Bajaj Auto, the coolest and best bike maker, has drawn up a new, aggressive strategy for its

motorcycles, which will involve a specific platform approach to generate big numbers. Bajaj has been trailing rival Hero Honda, for a long time now and as part of this effort, it has also decided to launch a 125 cc version of the Platina that will coexist with its 100 cc sibling. Managing director of Bajaj Auto, Rajiv Bajaj told that three distinct platforms would form part of the plan. The top tier comprises the Discover, Pulsar and Avenger while the XCD represents the mid-platform.

Platina to get 125cc engine

The 100cc range rolls out of the basic platform which includes the Platina as well as export models like the Boxer and CT 100. Our plan is in place with the last bike from the XCD platform due to debut in February next year, by which time the three platforms will account for combined sales of 225,000 to 240,000 bikes each month both for the local and international markets, he said. Put simply, each platform will churn out 75,000 to 80,000 bikes every month as part of a new, uncluttered approach to take the fight to rival Hero Honda s camp.

XCD platform to spawn more variants

According to Bajaj, the company had also altered its 125cc bike strategy from the originally planned XCD Sprint. We are now prioritising another product that will be out in September, followed by one in November and finally in February to complete the picture for the XCD, he added. The strategy for the 125 cc version of the Platina is interesting in this context, especially when Bajaj Auto has maintained that the bike does not represe a brand nt and is only a product by the end of the day which hardly yields any money. However, its numbers still make it relevant to both suppliers and dealers.

In the pr ce seg ent it oper tes in, the Platina is ahead of models from Hero Honda and TVS with a 44 % market share. We had earlier kicked off with the Boxer and CT 100 in this segment b t they were easy to imitate and competing models quickly joined the arena. Even when we added interesting features to the Platina, it was only a matter of months before competition followed suit, Bajaj said.The company then decided that it was time to do something which would not be imitated so quickly. The solution lay in changing the engine. An electric start 125cc would positively take two years to imitate quite unlike the past where we saw competing models emerge in six months, he said.

Bajaj Discover to get 150cc mill

The engineering done on the XCD platform has resulted in some terrific costing and high milea ge for a 125cc bike. Taking advantage of that feature,Bajaj Auto has now decided to go in for the Platina 125 which can hold its own in the market and insulates the company from any similar product in a hurry. This motorcycle is a premium to the 100cc Platina and will give us more money. It could also help build the bike s brand and wean 100cc customers gradually away to this better option, Bajaj said.He reiterated that the top priority was to defend the company s leadership in the 125 cc plus segment while constantly upgrading products. This was the rationale for the launch of the sportier Discover 135 DTS-i last week.

XCD spr

gs

Bajaj Discover 135 DTS-i gets a sports variant

The Pulsar lineups are being upgraded every 18 months and the time has now come for the Discover which has been untouched for two years. The new features make it sharper and more aggressive to fit in with the image of our bikes in this product category. This becomes harmonious with the DTS-i portfolio that stands for sporty, hitech bikes, Bajaj said.This change in the Discover makes it dearer by Rs 2,500 and the least expensive option at Rs 47,000 (ex-showroom) is still Rs 6,000 costlier than the top-end electric start XCD. It is in this price gap that we are creating more bikes which will improve profitability and create a stronger brand, he added.

Read more: http://indianautosblog.com/2008/08/bajaj-redraws-bike-platform-strategy#ixzz1QPTR1cX7

Bajaj Auto Ltd. (BAL) is one of the oldest and the largest manufacturer of automobiles in India and has been the market leader in scooters. In 1990s, the near monopolistic market structure, perhaps, lulled the company into being complacent and they gave way to the competitors like Hero Honda and TVS. Hero Honda and TVS Suzuki tied up with foreign majors to bring in the latest in terms of aesthetics and technology, and Bajaj failed to gauge the changing tastes of consumers. In 1990s, there was a marked shift in customer preference from scooters to motorcycles. Bajaj found itself at a loss here, as this was largely an unchartered territory. Here in this work, I started with the industry analysis, company analysis, portfolio analysis, and then moved on to exploring the strategies adopted by BAL to reinvent itself and once again become a market force to reckon with in the Indian two wheeler industry. The paper touches upon the following areas: Industry Analysis - Five Forces Analysis SWOT Analysis Tows Matrix Marketing Strategies Strategies Implementation Strategies for Overseas Market Research & Development Future Recommendations The Company Bajaj Auto is the flagship of the Bajaj Group of Companies. Bajaj is currently India's largest two- and three-wheeler manufacturer and one of the biggest in the world. Bajaj has long left behind its annual turnover of Rs. 72 million (1968), to currently register an impressive figure of Rs. 81.06 billion. Current Situation & Current Performance BAL is currently outperforming the industry growth rate in two -wheeler segment with 32% growth in year 2004 -05 v/s industry growth of 19%.

