MARKET ANALYSIS OF 2 WHEELER SEGMENT: BAJAJ MOTORBIKES

Presented by:
Group 5
Rinky Sachdeva (146) Rohit Jain (147) Atul Mathur (149) Noufal Ahmed (150) Munish Mittal (151)

INTRODUCTION
The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. The dominant product of the automobile industry is Two Wheelers with a market share of over 77%. Major players in the 2-wheeler industry are Bajaj Auto Ltd (Bajaj Auto), Hero Moto Corp, TVS Motor Company Ltd (TVS), Honda Motorcycle and Scooter India Private Limited (HMSI) accounting for over 93% of the sales in the domestic two wheeler market.

Contd..
As per market research, around 70% of the motorcycles sold in India in 2011-12 belonged to the 75-125cc These are bikes which are positioned for the mass commuter segment where better fuel economy and low price are the prime customer considerations. However, the volume share of this segment has been coming down over the years The share gradually being taken away by bikes in the 125cc and 150cc segments

Trend in Sales Volumes of Motorcycles (Domestic)

12

10

0 2007-08 2008-09 2009-10 2010-11 2011-12

Market Share of Various Brands in India

100% 90% 3.6 4.4 8.7 4.3 6.2 7.9 21.9 4.4 6.2 6.7

80%
70% 60% 50% 40% 30% 20% 10% 0% 2007-08 2008-09 2009-10 54.4 59.8 58.5

4.3 7.3 7 26.8

4.8 7.6 6.2

Others
28.7 24.3
25.4

Honda TVS
54.6
56

Bajaj Auto

Hero MotoCorp
2010-11 2011-12

 Executive segment (bikes in the Rs. 40,00050,000 price range) is expected to maintain its steady growth. But competition is likely to intensify following aggressive model refurbishment and new model launch plans of most OEMs. The premium segment (bikes having price > Rs. 50,000) is expected to remain the fastest growing over the medium term Because of the strong growth in purchasing power in the hands of middle-class urbanites especially in the age group of 20-30 years

About Bajaj Motorbikes

Bajaj Auto is a major Indian vehicle manufacturer headed by Rajiv Bajaj Bajaj Auto came into existence on 29 November 1945 as M/s Bachraj Trading Corporation Private Limited. In 1959, it obtained license from the Government of India to manufacture two- and three-wheelers and it went public in 1960 In FY2012, Bajaj Auto sold over 3.83 million motorcycles in India and abroad. In doing so, it grew sales by 13.2% over FY2011, which was lower than in the previous two years. Thus, despite lower growth, Bajaj Auto held on to a share of over 32%.

Product Portfolio
Bajaj Pulsar 150 DTSi. Bajaj Discover. Bajaj Avenger. Bajaj Platina. Bajaj Kawasaki KB 100 RTZ. Bajaj Boxer. Bajaj Caliber. Bajaj Pulsar 220 DTS-Fi. Bajaj Krystal. Bajaj Pulsar 180 DTSi.

Segmentation, Targeting and Positioning

In our survey, we have taken the responses and segmented the motorcycle market according to demographic and Psychographic factors. Geographical factors are not taken into account since our study is conducted in Delhi region. In our survey we tried to find out the perception of people (on a scale of 1 to 5, where importance increases from 1 to 5) for various factors affecting their buying decision for motorcycles.

Factors Affecting Consumer Buying Behaviour

4.5 4 3.5 3 2.5 2

1.5
1 0.5 0

Factors Affecting Consumer Buying Behaviour

Segmentation
Age: A sample of 80 respondents was collected, out of which 29% were of 18-24 years of age.71% were of age 25-30 years of age.

No of Respondents(80)

29% 71% 18-24 year 25-30 year

Respondents in Age group of 18-24 years

25 21 20 15 10 5 0 4 3 8 No of Respondent s 19

It is clear from the figure that Hero is the leading motorcycle brand in 1824 years of age group. However Bajaj is giving tough competition to Hero with second leading position.

Contd.
Respondents in the Age group 25-30 years 10 9 8 7 6 5 4 3 2 1 0 9 9

4
1 No of Respondents

For age group 2530 years, Bajaj and Hero stands equally in terms of market share.

