Product Market Analysis

Motorcycles in India

The Players

IIMC SMP09 – Motorcycle Team 2

The Motorcycle Market • South East Asia has a huge motorcycle market

– demographics favor further growth

IIMC SMP09 – Motorcycle Team 3

• Global Market eyeing India – Piaggio plans to increase production in India – KTM plans to set up plant in India

• Indian brands need to increase R&D – to compete with global brands in local market

The Motorcycle Market ..contd. • 2W sales growth drop in 2012, matter of concern

IIMC SMP09 – Motorcycle Team 4

• Rise in raw material costs • Global demand for

electric 2W is projected

Market trends Before competition act: • 1955-69: Collaboration • 1970-80: Manufacturing Increased

– Growth in demand – fuel price increase – FERA caused technological stagnation

• 1981-90: Foreign collaboration – up to 100cc motor cycles license capacity was increased

• 1991-99: Liberalization of economy – more brands – increased sales

IIMC SMP09 – Motorcycle Team 5

Market trends ..contd. Post competition act(2002): • 2000-2010:

– Rapid growth in urban areas. – Parking space, traffic chaos made 2W preferred option – demand of gearless scooters

• women working population increase

• 2010-2020: – Overcapacity – Potential speed bump in urban areas – Rural market needs to tapped to continue growth rate – Need to tie up with local (service) centers in rural areas

• to display brand presence across every corner in the country • have an edge over others in providing service

– Need for rollover of success trend • from urban Tier I cities to Tier II and III cities

IIMC SMP09 – Motorcycle Team 6

Product Segments

IIMC SMP09 – Motorcycle Team 7

• Standard – Rational:

• Basic cost effective model available. • Good fuel efficiency (around 65-70 kmpl)

– Emotional: • Doesn’t get affected by emotional aspects. • Doesn’t mind being seen riding entry level models.

– Models : • Bajaj Platina, Hero Honda CD Dawn/Deluxe, TVS Star City, Yamaha Crux

• Deluxe – Rational:

• Good fuel efficiency (around 50-65 kmpl). • Simple sober styling, in some cases matching the looks of upper segments.

– Emotional: • Doesn’t like to be seen buying into the least price (entry) models. • Models in this segment has more prestige value than standard models

– Models: • Hero Splendor, Hero Passion, Hero Glamour, Bajaj Discover, TVS Star City, Honda

Shine, Yamaha YBR, Suzuki Slingshot, TVS Flame, Honda CB Twister

Product Segments ..contd. • Sports

– Rational: • Combination of decent fuel efficiency (around 40-50 kmpl) with decent pick up • Top speed around the (150-20) kmph mark

– Emotional: • Power and pickup takes equal importance. • Bikes in this segment are also expected to be styled in a muscular manner • Good engine performance

– Models: • Bajaj Pulsar, Hero CBZ Xtreme, Honda CB Unicorn, Honda CB Unicorn Dazzler, TVS Apache RTR,

Suzuki GS150R, Hero Karizma, Yamaha Fazer, Honda CBR250R, KTM 200 Duke

• Cruiser – Rational:

• Standing apart from the crowd • Typical fuel efficiency (around 30-40 kmpl) • More emphasis on power and pickup

– Emotional: • Stand apart from the crowd • Styling elements like Half Fairing, Full Fairing, Differentiated Styling

– Models: • Bajaj Avenger, Royal Enfield Thunderbird, Harley Davidson FLST, Ducati Strada, Hyosung Aquila

IIMC SMP09 – Motorcycle Team 8

Price Segments • 30K-60K :

– Hero Dawn, Suzuki Hayate, Hero Moto Deluxe, TVS Star Sport, TVS Star City, Yamaha Crux, Hero Moto Corp Splendor, Bajaj Discover, Yamaha YBR, Suzuki Slingshot, Honda CB Twister, Hero Moto Corp Passion, TVS Jive, TVS Flame, Hero Moto Corp Glamour, Yamaha Gladiator, Hero Moto Corp Achiever, Honda CBFStunner

