MARKETING MANAGEMENT Mid-term Project Report Presented to Professor.

NagasimhaBalakrishnaKanagal Indian Institute of Management, Bangalore On October 27th, 2011 By

Section A

AMITH KUMAR REDDY 1111007 DAISY PRIYA 1111020 KARAN KUCHINAD 1111033 P SUPREET KUMAR 1111046 SANGRAM K MALLICK 1111060 UDAYAN KEJRIWAL 1111073

Contents
Title of the project.......................................................................................................2 Marketing Decision Problem..........................................................................................2 Rationale..................................................................................................................2 Scope and Limitations of the Project................................................................................2 Scope...................................................................................................................2 Limitations.............................................................................................................2 Detailed Methodology..................................................................................................3 Secondary study.........................................................................................................4 Industry overview....................................................................................................4 Indian Two-Wheeler Industry..................................................................................4 Indian Scooter/Scooterette Industry...........................................................................7 Identification of target segment and addressable market..................................8 Background on Mahindra scooters.....................................................................9 About The Mahindra Group..............................................................................9 Mahindra 2W segment..................................................................................10 Current positioning of Mahindra Flyte and comparative analysis with peers....11 Current Positioning of Mahindra Flyte...........................................................11 Current positioning of competitors/peers......................................................11 Feature Analysis............................................................................................13 Points of Parity and Points of Differentiation with Honda Pleasure................13 Improved Service Network and Increased Warranty Coverage Period..........14 New Positioning and brand identity..................................................................14 New positioning.............................................................................................14 Brand Identity Statement..............................................................................14 Layout approach of primary study.................................................................................15 References...........................................................................................................15 Appendix..............................................................................................................17 Appendix

Title of the project

The title of the project is To design a strategy to reposition Mahindra Flyte in the two-wheeler scooterette segment.

Marketing Decision Problem

Mahindra is one of the largest automobile manufacturers in the country. The company has a wide variety of projects in personal and commercial segment.They entered two wheelers segment in 2008. Company launched Flyte with a view to target women riders but hasnt been able to gain popularity.

Rationale
Repositioning is changing a brand's status in comparison to that of the competing brands. Repositioning is effected usually through changing the marketing mix in response to changes in the market place, or due to a failure to reach the brand's marketing objectives.Mahindra Scooters is facing the challenge to reposition its existing offering and compete against other established players. So far its performance has been relatively poor, capturing <5%share in 2 years of launch. The above marketing problem presents a unique challenge to apply theoretical concepts on a real business problem. It encompasses both primary and secondary research to identify issues behind it and come up with possible solution. This is the rationale behind picking the above problem as the project.

Scope and Limitations of the Project

Scope
The project would cover the marketing strategy that would define the re-launch of Flyte like identifying the product specifications and variations, working out appropriate price range, designing a promotion strategy and ways to leverage the existing dealer base of the company.

Limitations
1. Since the project is hypothetical in nature we have no access to company officials, limiting our data collection. 2. The geographical area to be covered in the study of the target customer base and dealer network is limited. 3. The entry of competitors in the similar segment during the course of the launch of the product will not be considered. 4. The Impact of change in Government policies on Industry, pollution control norms during the course of the product launch shall not be considered.

Detailed Methodology
We will be following the subsequent steps in the analysis of our project: 1. Data collection can be divided into primary and secondary data. Primary Data Collection: We will be conducting surveys of: Consumers to understand their preferences and choice in the present two wheeler market Target customer base to understand their needs and desires in the product which will enable us to re-launch the product to increase satisfaction. Customers using the competitors products which will enable us to gauge the competitors strengths and weaknesses. Interviews with dealers to get a clear picture of the current market trend and their expectations from the product. Secondary Data Collection: Media reports and magazine articles on the two wheeler segment in the present scenario. Market share of various two wheeler brands in India and the position of various competitors. Data on strategies currently followed by Mahindra. Data on strategies followed by Mahindras competitors on advertising and promotion. Industry standards on pricing and best practices followed in advertising, brand management, promotion and cost management. 2. Based on the results of the study, we will design a marketing strategy consisting of the following: Specification of the product, different varieties of the product and additional features to be introduced will be decided upon.

