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India Yamaha Motor Pvt.

1.0 INTRODUCTION 1.1 1.2 2.0 Introduction to Yamaha India Private Ltd. Introduction to Yamaha FZ-S 2 2

MARKETING ENVIRONMENT 2.1 2.2 2.3 Micro Environment Macro Environment Competitive Environment 4 5 7


SEGMENTATION, TARGETING AND POSITIONING STRATEGIES 3.1 3.2 3.3 Segmentation Strategies Target Market Market Position 8 9 9


MARKETING MIX 4.1 4.2 4.3 4.4 Product Price Promotion Place 11 12 14 15


CRITICAL ANALYSIS OF RELEVANT THEORIES 5.1 5.2 5.3 Product Life Cycle Boston Matrix Ansoffs Matrix 16 17 18 19 20

6.0 7.0


FIGURES Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Marketing Environment Indian Automobile Market Segmentation Population Ratio of India Marketing Mix Product Life Cycle Boston Matrix Ansoff Matrix 3 8 9 10 16 17 18

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This report will be analyse and evaluate the marketing of Yamaha FZ-S in Indian automobile market. This report will consist of an evaluation of the marketing environment of Indian automobile market using relevant theories and will conclude recommendations for the marketing mix of Yamaha FZ-S.


Introduction to India Yamaha Motor Private Ltd.

Yamaha was founded in Japan by Torakusu Yamaha in July, 1887. Firstly it was a musical instruments manufacturing company. Yamaha started production of motorcycles in July 1955 under Yamaha Motor Co Ltd. Initially Yamaha entered India into a 50 - 50 joint-venture with the Escorts Group in 1996. However, in August 2001, Yamaha acquired its remaining stake becoming a 100% subsidiary of Yamaha Motor Co., Ltd, Japan (YMC). In 2008, Mitsui & Co., Ltd. entered into an agreement with YMC to become a joint-investor in the motorcycle manufacturing company "India Yamaha Motor Private Limited (IYM)". (Yamaha Ltd, 2010)


Introduction to Yamaha FZ-S

Yamaha launched FZ-S bike to Indian market in early 2009, soon after the launch of its earlier version Yamaha FZ 16. Although FZ 16 was successful and doing well in the market Yamaha makes some minor changes in its look and launched an upgraded version FZ-S. Yamaha FZ-S comes with 153 CC air cooled 4 stoke petrol engine, that provide 14 PS power at 7500 rpm. FZ-S comes only with electric start option. The highlight of FZ-S is its contemporary look which was new to Indian Automobile market. (Yamaha FZ-S /Specifications)

India Yamaha Motor Pvt. Ltd



Dibb, S and Simkin, L (2001) explains that the marketing environment acts as an external force that directly or indirectly affect an organisations ability to undertake its business. Marketing environment basically consists of two major factors, the factors that are beyond the control of the organisation sometimes called external factors are known as macro environment while the factors that are more detailed to particular trades or segments and where an organisation has some control over them are known as micro environment (Gosnay, R and Richardson, N. 2008)

Figure:-1 Marketing Environment

(Adapted from: - Jobber, 2010, p73)

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Micro Environment

The forces within the micro environment can be manipulated. Michael Porter in his earlier work includes all accepts of forces that comes under to the micro environment such as bargaining power of buyers, bargaining power of suppliers, threat of new entrants, substitutes and internal rivalry. Together all these five forces are term as Porters five forces. To interpret the internal marketing factors that IYM faces Porters five forces could be helpful tool (Dibb, S and Simkin, L. 2001)

2.1.1 Bargaining Power of Buyers

Indian two wheeler market is one of the largest markets in the world automobile sector. In this segment buyers have been given many options in their decision making process such buying two wheelers from showrooms due to excess competition and resulting into high bargaining power of buyers but considering the fact that two wheeler manufacture companies have powers to create demands for their product due to huge market. IYM has manipulated bargains of buyers by limited production of Yamaha FZ-S and placing into few exclusive showrooms making bike high end product. (Datamonitor, 2010) 2.1.2 Bargaining Power of suppliers

The bargaining power of suppliers in India for automobile two wheeler sector is low because the players in such a huge market are really big in comparison with suppliers resulting into cost effective manufacturing of IYMs FZ-S.