• 60K-1L: – Bajaj Pulsar, Hero Moto Corp Hunk, Honda CB Unicorn Dazzler, Yamaha

FZ,TVS Apache RTR, Yamaha Fazer, Bajaj Avenger,Hero Moto Corp Karizma, Royal Enfield Bullet 350

• 1L-5L : – Royal Enfield Bullet Electra, Yamaha YZF, Royal Enfield Classic, Honda

CBR150R,KTM Duke, Honda CBR250R, Hyosung GT250R, Kawasaki Ninja, Hyosung GT650N, Hyosung GT650R, Hyosung GV650

• >5L : – Harley Davidson XL883, Hyosung ST7, Harley Davidson XL1200, Ducati

Monster, Suzuki Bandit, Suzuki Intruder, Yamaha FZ1, Honda CB1000R, Harley Davidson FXD, Ducati HyperMotorad, Ducati Superbike, Suzuki Hayabusa, BMW 1200, Ducati Diavel, Ducati Multistrada, Yamaha VMAX

IIMC SMP09 – Motorcycle Team 9

Customer Segments

IIMC SMP09 – Motorcycle Team 10

Deprived (< 90K) Aspirers (90K-2L) Middle Class (2-10L) Rich (> 10L)

Standard Public transportation

not available. Business

needs. Rural areas.

Needed for regular

commuting. Can

commute in public

transport but feels

good in own vehicle.

Maybe for alternate

transport option

NA

Deluxe NA Proud to own a deluxe

motorcycle.

Alternate transport option NA

Sports NA Very passionate about

riding sports

motorcycles

Medium range sports

category for young siblings

High end sports

category for young

siblings

Cruiser NA NA Very passionate about

riding two wheelers

Passionate about

riding two wheelers

Consumer Behaviour • Standard

– Typical consumer class: • Rural middle class • Urban Lower and Lower-Middle class

– Behavioral characteristics: • Fuel efficiency • Low maintenance • Low cost

– Used for • Business commute - newspaper, milk, daily use vendor distributor • Lack of public transportation, especially in rural areas • Convenience for small family commute

• Deluxe – Typical consumer class:

• Rural middle class • Urban Lower-Middle and Middle class

– Behavioral characteristics: • Motorcycle looks not too sporty but decently styled • Doesn’t want to own an entry level bike, social status is important • Doesn’t mind paying more, but demands value for money • Should be a good mix of fuel efficiency, maintenance, safety, style and cost

– Used for • Daily office commute • Lack of public transportation, especially in rural areas • Convenience for small family commute

IIMC SMP09 – Motorcycle Team 11

Consumer Behaviour ..contd. • Sports

– Typical consumer class: • Urban Middle class • Young professionals • College students

– Behavioral characteristics: • Fast and furious • Young and impatient • Weakness to imitate powerful stars • Style statement takes precedence over mileage or cost

– Used for • Commuting to college, office • Casual and official racing

• Cruiser – Typical consumer class:

• Rich on the road movers

– Behavioral characteristics: • Passionate about motorcycles • Typically like to be independent and travel alone or in small groups • Loves to be close to nature

– Used for • Casual long distance tours • Adventure travel

IIMC SMP09 – Motorcycle Team 12

Positioning • Hero MotoCorp

– New Brand identity, post split with Honda – Connect with people on all product segments

• Bajaj – Product segments targeted : Deluxe, Sports – Brave strategy : targeting premium performance segment

• TVS – Product segments targeted : Standard, Deluxe – Launch new products in the standard and deluxe segment

• Honda – Product segments targeted : Standard, Sports – Targeting Indian common man in standard – Targeting Indian racing enthusiasts in sports

• Mahindra – Product segments targeted : Deluxe – Create new market segment within 110 cc