        

Market share in Motorcycles is improving with every passing year. It has also increased from 28% in 2004 -05 to 31% in 2005-06. Annual turnover for the year 2005 -06 is Rs. 81.06 billion v/s Rs. 63.23 billion a year before - an increase of 28% which is very healthy. BAL has significant presence in all the three basic segments - Price Segment, Value Segment and Performance Segment - and has been showing increased sales in all the segments over years. Besides this, BAL is a market leader in two -wheeler exports and it consists a great chunk of there overall revenues. Currently, BAL is selling over 1 lac motorcycles annually in Sri Lanka, further, they are commanding 50% market share in Central America. Profile Change in Indian Two-Wheeler Industry The demand shift from scooters to motorcycles in the 1990s was without parallel in any comparable product category in India. This was mainly attributed to the change in customers' preference towards fuel -efficient and aesthetically appealing models, which scooter manufacturers failed to provide. The delayed launch of new, advanced scooter models, fear of four -stroke scooters being prone to increased skidding risks and vibrations, and the difficulty of maintenance also contributed to this shift.

Interestingly, the growth in the motorcycle segment was mainly driven by the demand from rural and semi -urban consumers. An estimated 60% of the demand for motorcycles came from rural and semi -urban customers. The rise in their disposable incomes on account of good monsoons in the 1990s provided the normally conservative rural and semi -urban customers with extra money that induced them to experiment with new, innovative products. Shift from Scooter to Motorcycle

Advanced technology, larger wheelbase, higher ground clearance and the ability to ride on bad roads with less effort and less danger of skidding and decreased maintenance cost were the other factors that encouraged customers to choose motorbikes over other two-wheelers. The Industry Analysis - Five Forces Analysis External Environment Industry: Automobiles: Two Wheelers Segments: Presence in all segments Entry Barriers: Entry barriers are high. The market runs on high economies of scale and on high econ omies of scope. The need for technical expertise is high. Owning a strong distribution network is important and is very costly. All these make the barrier high enough to be a deterrent for new entrants. Supplier Bargaining Power: Suppliers of auto compone nts 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 critical need. Buyer's Bargaining Power: Buyers in automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent. Industry Rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with int ernational players. Substitutes: There is no perfect substitute to this industry. Also, if there is any substitute to a two-wheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never directly compete or come in consideration w hile selecting a two-wheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential. Summarizing the industry analysis,it can be said that the two -wheeler market is attractive as it scores well on three out of five categories.

Key Earnings Drivers Below are the key factors, which strongly affect the auto industry: Government policy impact on petrol prices: Petrol prices determine the running cost of two/three wheelers expressed in Rupees per kilometer. Petrol prices are the highest in India as GOI subsidizes kerosene and diesel. But with the recent change in GOI policy to reduce the subsidy, the prices of petrol will remain constant at the current prices. This will have a positive effect on purchases of two/three wheelers. Improvement in disposable income: With the increase in salary levels, due to entry of multinationals following liberalization process and fifth pay commission, the disposable income has improved exponentially over the years. This will have multiplier effect on demand for consumer durables including two -wheelers. Changes in prices of second-hand cars: The second hand car prices of small cars have come down sharply in the recent past. This will shift the demand from higher end two-wheelers to cars and affect the demand for two -wheelers negatively. A further drop in second -hand car prices will lead to pressure on the two -wheeler majors who plan to relea se higher-end scooters and motorcycles. Implementation of mass transport system: Many states have planned to implement mass transport systems in state capitals in the future. This will have negative impact on demand for two -wheelers in the long run. But taking into account the delays involved in implementation of such large infrastructure projects the demand to be affected only five to seven years down the line. Availability of credit for vehicle purchase: The availability and cost of finance affects the demand for two - and three-wheelers as the trend for increased credit purchases for consumer durables have increased over the years. Therefore, any change with respect to any of these two parameters as a result of change in RBI policy has to be closely wa tched to assess the demand for two - and three-wheelers. Internal Factors - Strengths & Weaknesses SWOT Analysis Let'sanalyze the position of Bajaj in the current market set -up, evaluating its strengths, weaknesses, threats and opportunities available. Strengths: Highly experienced management. Product design and development capabilities. Extensive R & D focus. Widespread distribution network.

