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Journey of Royal Enfield from Dusk to Down Along with Various Strategies Adopted

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Journey of Royal Enfield from Dusk to Down Along with Various Strategies Adopted Vol-1, Issue-I Amity Journal of Strategic Management 2017 Case Study Journey of Royal Enfield from Dusk to Down along with Various Strategies Adopted Neha Bharti, Student, NIFT, New Delhi and Manish Nangia, Assistant Professor, NIFT, New Delhi. Abstract Royal Enfield is the oldest surviving brand of motorcycles in the world. The brand which is more than 100 years old has been in India since 1949. The manufacturer Enfield India was bought over by Eicher Motors Limited in 1994. Since then, the brand is owned by Eicher Motors. Eicher Motors faced a tough choice in early 2000. This was the time when the company gave one final chance to revive its loss-making brand Royal Enfield, company’s motorcycle division. To materialize the opportunity, they wanted to modernize the bikes to appeal to a wider customer base. However, the manufacturer faced challenges as the existing customers wanted their Bullets just the way they had always been. By modernizing, Royal Enfield risked losing traditional fans without possibly gaining any new customers. The case study details how it met the challenge by focusing on different types of strategies. Key Words: Royal Enfield, branding, Eicher Motors, Marketing Strategy. JEL Codes: L1, M31 Introduction Royal Enfield is the oldest surviving brand of motorcycles in the world. The brand which is more than 100 years old has been in India since 1949. The manufacturer Enfield India was bought over by Eicher Motors Limited in 1994. Since then, the brand is owned by Eicher Motors. Thus, it is now an Indian brand. Once considered as the king of the world, the kingdom of Royal Enfield was on the verge of getting snatched away at one point of time in late 1990. Beating the odds, Royal Enfield, the oldest motorcycle brand, is still in production. The legendary bike brand was facing a loss of Rs. 20 crore and was on the edge of a shutdown in 2000. The manner in which the fortunes of the brand turned can be an excellent example of brilliant product planning, process and brand management coupled with excellent marketing strategies. History In the year 1890, Enfield Manufacturing Company Limited was set up in England. The Company started manufacturing its product Royal Enfield as brand name. Soon the brand decided to focus on other vehicles as well. In 1899, it started manufacturing a quadricycle called “Royal Enfield Quadricycle.” Despite being an innovative concept, the product had limited market potential. In the year 1901, the Company launched its first motorcycle fitted with a 239-cc engine. In 1909, introduction of a small Motorcycle with a 2 ¼ HP V twin Motosacoche engine of Swiss origin pleasantly surprised the motorcycling world. The next was in 1911, powered by a 2 ¾ HP engine and boasted of the well known Enfield 2-speed gear. In 1912 was the year for iconic JAP 6 HP 770 CC V twin with a sidecar combination which made Enfield a household name. In 1914 world experienced the ride of 3 HP motorcycles with Enfield’s own engine which having the standardised Enfield paint scheme of black enameled parts and green tank with gold trim. In 1949, Enfield started selling its motorcycles in the Indian market as a strategic move for its global expansion serving the need of Indian Army. The Royal Enfield motorcycles were considered an ideal choice for the Indian army for patrolling the country’s border and as a result of that in 1955 the Indian government placed an order of 800 350-cc Royal Enfield motorcycles. Soon after receiving a thumbs up from Indian customers, the company also started manufacturing 500 cc Bullet for Indian markets. In 1955, the company partnered with Madras Motors in India to form 'Enfield India' to assemble, under license, the 350-cc Royal Enfield Bullet motorcycle in Madras (now called Chennai). The tooling was sold to Enfield India so that they could manufacture components. By 1962, all components were made in India. The Indian Enfield uses the 1960 engine (with metric bearing sizes), Royal Enfield still makes an essentially similar bike in 350 cc and 500 cc forms today, along with several different models for different market segments. In 1990, Royal Enfield collaborated with the Eicher Group, an automotive company in India, and merged with it in 1994. Apart from bikes, Eicher Group is involved in the production and sale of tractors, commercial vehicles and automotive gears. Royal Enfield experienced difficulties in the 1990s, and ceased motorcycle production at their Jaipur factory in 2002. 