Case 1: Fiery Thrills or Windy Rides: Positioning a new Brand of Motorcycle in the Indian Context (An Emerging Market) – Consumer Behaviour and Branding: Concepts, Readings and Cases – The Indian Context

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Fiery Thrills or Windy Rides: Positioning a New Brand of Motorcycle in the Indian context (An Emerging Market)

S. Ramesh Kumar and M. Geetha

Concepts associated with the case: Perception, brand imagery and associations, brand positioning strategy.

Introduction

Rajesh who has just turned 50, saw the several brands of motorcycles parked at the theatre complex. They ranged from the rugged models that were about ten years old to the dazzling ones that could set the heart pounding among the yuppies. Rajesh wondered if all these motorcycles were being used fully for their functionality (as a means of personal transport) or if there were symbolic reasons for the purchase of these motorcycles. These thoughts brought back to him nostalgic memories of how the Yezdis and Jawas of the yesteryears were always considered as the “in thing” during his college days. The thoughts, of course triggered memories of the film Andaz of the early seventies, which dramatized romance with its symbolic motorcycle association (through its ever popular “Zindagi Ek Safar…” song that can be heard even today in several radio stations targeting youth). The film, launched all over the country, reinforced the fact that films, as a medium, are instrumental in dishing out products that may have a special significance in the psyche of consumers – a reality that is true to this day.

Rajesh was brought back to the realities of his current challenges when he noticed Kiran coming over to meet up with him. Rajesh, after his basic degree, had worked in the motorcycle industry for more than two decades. He had spent his last eight years in sales and marketing job profiles. His commitment and passion to his work enabled him to rise up to positions that involved branding and product management challenges that are normally the preserve of management graduates. His current and busy consultancy work with regard to marketing of durable product categories showcased his penchant for achieving success in a crowded market place. One of his present assignments involved probably the greatest challenge he had faced in his career: working in the motorcycle industry to launch a new brand. Kiran was the product manager of a new company and he had about six years of experience in both fast moving consumer goods (FMCG) and durable product categories. Kiran’s educational background in management, his conceptual and analytical abilities and his thirst to succeed by fighting against the odds were primarily the reasons for Windy Bikes Company to recruit him a few months back. The hardcore practical insights of Rajesh and the marketing intellect of Kiran were probably the prerequisite combination required to succeed in a market, which had several complexities and nuances reflecting the developing nature of the Indian market. They had to meet up with the Chief Executive Officer of Windy Bikes in about two weeks’ time to finalize the positioning strategy for their brand.

“Could we go to Breezy Day, the ideal place for people like us to spend hours to brainstorm business problems and issues?” asked Rajesh. Breezy Day was like Coffee Day, a place for people belonging to a specific strata of the society to meet up. However, unlike Coffee Day, Breezy Day was positioned towards young executives who could become annual members and spend time in the ambience of natural greenery stocked with books, PCs, internet facilities and reports and journals across functional areas.

Rajesh was aware of the challenges ahead. His immediate task was to decide on the launch of a new bike.

The Indian market is one of the emerging economies, and it has a unique set of challenges that are significantly different from developed markets. Branding is one of the areas where a conceptual application with regard to the Indian context is required. This case study analyzes the market of motorcycles from the view point of brand positioning strategies. The clutter of marketing communication in this category makes it an ideal choice for the setting of such an exercise in brand positioning. The case study portrays both the urban and the rural market for the product, and introduces the lifestyle aspects associated with the category as a whole, and the consumer in particular. It discusses various brands from the viewpoint of their functional and symbolic appeals. A distinguishing feature of the Indian market in this category is the segmentation based on price points. Price points, brand associations, brand differentiation and positioning strategies of brands make the case an ideal one to apply the principles of brand positioning and perception.

Motorcycle Industry: An Overview

The Indian motorcycle industry has been gaining momentum in the last two decades. Changing lifestyles, commuting to work, fun and leisure and the emergence of upwardly mobile youngsters who like to associate themselves with motorcycle brands to reflect their lifestyles in urban markets are some of the reasons for the increasing demand for this type of two wheelers. The rural market too, has a traditional orientation towards two wheelers not only as a mode of personal transport but also as a mode of transport for a small family. Besides, it also serves as a means to transport goods for the small vendor and shows promising signs of growth potential. Going by the behaviour of rural consumers in several conspicuous categories, the youngsters in these markets are likely to have their counterparts in urban markets as role models in the two-wheeler category. The expected rise in household income, easy availability of consumer finance, growing replacement demand, frequent introduction of newer trendy models by players and the growing aggressiveness by key players are the factors aiding the growth of the two-wheeler market. This will drive the overall two-wheeler sales growth by around 12.7 per cent to 11.9 million units by 2009–′10. Tables 1–7 provide an overview about the various aspects of the motorcycle market in India.

