Analysis of Target Market, Positioning and Marketing mix of Indian Bike industry

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ABSTRACT

This report focuses on the motorcycle revolution in India, and its successful foothold in the Indian market. Before deep-diving into the nitty-gritty of this huge market, we need to have an overall perspective of the two wheeler industry in India.

Automobile is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognised as one of the drivers of economic growth. During the last decade, well-directed efforts have been made to provide a new look to the automobile policy for realising the sector's full potential for the economy. Steps like abolition of licensing, removal of quantitative restrictions and initiatives to bring the policy framework in consonance with WTO requirements have set the industry in a progressive track. Removal of the restrictive environment has helped restructuring, and enabled industry to absorb new technologies, aligning itself with the global development and also to realise its potential in the country. The liberalisation policies have led to continuous increase in competition which has ultimately resulted in modernisation in line with the global standards as well as in substantial cut in prices. Aggressive marketing by the auto finance companies have also played a significant role in boosting automobile demand, especially from the population in the middle income group.

Evolution of the Two Wheeler industry in India

Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment. The two-wheeler industry has been in existence in the country since 1955. It consists of three segments viz. scooters, motorcycles and mopeds. According to the figures published by SIAM, the share of two-wheelers in automobile sector in terms of units sold was about 80 per cent during 2003-¬04. This high figure itself is suggestive of the importance of the sector. In the initial years, entry of firms, capacity expansion, choice of products including capacity mix and technology, all critical areas of functioning of an industry, were effectively controlled by the State machinery.

A Growth Perspective of the Bike Industry

Two wheelers segment has been the most vibrant in the automobile sector. In the past five years this segment has grown at a CAGR of 19 percent, as compared to cars which grew at 13 percent and commercial vehicles which fell by 3 percent. It is the only automobile segment which has withstood the economic downturn of the past few years.

The reasons for this are many: rise in income levels, impact of urbanisation, easy availability of finance and of course the most important, the fact that two wheelers are preferred entry level vehicles. This being due to their low price and reasonable maintenance cost. In a developing country like India, this segment is likely to have buoyant demand over the years to come.

Though overall two wheeler volumes have been growing, the composition of the two wheeler industry has undergone dramatic changes in the last few years. Why has this happened? The answers to this are many. The two main sub-segments scooters and motorcycles have moved in opposite directions. On one hand, scooter volumes have declined while on the other Indo-Japanese motorcycles have reported robust growth rates. Demand for scooters has a direct correlation to industrial growth, while motorcycles have a correlation to agriculture growth. The agriculture sector has performed very well over the last couple of years, while the industrial sector performance was lacklustre during this period. This has lead to opposite demand trends in both the segments.

Motorcycles made their debut around the 1950s.It was in the year 1954 that the Indian government ordered for total number of 800 motorcycles to man the Pakistani borders. In came the Bullets which were initially launched in England as a 350cc bike and it was upgraded to 500cc a year or so later. These bikes have remained unaltered, barring some cosmetic changes which have undergone over the years. Thus one can say without much of a doubt that the 1955 Bullet was one of the initial hits of the Indian two-wheeler industry and till today it continues to be a darling of the motorcycle enthusiasts.

Enfield Bullet had a close competition with another sturdy bike named Rajdoot; as the bike was strong enough to handle the rough Indian roads. The company had roped in Indian He-man Dharmendra for the promotion of the bike. With more than 1.6 million vehicles on the road the Rajdoot motorcycle was one of the initial hits of the earlier years of two-wheeler history in the country.

When heavy motorcycles were the order of the day, a relatively lighter bike had caught on the imagination of the Indian two wheeler user. Ind- Suzuki bike launched by the then TVS Suzuki group was an instant hit; however the bike could not sustain its initial success due to the high import content in the vehicle and less of localization.

Following is a snapshot of the market dominated by scooter and motorcycle till FY 2000

Key Players in the Bike Industry

The key players in the motorcycle segment are Hero Honda, Bajaj Auto and TVS Suzuki. Hero Honda leads the market with a 42 percent market share. Its tie-up with Honda Motors gives it access to the best available technology. It continues to report good growth in volumes and has the distinction of introducing the first disc brake model. Bajaj Auto has the second highest market share at 24 percent. BAL though a late comer has recently become very aggressive in motorcycles and is stepping up its capacity to capture a higher chunk of the industry. This new found aggression of BAL is expected to make it achieve a higher market share in the current year. The third largest player, TVS Suzuki with a 18 percent market enjoys some technological inputs from its partner Suzuki.