• Harley Davidson – Product segments targeted : Cruiser – Planning affordable machines for Indian market

IIMC SMP09 – Motorcycle Team 13

Positioning –Comparison

IIMC SMP09 – Motorcycle Team 14

Standard Segment

Brand Name Bajaj Platina Yamaha Crux

Tagline/ Slogan Dumdaar sawari Aapke irade sa mazboot; Yes Yamaha

USP Durable stylish and good performance Bike which has good mileage

Segment Middle-class people who want a bike that is stylish and

gives a good mileage

Middle-class people who want a bike that is stylish and

gives a good mileage

Target Group Middle class youth from the age bracket of 25-36 Middle class youth from the age bracket of 25-35

Positioning For bikes who want to experience a powerful ride A strong bike which encourages a strong life

Strength Strong brand name and huge market Excellent distribution through franchisees Most reliable as it requires low maintenance Good mileage

Huge market Excellent distribution through franchisees Good mileage

Weakness Simplistic Design Focuses on just mileage

Limited market share as compared to other leading brands

Opportunity Expansion in rural and tier-2 cities Innovations in technology

Expansion in rural and tier-2 cities Innovations in technology More brand visibility

Threats New entrants Competitors Low cost bikes

New entrants Competitors Low cost bikes

Competitors Victor

Apache

Passion

Yamaha Crux

Victor

Apache

Discover

Bajaj Platina

Positioning – Comparison ..contd.

IIMC SMP09 – Motorcycle Team 15

Deluxe Segment

Brand Name Hero Honda(Hero MotoCorp) Splendor Bajaj Pulsar

Tagline/ Slogan Yaari ki Gaadi; Desh ki dhadkan Definitely Male, The Fastest Indian

USP A bike with low maintenance and good mileage Powerful engine and good pickup

Segment Middle-class people who want a bike that is stylish and gives

a good mileage

Young boys looking for fast sporty bikes for Indian

roads

Target Group Middle class youth from the age bracket of 25-35 Young boys in the age 18-30 middle class

Positioning A motorcycle for making friends in life The No.1 Sports bike in India

Strength Strong brand name and huge market Excellent distribution through franchisees Most reliable as it requires low maintenance Good mileage

Excellent brand name High product quality High performance, speed and pickup

Weakness Focuses on just mileage and no power Mileage on a lower side due to focus on Power

High cost in various variants

Opportunity Expansion in rural and tier-2 cities Innovations in technology

Expansion in rural and tier-2 cities Cost management thus reducing the price of

the bike Developmental changes thus reducing bike's

weight

Threats New entrants

Competitors

Low cost bikes

New entrants

Competitors

Low cost bikes

Competitors Passion

Discover

Pulsar

Passion

Discover

Splendor

Positioning – Comparison ..contd.

IIMC SMP09 – Motorcycle Team 16

Sports Segment

Brand Name Hero Honda CBZ Yamaha FZ

Tagline/ Slogan Live off the edge; Desh ki dhadkan Lord of the street

USP Fast and Sport looking bike Powerful engine and good pickup

Segment Young boys looking for fast sporty bikes for Indian roads Young boys looking for fast sporty bikes for Indian

roads

Target Group Young boys in the age 18-30 middle class Young boys in the age 18-30 middle class

Positioning For bikers who want to live life in the extreme For sports bike lovers who like to rule the streets

Strength Excellent brand name High product quality

Excellent brand name High product quality High performance, speed and pickup

Weakness Lower on mileage High cost

Very low mileage High cost and thus limited target segment

Opportunity Expansion in rural and tier-2 cities Cost management thus reducing the price of the bike Developmental changes thus reducing bike's weight

Expansion in rural and tier-2 cities Cost management thus reducing the price of

the bike Developmental changes thus reducing bike's

weight

Threats New entrants Competitors Low cost bikes

New entrants Competitors Low cost bikes

Competitors Karizma

Yamaha FZ

CBZ

Karizma

Positioning – Comparison ..contd.