2.1.3 Threats of new entrants

Easy availability of raw materials and huge number of buyers gives ample of scope for trade in this Indian automobile segment. Its very easy for new entrants to enter into this business. Yamaha 2.3% market share shows company loose grip in this segment but having consider

India Yamaha Motor Pvt. Ltd

the resources the Yamaha has, it can surely give sustainable competitive advantage if resources have been used according to the strategy. (Datamonitor, 2010)

2.1.4 Substitutes

The role that substitutes play in this sector is minor so the threat of substitutes could be consider as low. Out of 100%, 92.2% of consumers use motor bikes in two wheelers where as substitutes have got their share of just 7.8%. This gives Yamaha FZ-S low threat of substitutes.

2.1.5 Internal Rivals

Market leader in this segment have got significant amount of shares. Hero Honda


Bajaj have got 49.1% & 17.3% of shares respectively. IYM have got only 2.3% of market share resulting into high threat of internal rivals. On the contrary having established in such a promising environment Yamaha could achieve more then what they are in this segment. (Datamonitor, 2010) Apart from the Porters five forces IYMs internal environment such as assets, employs, financial status, and its expertise, stake holders, customers also have significant role in marketing environment of IYM.


Macro Environment

The macro environment forces identified by the economists can be analysed by PEST analysis.

2.2.1 PEST Analysis

PEST analysis consist of four factors Political, Economical, Social/cultural and Technological.

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Political: -

According to (Gosnay, R and Richardson, N 2008), the organisation and its customer be effected by the Government of the country in which organisation is stabilised.


Although there are lots of regional and cultural differences, for the most parts India has functioned as a democracy. In 1991 economic liberalization helps India led to rapid economic growth and also brought India closer to North America and Western Europe. Both main national parties of India, the INC and BJP, have similar economic policies and are in favour of liberalization.

Social/Cultural: -

(Gosnay R. and Richardson N., 2008), state that ccustomer demand depends upon the social and cultural factors of the country like age income and occupation etc. India has the second largest population in the world which is approx. 1.1 billion people Most of them are young as India have an average age of 25.3 years and only 5.2% of the population are above the age of 65. Males dominate in the sex ratio of Indian Population. India has formulated a population policy which makes provisions for controlling its growing population. India has a multicultural ethnic fabric, and maintains uniformity in secular ideas, with the freedom to follow any religion. India produces a huge number of graduates and skilled labour every year, resulting to this India got cheap skilled labour.

(Datamonitor, 2010) Economical: -

The Indian economy had a robust growth during the year 2005-07 as the average GDP growth rate during this period was 9.3%. Although global financial crisis affect the growth momentum of Indian economy and the real GDP fell to 7.2% in 2008. Later it falls more and

India Yamaha Motor Pvt. Ltd

comes down to 6.5% 2009-2010. Now the economic conditions are improving and it is expected that the GDP during 2010-11 will be 7.9%. Indias GDP is USD 650 billion and expected to be USD 1390 billion till 2016. At that time Indian automobile market contribution in this GDP expected to be $ 145 billion which is now $ 34 billion. (Automative Mission Plan, Government of India) Technological: -

Technology has a huge impact on the business environment specially in a developing country like India. In India number of mobile and internet users increasing sharply. Mobile users in India have an annual growth rate of 23.5%. This could affect the marketing strategy of any organisation. (Datamonitor, 2010) Today technology is affecting almost all sectors so well in Indian automobile. New technology are coming in bikes of Indian market like Bajaj introduce DTS-i engine and TVS introduce ccvt-i technology. Yamaha introduce the four valve and single axis balance engines to Indian market. Yamaha continuously works on towards improving its technology, Today Yamaha produce one of the most technological advanced motorbikes that is a USP of India Yamaha Motor.


Competitive Environment

It is widely accepted that the nature of competition in an industry is more directly influenced by developments taking place in the competitive environment (Henry, 2008, p.67). Yamaha Introduce its motorcycles to market of India which is already dominated by big players of Indian automobile market like Bajaj and Hero Honda. Bajaj and Hero Honda are much older and trusted name in Indian automobile market. Yamaha is relatively new name to the Indian market so they have to make place for their self. Yamaha FZ-S faces direct competition from Bajajs Pulsar, Hero Hondas CBZ and TVSs Apache motorcycles as all of them comes in 150cc segment. All of these competitor bikes are highly popular among youth of India.

India Yamaha Motor Pvt. Ltd



3.1 Segmentation Strategies

Jobber, D (2010) defines that market segmentation is a tool which is often used by the marketers to get control over different types of markets around the world. Marketing strategy of any organisation has to include segmentation of the product in the market before launching the product. It is one of the prerequisite of marketing strategy. Yamaha as a responsible organisation must have statically analysed the growing automobile market of India, out of which 76.23% share is of motorcycle market. .

