Bajaj Auto “Good evening and thank you for taking time out to interview with us Mr. Rajiv Bajaj” said Ashwini Mathur, correspondent of a prominent news channel. “The pleasure is all mine” replied Rajiv Bajaj, Managing Director of Bajaj Auto. Rajiv Bajaj is confident—after all, he has been there and done that. At his office in Mumbai, he casually chooses where he wants to sit on the couch. During the interview, he turns a question around to check if you really mean it. He poses for a photograph. He raises his voice while making a point but
does answer everything patiently. This interview was happening as part of the series of interviews conducted by the news channel during the month of December. The primary objective of these interactions was to gauge what were the business plans for these different companies for the New Year, what their outlook were and predictions. By presenting a series of such interviews, the news channel was helping the investors, shareholders and the public build a perception of the near future and prospects. Ashwini Mathur (AM): How has this past year been for
Bajaj? Rajiv Bajaj (RB): For the year as a whole, about eight months have passed, overall sales are down by about 10% as a reflection of the market situation. If we look deeper we notice that motorcycles division is down about 10% and three-wheelers about 4%. So, that is for the first eight months of the year. If we go through exports, we have had a reasonably good year – with a growth of about 8%. Though we did face some issues in the middle we are hoping to make that up this month. However, on the three-wheelers, we are facing de-growth of about 15%.
15% because that is the state of the commercial vehicle industry, it is not like we are losing share there but the industry is. In the motorcycles division, a little more than 40% has come from the Boxer and Platina platform, 34% from Discover and 25% from Pulsar. Therein again we had good exports but could have done better. AM: Could you throw some light on the market share Bajaj enjoys? RB: We are constrained by capacity. But I would not say it is only a matter of production constraintit is a matter of production constraint as far as the new products are concerned.
For example, we still sell the older Discover but obviously that is the 2004 vintage, the novelty has worn off. Even if we can make more, we are not going to be able to sell more. So we need to make more of this new Discovery 100 M that we have launched that has been received very well. I think we have done well to come to a level of 40,000 in its first full month of production. But in November we lost four-five days due to the Diwali holidays, in December we have the annual shutdown. So, it will take until January before we can do better on that front.
AM: What do you think of the gloom that has hit the automobile industry as a whole? Do you see it lift? RB: Of course I see it lift. That is the whole idea of business. How else would I make money? (laughing). Jokes aside, the recession will pass. It has definitely affected us. Sales have been hit, revenues have taken a beating and some of our long term visions need to be revisited. But that is the beauty of doing business. The uncertainty! Having said this, the government, in collaboration with RBI and all the other authorities, is working towards helping us get over this phase. Investments
need to pick up and that is the trigger. Election times are always a bit tricky but this shall pass and we should be back on a good growth track. AM: What are your predictions about the coming year for Bajaj? RB: I think in December we will remain under two lakh units’ sales. I cannot see us exceeding two lakh in December. However, definitely from January I would like to believe that if we are able to make as many of the new products as we wish to and I think we will be able to, and then clearly we should start demonstrating a positive year on year growth. But we definitely need to revisit our drawing board.
The existing marketing strategies we have employed may not hold on. Additionally, we will look at extending our product line and targeting the rural market. The good thing is we have all the talent that we need in the right place. All that we need now is result. To get a better perspective of all that Rajiv Bajaj has shared, let us look at Bajaj and Pulsar specifically to understand what they have been doing right and not. About Bajaj Auto Bajaj Auto is a part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan 29 November 1945 as M/s Bachraj Trading Corporation Private Limited.
It started off by selling imported two- and three-wheelers and became a public limited company in 1960. It is based in Pune, with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttarakhand. The oldest plant at Akurdi (Pune) now houses the R&D centre ‘Ahead’. ? ? ? ? In 1970, it rolled out its 100,000th vehicle. In 1977, it sold 100,000 vehicles in a financial year. In 1986, it sold 500,000 vehicles in a financial year. In 1995, it rolled out its ten millionth vehicle and produced and sold one million vehicles in a year ? Bajaj Auto is the world’s third-largest manufacturer of motorcycles and the secondlargest in India.