High performance products across all categories. High export to domestic sales ratio. Great financial support network (For financing the automobile) High economies of scale. High economies of scope. Weaknesses: Hasn't employed the excess cash for long. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes. Not a globally recognizable brand (unlike the JV partner Kawasaki) Threats: The competition catches-up any new innovation in no time. Threat of cheap imported motorcycles from China. Margins getting squeezed from both the directions (Pr ice as well as Cost) TATA Ace is a serious competition for the three -wheeler cargo segment. Opportunities: Double-digit growth in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards higher -end motorcycles. The growing gearless trendy scooters and scooterette market. Growing world demand for entry -level motorcycles especially in emerging markets. The Inevitable Change Bajaj on internal analysis found that it lacked 1. The technical expertise to deliver com petitive goods. 2. The design know -how. 3. And the immediate inability to support the onslaught of competitors. All these forced Bajaj to look for an international partner who could bring in technology and also offer some basic platforms to be manufactured and marketed in India. Kawasaki of Japan is a world -renowned manufacturer of high performance bikes. Bajaj entered into a strategic tie -up with Kawasaki in late 1990s to enhance its product line and knowledge up-gradation to support long -term strategies. This served the purpose of sustaining the market competition for a while. From 1996 to 2000, Bajaj invested hugely in infrastructure while simultaneously developing product design and innovation capabilities, which is the prime reason behind the energetic Bajaj of 21st century. Bajaj introduced a slew of products right from entry level motorcycle to the high premium segment right from 2001 onwards, and since then its raining success all the way for Bajaj.

This stands a testimony to the various largest manufacturer grew at just 6 important strategic decisions over the past decade.
 

s Matrix f r BAL

The focus of BAL off late has been on providing the best of the class models at competitive prices. Most of the Bajaj models come loaded with the latest features within the price band acceptable by the market. BAL has been the pioneer in stretching competition into providing latest features in the price segment by updating the low price bikes with the latest features like disk-brakes, anti-skid technology and dual suspension, etc. BAL adopted different marketing strategies for different models few of them are , discussed below: Kawasaki 4 - First attempt by bajaj to make a mark in the motorcycle segment. The target customer was the father in the family but the target audience of the Hero Honda was the market leader in fuel-efficient bikes and Yamaha in the performance bikes. The commercial of Kawasaki 4 had the punch line "Kyun Hero" means "now what hero" which reflected the aggressiveness in the marketing fron by the company. t Boxer - It took the reins from where the Kawasaki 4
  

commercial was the son in the family. The time at which Kawasaki 4

population and the price sensitive customer. Boxer marketed as a value for money bike with great mileage. Larger wheelbase, high ground clearance and high m ileage

Marketin

trategies

was launched

left. Target was the rural





Las

a rter, Bajaj had im ressive performance growing at a rate of 20

+ when the

were the selling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100. Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the bike look bigger and feel more powerful than its predecessor (characteristics that will attract the average, 25 -plus, executive segment bike buyer), its approach towards advertising is even more radically different this time around. Bajaj g ave the mandate for the ad campaign to Lowe, picking them from the clique of three agencies that do promos for the company (the other two being Leo Burnett and O&M). Going by the initial market response, the campaign was clearly a hit in the 5 10 years age bracket. So, the teaser campaign and the emphasis on the Caliber 115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college -goers and the 25 plus executives both at the same time.