Segmentation on the basis of Marital Status

No of Respondents(80)

18%

Single Married

82%

Marital Status: Unmarried

Respondents using Bajaj Motorcycle(23)
Respondents using other motorcycles(43)

9% 2% 3%
Hero

30% 70%
Discover

Yamaha

21%

TVS

65%
Pulsar

Honda Royal Enfield

As per our responses, unmarried consumers which are using Bajaj motorcycles, a large part of this market segment i.e.70% are using Pulsar and 30% are using Discover.

As per our responses, unmarried consumers which are using other motorcycles, a large part of this market segment i.e.65% are using Hero bikes and Yamaha constitutes 21% of market share.

Marital Status: Married

Respondents using Bajaj (5)

Respondents using other brands(9)

40%
60% Discover Pulsar

44%

56%

Hero Royal Enfield

As per our the responses, married consumers which are using Bajaj motorcycles, a large part of this market segment i.e.60% are using Pulsar and Discover constitutes 40% of market share.

As per our the responses, married consumers which are using other motorcycles, a large part of this market segment i.e.56% are using Royal Enfield and Hero constitutes 44% of market share.

Segmentation on the basis of Annual family Income

25 22

20
17 15 10 7 5 5

10

Bajaj Others
8

2
0 less than 2 lacs 2- 5 lacs 5- 8 lacs more than 8 lacs

Analysis
Less than 2 lacs: Consumers prefer to have other motorcycles. 2-5 lacs: 10 consumers own Bajaj while 19 out of 22 other users have Hero. 5-8 lacs: 7 consumers own Bajaj while 6 own Hero and 6 own Yamaha out of 17 other users. >8 lacs: 9 consumers use Bajaj bikes Thus it clear that the present market segment of Bajaj motorcycles comprises of consumers which have annual family income more than 5 lacs.

Segmentation on the basis of Profession

No of respondents(80)
9%
47% 44%
Business Service Student

Service class customers using other bikes (22)

9% 5%
Hero

In service class sector, Pulsar constitutes 56% while 46% own Discover

86%

Honda Yamaha

Service class respondents using Bajaj (13)

In service class consumers, a large part of consumers (86%) own Hero

46% 54%
Discover Pulsar

Business class consumers (7)

29%
Bajaj Pulsar

Royal Enfield

Business class customers which we surveyed, 71% owned Royal Enfield and 29% constitutes Bajaj Pulsar

71%

Student using Bajaj(13)

As is clear, Students using Bajaj motorcycles prefer Pulsar as compared to Discover

23% 77%
Discover Pulsar

Student using other bikes(25) As is clear, Students using other motorcycles prefer Hero and Yamaha as compared to Honda, Royal Enfield and TVS.

32% 52% 4% 4% 8%

Hero Honda Royal Enfield TVS Yamaha

Targeting
On the basis of segmentation of market, Bajaj segment consists of: Consumers with age group 18-30 years. Consumers with family income more than 5 lacs. Consumers which are students and business class people. Out of this segment market, Bajaj should focus on a target group which best suits their interests for Bajaj motorcycles. Since Bajaj motorcycles have high price, it should target consumers with high annual income specially business class consumers with age group of 18-30 years.

Positioning
Bajaj has positioned Pulsar in the High Style High Price segment along with Hero Honda Karizma, Hero Honda CBZ, Royal Enfield Bullet. It also has positioned CT 100 in the Low Style Low Price segment along with Hero Honda Splendor, TVS Star City

Customer Responses on various Factors

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Competitors

Competitors Analysis
Bajaj motorcycle owners are highly satisfied in comparison to its competitors on :
Performance Style and Design Insurance facility.

Bajaj motorcycle owners are dissatisfied in comparison to its competitors on

Mileage However on any other parameter, Bajaj is almost comparable to its competitors.