Figure 1 – Interesting facts With the launch of motorcycles in 1986, the company changed its image from a scooter manufacturer to a two-wheeler manufacturer and quite recently completely stopped the manufacture of scooters. Now, Bajaj concentrates on only motorcycles and three-wheelers and has operations in 50 countries by creating a line of bikes targeted to the preferences of entry-level buyers. It has now become the largest exporter of motorcycles and three-wheelers in India. Over the last 50 years, Bajaj Auto has spent considerably on Research and Development in coming up with new vehicles.
Their prime focus has been on providing customers with what they truly want. Please find below a table with all their products. Figure 2 – Products Two wheeler Industry Indian two -wheeler industry contributes the largest volumes amongst all the segments in the automobile industry. We can broadly categorize this into 3 sub-segments – scooters, motorcycles and mopeds. Off late, we have seen a marked shift towards motorcycles at the expense of scooters. In the rural areas, preferences have shifted towards sturdier bikes to withstand the bad roads.
In the process the share of motorcycle segment has grown from 48% to 58%, the share of scooters declined drastically from 33% to 25% and that of mopeds declined by 2% from 19% to 17%. The increasing demand from semi-urban and rural segments may have caused this positive shift towards motorcycles. Additionally, easy credit coupled with low interest rate being offered by various banks and non-banking financial corporation, increasing income levels and higher aspirations of young people all seem to be the factors responsible for such high growth in two-wheelers.
The growth in two-wheelers has overall been strong enough to counter the slowdown a fair bit and other factors constraining the overall business activity in the country. We also expect the motorcycles to continue to lead the two-wheeler segment like in all other Asian countries. The first motorcycles were Enfield 350cc bikes and Escorts 175cc and these dominated the market. The market was opened to foreign competition in the mid-80s. And soon we saw a number of IndoJapanese joint ventures coming up with an onslaught of 100cc bikes that caught the incumbents unawares.
With the increase in availability of fuel efficient low power bikes, demand swelled. Hero Honda – then the only producer of four stroke bikes greatly benefited. TVS Suzuki and Hero Honda, as most would know, brought in the first two-stroke and four-stroke engine motorcycles respectively. Bajaj Pulsar The mid-nineties were tough times for Bajaj Auto. Bajaj Auto used to dominate India’s two wheeler industry with its scooter for the better part of the last century. But as India marched towards the new millennium, there was a dramatic shift in the preference of consumers. The market shifted in favour of motorcycles.
By 1999 motorcycles overtook scooter sales for the first time. Before the introduction of the Bajaj Pulsar in 2002, Hero Honda dominated the motorcycle scene in India. Although it started off as yet another domestic two-wheeler manufacturing company, Bajaj Auto had a good stake in Indian two-wheeler market and successfully launched Kawasaki Bajaj and Bajaj Boxer in the 100 cc segment. However, these efforts were not satisfactory to compete with the dominating leader Hero Honda. Kawasaki had almost lost its stake in market and the charisma of Bajaj Boxer was also on a decline.
It was then that Bajaj Auto in joint efforts with Japanese bike-designing firm R&D anticipated the idea of launching its new bike, which in following years created the history of success and totally changed the scenario of Indian bike market. In 2001 Bajaj’s hard endeavours got a perfect shape when it launched its Bajaj Pulsar that within no time it became the first choice of every Indian bike rider. At present, five variants of Bajaj Pulsar with varied engine efficiency are available in Indian bike market, energised with different engine capacities — 135cc, 150cc, 180cc, 200cc and 220cc.