 The pricing of the product will be decided taking into account factors such as the market growth rate, projected sales growth, investment required and expected return on investment. The analysis of regions in which the product should be re-launched will be decided taking into consideration target customer base, existing dealer networks and the distribution channels present. A strategy for the advertising and promotion of the brand will be arrived at based on the target segment and the product USP and by comparing the strategy of the competitor in promoting the brand,

Secondary study
Secondary study has been carried out using publicly available sources i.e. company website, company reports, press articles and sector reports. Secondary study covers the following points: Industry overview Identification of target segment and addressable market Background on Mahindra scooters Current positioning of Mahindra Flyte and comparative analysis of competition

Industry overview
Indian Two-Wheeler Industry India is the second largest producer of two-wheelers in the world. The country stands next to China and Japan in terms of production and sales respectively. Two wheelers have made a significant contribution to the growth of Indian automobile industry. Over the years both the domestic sales as well as the exports of various two wheelers have grown in large numbers. Indias major share of automobile industry goes to two wheelers (nearly 76.49%) with Passenger Vehicles (PVs) getting 15.96% share (Figure 1). Commercial Vehicles (CVs) have got 3.95% share and three wheelers have got 3.60% share.

Figure 1: Indian Automobile Industry

Two-wheeler segment can be further segmented as Motor cycles, Scooters and Mopeds (including the electric bikes).Capturing a large share in the two-wheeler industry, bikes and scooters cover a major segment. Bikes are considered to be the favourite among the youth generation, as they help in easy commutation. In the two wheeler segment, motor cycles cover a huge market share of 77% in terms of production and sales; the scooter segment covers 17% and the remaining 6% of this industry is covered by Mopeds (Figure 2)

Figure 2: Market shares in Two Wheeler Industry

Volumes (Units, Nos.)

Domestic 200809

200910

2010-11

Q1, 2011-12

Y%)

200809

200910

201011

Q1, 2011-12

Motorcycles Scooters Mopeds Total Domestic

Exports

5,831,9 53 1,148,0 07 431,21 4 7,437, 619

200809

7,341,1 39 1,462,5 07 564,58 4 9,371, 231

200910

9,019,09 0 2,073,79 7 697,418 11,790, 305

2010-11

2,464,14 3 532,867 190,672 3,187,6 82

Q1, 2011-12

1.1% 9.3% 4.2% 2.6%

200809

25.9 % 27.4 % 30.9 % 26.0 %

200910

22.9 % 41.8 % 23.5 % 25.8 %

201011

17.5% 13.3% 21.0% 17.0%

Q1, 2011-12

Motorcycles Scooters Mopeds Total Exports

971,01 8 25,816 7,300 1,004, 174

1,103,1 04 30,125 6,905 1,140, 184

1,480,98 3 52,312 6,295 1,539,5 90

482,566 20,949 1,461 504,97 6

25.1 % 1.3% 59.9 % 22.5 %

13.6 % 16.7 % -5.4% 13.5 %

34.3 % 73.6 % -8.8% 35.0 %

27.1% 100.4% -44.0% 28.6%

Table 1: Trend in Sales Volumes of Indian 2W Industry

Scooters
A scooter is a two-wheeled motor vehicle and the most commonly used personal mode of transport for the Indian middle class in towns and cities. Over the past few years the scooter label has been broadened to include a wide array of designs featuring many different technologies and capabilities.

Modern scooters cover a broad spectrum of designs including wide range of engine displacements. Scooters offer several advantages over motorcycles such as convenience, less cost, easier operation lockable storage and low maintenance costs. Scooterettes Scooterettes have been climbing up the popularity charts lately at the expense of the metal bodied scooters. They are a hit among people over the age group of 45, women and the young adults. They are lighter which makes them easier to handle and come with a digital ignition system to eliminate the inconvenience of the kick start. They also have smaller wheels for better balance and manoeuvrability. They cater to the load carrying and personal transport requirement of most urban two wheeler user. One company which has remained in the forefront of scooterettes and mopeds manufacturing in the country is TV SundramIyengar and Sons Limited (TVS), they were the first to launch an indigenous scooterettes in the Sub 100 cc category in the year 1984. Indian Scooter/Scooterette Industry Honda is clearly a market leader with its flagship products Activa and Dio. The scooterette market is becoming very attractive in India as the companies seek to unlock the untapped potential in rural markets. The heavy scooters have fallen out of choice with the customers and have been replaced by more trendy looking scooterettes which are more fuel efficient and are easier to handle. Most of the scooterettes target either male or female customers. However, Honda Activa seems to be the only one in the market to target both the segments. This strategy has propelled it to be the market leader in this segment. Figure 3: Market share of players

Identification of target segment and addressable market

The target segment for our product is young girls and working women. This essentially means women in the age group of 18-35 belonging to households with an annual income in excess of Rs. 240,000/-. The Estimated Market Size of this target segment has been arrived at by the following method: First we took the total number of females in the country as per the 2011 Census. The percentage of females in the target age group was calculated as per the data available from the 2001 Census. We have assumed that the same proportion of females exist in the 18-35 age group in the year 2011. We then took the number of households in India as per the 2001 Census and estimated the number of households to remain at around the same levels in 2011. The number of females in the age group of 18-35 per household was calculated by dividing the total number of females in such age group by the total number of households. After this, we took the number of households with an annual income greater than Rs. 2,40,000/- and estimated the number of females in the age group of 18-35 in such households. The detailed calculations are shown below:

