india 2 wheeler market analysis

7/29/2019 India 2 wheeler market analysis

1/49

MARKET ANALYSIS OF 2

WHEELER SEGMENT: BAJAJMOTORBIKES

Presented by:

Group 5

Rinky Sachdeva (146)Rohit Jain (147)

Atul Mathur (149)

Noufal Ahmed (150)

Munish Mittal (151)


2/49

The Automotive industry in India is one of the largestin the world and one of the fastest growing globally.

The dominant product of the automobile industry isTwo Wheelers with a market share of over 77%.

Major players in the 2-wheeler industry are Bajaj AutoLtd (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.

INTRODUCTION


3/49

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 masscommuter segment where better fuel economy and low

price are the prime customer considerations.

However, the volume share of this segment has beencoming down over the years

The share gradually being taken away by bikes in the

125cc and 150cc segments

Contd..


4/49

0

2

4

6

8

10

12

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

Trend in Sales Volumes of Motorcycles (Domestic)


5/49

54.4 59.8 58.5 54.6 56

28.7

21.9 24.3

26.8 25.4

8.7 7.9 6.7 7 6.2

4.4 6.2 6.2 7.3 7.6

3.6 4.3 4.4 4.3 4.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

Others

Honda

TVS

Bajaj Auto

HeroMotoCorp

Market Share of Various Brands in

India


6/49

Executive segment (bikes in the Rs. 40,000-

50,000 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


7/49

Bajaj Auto is a major Indian vehicle manufacturer headedby 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 tomanufacture 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%.

About Bajaj Motorbikes


8/49

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.

Product Portfolio


9/49

In our survey, we have taken the responses and

segmented the motorcycle market according to

demographic and Psychographic factors. Geographicalfactors 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.

Segmentation, Targeting and

Positioning


10/49

0

0.5

1

1.52

2.5

3

3.5

4

4.5

Factors Affecting Consumer BuyingBehaviour

Factors Affecting Consumer Buying Behaviour


11/49

Segmentation

71%

29%

No of Respondents(80)

18-24 year

25-30 year

Age:

A sample of 80 respondents

was collected, out of which29% were of 18-24 years of

age.71% were of age 25-30

years of age.


12/49

1921

43

8

0

5

10

15

20

25

Respondents in Age group of 18-24

years

No ofRespondents

It is clear from the figure

that Hero is the leading

motorcycle brand in 18-

24 years of age group.

However Bajaj is givingtough competition to

Hero with second leading

position.


13/49

Contd.

9 9

4

1

01

2345678

910

Respondents in the Age group 25-30years

No ofRespondents

For age group 25-

30 years, Bajaj and

Hero stands equallyin terms of market

share.


14/49

Segmentation on the basis of

Marital Status

82%

18%

No of Respondents(80)

Single

Married


15/49

30%

70%

Respondents using Bajaj

Motorcycle(23)

Discover

Pulsar

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.

65%

21%

3%9% 2%

Respondents using other motorcycles(43)

Hero

Yamaha

TVS

HondaRoyal Enfield

As per our responses,

unmarried consumers whichare 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: Unmarried


16/49

Marital Status: Married

40%

60%

Respondents using Bajaj (5)

DiscoverPulsar

As per our the responses,

married consumers which areusing Bajaj motorcycles, a large

part of this market segment

i.e.60% are using Pulsar and

Discover constitutes 40% of

market share.

44%

56%

Respondents using otherbrands(9)

Hero

Royal Enfield

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.


17/49


Annual family Income

2

10

7

9

5

22

17

8

0

5

10

15

20

25

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

Bajaj

Others


18/49

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 bikesThus it clear that the present market segment of Bajaj

motorcycles comprises of consumers which have

annual family income more than 5 lacs.

Analysis


19/49


Profession

9%

44%

47%

No of respondents(80)

Business

Service

Student


20/49

29%

71%

Business class

consumers (7)

BajajPulsar

RoyalEnfield

46%54%

Service class respondentsusing Bajaj (13)

Discover

Pulsar

86%

9% 5%

Service classcustomers using other

bikes (22)

HeroHonda

Yamaha

In service class consumers, a

large part of consumers (86%)own Hero

In service class sector, Pulsar

constitutes 56% while 46% own

Discover

Business class

customers which we

surveyed, 71% owned

Royal Enfield and 29%

constitutes Bajaj Pulsar


21/49

23%

77%

Student using Bajaj(13)

Discover Pulsar

52%

8%4%

4%

32%

Student using other

bikes(25)

Hero

Honda

Royal Enfield

TVS

Yamaha

As is clear, Students using

Bajaj motorcycles prefer

Pulsar as compared to

Discover

As is clear, Students using other

motorcycles prefer Hero andYamaha as compared to Honda,

Royal Enfield and TVS.


22/49

On the basis of segmentation of market, Bajaj segmentconsists 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 targetconsumers with high annual income specially businessclass consumers with age group of 18-30 years.

Targeting


23/49

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

Positioning


24/49

00.5

1

1.5

2

2.53

3.5

4

4.5

5

Competitors

Customer Responses on

various Factors


25/49

Bajaj motorcycle owners are highly satisfied incomparison to its competitors on :

Performance

Style and DesignInsurance facility.

Bajaj motorcycle owners are dissatisfied in comparison

to its competitors onMileage

However on any other parameter, Bajaj is almostcomparable to its competitors.

