Chetak – Achieving Iconic Status
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IBS Mumbai Sec – A PGPM Sem IV (2012) Presented By:- Rohit Khushalani 10BSP1403 KirtiVardhan Bhalerao 10BSP0700 Shaili Sirohi 10BSP0771 Overview Founded in 1926 by JamnaLal Bajaj. In 1942 Kamalnayan Bajaj The present Chairman of the group, Rahul Bajaj, 1965 The company was incorporated on April 30, 2007 as a wholly owned subsidiary of erstwhile Bajaj Auto Ltd (the holding company) with the name Bajaj Investment & Holding Ltd. The company received the certificate of commencement of business on May 7, 2007. Bajaj Auto Ltd.(BAL) Bajaj is India's second largest motorcycle maker Bajaj Auto, is ranked as the world’s fourth largest two- and three- wheeler manufacturer. The company is well known for their R&D, product development, process engineering and low-cost manufacturing skills. INTRODUCTION In the mid -1940s,BAL started as an importing of two –and three- wheelers . In the early 1960s,BAL ,in collaboration with piaggo ,started manufacturing vespa brand scooters at its plant near Pune , Maharashtra. In 1970s,BAL started manufacturing scooters under the Bajaj brand. Bal’s first scooter model under the Bajaj brand was introduced in 1972.(Chetak) In the late 1990’s the Indian two wheeler market witnessed a shift in consumer preferences. In 2005-06 scooter sales in the Indian market were around 1 million units annually and consisted predominantly of gearless scooters. In early 2006 BAL announced that it would launch two new models of gearless scooters in 2006-07. CSR Bajaj Auto is committed to nation-building and contributing to the uplift and development of the weaker sections of society. This is a legacy of the founders, Jamanalalji, Kamalnayanji and Ramkrishna Bajaj. Jankidevi Bajaj Gram Vikas Sanstha (JBGVS) Samaj Seva Kendra. Kamalnayan Bajaj Hospital Timeline of New Product release 1971 - Three-wheeler goods carrier 1972 - Bajaj Chetak 1976 - Bajaj Super 1977 - Rear engine Autorickshaw 1981 - Bajaj M-50 1986 - Bajaj M-80, Kawasaki Bajaj KB100 1990 - Bajaj Sunny 1991 - Kawasaki Bajaj 4S Champion 1994 - Bajaj Classic 1995 - Bajaj Super Excel Contd… 1997 - Kawasaki Bajaj Boxer, Rear Engine Diesel Autorickshaw 1998 - Bajaj Caliber, Bajaj Legend, India's first four- stroke scooter, Bajaj Spirit 2001 - Eliminator, Bajaj Pulsar 2003 - Caliber115, Bajaj Wind 125, Bajaj Pulsar 2004 - Bajaj CT 100, New Bajaj Chetak 4-stroke, Bajaj Discover 2005 - Bajaj Wave, Bajaj Avenger 2006 - Bajaj Platina 2007 - Bajaj Pulsar-200(Oil Cooled), Bajaj Kristal, Bajaj Pulsar 220 DTS-Fi, XCD 125 DTS-Si (Pronounced Exceed 125 DTS-Si) “Hamara Bajaj” •Positioned CHETAK brand with this ad campaign. • Core Values : Reliable & Trustworthy. • Campaign based on V-F-M products. • Ad campaign helped bajaj position CHETAK: “a geared model-scooter occuping near iconic status”. Products •1950s -1980s: "License Raj” . •Scooter were more preferred to motorcycles.2-wheelers demand increased due to inefficient transport system, the Chetak & the Super launched. •Customers had to wait for many years for delivery.(10-12 yrs for Bajaj Chetak). •It plays a major role in dowry in India. After Liberalization GoI changed several policies in 1970s & early 1980s to give impetus to auto industry. Focus on :modernization, technology upgradations,& healthy competitions in domestic market. Many players like Honda,Suzuki,Yamaha had joint ventures with Indian companies. The foreign players came with latest technology, efficient production system etc that enhance the quality of the motorcycle in India . Soon new models come with new style, advanced technology & fuel efficient. 1984:The Kinetic tied up with Honda ,introduced new models , new features like self start & automatic gear transmissions. 1980-1990s :BAL dominate by Chetak & Super model with their values for money appeal durability, versatility, low maintenance, avaliablity of spare parts ,etc.”Hamara Bajaj “ add campaign. However, in 1990, the pattern of demand changed & motorcycles became the fastest growing segment Motorcycles were preferred to scooters in the rural areas because of poor road conditions Demographic changes – Increasing proportion of younger people in the overall population Lower interest rates on vehicle loans made motorcycles more affordable Sales of motorcycles surpassed that of scooters for the first time in 1999 (with Hero Honda SPLENDOR) In 2000 Bharat Stage II, a new set of emission norms, came into effect. It was for petrol two-stroke engines & it gave a blow to