SWOT Analysis
Strengths Focus on Extensive Research & Development High performance products across all categories High export to domestic sales ratio(1:2) Legacy of brand name Highly experienced management Great finance support network Product design and development capabilities Widespread distribution network

Contd
Weaknesses
Has presence mostly in higher segment (150cc,180cc) Less variety of products in lower segment(100cc,125cc) Still not a very established name in the global market Hasnt employed the excess cash for long

Contd
Opportunities
Growing two-wheeler market in India and across globe Growing gearless trendy scooters market More maturity in moving towards higher end segment(Above 200cc) Can use the existing R&D capabilities for new models in lower segment

Contd
Threats Tough competition from domestic as well as foreign players Tough competition specially from Hero which has large market share(~ 56%) Margin squeezes from all the directions(Price as well as cost) The competition catches up with any new innovation in no time

BCG Matrix

Star (high growth, high market share)

Stars use large amounts of cash: As the Discover, Pulsar 150 and 180 cc are the star performer of Bajaj so Bajaj has to invest on advertisement to capture maximum market share. Stars are leaders in the business: Today Bajaj Pulsar 180 and 150 cc are leaders in market. As they are first choice of the youth those are interested in looks, technology and performance. Stars usually generate cash for the company. Pulsar generates maximum cash for Bajaj auto ltd. Pulsar is having 47% of market share in its segment. It is critical that Stars should hold the market share, because the future rewards are generally cash cows

Cash Cows (low growth, high market share)

Profits and cash generation should be high: Platina and CT 100 are the models which generates high profits for Bajaj auto ltd. Low market growth does not attract new competitors: Now, the market share growth if Platina and CT 100 are very less, they are unable to attract new customer in the market. Low market growth, call for less investments: It is of no use to invest more on these models of Bajaj motorcycles. It is better to invest on R&D, or some other star performer.

Dogs (low growth, low market share)

Avoid and minimize the number of Dogs: Avengers and Kristal now become the dog for Bajaj auto ltd. They have to stop the production for these models and rather use this investment in designing of some new model. Watch out for expensive 'rescue plans': Bajaj should stop further investing in these models and save the investment for some other purpose. Low growth coupled with market share is generally a loss making proposition for a company Dogs must deliver cash, otherwise they must be liquidated

Question Marks (high growth, low market share)

Question Marks have high cash demands (High Market growth): Pulsar 200 and 220 cc are in high demand but their market share is low. The customer which come the segmentation for these models are less in number, so it difficult to say whether is wise to invest further in these models. Question Marks generate low returns, (Low market share):The market share of XCD 125, Pulsar 200, 220 cc, Blade have very less market share. The customer which come the segmentation for these models are less in number, so it difficult to say whether is wise to invest further in these models. If the market share remains unchanged, Question Marks will simply absorb great amounts of cash Either invests heavily, or sell off, or invest nothing and generate any cash that you can.

Outcomes of such a Strategy

Cash Cows Business Units will reach their profit target easily. They are often allowed to reinvest substantial cash amounts in their mature business. Dogs Business Units are fighting an impossible battle and, even worse, now and then investments are made. Question Marks and Stars receive only mediocre investment funds; hence they can never become Cash Cows (or Stars)

Porters Five Forces

Porters five forces assumes that there are five competitive forces that identifies the competitive power in a business situation or these help us to find the attractiveness of a market segment.

Threat of Substitute Products

There are many substitute products available like Yamaha R15 and Fazer, Hero Splendor and Passion Pro. Customer can easily find the product that youre offering at the same or less price. Quality of the competitors product is better- Hero is still known for its mileage and technology. Substitute product is by a company earning high profits so it can reduce prices or can give discount offers to the lowest level. Hero as of now acts as the strongest competitor to Bajaj motorcycles.

Threat of New Entrants

The market runs on high economies of scale and on high economies of scope as well. Need for technical expertise is high and thus a new entrant will have a huge uphill task. Owning a strong distribution network is very important and is very costly which certainly takes a lot of time and energy. There is also involvement of huge cost. All these make the barrier high enough to be restraining for any new entrants in the market.

