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Royal Enfield is the oldest surviving brand of motorcycles in the world. With its
heritage as a weapons maker and Made like a gun as tag line, Royal Enfield
started in the 1890s making bicycles, lawn mowers and motorcycles in England.
Since the 1940s, the company hasnt much altered the technology in the singlecylinder engined two-wheelers except for modern features such as direct fuel
injection and switch ignition. The British military used the bikes, including the
Flying Flea designed for parachute drops with airborne troops during the
Second World War.The manufacturer Enfield India was bought over by Eicher
Motors Limited in 1994. The brand is now owned by Eicher Motors. Thus, it is now
an Indian brand. The 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 The Crown in 1890.
The first customers of the Bullet was the Indian Army. More often than not people
from defence forces, police and head or landlords from villages in India were
seen using this mean machine which helped in defining the brand as an
aspirational brand. The bullet was often seen as the vehicle of power and
affluence. The love for the bullet is often passed on as lineage from generation to
generation. Often bullet owners have felt the magic for the thump as kids when
their parents or elders in the family got home a bullet.
Brand Management
Royal Enfield
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Brand communication
Designing brand communication for such an iconic brand is always a challenge
since the right mix of portraying heritage and legacy vs modern well equipped
machine has to be chosen. The Bullet has always been associated with
independence, self expression, power and passion. Even the marketing campaign
Leaving Home, Selfism focussed on the same aspect as it showed a boy
cutting his umbilical cord to ride his dream bike. The brand communication was
based on the insight that many young men stay at home for too long missing out
on the fun of an independent life. Recently the brand communication revolves
around being independent, being free and power. Earlier in 1980s, it was more
about power and authority. But during 2000, Royal Enfield changed its
communication from targeting people above 30 years to the youth. The brand
then started communicating the values of self-respect, independence , power
and adventure. The different branding activities of Royal Enfield are all encircled
around this brand communication.
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Perceptual Mapping
In the perceptual mapping matrix Royal Enfield is bound to take up the elite class
top right corner beating all the other brands, hands down. The brand value and
image which Royal Enfield has built over the years is out of the bounds for any
other brand. They are currently the most respected motorcycles in the market
and lie in the premium sector. They have established a cult image for themselves
and carved out a niche for themselves in the market giving the owners more
than simply a means of transport. The brand is perceived to give a sense of pride
and authority to the owner and adds up a definition to the persons character. In
India Royal Enfield has the same image as Harley Davidson has in west, it gives a
sense of pride, freedom, passion and distinctiveness. They have also set their
image as a very manly bike, as being very heavy it becomes a little difficult to
handle making it possible only for well-built people to handle it. This further gives
a hint of muscularity and pride to the owner, to be a part of the few who can
handle the beast. The people who dont or rather cant, own a Royal Enfield
aspire to own one and the owners are generally looked at with respect. Many
brands like Bajaj and Kawasaki tried to enter the segment with their cruiser bikes
like Avenger and Enticer respectively but could not come anywhere near to the
leader Bullet. Although they fulfilled the dream of owning a cruiser bike for
those who couldnt afford a Bullet, but were unable to tap the image which Royal
Enfield had its old on. The brand has worked hard in building this perception from
the very beginning, for instance the motorcycle was first to be seen owned by
the powerful people only, like police officials, zamindars etc. making it an
aspiration for others. Royal Enfield advertises their motorcycles in a completely
different manner, unlike other brands they never show comfort and economy,
they simply concentrate on the sheer power of the machine and the respect it
brings along with it. Association of customers with the brand has grown very
deep with the years and customer loyalty simply breaks the charts. Transition
from Royal Enfield to some other motorcycle is a very rare phenomenon as the
attitude which is perceived for the brand, the association with power, strength
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and ruggedness with unique touch of luxury is not to be seen in any other brand.
Royal Enfield can very well be termed as an epitome of brand loyalty and this
can be sensed by the fact that unlike for any other brand, people are ready to
wait for 6-8 months to get their Royal Enfield.
Other brands in the market like Bajaj, Hero Honda, TVS, Suzuki, Yamaha etc.
have their customer base diversified and they cater to different market segments
with different line of products ranging from 100 cc to 200-250 cc. This widened
their customer base but also loses the sense of individuality among the owners
and the motorcycles are bound to remain just a mean of transport. On the
contrary Royal Enfield cater to only one segment and maintain their core
competency, i.e. lifestyle biking. They give the riders a sense of belonging that
the motorcycle has been specially built for someone like him/her. They dont
have any low range products maintaining the premium image of the brand and
even in the future they plan to go further up the ladder of power and thrill.
Value Stage
Marketing Program Investment
Customer
Shareholder
Market Performance
Mind set
Value
Product
Awareness Price PremiumPredictable Reven
CommunicationAssociations Price ElasticityStock Price
Trade ProgramAttitudes
Market
Share P/E
Ratios
Quality
Marketplace
Conditions
Investor
Sentiment
Multiplier
Employee
Attachment Expansion Success
Mkt Cap
Competitive
Response
Market Dynamics
Other Clarity Activity
Profitability
Consistency
Support Growth Potential
*Page 318, Strategic Brand
Management,Channel
Keller Et al.