Growth of Motorcycle segments in the Indian context

Motorcycle production started in 1952 with Royal Enfield as the only producer till the early sixties, with the production of 2,500 units per annum. The growth in production increased to 39,000 between 1963 and 1971 with Ideal Java and Escorts entering the field.

1972–′79 was a period of slow down for motorcycle segment due to lower fuel efficiency and lack of design improvement. 1980–′86 was a period of foreign collaboration and broad banding of capacity, as a result of which the demand grew by 47 percent by 1987, but the momentum could not be sustained after 1989, when the prices of all the motorcycles were hiked and there was an economic slowdown. The period between 1994–2002 saw the consumer preference shifted towards motorcycles in the whole of the two-wheeler market. After registering a remarkable growth of 15.1 percent (CAGR) between 2000–′01 and 2004–′05 (see Figure 1.1), the motorcycle segment is expected to expand at a compounded rate of 13.8 percent between 2004–′05 and 2009–′10 to touch 9.5 million units by 2009–′10. The expected surge in the rural demand will play a key role in driving the motorcycle demand.

 

Table 1 Two-wheelers: Sales trend

Year No Of Units
99–00
3,468,991
00–01
3,574,356
01–02
4,306,057
02–03
5,054,142
03–04
5,629,663
04–05
6,575,584

 

Table 2 Two-wheelers: Brand-wise volume sales

Source: SIAM

 

Table 3 Motorcycle demand forecast (2009–2010)

Source: CRISINFAC

 

Figure 1.1 Motorcycle sales.trend (1980–′81 to 2004–′05)

 

Table 4 Segmentation of motorcycle

Source: CRISINFAC

Segmentation of motorcycle

Motorcycle is sub-divided into further three categories

  1. Economy
  2. Executive
  3. Premium

In 2003–′04 the executive segment has grown by 17.6 percent and in 2004–′05 it has grown by 22.7 percent. Income levels, a flurry of new models/variants from Bajaj Auto (Wind 125, Caliber 115), Hero Honda (Splendor Plus, Passion Plus), LML Freedom and the strong sales of TVS Victor (in the first half of the year) aided demand growth. The growth momentum continued during 2004–′05 (sales are estimated to have grown by 22.7 percent during this period). The growth came mainly from the Splendor and Passion variants, on account of discounts offered by Hero Honda. New introductions such as Bajaj Discover grew well, while TVS Centra ( January 2004) and TVS Victor GLX ( June 2004) grew on a small scale. The economy segment in 2004–′05 has grown by 48 percent covering 30 percent of the total motorcycle sales. The price sensitive economy segment caters largely to the Sec C segment (which mainly includes small shop owners and traders, junior officers, salesmen and supervisor level officers) and low-income buyers from rural areas, and it is highly dependent on monsoons and overall economic performance. Factors like consistent new model launches, and the rise in farm incomes on account of a good monsoon in 2003–′04, contributed to the strong growth in this segment. In the past few years, the economy segment witnessed a series of launches from Hero Honda (with Dawn and CD-Dawn) and Bajaj Auto (with Boxer and its latest offering, CT-100). These model launches have generated a lot of consumer interest and induced motorcycle purchases, resulting in a strong sales growth in the economy segment. For instance, Hero Honda's launch of Dawn contributed to almost 70 percent of the segment growth in 2002–′03, while CD-Dawn, with its aggressive volume growth (since it was priced lower than BAL’s Boxer), ate into the volumes of its competitors in 2003–′04. The launch of CT-100 in 2004–′05 met with instant success, while the recent launch of TVS Star (in select cities) has received a moderate response. However, as the euphoria over new model launches diminishes, we expect demand in this segment to stabilise in the medium term.

 

Table 5 Market share of leading brands in the three segments

Source: CRISINFAC

 

The blurring of segments—The impact of competition

Increasing competition has narrowed down the price differential between the economy and executive segments. While CT-100’s success has proved that the price-conscious economy segment customers are ready to pay a few thousands more for better styling and mileage and hence be pulled in to the executive segment, aggressive pricing of 125 cc Discover effectively reduced the prices in executive segment. This triggered price cuts, mainly in the form of discounts by select players (as direct price cuts can dilute the brand value of a model).

Bajaj is the leading brand in economy and premium segment and Hero Honda is the leading brand in Executive segment.

Brands and their presence in the two wheeler market

The success of the players in the two-wheeler industry depends largely on factors such as diversified product mix, regular introduction of new models or variants, selling and advertising budget vis-à-vis player market share, cost-competitiveness, and access to the latest technology along with indigenous research and development capability.