Background on Mahindra scooters

About The Mahindra Group Mahindra embarked on its journey in 1945 by assembling the Willys Jeep in India and is now a US $7.1 billion Indianmultinational. It employs over 1,00,000 people across the globe and enjoys a leadership position in utility vehicles, tractorsand information technology, with a significant and growing presence in financial services, aerospace, after-market, realestate, hospitality, logistics. The Mahindra Group today is an embodiment of global excellence and enjoys a strongcorporate brand image. The competitive in the two wheeler market is very high. At one stage, it was on oxygen. Stylish and fuel efficient motorcycles had more or less killed the market for scooters. So much so, market leader

Bajaj Auto decided to vacate the space. But the market has bounced back in the last few years because of two reasons: One, scooters now offer mileage that is not very different from motorcycles; and two, scooters require lesser maintenance than motorcycles because they are used in large numbers by women who are cautious drivers. Honda leads the pack with a market share of 53 per cent, followed by TVS (21 per cent), Hero Honda (14 per cent) and Suzuki (8 per cent). Mahindra & Mahindras share is a tad above 2 per cent. Mahindra 2W segment Mahindra Two Wheelers, a part of the US $7.1 billion Mahindra Group, furtherconsolidated its presence in the two wheeler segment in February 2011.The companys sales for the month of February 2011 stood at 12,682 units, as against 9,726 units in February2010, an increase of 30%. Total cumulative sales from April 2010 to February 2011 stood at 151,164 units, as compared to 57,711 units forthe same period last year, an increase of 162%. Mahindra Two Wheelers crossed the landmark cumulative figure of 200,000 units,

therebyestablishing itself as a two wheeler marketeer of significance. This feat has been achieved in 16 months fromthe launch of the PowerScooter portfolio in September 2009. Mahindra two wheelers achieved this milestone inone of the shortest time spans among two wheeler manufacturers. The sales of Mahindra Stallio stood at 5181units. Mahindra 2 Wheelers Power Scooters cater to a range of consumer segments. The Mahindra Rodeo with itsvery innovative, contemporary features is popular amongst the Indian youth, while the Mahindra Duro ispositioned as a family scooter. The Flyte is the Indian womans two-wheeler of choice. The stylish Stallio createsa niche for itself in the motorcycles category. Mahindra & Mahindra has positioned its scooters, a portfolio of three (Duro, Rodeo and Flyte), as power scooters. Each of the three scooters has been equipped with an 8-hp 125-cc engine, packing more power (better displacement) than the 100 cc scooters of rivals. The Suzuki Access is the only other scooter in the market that rides on a 125 cc engine. What also helped was the acquisition of the assets of the Firodia-promoted Kinetic Motors in 2008 for Rs 110 crore. Kinetic had launched Flyte, complete with a 125 cc engine, in 2007. The acquisition

thus gave Mahindra & Mahindra a ready power scooter to launch. This is what the company has done now, of course, after touching up the scooter a bit to give it a new look and feel. Flyte has been selling 4,000 per month in the last six months. This is double the monthly sales of the Kinetic Flyte at its peak.Kinetic did have one advantage. SYM, the $1-billion Taiwanese automobile maker, was Kinetics partner in India and had helped it launch the Flyte. Mahindra & Mahindra could count on its technical expertise. Kinetic also had an 80:20 partnership with Italjet Moto SpA of Italy. It was through this joint venture that the Blaze was launched and subsequently discontinued. But Mahindra & Mahindra does not see much value in it. Mahindra & Mahindra can also draw on the expertise of Engines Engineering, the Italian automobile design and technology outfit that has worked on brands such as Ducati and Honda, which it bought in 2008. Though priced in the same range as the Hero Honda Pleasure and TVS Scooty Pep, these are 5 to 6 per cent cheaper than market leader Honda Activa, despite an engine that is 12 to 18 per cent larger. These are also 8 to 12 per cent cheaper than Suzuki Access. The pricing strategy seems to be similar to the one Mahindra & Mahindra used when it launched the Scorpio low inaugural prices which can be ramped up once the brand is well established in the market place. Mahindra & Mahindra wants to sell no less than 100,000 scooters in a year and a half. To create the demand for its scooters, it has come out with a teaser ad that highlights the power. The company has also tried to reach out through a refurbished website and is present in the social media.