Figure:- 2 Indian automobile market segmentation (Society of Indian Automobile Manufacturer, Statistics)

Indian motorcycle markets grew by 12.1% during year 2009 and reach the volume of 9371.2 thousand units.

India Yamaha Motor Pvt. Ltd


Target Market

As suggested by name, Target Market, it is the segment of the market to be targeted by the company. Also, Jobber, D (2010) stated that a company needs to assess the market segments and then decide which of the segment to be served. India is second largest populated country, and has a huge number of youth. Out of total population, India has 41.05% youth.

Figure: - 3 Population Ratio of India (Adapted from: - Indian Youth Portal)

One of the significant motives of the trade is to get profit. Profit is at the core of any organisations marketing strategy conceding the organisation will make profit in the future their target market must be promising. Yamaha has chosen Indian market which is one of the largest growing markets in the world and the target segment into this market is youth for FZS.


Market Position

According to Dibb, S and Simkin, L (2001,pg 65), A Product positioning is the activity directed towards creating and maintaining a companys intended product concept and image in the mind of targeted customers.

Hence it is last stage of market segmentation and finalizes the marketing strategy it has given the most importance. This is not something that the product itself creates its impression on the minds of targeted consumers but it is one of the part of prolong process of rigorous thinking of marketers. It goes with some crucial stages of market research aiming consumer behavior what they want out of product identifying the segment of market where the product fits. Now if we briefly have a glance of the Yamaha FZ-S marketing strategy it clearly 9

India Yamaha Motor Pvt. Ltd

suggest that Yamaha had figured out market segment which is youth of India comprises of 41.05% of total Indian population which is largely automobile savvy by far extent also contemporary in terms of selection of motor bikes which expects looks performance of engine low maintenance revels high speed and gives exclusivity to Indian youth. Having considered these factors it is clearly seen that the position that Yamaha FZ-S got in the market today (exclusive), the marketers of Yamaha has achieved product positioning in Indian market.



Marketing mix are the factors that marketers use to implement their marketing approaches to satisfy their targeted customers and that are Product, Price, Place and Promotion (Dibb, S and Simkin, L. 2001).

Among all these factors each of them is very unique and has got its own importance on the contrary none of them stand alone they are quite intercepted .The execution of strategy depends upon cluster of all 4 Ps.

Figure:- 4 Marketing Mix

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India Yamaha Motor Pvt. Ltd

4.1 Product

The Yamaha FZ-S catering the Indian youth could be consider as tangible product of the company as a whole but while defining the product it just not physical appearance that counts but the factors that make the product complete are also the intangible components adhere with the product. For an instance the brand Yamaha which is known for its speed and contemporary design also the facts which is to be considered is its exclusive availability to Indian market. Now if we observe the product components under the microscope the characteristics of product could be illuminated, which are as follows: -

4.1.1 The Core Product

According to (Gosnay R. and Richardson N. 2008), the core product refers to the benefits that the product gives to a consumer. Here in this case Yamaha FZ-S is a two wheeler with cutting edge technology 150cc, 4 stoke motor bike. The benefits of it are enormous, such as it makes traveling easy and comfortable with its advanced monocross suspension. Its engine produces 14 PS power which give high speed in less time. Its advance exhausts system give a sense of volume which attracts the youth. Its large diameter front disk brake and multi reflector headlight adopter make it highly stylish. (Yamaha Features, 2010)

4.1.2 The Tangible Product

(Gosnay R. and Richardson N. 2008), defines the tangible product as emphasis given to physical features and USP of the product. Yamaha FZ-S has got a unique design and new colors & graphics, aerodynamic shape, stylish and sporty carbon pattern meter and more aggressive looking headlight. FZ-S got the widest rare radial tyre among all bikes available in Indian automobile market. The muscular body part and muscular chassis with wide rare tyre are the highlight of FZ-S Design and that is also the USP of the product. (Yamaha Ltd, 2010)


India Yamaha Motor Pvt. Ltd

4.1.3 The augmented Product

The least attention is being paid on this aspect of product by most of the organisation. Hence most organisation mainly concentrate into manufacturing of the product and selling it to the customer but very few companies pays attention for after sales services, modes of selling for ex. Finance or spread the price quality of the product for ex. Free maintenance (Gosnay, R. and Richardson, N. 2008). IYMs FZ-S comes with bundle of services which makes it lucrative product in this segment. Given a name Yamaha FZ-S comes Two year of free Maintenance and five years engine warranty. Yamaha offer eight free service of FZ-S which is quite promising and double the offerings of its competitor. (Yamaha Ltd, 2010)



Pricing is one of the most challenging areas for marketer as it is the only area in marketing mix which generates revenue and price also reflects the quality and exclusivity of the product (Gosnay, R. and Richardson, N. 2008). A company puts many efforts to introduce a product to the market that is in the manufacturing and marketing of the product. The price of the product is something that the company got back in return of all those efforts. Price should be set by considering product, place and promotion to form a coherent mix and should provide superior value to its customer (Jobber, D 2010).