The performance of the top two players–Hero Honda and Bajaj Auto–has been favorable on the majority of the above-mentioned parameters and hence, they are expected to continue to dominate the industry in the longer run.

Bajaj, Hero Honda and TVS account for more than 80 percent mrket share of the total motorcycle segment.

 

Table 6 Brand-wise presence in two-wheeler segments

Two-wheeler players Segments MC Sub-segment
Hero Honda MC Eco, Exe, Pre
Bajaj Auto MC, S Eco, Exe, Pre
TVS Motor MC, S, M Eco, Exe, Pre
Yamaha Motors MC Exe, Pre
Kinetic Group MC, S, M Eco, Exe, Pre
LML MC, S Exe, Pre
Royal Enfield Motors MC Exe, Pre
Honda Motorcycle & Scooter MC, S Pre
MC: Motorcycles; M: Mopeds; S: Scooters
Eco: Economy; Exe: Executive; Pre: Premium

Source: CRISINFAC

 

Table 7 Market share comparison of key players (2003–′04 and 2004–′05) in motorcycle segment

2003–04 2004–05
Bajaj
24%
28%
Hero Honda
48%
50%
TVS
16%
13%
HMSI
1%
Yamaha
6%
5%

Source: CRIS INFAC

 

Note: Tables UMO, UCPM, SUMO, SUCPM provide the indicated responses from the respondents. Appendix 1 provides how rankings of purchase factors have been arrived at and Appendix 2 provides the weightages that can be given to the features of various models.

Urban Motorcycle Owners

Note: The data was collected from 200 samples of a metropolitan city. The results are summarized in the table given below. The tables are marked as UMO–Tn (Urban motorcycle owners–Table (n = table number)).

 

UMO–T1 Factors associated with purchase/Ranking intended to purchase

 

Options Weighted average Ranking
Price
6.71
2
Looks
6.04
3
Mileage
7.21
1
After-sales service
4.58
7
Technology
5.05
4
Driving pleasure
5.025
5
Maintenance costs
4.7
6
Features
3.685
8
Fun
2.3
9

 

UMO–T2 Infromation about interest patterns of respondents

Note: The survey included owners/prospective owners of motorcycles in the urban market and included economy, executive and premium segments. Respondents were selected in equal proportion and the responses in the table takes into consideration the responses received from each of these segments. This means that the ranking holds good for all the three segments.

 

UMO–T3 Favorite Pastimes/Hobbies/Recreation

 

UMO–T4 Motorcycles, a frequent topic of discussion

 

UMO–T5 Motorcycles and Image Association

 

UMO–T6 Technology Awareness

 

UMO–T7 Occupation of the respondents

Occupations Number of respondents Percentage
Student
61
30.5
Executive
87
43.5
Government employed
14
7
Professional (doctor/engineer/CA etc)
35
17.5
Others
3
1.5

 

UMO–T8 Age distribution of the respondents

Age Number of respondents Percentage
18–25
95
47.5
26–45
90
45
46 years and above
15
7.5

Prospective Semi-Urban Consumers for the Purchase of Motor Cycle

Note: The data was collected from 116 samples of a metropolitan city. The results are summarized in the table given below. The tables are marked as UCPM–Tn (Urban prospective consumers for motorcycle– Table (n = Table number))

 

UCPM–T1 Factors associated with purchase/Ranking intended to purchase

 

Options Weighted average Ranking
Price
6.89
2
Looks
5.79
3
Mileage
7.72
1
After sales service
3.95
8
Technology
5.16
4
Driving pleasure
5.086
5
Maintenance costs
4.55
6
Features
4.09
7
Fun
2.21
9

 

UCPM–T2 Information about interest patterns of respondents

 

UCPM–T3 Favorite Pastimes/Hobbies/Recreation

 

UCPM–T4 Motorcycles, a frequent topic of discussion

 

UCPM–T5 Motorcycles and Image Association

 

UCPM–T6 Technology Awareness

 

UCPM–T7 Occupations of the respondents

Occupations Number of respondents Percentage
Student
79
68
Executive
11
9.5
Government employed
6
5
Professional (doctor/engineer/CA etc)
20
17

 

UCPM–T8 Age distribution of the respondents

Age Number of respondents Percentage
18–25
84
72.4
26–45
28
24.1
46 years and above
4
3.5

Semi-Urban Motorcycle Owners

Note: The data was collected from 50 samples of a semi-urban area. The results are summarized in the table marked as SUMO–Tn (Semi-urban motorcycle owners–Table (n = Table number))

 

SUMO–T1 Factors associated with purchase/Ranking intended to purchase

 

SUMO–T2 Information about interest patterns

Note The survey included owners and prospective owners of motorcycle in the semi-urban areas and it covers only the economy and executive segments. Respondents were selected in equal proportions in both these segments and the response indicated in the table takes into consideration the responses from both these segments. This means the ranking indicated in the table holds good for both these segments.