Current positioning of Mahindra Flyte and comparative analysis with peers

Current Positioning of Mahindra Flyte Mahindra 2 Wheelers has 3 products Duro, Rodeo and Flyte in its stable. Mahindra had actually acquired Kinetic in 2008. Mahindra Flyte is the only product from the Kinetic stable that it chose to continue with. The rodeo has been positioned as a power scooter .It is shown as an alternative to a motorcycle which is assumed to be powerful. Duro is positioned as durable and powerful family scooter with a tagline, Chale apne dum(power) par. Mahindra Flyte is positioned as a scooter that matches personality and lifestyle. It is targeted at young people.

Current positioning of competitors/peers With the famous tag line and jingle Why should boys have all the fun? Hero Honda Pleasure has captured the imagination of young women aspiring to make a mark in their own lives and feeds on womens aspirations and ambitions and the need to be independent. The current market leader, Honda Activa is positioned as a family utility vehicle with universal appeal. Suzuki Access focuses on Power, style and mileage to position itself in the scooter market.TVSScooty Pep targets young girls by positioning itself as a stylish and economical vehicle. Peps go babelacious campaign and rich variety of colors offered reinforce its fashion statement.

Figure 4: Comparative Analysis

Figure 5: Segments and dominant players

Feature Analysis

Points of Parity and Points of Differentiation with Honda Pleasure

IgnitionIn order to cater to the demands of commuting in City traffic, Flyte has been equipped with Self Ignition in addition to the traditional Manual Ignition. This would place Flyte on par with its competitors. Kerb Weight Its a pre-requisite for any scooterette catering to women to be lightweight but not wobbly. Flytescooterette is designed with new age technology and has a high end plastic body to keep the kerb weight in check and maintain the sturdiness of the vehicle. TransmissionTo enhance the riding ease for women buyers, the power transmission system of Flyte is designed to be automatic in comparison to the manual gear shifts of the past. This is again a pre requisite for a product vying to enter the scooterette market in the country. In addition to these Points of Parity, Flyte has the following unique features which would enable to differentiate it from that of its competitors: Engine Capacity Mahindra Flyte is powered by a 124.6 cc four stroke SI Engine, which provides a maximum power of 8 BHP. This engine Capacity is offered only by Suzuki Access in the market. Central Control/lockThis is another unique feature of Flyte and enables the owner to centralcontrol, locking and anti-theft magnetic key. Better Ride QualityComfort extends to the front fueling (4.5 ltr tank) where the rider need not alight from the vehicle for fuelling the tank which is normally under the seat. It has huge boot storage capacity. Optional mobile charger facility is available which goes well with todays modern technology of saving time. It also sports huge under seat storage space, a front telescopic suspension and a hydraulic rear suspension adding on to the riding experience. Improved Service Network and Increased Warranty Coverage Period Flyte offers warranty for a period of 18 months in comparison to 6 months of Honda Activa. Also, the number of authorized service providers for Flyte in the country is about 20% higher than those authorized for Honda Activa.

Secondary Study:

Primary Study:

Changes in the Product specifications: (include price range also, everything supported by primary and secondary study)
The primary and secondary studies reflected these required changes in the current model: 1. Redesigning the product: The major complains of consumers regarding the current model were non-attractive front part and only few available colours. To resolve these issues the following changes in the current design are proposed: a. Attractive front part, designed using state of art aero-dynamics technology b. Increase the variety in colours and improve the graphics so as to make the product more suited to the stylish lifestyle of the target market. 2. Technical Changes: There were few technical difficulties faced by our existing customers and these issues were confirmed by our interaction with the dealer. The major technical problems that will be addressed in the new model are: a. Ground clearance to be increased from 115mm to 140mm b. The petrol tank is divided into 2 tanks with capacities of 2.5lts and 2lts, but the fuel gauge indicates the petrol level of only one tank i.e. 2.5lts, which is the secondary tank. Therefore an inaccurate indication of fuel is observed. We will address this issue when redesigning the scooterette. c. The mileage will be increased by 5 more kms, giving more value for money to the consumers. d. Starter HT coil will be changed and a new improved HT coil will be employed so as to prevent the self starter problem. e. High end transmission system will be used to prevent the frequent starting problem f. Accelerator and variator will be well synchronized thereby smoothening the acceleration g. The complete body will be made sturdier so as to reduce vibrations at high speeds. h. The engine power will be reduced from 124cc to 110 cc. This reduction in cost will take care of the costs incurred due to the above mentioned changes. This change in engine power will improve the mileage and also result in differentiation between the other two offered products namelyMahindra Duro and Rodeo Inspite of the above mentioned product adaptations the price of the Mahindra FlyteX will be kept the same at 47, 500.00 INR.