Industry Rivalry
The industry rivalry is extremely high with any product being matched in a few months by competitors. This instinct of the industry is primarily driven by the technical capabilities acquired over years of development under the technical collaboration with international players. Exit barriers are high and rivals stay and compete-a large market share to capture. Fixed cost are high resulting huge production and reduction in prices

Bargaining Power of Suppliers

Suppliers are concentrated and well organized. Many substitutes available to suppliers. Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet a critical need.

Bargaining Power of Buyers

Product is not differentiated much. Buyers cost of switching to a competitors product is low as almost all companies are producing at relatively same price. Buyers are price sensitive and fully informed.

Marketing Mix

McCarthy classified various marketing activities into marketing-mix tools of four broad kinds, which he called the four Ps of marketing, i.e. Product, Price, Place, and Promotion

PRODUCT MIX(width)
There are various segments which Bajaj auto is trying to serve. It is trying to target lower level segment with Bajaj platina (100cc) & Bajaj discover(125cc, 135cc) which targets the middle level segment customers. Apart from this the premium segment is served by Bajaj pulsar(150cc,180cc,200cc,220cc) and Bajaj avenger.

PRICE MIX
ECONOMY SEGMENT (100ccsegment): This segment is served by Bajaj platina (100cc), Bajaj Discover(100cc), Bajaj ct100.The ex-showroom price in Delhi of platina is around Rs 40000. PREMIUM SEGMENT (125cc-200cc): This segment is served by Bajaj Discover (125cc, 135cc), Bajaj pulsar (150cc, 180cc, 200cc). The price of Discover is around Rs 52500.

PROMOTION MIX BAJAJ auto has got showrooms evenly spread all over india. It also sells its premium segment bikes through probiking showrooms. Promotional strategies adopted: The largest maker of premium bikes in the country, is already working on a plan to launch another low-cost bike. Re-launching with improve features and advertising the lower segment bikes such as platina and discover 100.

PLACE MIXBajaj has a wide network of showrooms and has its has reached to mass population in rural areas through its distribution network. The premium segment motorcycle such as Ninja and Pulsar(200cc and 220 cc) is to be more promoted in urban areas.

Conclusion and Recommendations

From the analysis we can say that Pulsar and Discover are two products of Bajaj in motorcycle segment which contributes largely in its revenue. Pulsar and Discover are two brands in motorcycle segment of Bajaj which are preferred most and they did not use the phrase 'Bajaj Auto' to market either. Highly differentiated target groups for Pulsar and Discover is the prime reason behind the divorce of these sub-brands from the parent brand, Bajaj Auto. Bajaj was correct in adopting the two brand strategy. This has increase market share of Bajaj Auto Ltd. Today the reason why consumers buy a Pulsar is because it is a Pulsar, not because it belongs to Bajaj.

Contd.
Bajaj had designed Pulsar and Discover for two extreme ends of the consumer spectrum. The target group for Discover was 'the commuter' as it stands for balance, responsibility and all things homely. Conversely, Pulsar, 'the performer', symbolized arrogance, irreverence and attitude and hence categorized in the sports category and is mainly preferred by youngsters.

From the analysis we can say that Style and design and Price are the two most important factors influencing customer buying behavior. Pulsar and Discover both ranked high on Style but a notch higher on price compared to its competitors. Thus, Bajaj should try to reduce prices in this segment.

Contd.
Respondents using Bajaj Motorcycles found to be less satisfied on Mileage as compared to its competitors. To capture large market segment and to survive in the competition Bajaj should work on increasing the mileage in this segment through better technology.

References
Pindyck S Robert, Rubinfeld L Daniel, Mehta L Prem,(2009), Managerial Economics Marketing Management :South Asian perspective 14 e Philip Kotler, Kevin Keller, Abraham Koshy & Mithileshwar Jha (Pearson) Anderson, Sweeny, Williams (2007); Quantitative Methods for Managers http://business.mapsofindia.com/automobile/two-wheelers manufacturers/motorcycles.html http://www.moneycontrol.com/news_html_files/news_attachment/2012/ Indian -2W-Industry_ICRA_280512.pdf https://www.crisilresearch.com http://www.siamindia.com/scripts/market-share.aspx http://www.siamindia.com/scripts/domestic-sales-trend.aspx http://www.heromotocorp.com/en-in/