Distinctiveness
Segment Size andRisk
Profile
Profile
Relevance
Brand Contribution
Customer Mindset:
Awareness: Very high, due to high brand equity and strong brand loyalty
Associations: Royal Enfield is associated with power, strength, luxury,
ruggedness. It is the bike holding record of carrying 48 persons on a single bike
for over 1000 mts.
Brand Management
Royal Enfield
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Royal Enfield
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P/E Ratios: The P/E Ratio of the parent company Eicher Motors is 76.97 and EPS
of INR 53.61, which is pretty good from the investors point of view.
Market Cap: The Market Capitalization of Eicher Motors is INR 111.4263 billion.
Program Quality:
Clarity: Advertising program and marketing communication of royal enfield is
very clear. It is clearly perceived as a powerful bike for enthusiasts. It's owners
take proud in being amongst the few to dare to handle this bike.
Consistency: Program has been consistent in its communication, royal enfield
still represents what it represented 20 years back. Just that the customer base
has increased over the period of time, but the brand equity has only increased.
Distinctiveness:
Product
clearly
differentiates
itself
from
other
motorcycles.While other motorcycles focus on speed and comfort alone, royal
enfield has always leveraged on the advantage of being the powerful and
respectable bike. It distinguishes itself clearly against other popular motor cycles
like Pulsar or FZ 16 or Hero Honda.
Relevance: The product has been communicated well and also the marketing
program has been very relevant to the product's positioning. The product is
considered a niche to some extent and therefore the communication is more
towards a targeted set of customers rather than the entire population. Marketing
program for Royal Enfield is more about customer engagement and loyalty.
Market Conditions:
Competitive Response: Although Royal Enfield is the only player in 350cc to
500cc, many players have entered in the 200cc to 250cc motorbikes and then
there are players in the 500cc -1600cc range. Royal Enfield has been able to
maintain its market share in the premium range but may lose out to other
players if it loses its premium cult image in customers mind.
Channel Support: Royal Enfield has about 250 Dealers serving the customers
in mainly Tier 1 and 2 cities. It is yet to tap the potential of semi-urban/rural
markets, where affordability for its product is improving. Also the After Sales
Service of Royal Enfield is not great and numerous Customer dissatisfaction
reports have been recorded and Royal Enfield needs to work on this.
Segment Size and Profile: Royal Enfield has a niche segment in motorbikes
with a demand of about 250,000 motorbikes a year. But due to the Price
Premium that Royal Enfield charges, it is able to achieve higher profit margins.
Royal Enfield mainly comes in the Premium and Cult Category with a Niche
market aimed at Lifestyle Biking among customers with rising income and
aspiration levels.
Investor Sentiment:
Market Dynamics: According to the Society of Indian Automobile
Manufacturers data, the premium segment, which comprises motorcycles with
the engine capacity above 350cc till 1,600cc, grew by 49% to 54,425 units for
the April-July period this year, at a time when the overall two-wheelers,
comprising scooters and motorcycles, decline by 2%.
Growth Potential: Royal Enfield has a very good growth potential with an
expected growth in Sales Volume and PAT of about 100% by end of FY2015.
Risk Profile: There is only a Risk of a very large capex being involved of INR 1.5
billion for manufacturing expansion but this risk will also help to meet the
demand and increase revenues and profitability for the company for the next 3-4
years. Hence this risk needs to be taken
Brand Contribution: Due to the Cult and Superior Brand Image in India, Royal
Enfield has carved out a niche market for itself owning largely to the Brand value
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built over the years. The Brand contributes around 40% EBITDA to Eicher Motors
and is a significant part of their portfolio which will help them maintain higher
profitability and revenues in future.
Recommendations:
1) Improve the After Sales Service by opening more service centres, as lot of
customers have complained about lack of service and lot of problems with the
Royal Enfield bikes. Availability of spares is also a issues especially for old bullets.
2) In India, Royal Enfield currently has 250 dealers, catering largely to Tier 1 & 2
cities. It is yet to tap the potential of semi-urban/rural markets, where
affordability for its product is improving. Try and tap that market.
3) Due to numerous complaints
on delivery of bike - scratches, ignition problems, break down and other
complaints, try and make the manufacturing more automated - from current
levels of 30% automation to 50-60% automation, so that many of the problems
can be eliminated.
4) Try and build bikes to compete against Harley
Davidson (500cc - 1600cc) - INR 6 lakh above bikes, as they can have the
potential to capture that very niche market segment as well before Harley
Davidson does.
5) Royal Enfield brand ambassadors should come and join in some
rides happening to different parts of India.
6) The RE merchandise should be available
outside RE showroom too like at malls, etc so that people get greater access to
these merchandises.
Brand Management
Royal Enfield
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