With 43 per cent stake, Bajaj Pulsar 150cc engine bike is a highly acclaimed bike in Indian bike market. Before the emergence of Pulsar, Indian bikes were mainly engineered with engine capacity varying between 80 and 125 cc. Pulsar virtually created a new class of motorcycles in India – the performance oriented class. The Pulsars has comfortably outsold any other 150 cc motorcycle in India and has dominated the 150 cc and above sales since its launch. Meanwhile instead of sitting idle on its laurels, Bajaj has been constantly upgrading its models giving the others a run for their money. Product Life Cycle – Pulsar
Introduction Stage 2001: Pulsar 150 & 180 At the time when India was riding on 100 cc bikes, Pulsar was launched with two variants; 150 cc and 180 cc, stirring the entire two wheeler market. And with that, India’s first Sports Bike was born. Pulsar was the first bike on Indian roads to flaunt a stylish, muscular fuel tank. It offered features like disc brakes and electric start which were considered premium offerings for two wheelers. It was not only the bike’s performance that triggered the brand becoming an icon, a major part of the success was due to the classic advertising campaign by Bajaj.
Bajaj knew that the market was ready for something new and something good. They also realised that since the two wheeler industry was highly competitive they had to market their product well. Bajaj spent a considerable amount of time coming up with the marketing strategies and the positioning. The Big Idea was to position the bike as World’s first bike with a Sex/Gender. Bajaj targeted the youth within the age limits of 18-24 with Pulsar and their ads “Definitely Male”. To their surprise, they later found that the brand even appealed to a much older audience.
They were quick to realise the true market potential of Pulsar and modified their target group to 21-35 years. 2002: Pulsar DTS-I (UG1) By now, Pulsar was already ruling the roads. It dominated the two wheeler market with 71% market share. Pulsar was selling almost two times more than the competitor bikes put together (which included CBZ, Karizma, Hunk, Fiero and Apache. ) The second generation Pulsars featured Bajaj Auto’s newly developed DTSi technology and a new headlamp assembly. Bajaj spent heavily in advertising on TV and in magazines.
Numerous different TV commercials were made, all revolving around the same message, that of a male bike. These ads were a craze and an instant hit. The ads covered the aspect of showing a bike that brought out the masculinity of the rider and made him feel confident. Unlike its old ways of doing things, Bajaj did not rest with the laurels. It knew that Pulsar is the golden key to control the entire bike market. Hence Pulsar got undivided attention from the company. In 2003 another milestone event happened in the product lifecycle of the brand.
Bajaj launched its new technology DTSI. Analysis Pulsar was an example of a brand that didn’t spend too much time in the introduction phase. While it is believed that sales only gradually pick up while various problems are sorted, Pulsar was fortunate. Some possible reasons could be the powerful Bajaj name, a product that wasn’t in the market and a latent need that was untapped prior to this. Profitability was not the target here. Bajaj wanted to earn market share and win the trust of people which they could develop in the subsequent stages.
Growth Stage 2004: Pulsar UG2 In 2005, Bajaj launched another upgrade of the Pulsar. Innovations came in the form of smaller 17inch wheels, gas charged shock absorbers and Bajaj’s patented ExhausTEC technology. It was the first time any bike maker in India had offered 17-inch (430 mm) profile wheels at the rear. By now, Pulsar had been well accepted by the Indian masses, and was a market leader in the 150cc category. The 150cc variant took lot of customers away from the executive segment to the performance segment.
When DTSI was launched, Pulsar’s image was altered by changing the positioning of “Definitely Male” to “Digital Biking”. Although the ads were successful in conveying the technological superiority of DTSI and making that acronym popular, it deleted the most successful tagline from the brand’s elements. Much like the initial days of Pulsar, Bajaj followed an equally aggressive advertising campaign with the second generation DTSi Pulsar. 2006 : Pulsar UG3 In October ’06, the Pulsar 150 and 180 went through another round of stylish and technological overhaul.