New Positioning and brand identity

New positioning Mahindra Flyte is currently positioned as a scooter that matches personality and lifestyle. It is targeted at young people. The current target segment is working women. It can be expanded to include young

college girls by stressing on the style factor and enhancing the variety of colors offered. The new position for Mahindra Flyte would be as a stylish vehicle with a perfect balance between power and mileage, style and performance,sturdiness and ease of ride. Brand Identity Statement Fly your style To expand to the young girls segment, Mahindra Flyte should make its style statement. But to differentiate itself from competitors in this segment power factor also needs to be stressed upon. Fly your style Fly aptly captures the power of Flyte and Style reflects the aspirations of young girls.

Layout approach of primary study

We will carry out 2 primary surveys to complement the secondary study to come up with recommendations. These surveys are: 1. An online survey for consumers who may be using a scooty/moped/scooteretteor can be potential buyers for the same. This will help us identify the kind of people actually using such vehicles their age group, income level, occupation; what are the qualities they look for in a vehicle; who help them make buying decisions for them; where do they gather information from for such products.The survey will be administered online in the month of November for women across different profiles from various cities. Sample size will be approximately in the range of 30-50 people. Post survey, responses will be analyzed for insights. Questionnaire for survey attached in appendix. 2. An in-person interview with dealers of scooty/moped/scooterette in order to determine how existing dealer network can be leveraged to sell more units, where is Mahindra lacking, what is unique about competitors distribution strategy, how important is after sales network, how can after sales network be utilized to generate higher customer satisfaction, what are the incentives offered to dealers and sales representatives to boost sales, how does incentives vary across players.The in-person interview will be carried out in Bangalore city in the month of November. Number of dealers to be covered will be approximately in the range of 4-7 people.Questionnaire for survey attached in appendix.

Marketing Strategy:

Advertisements:

Promotions:
The several promotional campaigns that we zeroed upon for the launch of Mahindra FlyteX are: 1. Colleges 2. Software companies 3. Camps

4. Shopping mall

Promotions in College Campuses: After repositioning we will target college girls along with working women, so a lot of promotional campaigning in college campuses is required during the relaunch. The major promotional activities in colleges would include: 1. Events sponsorships: College fests are a good place to promote a relaunched product that is especially for the college going crowd. It not only provides an exposure to a large number of potential customers, but also creates a sense of pride among the current users. Mahindra FlyteX can sponsor certain events in college fests and during fests have test drive stalls in the campus itself. 2. Design/photo competitions: Mahindra FlyteX can also take a prosumer approach and improve consumer involvement in the product. This can be achieved by conducting national level design or photo competitions in countrys leading arts and design schools. The contestants can design either graphics for their scooterettes or design a dream scooterette for themselves. These competitions will also give the company a fair idea as to what kind of scooterettes the college going girls would prefer to ride. The interviews of current users reflect that many of them do not like the current looks of the scooterette, hence such activities can actually improve the image of the product in this context. Promotions in Software/IT agencies: Mahindra FlyteX will target working women along with college going girls, so the growth of IT companies and software agencies can be used to promote our product. As it can be seen that the number of software companies have increased at a very fast rate, so has

References
1. http://india-reports.in/transitions/two-wheeler-segment-in-india/ 2. Indian 2W Industry, Update, Aug 2011

3. http://www.mahindra2wheelers.com/pdf/PressRelease-DRAFTMahindraTwoWheelersFeb2011Sales.pdf
4. http://www.business-standard.com/india/news/scooter-diaries/372254/ 5. Census of India 6. KPMG report on automobile sector in India

Appendix
1. Questionnaire for online survey for consumers

2. Questionnaire for dealers interview What is the most demanded 2 wheeler? Which 1 do you prefer to sell more?(What margin does it offer?) Do you deal in Mahindra Flyte? If the answer to question 2 is yes then What is the margin from Mahindra Flyte? What are the most frequently faced problem in dealing with Flyte customers? What are the biggest issues in pushing Flyte off the racks? If the answer to question 2 is no then Have you dealt with Flyte before? If answer to the previous question is yes then Sub questions of question 3 Why did you stop dealing in Flyte? If answer to the 1st sub question is no then Would you like to deal in Mahindra Flyte? If no then why not? What are the after sales services offered by you? Are the spare parts of Mahindra Flyte readily available at your outlet? What is the current waiting period for Mahindra Flyte and the difference between the highest selling 2W vehicle? What are the monthly average complaints from FLYTE customers that you come across? Recommendations for bettering the Flyte services.