Competitors Analysis


26/49

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 managementGreat finance support network

Product design and development capabilities

Widespread distribution network

SWOT Analysis


27/49

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


28/49

Opportunities

Growing two-wheeler market in India and across globeGrowing 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


29/49

Threats

Tough competition from domestic as well as foreign

playersTough competition specially from Hero which has largemarket share(~ 56%)

Margin squeezes from all the directions(Price as wellas cost)

The competition catches up with any new innovation inno time

Contd


30/49

BCG Matrix


31/49

Stars use large amounts of cash: As the Discover, Pulsar 150and 180 cc are the star performer of Bajaj so Bajaj has to investon advertisement to capture maximum market share.

Stars are leaders in the business: Today Bajaj Pulsar 180 and150 cc are leaders in market. As they are first choice of theyouth those are interested in looks, technology andperformance.

Stars usually generate cash for the company. Pulsar generates

maximum cash for Bajaj auto ltd. Pulsar is having 47% of marketshare in its segment.

It is critical that Stars should hold the market share,because the future rewards are generally cash cows

Star (high growth, high market

share)


32/49

Profits and cash generation should be high: Platinaand CT 100 are the models which generates highprofits for Bajaj auto ltd.

Low market growth does not attract new competitors:Now, the market share growth if Platina and CT 100are very less, they are unable to attract new customerin the market.

Low market growth, call for less investments: It is ofno use to invest more on these models of Bajajmotorcycles. It is better to invest on R&D, or someother star performer.

Cash Cows (low growth, high

market share)


33/49

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 lossmaking proposition for a company

Dogs must deliver cash, otherwise they must be

liquidated

Dogs (low growth, low market

share)


34/49

Question Marks have high cash demands (High Market growth):Pulsar 200 and 220 cc are in high demand but their marketshare is low. The customer which come the segmentation forthese models are less in number, so it difficult to say whether iswise to invest further in these models.

Question Marks generate low returns, (Low market share):Themarket share of XCD 125, Pulsar 200, 220 cc, Blade have veryless market share. The customer which come the segmentationfor these models are less in number, so it difficult to say whetheris wise to invest further in these models.

If the market share remains unchanged, Question Marks willsimply absorb great amounts of cash

Either invests heavily, or sell off, or invest nothing andgenerate any cash that you can.

Question Marks (high growth,

low market share)


35/49

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 battleand, even worse, now and then investments are made.

Question Marks and Stars receive only mediocre

investment funds; hence they can never become CashCows (or Stars)

Outcomes of such a Strategy


36/49

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.

Th t f S b tit t


37/49

There are many substitute products available likeYamaha R15 and Fazer, Hero Splendor and PassionPro.

Customer can easily find the product that youreoffering at the same or less price.

Quality of the competitors product is better- Hero isstill known for its mileage and technology.

Substitute product is by a company earning highprofits so it can reduce prices or can give discountoffers to the lowest level. Hero as of now acts as thestrongest competitor to Bajaj motorcycles.

Threat of Substitute

Products


38/49

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.

Threat of New Entrants


39/49

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 ofdevelopment 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

Industry Rivalry


40/49

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 acritical need.

Bargaining Power of

Suppliers


41/49

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.

Bargaining Power of Buyers


42/49


43/49

PRODUCT MIX(width)There are various segments which Bajaj auto is trying toserve. It is trying to target lower level segment with Bajaj

platina (100cc) & Bajaj discover(125cc, 135cc) whichtargets the middle level segment customers. Apart from thisthe premium segment is served by Bajajpulsar(150cc,180cc,200cc,220cc) and Bajaj avenger.

PRICE MIXECONOMY SEGMENT (100ccsegment): This segment isserved 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 isserved by Bajaj Discover (125cc, 135cc), Bajaj pulsar(150cc, 180cc, 200cc). The price of Discover is around Rs52500.


44/49

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 launchanother low-cost bike.

Re-launching with improve features and advertising the lower

segment bikes such as platina and discover 100.

PLACE MIX-Bajaj has a wide network of showrooms and has its has

reached to mass population in rural areas through its distributionnetwork.

The premium segment motorcycle such as Ninja andPulsar(200cc and 220 cc) is to be more promoted in urbanareas.

Conclusion and


45/49

From the analysis we can say that Pulsar and Discover are twoproducts of Bajaj in motorcycle segment which contributes largely inits revenue.

Pulsar and Discover are two brands in motorcycle segment of Bajajwhich are preferred most and they did not use the phrase 'Bajaj Auto'to market either. Highly differentiated target groups for Pulsar andDiscover is the prime reason behind the divorce of these sub-brandsfrom the parent brand, Bajaj Auto.

Bajaj was correct in adopting the two brand strategy. This hasincrease market share of Bajaj Auto Ltd. Today the reason whyconsumers buy a Pulsar is because it is a Pulsar, not because itbelongs to Bajaj.

Conclusion and

Recommendations


46/49

Bajaj had designed Pulsar and Discover for two extremeends of the consumer spectrum. The target group forDiscover was 'the commuter' as it stands for balance,responsibility and all things homely. Conversely, Pulsar, 'theperformer', symbolized arrogance, irreverence and attitudeand hence categorized in the sports category and is mainlypreferred by youngsters.

From the analysis we can say that Style and design andPrice are the two most important factors influencing

customer buying behavior. Pulsar and Discover bothranked high on Style but a notch higher on price comparedto its competitors. Thus, Bajaj should try to reduce prices inthis segment.

Contd.


47/49

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 themileage in this segment through better technology.

Contd.


48/49

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-wheelersmanufacturers/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/


49/49

india 2 wheeler market analysis

Documents