The sales of Pulsar saw a new high with 40,574 bikes sold, which was almost double the competitor bikes put together. New features included: pilot lamps separated from the main headlamp, turn indicators with clear lenses and amber bulb, self-cancelling turn indicator switch, flush LCD screen, twin-stripe LED tail-light assembly and side panels altered for a sharp, taperingtowards-the-rear look. 2007: Pulsar 220 DTS-Fi In July 2007, Bajaj began selling the Bajaj Pulsar 220 DTS-Fi, the former featuring fuel injection and oil cooled engines, a digital dash, and modern styling.
This bike has some features which are totally new to the Indian market, like the fuel injection itself, rear disc brake and clip-on handlebars (the first two only available in the 220 model). With the campaign of the newly launched Pulsar 220 in 2007, Bajaj no longer used its blockbuster tagline “Definitely Male” but instead switched to the corporate brand tagline “Distinctly Ahead”. Bajaj earlier had another corporate tagline “Inspiring Confidence” when it completely redesigned its corporate logo and brand.
The Pulsar 220 was positioned as “The Fastest Indian” bike, and accordingly, the advertisement focussed on the new Pulsar’s power and speed. Analysis Truly representing the growth stage, Pulsar’s sales grew rapidly. Early adopters liked the product and started influencing more purchases. Though new competitors entered, Pulsar had established its name and was a power brand. New product features were introduced and distribution channels expanded. To maintain its position, the advertisement and marketing expenses were maintained and very intelligently spent in coming up with relevant ads.
Though it was a marketing blunder to replace the Definitely Male ad with the Digital Biking and Distinctly Ahead, it did not cause much damage. Sources say it was because of Bajaj’s strategy of switching between two Ad agencies every six months. Maturity Stage 2009: Pulsar UG4 Bajaj released the UG IV (fourth upgrade) versions of the Pulsar 150 and Pulsar 180 in April 2009. The upgrades for the Pulsar 150 included an all-black theme, tank scoops similar to those on the Pulsar 200, a 3D Pulsar logo, and a changed electrical system.
By 2010, the Pulsar had entered its maturity stage. In the high performance segment, it was facing competition from Japanese bike makers in the form of Yamaha R15 and the Honda CBR250, and the 150cc segment was even more fiercely competitive. Pulsar was innovating but as was expected the competitors were coming up with good bikes too. Pulsar had to come up with something different. Bajaj came up with a new concept of Free Biking. They define it as all about tackling obstacles. The emphasis here is on how you ride rather than where you ride.
This was more of a marketing strategy aimed at the riding skills and indirectly selling Pulsar as a bike that brings out the free biking spirit in riders. The ads that were made for this were pulsating and captured the essence well. Set in Havana, it has two riders discover new routes to their destination due to a traffic jam. The ads received mixed response. While people agreed with the idea of free biking the execution shown in the ads were too fictional or movie like. 2011 : Pulsar 200 NS In 2011, the Pulsar 200NS was launched. It is a completely redesigned motorcycle and shares very little with its predecessors other than the Pulsar tag.
It has a completely redesigned 200cc four valve engine with triple spark technology, and completely overhauled mechanicals as compared to older generation pulsars. The advertising of the Pulsar 200NS was significantly different from the earlier campaigns. All earlier models of Pulsar were much more aggressively marketed, with considerable TV airtime and high visibility in the printed media. However, this time, the TV commercial came months after the bike was launched. And even when the TV commercial came out, its visibility and airtime was much lower than earlier advertisements.
The ad film is set at the Tibidabo Amusement Park in Barcelona with three riders on their Pulsar 200NS bikes. The voice over says, “You have never seen an engine like this, so you have not seen stuff like this. ” The bikers go on to perform dangerous stunts against the backdrop of the roller coaster and other rides. The stunts performed by the riders showcase the ‘precision performance’ of the bikes. At the end of the film, the voice over signs off saying, “The revolutionary new Pulsar 200 NS with the world’s first four valve triple spark DTS engine. Pulsar. India’s No. 1 sports bike.