BAL, which primarily sold two-wheelers with two-stroke engines Chetak – Achieving Iconic Status Considering- (A) As a Product (B) As BAL (C) Other factors The brand which ruled the Indian roads Chetak was an unavoidable dowry in 1970's and 80's Had a waiting period of more than 10 years Officially stopped the production of Bajaj Chetak from December 2005 Reason:- product no longer has any relevance to the customer Rajiv bajaj quoted " Any one who clings to the past is a failure". Sucess Inefficient public transport system Indian Auto Industry – A seller’s market Policy changes by GoI in Auto Industry sector Building up a reliable and trustworthy brand – Hamara Bajaj Challenges/Failure Shift in Consumer Preference: -> Scooter becoming less popular with rise in motorcycles 90 80 70 60 Scooters 50 motorbikes 40 mopeds 30 20 10 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Challenges Competitors with Competent products: Period of Name of the Indian Name of foreign Segment Brand name Entry Firm Firm of the product 1955-1969 Enfield India Ltd Enfield Ltd. , UK Motorcycle Royal Enfield API Innocenti Ltd., Italy Scooter Lambretta Escorts Ltd. CEKOP, Poland Motorcycle Rajdoot Ideal Jawa Jawa Ltd, Motorcycle Yezdi Czechoslovakia 1970-1980 Kinetic Engineering --- Moped Luna SIL --- Scooter Vijai Super Majestic Auto Ltd --- Moped Hero Majestic Maharashtra Scooters --- Scooter Priya Ltd Challenges Neglecting Customers Limited Product Depth No variation in existing products with respect to various segments as:- Sales After Sales Services People Product Waiting period Price Extending from 3-10 yrs • Technological Innovation The Turning Point Early 1990’s saw a recession in the Indian two wheeler market. Overall sales of two wheelers declined by 15% in 1991 and 8% in 1992. Steep rise in fuel price is the main reason for declination of sales of two wheelers. ADVENT OF NEW TREND Advent of new trend(contd..) In the late 1990s,Motorcycles became the fastest growing segment of two wheeler market. People started buying them for their fuel efficiency, Power and later, even for their style. Motorcycles with their improved styling and power attracted young men Contd.. Hero- Honda became the new market leader with its splendor, a 100 cc motorcycle. Sales of Scooters fall tremendously, This shift take toll on BAL, the market leader till then. Thus BAL lost its number one position to Hero-Honda. Market share of different two wheeler segments Even as late as 1997-1998,the scooter segment was the largest sub-segment in the two wheeler market. Present scenario of the Indian 2 wheeler market • Double-digit growth rates to continue in 2011-12 • What are the Demand and Growth Drivers ? I. Personal Income II. Demography and Inspiration III. Penetration Level IV. Other Factors • Negative Growth I. Interest Rates , Credit Crunch & Oil Prices II. Launch of Low Priced Cars Like Tata Nano III. Tightening Regulations (Emission Standards) Current Scenario Positioning of Bajaj Auto in the TwoWheeler Industry • Thecore competence of Bajaj Auto Ltd is its technology and innovation. • Both DTS-i (Digital Twin Spark Ignition) and DTS-Fi (Digital Twin Spark Fuel Ignition) are technological breakthroughs by Bajaj. BAL is also a pioneer in product innovation having introduced technologies such as ExhausTEC (Exhaust Torque Expansion Chamber), LED Tail Lamps, LCD Display, SNS, Spare parts (Tubeless tyres, rear disc brakes), Black colour scheme etc. Thus we observe that BAL which used to be a Defender in 1970-1990 through Bajaj Chetak radically moved towards becoming an Analyzer (1990-1997) by focussing on bike segments It has now become a Prospector (1997-date) with several patents in its kitty and new bike launches every year. Therefore, for a follower to move on and become a market leader it is essential that it focuses on innovation and consumer demand. Shares of the major players in the two wheeler market segment Positioning of Bajaj Auto in the Two Wheeler Industry Graduating Customers from the 100cc to Higher Segments Focus on Gearless Scooters Entry into Four Wheeler Segment Scaling Up Service Centers Focus on Easy Credit Lending BCG Portfolio Decision Matrix Supplier Bargaining Power: 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 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 international 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 while 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. SWOT 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 automobiles) High economies of scale.