal Purpose only Page 35

36 Q5: Which bikes do you like in 150 cc segment? As it is clearly seen that Bajaj auto 150 DTSi has beaten other brands with high percentage of 75% and other brands like TVS apache, Hero Honda Achiever and other have constituted only 25%. This clearly indicates that Bajaj auto is one of the best in 150cc segment. Q7: Does Advertisement influence your decision in choosing a motorbike? Advertisements do affect the consumers in consumer s buying decision as seen from the result. 61% say that the advertisements impact them. Internal Purpose only Page 36

37 It can be seen from above results that Bajaj is the best most of the parameters displayed above, be it mileage or price. Bajaj still needs to focus at its brand image because brand value of Hero Honda is more than Bajaj. Bajaj needs to focus on customer satisfaction in best possible way. Brand image would automatically be established if Bajaj becomes more customers oriented. Recommendations As we have seen from the conducted survey that Bajaj auto or Bajaj bikes are the best in bikes segment but still we would like to give some recommendation to Bajaj so that they can improvise. 1. Long hour driving comfort is what is missing from Bajaj auto. So we would like to recommend that Bajaj should introduce a better design for comfort for long drives. 2. As Bajaj is spending much on other accessories like digital speedometer or electric start, they must also spend on the comfort accessories to the driver. 3. With good power in the bikes comes a disadvantage like lower mileage. Bajaj should invest in new technology to get more mileage in high power bikes. 4. Bajaj should introduce Tube less tires as an optional accessory. 5. Bajaj can introduce Vehicle tracker/central locking for Bikes to prevent theft. 6. Bajaj can introduce disk brake for Rear tires as well, which is generally seen in sports bike. This will give Bajaj an X-factor. Internal Purpose only Page 37

38 1. CONCLUSION Putting together these four sections on the analysis of Bajaj auto as a product, its marketing strategies, its competitors etc. has given us many insights into the twowheeler market as a whole. Starting with the first section about the SWOT analysis of Pulsar, we could analyze the various external and internal factors, which contribute into the growth of Pulsar as a brand and the various opportunities, and threats it faces for its future prospects. We learned about the various marketing strategies adopted by Bajaj for Pulsar right from its inception and how they have been instrumental in building the brand Pulsar. Right from its Definitely Male to its latest Pulsarmania campaign. In the second section, we analyzed the consumer behavior for Pulsar in terms of purchase behavior, buying roles and decision-making process. We segmented the Pulsar brand into various categories according cc of engine and analyzed the consumer behavior for each. We also had the support of various customer surveys, conducted by us as well as from some external agencies to substantiate the analysis. This section helped us understand how Bike makers cater to various segments through various offerings and customer centric measures, in case of Pulsar these being Probiking stores and Extended Warranty plans. In the third section we undertook the competitor analysis of Pulsar among various categories from various companies. We understood the various strategies taken by these companies for their products and the effect this had on the Pulsar sales. We understood the status and activities of the competitors like Hero Honda, Yamaha, TVS and foreign competitors. Internal Purpose only Page 38

39 In the fourth section we analyzed the results of the survey conducted by us with respect to different brands of bikes and compared them on some parameters like price, mileage etc. In the end, we concluded that Bajaj auto 150 DTSi is the best bike in 150 cc segments over-powering other bikes, which include Yamaha, TVS and other brands. Also, we were able to give recommendations to Bajaj and other bike companies, which would help them in improving the bikes and building a brand image. Thus overall, this project was an experiential way to understand the concepts of marketing and how they are applied in the real world. 2. REFERENCES 1. Pulsar 150cc reviews 2. Pulsar Club Site 3. Bajaj Auto site 4. Buying roles model by Yoram Wind, Frederick Webster 5. Hero Honda Karizma Yamaha India TVS Motors - Internal Purpose only Page 39

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