Analysis This ad was again targeted at the youth. Having tried different strategies with riding and style, Pulsar decided to concentrate on the product and its features. With DTSi being Bajaj’s patented technology, they wanted the world to know how good it is. The ad concentrated on how the engine improves the riding experience and provides performance of a high quality. This ad again received mixed response. People were used to seeing Pulsar ads that were different and showed something that they had but were afraid to bring our like “Definitely Male” or “Distinctly Ahead”.
While it kept the tag line this ad was more technical rather than emotional. The biggest advantage of Bajaj Pulsar is that it has been keeping the customer on tenterhooks by releasing a new version of Pulsar from time to time. Therefore the Pulsar Brand has always been on a growth and less of decline. There were constant design changes. The designs became a rage amongst the youth and diverse product Line with few changes actually helped its cause. Figure 3 – Different Pulsars Bajaj started from 135cc and went on to increase the capacity to 220 cc.
The cost of the older models came down drastically due to economies of scale and learning curve as we know. Hence initially Pulsar had to do some aggressive advertising but as time passed by it won the trust of the consumers and hence they were able to effortlessly market their product to the prospective buyers. Hence as long as Pulsar can bring about newer models and change the design according to its trends it will always have a steady demand. The primary evolution that we observe is that the Pulsar family has moved on from “basic bike for the youth” to the sports Bike segment in the span of under 10 years.
Pulsar as a fashion One may say, after looking at the models and the strategies that Pulsar is like a fashion – accepted and popular in its field. Fashions are known to pass through four stages – distinctiveness, emulation, mass fashion and decline. It has always been believed that fashion is with apparels or cosmetic items. But it can be that a bike is a fashion item. If we observe, we notice that when Pulsar was first launched it had distinct features that made it stand out – the 150 cc engine, the masculine look, the Definitely Male ad and more.
As Pulsar started coming up with newer models, competitors entered the market and tried to emulate the design. It is well known that TVS tried to use the DTSi engine for its bike which after a long litigation between Bajaj and TVS was handed to Bajaj. Figure 4 – The future Marketing Mix followed by Pulsar Price The price of Pulsar was set taking the price of CBZ under consideration and hence it was priced to be cheaper than that. This was mainly for the purpose of market entry and gain sufficient market share. Skimming is referred to as selling a product at a high price; basically companies sacrificing sales to gain high profits.
This strategy was adopted for the purpose of regaining the investment that had been made. Hence the prices of Pulsar were dropped within two years to capitalize on the consumer surplus. The short term strategy was to earn more profits and in the long term they wanted to invest in more R&D. The mistakes of Hero Honda and Yamaha were addressed by Pulsar and hence it was able to command the price premium because of a smooth driving experience. It set its price slightly lower than its competitor without compromising on any of the features provided by its competitor to attract value-conscious customers.
It had also offered three free services to attract customers. Also there has been a price war between Karizma and Pulsar and the new version Pulsar is quite competitive to Karizma. Promotions Pulsar was the first bike launched by Bajaj Auto without Kawasaki’s collaboration. The promotion and advertising contract for Pulsar was given to renowned Ogilvy and Mather. They wanted to associate the bike with a gender. Hence came the campaign with a tagline “Definitely Male”. In tandem with the promotion, the style and performance of the bike was superior and hence turned into huge sales for Bajaj.
Bajaj focused on the concept of free biking when they came with the Bajaj 200 version and according to Bajaj, free biking is all about tackling obstacles. An ad was shot in Havana, Cuba showing how Pulsar will find a new route when the road is blocked by a traffic jam. Additionally, Pulsar also got associated with a reality show – Stunt Mania on MTV which targets the audience in the age group of 18 -30 years of age. This is the first reality show on stunt biking. Here selected riders perform stunts to qualify to the next round. Tips are also provided on bike maintenance and safety.