A quick snapshot of the market share enjoyed by the various players:

Royal Enfield

“Made like a gun, goes like a bullet”

History

Royal Enfield was the name under which the Enfield Cycle Company (a division of the British arms- making company Royal Small Arms Factory in Enfield Lock), made motorcycles, lawn movers and stationary engines. This legacy of weapons manufacture is reflected in the logo, a cannon, and their motto "Made like a gun, goes like a bullet". Use of the brand name Royal Enfield was licensed by  in 1890. In 1956 Enfield of India started assembling Bullet motorcycles under license from UK components, and by 1962 was manufacturing complete bikes. Enfield of India bought the rights to use the Royal Enfield name in 1995. Royal Enfield production, based in Chennai, continues and Royal Enfield is now the oldest motorcycle brand in the world still in production with the Bullet model enjoying the longest motorcycle production run of all time.

Target Market

Royal Enfield, as a premium brand, targets affluent Indians as its consumers. The segment of market which Royal Enfield caters to is urban working professionals or students, which has really powered bike sales. A large number of these are coming up from industries such as IT, banking, pharma and FMCG. Now, people earn more money and have greater disposable income. They want to make a statement and enjoy the ride for which bike is a perfect fit for them. They have targeted this growing set of consumers with their classic series of motorcycles – Classic 350 and classic 500, along with thunderbird series. With traditional stronghold markets of Punjab and Kerala, Ludhiana being the highest purchaser, Enfield has consumers who really like the feel and sound of the bike and are real loyalists.

The target market of Enfield as mentioned above is based on selective specialization of Market in 350cc-500 cc range. The differentiated products which it offers in this category serve the market or segment which has a pleasure for riding. The target market is the hardcore bullet lovers, the ones who have bought the bike through thick and thin and are looking for steady, sturdy and rough and tough bike. Because of its power and ruggedness it has found a target market in Indian defense services, police and paramilitary forces.

Positioning

Royal Enfield is positioned as a leisure and practical brand and has its own niche market for itself. It has positioned itself as a promoter not of motorcycles but of motorcycling experience.  

The voice of Enfield is compared to a tractor, but even that has helped it position in the minds of its customers and aspirants. Built around quality and unflinching loyalty to the customer, a few reasons why the legendary Bullet is not just a bike but is also considered as a motorcycling icon. The ruggedness and reliability of the bike is endorsed by the army, the police, the paramilitary forces and over 500 institutions which form part of the die-hard customer base of the Bullet, dubbed the "Rajagadi", or royal vehicle.

Another positioning perspective of Royal Enfield is to be considered as a truly genuine touring motorcycle. It’s a bike for long distance travelers, which is known as riding and eating up miles. It is also known, amongst hard core bikers, as promoter of leisure motorcycling as a lifestyle and encourages the Royal Enfield riders/owners to keep riding. It’s a bike which most of bike lovers wants to own and shares a place in their heart.

Marketing Mix

The differentiated positioning and target market of Royal Enfield in the bike market, has forced the Eicher group to strategize and place itself differently.

  1. Product:

The two most coveted product offerings from Royal Enfield are Classic 350 and classic 500cc bikes. Following is the brief description of the product in both the segments.

Classic 350cc                        Classic 500cc

The product offers maximum horse power (bhp) of 27.2 bhp which makes it an absolute driving pleasure while being on long drives.

Targeting, Positioning and Marketing Mix (Product) of Royal Enfield

Royal Enfield has positioned itself as a bike for passionate bike riders and those who travel more and frequently. Based on the positioning Enfield has designed the product which is more stable and power driven. The maximum power of 19.8 bhp and 27.2 bhp helps the bike to drive easily on hilly terrains. The torque and five gear transmission helps for more power distribution at each gear level and hence better performance. The disc brake at front tires provides emergency and stable brake system which does not allow bike to skid on the roads at high speeds and thus provide stability which is must for a travelers bike and for all weathers. The maximum speed has been kept again according to the needs and positioning of the brand. To provide the above listed features the most important factor is the engine power, which in Enfield is more than any normal bike i.e. 350 cc and 500 cc as compared to 100cc - 200cc. Youth which is the target market, looks for the above features in a product which also provides them with a non resisting temptation of driving Enfield and adds to their status symbol.  Moreover the three colors red, black and grey are bold and evergreen colors in which the bike has its offerings. These colors also appeal to the youth category a lot. Hence the product has been designed after looking in to the considerations of the target market and company has positioned itself in the market in accordance to it.

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  1. Price

        The price of the Royal Enfield has been kept according to the features and product offerings. Following are the prices of Enfield for its two classic 350cc and classic 500 cc offerings.

        *Ex show room Price Delhi                                                                        Source: http://www.priceindia.in/bike/royal-enfield-classic-500-price/

As the power and features keeps on being added, the price of the bike keeps on rising.

 Targeting, Positioning and Marketing Mix (Price) of Royal Enfield

The target market of Royal Enfield is the affluent Indian market which has greater disposable income. Also they have positioned themselves as a royal commodity and the exclusive bike lovers. This is ...

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