79 Vol-1, Issue-I Amity Journal of Strategic Management 2017 Year Strategies adopted by Royal Enfield in various years 1890 Enfield Manufacturing Company Limited was set up in England 1899 Started manufacturing “Royal Enfield Quadricycle” 1901 Launched its first motorcycle fitted with a 239-cc engine 1909 Introduction of small Motorcycle with a 2 ¼ HP V twin Motosacoche engine of Swiss origin 1911 Next model powered by a 2 ¾ HP engine and boasted of Enfield 2-speed gear 1912 JAP 6 HP 770 CC V twin with a sidecar combination, motorcycle which made Enfield a household name 1914 3 HP motorcycles this time with Enfield’s own engine which now had the standardized Enfield paint scheme of black enameled parts and green tank with gold trim 1949 Started selling its motorcycles in the Indian market as a part of its global expansion 1955 Indian government placed an order of 800 350-cc Royal Enfield motorcycles, the company started manufacturing 500 cc Bullet for Indian markets 1955 Company partnered with Madras Motors in India to form 'Enfield India' to assemble, under license, the 350-cc Royal Enfield Bullet motorcycle 1965 Reached efficiency of manufacturing all components in India 1990 Royal Enfield collaborated with the Eicher Group 1994 Merged with Eicher Group 2000 Sales of the bike were down to 2,000 units a month against the plant's capacity of 6,000 2001 Electra was launched as Indian market only model with 346 cc classic engine. 4-speed or 5- speed gearbox 2002 Ceased motorcycle production at their Jaipur factory 2002 Launched models of Thunderbird 350 2008 Classic models were launched - inspired by J2, a 1950 model Bullet 2011 Fury: A flat-track style version of the 500cc Bullet Electra EFI, sold exclusively in the UK by importer Watsonian Squire 2013 500 cc variant of the Thunderbird. Fuel injection, digital console, electronic fuel gauge, projector headlamps and 18-inch wheels. Currently the flagship model of Royal Enfield India 2014 Continental GT: Cafe Racer styling. Fuel injection, Digital console, electronic fuel gauge, projector headlamps Twin downtube cradle frame, Paioli, Twin gas charged shock absorbers with adjustable preload, 80mm travel 2015 Eicher Motors had become one of the most expensive automobile stocks in India 2016 Himalayan: Launched as all terrain, all weather bike promising both adventure and comfort Marketing and Networking Strategies adopted by Royal Enfield 1990 was the year for Enfield to enter into a strategic alliance with the Eicher Group in India, and later merged with it in 1994. Royal Enfield positions itself in 'lifestyle' category of the motorcycles market. The year 2000 could have been decisive. That was when the board of directors at Eicher Motors decided to either shut down or sell off Royal Enfield – the company's oldest Chennai-based motorcycle division. For all its reputation, the sales of the bike were down to 2,000 units a month against the plant's capacity of 6,000. Though the bikes had diehard followers, there were also frequent complaints about them with regard to engine seizures, snapping of the accelerator or clutch cables, electrical failures and oil leakages. Many found them too heavy, difficult to maintain, with the gear lever inconveniently positioned and a daunting kick-start. In 2010, 113 lakh motorcycles were sold in India of which the company sold only 52,000. Since the brand is a niche brand, it cannot target the mass market. But in order to survive in the market place they were faced with the daunting task of ensuring that the sales grow gradually and the margins keep on increasing due to increased cost of overheads. 80 Vol-1, Issue-I Amity Journal of Strategic Management 2017 Newspaper reports were of the opinion that there is an increasing demand of high end bikes in India. Kawasaki Ninja, Ducati, Honda all are seeing a spike in sales. Even the legendary brand Harley Davidson is now in India. All these brands are in the 500 cc plus segment. The competition is the last problem for the brand. The only competition to Royal Enfield is Royal Enfield itself. The competitors cannot cause much problem because they are far too costly. While Ninja comes at Rs. 4 to 5 lakh, Harley is available at Rs 7 lakh. Compared to this, the price range at Enfield is Rs. 95,000 to Rs. 1, 70,000 only. Problems and issues faced by Royal Enfield The problems they faced were manifold but the brand still commanded a loyal following. Most of the customers were of the opinion that the bikes were too heavy and difficult to maintain. It was time to modernize the Bullet. The marketing mavens at Royal Enfield understood the need for a complete makeover, but they faced a catch-22 situation; doing so could bring in a newer profile of buyers, but they also risked alienating their loyal audience that defined the brand. It was a challenge they had to meet, and they did so in style. Siddhartha Lal, a third generation member of the Delhi-based Lal family, was one of the key promoters of the Eicher group of companies.
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