This provided Pulsar a platform to showcase its bike’s prowess and capabilities. The show has been a huge success. Bajaj is a company that never rests on its laurels. The main distinct feature of Pulsar was the adaptation of new technology as and when it comes. The Bike panel always exuded high technology and then Bajaj Introduced DTS (Digital Twin spark ignition) for its Pulsar which was then carried on to Discover too. It also introduced another technology called ExhausTEC. They also went on to introduce an LED tail light which was perhaps the first in India.
Pulsar, thus always remained at the helm of innovation. These actually helped Pulsar to steer clear of its competition like Yamaha, Honda etc. When customers were asked to rate Bajaj Pulsar in mouthshut. com these were the responses. Figure 5 – Customer Perception Portal Management/ Online presence The good part here is that Pulsar has a dedicated website for every Model that it has and therefore adds more credibility to the users also it has started an “Anti-piracy campaign” wherein they insist the usage of genuine parts only for the replacement. Hence Bajaj wishes to have a strong hold on the spares market too.
Pulsar has efficiently leveraged on the strength of social media. The Facebook page on Pulsar has over 1million likes which is really a great number. The owners can customize their vehicles and post their photos. Thus Pulsar is bringing out a high degree of customer involvement in this manner. Figure 6 – Facebook page and Anti-piracy Bajaj also promotes its racing enthusiasts by a tie up with KTM – an Austrian Bike manufacturing company in the form of KTM Ready to Race India. Bajaj also has its own subsidiary Bajaj Auto Finance to provide Auto Loans and Bajaj has always used its portals to promote its cause.
Bajaj also provides its periodic maintenance and evaluation chart as a pdf for customers to download online and maintain their “Favourite Vehicle” accordingly. Place Dealership system of Bajaj Auto The company has a network of 498 dealers and over 1,500 authorized service centres across the country. Around 1,400 rural outlets have been created in towns with population of 25,000 and below. Following are the various types of showrooms implemented by Bajaj Auto: ? ? COCO: These are Company Owned & Company Operated showrooms. These concepts exist only for Pro-Biking showrooms.
CODO: These are Company Owned & Dealer Operated showrooms. In this case, showrooms are owned by the company but the operations in the showroom are managed by the dealer. This model is followed when Bajaj wants to provide the dealer financial benefits. Bajaj has set up its depots in a strategic manner. But this does not mean that the company has gone all out to open a large number of depots. It has chosen vital locations in the country for its depot. The purpose of these depots is that they are meant to cater to any sudden rise in demand of vehicles, and any order in India in its entirety.
A dealer needs to consider his customer requirements and then come up with a consolidated order to place to the regional office. Market Share Two- wheeler sales in the country have sky rocketed in the recent years, and the annual sales of motorcycles in India expected to cross the 15 million mark by 2015. The low penetration of twowheelers in the country 31 two-wheelers per 1000 citizens (2004) leaves immense scope for the growth of the market. The share of motorcycles has increased over the years, while that of other two-wheelers like geared scooters, cooperates and mopeds have shown a negative growth or remained stagnant.
The twowheelers have penetrated 7% of rural house hold and 24% of urban markets, thus it leaves an immense scope for the market to grow. According to the company report the two wheeler segment was led by the sportier models of motorcycles like the Pulsar with a 35% increase seen in the sales figure. March 2011 alone showed a jump in sales of about 12%. The company sold almost 3. 39 million motorcycles in India and elsewhere. In the process, Bajaj Auto grew its sales by 35. 1% or 10. 8 percentage points above the market as a whole. Bajaj Auto one of the leading producers of automobiles in the country has been able to sell close to 2.
3 million vehicles in 2005/2006, the sales of the company grew by almost 31%. The company registered a 32% growth in the sales of motorcycles much above the industry average of 19%. Bajaj Auto has emerged as a market leader in the entry level or price segment motorcycle with the Bajaj CT 100 accounting for nearly 40% of the market share. It also commands a 62% market share in the premium segment of motorcycles with products like the Bajaj Pulsar DTSI. TVS Motors which has lots of firsts to its credit in the two-wheeler sector in the country was able to sell 1.