IIMC SMP09 – Motorcycle Team 17

Cruiser Segment

Brand Name Royal Enfield Classic Bajaj Avenger

Tagline/ Slogan Handcrafted in Chennai Feel like God

USP Indian cruiser bike Indian cruiser bike

Segment Boys who want to go for bike cruises Boys who want to go for bike cruises

Target Group Middle class boy of the age group 18-31 Middle class boy of the age group 18-30

Positioning Handmade classic powerful bike for Indian roads For people who want to take control on the road

Strength Oldest motorcycle brand in the world Excellent branding and positioning High performance and comfort Used on a large scale for military purposes because of

its sturdiness

Strong brand name Excellent distribution Good performance Comfortable, safe, stylish

Weakness Weight of the motor cycle can be an issue for few customers.

Mileage of high cc bikes is an issue

Comparatively smaller market for cruiser bikes

High price

Opportunity Tap the urban market More brand visibility

Expansion in rural and tier-2 cities Cost management thus reducing the price of

the bike Developmental changes thus reducing bike's

weight

Threats Threat from other competitors New entrants Competitors Low cost bikes

Competitors Avenger

Harley Davidson

Royal Enfield

Harley Davidson

Positioning – Comparison ..contd.

IIMC SMP09 – Motorcycle Team 18

• Competitor strength grid of major players

Description Hero Bajaj Honda Yamaha Suzuki

Brand Recognition

Price

Distribution Channel

STRONG

Availability of service centres

ABOVE AVERAGE

Sporty Look

AVERAGE

Warranty

LESS THAN AVERAGE

Re-sale Value

WEAK

India market Sales

Advertising and Promotion • Royal Enfield

– power and royalty – unique thump sound – Flagship product :Bullet – promotes cult culture through social

networking over net – organizes leisure and adventure trips

IIMC SMP09 – Motorcycle Team 19

Advertising and Promotion ..contd. • Bajaj

– Switch from Scooter to Motorcycle – Definitely Male campaign - Pulsar – Feel like God : Cruiser segment – Mileage campaign – Easy financing options – “Humara Bajaj” -> “Inspiring Confidence”

-> ”Distinctly Ahead”

IIMC SMP09 – Motorcycle Team 20

Advertising and Promotion ..contd. • Hero

– Flagship product : Splendor – New modern logo – Communicate R&D focus – Stylish in upcoming products – “Desh ki dhadkan” to “Hum mein hai

Hero”

IIMC SMP09 – Motorcycle Team 21

Advertising and Promotion ..contd. • Mahindra

– Entering motorcycle market

– Communicating focus on R&D

– Create sub-segments • targeting specific customer

experiences

IIMC SMP09 – Motorcycle Team 22

Advertising and Promotion ..contd. • Honda

– marketing itself as an Indian company

– “Sach kar denge sapne” Indian translation of “The power of dreams”

– targeting mass section – strengthening network and

dealership outlets – Sports segment

• racing enthusiasts • “Taste First Blood” campaign • CBR club

IIMC SMP09 – Motorcycle Team 23

Advertising and Promotion ..contd. • Harley Davidson

– Currently targeting customers wanting Intl. products

– Promoting typical US cruiser attitude

• Don’t care attitude (Screw it, lets ride)

– Planning custom products by 2014 for Indian market

IIMC SMP09 – Motorcycle Team 24

Marketing Strategies • Bajaj:

– Brave steps taken to move from Scooter to Motorcycle market

– Switch customers from standard to deluxe segments

– credibility through integrity

– providing better value for consumer’s money

– dependable product and service

• TVS Motors: – stronghold in low standard segment

– product specific to geographic division

– dirt bike rally, MRF super cross championship rally

– Brand ambassador like Virat Kohli and MS Dhoni

IIMC SMP09 – Motorcycle Team 25

IIMC SMP09 – Motorcycle Team 26

Thank You