 

SUMO–T3 Favorite Pastimes/Hobbies/Recreation

 

SUMO–T4 Motorcycles a frequent topic of discussion

 

SUMO–T5 Motorcycles and Image Association

 

SUMO–T6 Technology Awareness

 

SUMO–T7 Occupations of the respondents

Occupation Number of respondents Percentage
Student
27
54
Executive
3
6
Government employed
0
0
Professional (doctor/engineer/CA etc)
20
40

SUMO–T8 Age distribution of the respondents

Age Number of respondents Percentage
18–25
47
94
26–45
3
6
46 years and above
0
0

Prospective Semi Urban Consumers for the Purchase of Motor Cycle

Note: The data was collected from 52 samples of a semi-urban area. The results are summarized in the table marked as SUCPM–Tn(Semi-urban prospective consumers for motorcycle– Table (n = Table number))

 

SUCPM–T1 Factors associated with the purchase / Ranking intended purchase

 

SUCPM–T2 Information about interest patterns of respondents

 

SUCPM–T3 Favorite Pastimes/Hobbies/Recreation

 

SUCPM–T4 Motorcycles, a frequent topic of discussion

 

SUCPM–T5 Motorcycle and Image Association

 

SUCPM–T6 Technology Awareness

 

SUCPM–T7 Occupations of the respondents

Occupations Number of respondents Percentage
Student
15
28.8
Executive
24
46.2
Government employed
8
15.4
Professional (doctor/engineer/CA etc)
5
9.6

SUCPM–T8 Age distributions of the respondents

Age Number of respondents Percentage
18–25
15
28.8
26–45
30
57.7
46 years and above
7
13.5

 

Question: How will you launch a new brand of motorcycle using the information provided in this case? Approach the new brand from the viewpoint of information on segments, price points, brand positioning and imagery, using the principles of perception.

Appendix 1: Sample Calculation on How Rankings were Arrived

Ranking for price

 

 

Ranking For Looks

 

Ranking For Mileage

 

 

Ranking for after-sales service

 

 

Appendix 2: Weightages Given to the Features of Various Models

Weightages given to the features of various models.

 

 

Note on lifestyle positioning: Most brands of premium motorcycles have a strong lifestyle positioning. Executive segment brands and economy segment brands too have several shades of lifestyle orientation in their positioning. These aspects can be observed in some of the Web sites of the brands/respective companies. The functional features were rated based on the authors’ perception of the physical attributes of the respective model listed in Appendix 2.

Most references were used for the development of teaching notes rather than for the case study

Instructors discussing this case may contact the author at rkumar@iimb.ernet.in and receive the teaching note on sending the details of their affiliation.

 

References

 

“Top throttle Positioning” Auto Times, The Times of India, May 25, 2006

Pankaj Sukhija, “Riding High on style”, The New Sunday Express, May 28, 2006.

“Yamaha Gladiator: Into The Colosseum for 125cc fight”, The Hindu Businessline, Sunday, May 28, 2006.

www.tvsmotor.in

www.bajajauto.com

www.herohonda.com

www.yamaha-motor-india.com

www.royalenfield.com

www.honda2wheelersindia.com

“Delhi Auto Expo … Bajaj Auto displays 2006 model line up”, www.indiainfoline.com/news/news.asp?dat=73969

“TVS Motor records 25 pc growth in motorcycles sales”, www.blonnet.com/2006/02/03/stories/2006020301030200.htm

“Suzuki Motorcycle plans Indian launch in Oct with 125-cc bike”, www.blonnet.com/2005/07/14/stories/2005071402530200.htm

“Mobike makers rev up launches in entry-level segment”, www.blonnet.com/2006/06/03/stories/2006060300670500.htm

“TVS Motor aims to sell 8.5-lakh motorcycles” www.blonnet.com/2005/09/17/stories/2005091702000200.htm

“Question ‘N’ Auto” www.blonnet.com/iw/2006/01/01/stories/2006010100451500.htm

Muralidhar S,“Lining up the 150cc bikes”, The Hindu Businessline, May 14, 2006

Rishad Cooper, “Platinum Edge”, The Hindu, Jun 14, 2006.

“Glad to meet you”, The Hindu, 31 May, 2006

www.crisil.com (CRISINFAC)

www.siamindia.com (SIAM–Society of Indian Automobile Manufacturers)