34 million units during the same period thus registering an overall growth of 15% from the previous year. In the motorcycle segment the company’s growth in sales was in sync with the industry average. In August 2013, Honda overtook Bajaj in overall sales. Honda Motorcycle and Scooter India posted sales of 2,87,177 (including exports) motorcycles and scooters in the month of July 2013. Honda not only registered its personal best sales till date, surpassed Bajaj Auto to become the second largest two-wheeler manufacturer in the Indian two-wheeler industry today.
However, in the 150cc plus performance, Bajaj continues to be the market leader with a market share of close to 38%. The following table shows the sales of Bajaj and its competition (2013): Figure 7 – Sales figures Figure 8 – BCG Matrix SWOT Analysis Strengths ? ? ? ? ? ? Very popular brand positioning (DEFINITELY MALE) which helped quite a lot in positioning. Style of the bike was a novelty and in line with being a bike for males Great performance compared to other bikes Impressive mileage Advertisements connected with people and with its target group. Youth connect with the ads, the stunts, the feel of the bike and wish to emulate the same.
Regularly coming up with new products that are in sync with the needs of the times. Weakness ? ? ? A few technical issues with gear box and breaks are present Not able to diversify into the rural segments The target group is primarily youth. This provides opportunities for competitors to target the other segments in the market. Opportunities ? ? ? ? High end bike market which currently has only sports bike is a good opportunity Expand to newer markets and expand the target group Now that it is in the maturity phase of the product, it must look to reinvent itself to prevent itself from declining.
More BTL and ATL advertisements to increase market share. Threats ? ? ? ? ? Competitors are coming up with high technology bikes New design bikes like CBZ is eating into the market share of Pulsar Bajaj as a brand had an image of producing rustic, Indian, old scooters. This brand image could work against it when it was venturing into selling bikes which were more internationally styled. Cheap Chinese imports are trying to dent the market share. Macroeconomic factors. Competitive Analysis Threat of new entrants (LOW) Buyer’s bargaining power (HIGH) ? ? ? Many options available to buyers ? Substitutes such as cheap cars
(Nano), taxis, cycle are available ? Supply-demand mismatch in the industry ? Customers have a greater say in what features they want ? ? ? ? Entry barriers are very high Product falls under the category of high level of involvement The biggest challenge is setting up sales service center, which is very hard for a new entrant Well established players are already existing Industry is consolidated Economies of scale Competition (HIGH) ? 7 players are present in commuter segment. ? Plenty of bikes targeting different segments ? Manufacturing capacity already exceeding demand ? RnD spend being matched by big companies
? Foreign players pose a challenge Supplier’s bargaining power (LOW) Threat of Substitutes (HIGH) ? ? Local trains providing safety, affordability, time saving and reducing pollution. ? Cars provide status symbol and safety. Also there are cheap versions ? Other modes of public transport ? Electrical vehicles ? ? ? Metal : Prices are determined in international markets, chances of Bargaining power is less Tires: They are 40 listed tire manufactures in India, Industry is fragmented. Bargaining power of suppliers is low Batteries: Industry is fragmented. Bargaining power of suppliers is low Component Manufacturers: Industry is
fragmented. Bargaining power of suppliers is low Reactions to Challenges Technological advancement Pulsar – ? ? Bajaj is working on bringing out Pulsar 350cc and 500cc which would be first of a kind Digital Twin Spark ignition engine is a patented innovation of Pulsar and provides for smooth riding. Others – ? ? TVS Motors has decided to double its R&D spending this year. Over 300 personnel are deployed for product development and the company is striving to set out a new benchmark in this area. Foreign brands plan to manufacture bikes in high end facilities outside and export it to India. Customer behaviour The ta