According to Gosnay R. and Richardson N, (2008), there are many techniques which helps marketer to do the pricing of a product some of these techniques are as fellow:

4.2.1 Cost Based Pricing This method is used to set a price on the basis of the cost involved in the production. Cost base pricing can be done by three types:


India Yamaha Motor Pvt. Ltd

Cost plus pricing - Calculating all input cost in per unit product and adding the margin, in that case we got selling price by cost plus pricing. Full cost pricing After adding the margin in average cost of the production of a product we got selling price by full cost pricing method. Mark up Pricing when a fixed margin being added in the buying price by the retailer that called mark- up pricing.

4.2.2 Competitor Based Pricing

Competitor based pricing done by considering the competitors in the market. Competitor base pricing also done by three types: Going Rate pricing Where price has been set on the bases of competitors price. Premium Pricing - Where Price has been set above the price of competitors. Discount Pricing Where the price has been set below price of competitors.

4.2.3 Market Base Pricing

Market based pricing done by taken market into consideration. Market base pricing done by two types: Market Skimming In this method company set high price at the starting period of its launch to make more profit and later reduce its price layer by layer to maintain its market position Market Penetration- In this method company set relatively low price to capture the market.

Price of Yamaha FZ-S in compression of its competitors is as follow:

Model Bajaj Pulsar 150 DTS-I Hero Honda Hunk TVS Apache RTR Yamaha FZ-S

Price (Rs.) 62,113/61,215/60,700/67,000/(Price India, 2010)


India Yamaha Motor Pvt. Ltd

As we can see Yamaha offer the price of FZ-S little more than the price what its competitors offering. Yamaha use competitor based pricing method and give FZ-S premium price. It helps IYM to make FZ-S exclusive to its customer.



An organisation uses promotion mix to communicate with their target customer. Promotion mix comprises different tools according to Jobber Promotional mix consist of five tools which are advertising, personal selling, direct marketing, sales promotion and publicity(Jobber, D 2001).

4.3.1 Advertising

Advertising has been done not only to promote brand but it also include factors like stimulating demand, combating competitors, supporting the field force, educating customer & increase use of product etc. Yamaha uses the advertising medium very well to reach its target customer. As Yamaha knows that Indian Youth is its target customer they use John Abraham a famous Bollywood star and youth icon in India as their brand ambassador and that work very well for them as Indian youth easily got influence by their icons. Tagline of the Yamaha FZ series is LORD OF THE STREETS and for FZ-S they use KNOWS STREET SMART WAYS TO RULE THE STREET both the tagline are very catchy and goes with the type of product Yamaha marketing. Yamaha goes one step further and introduce a totally new and innovative way to promote FZS in Indian market; they bring a motorbike Stunt realty show UTV Bindaas DreamRider on a popular Indian TV Channel. As youth is their prime target customer that show works really well for them. (Yamaha Ltd., 2010)

4.3.2 Direct Marketing

Direct marketing is done on the target segment directly and marketer can got imitate reactions of the customer.


India Yamaha Motor Pvt. Ltd

Yamaha promotes FZ-S in many public places mainly at colleges and universities where they can find their target customer through their mobile campaign shows, they offer free test drives to student and take their feedback.

4.3.3 Sales Promotion

Sales promotion could be referred as the promotion activities that used to motivate customers for buying the product by adding some extra value. Companies did Sales promotions usually for a short time period. Company normally did sales promotion to support to their other promotion activities. (Perreault, W.D et al 2000)

Yamaha also use sales promotion to promote its product to its target customer as they offer some cash back to the students when they buy the FZ-S. To attract its target customers Yamaha sometimes use sales promotion to increase its sale like they offer 0% interest on Yamaha FZ-S when buy on EMI. Yamaha also signs a deal with Axis bank for allowing its customer to get easy and fast finance for the bike. (Market line)



Place is one of the component of marketing mix and it refers to place of selling the product, it involves the crucial part of strategy i.e. controlling distribution channel in order to transport the product to the customers. This transportation invest great deal of safety and security to insure that that the actual product that consumer buy should be undamaged and without any default (Gosnay, R. and Richardson, N. 2008).

Yamaha works on one level marking channel the product reaches the customer through Yamahas Dealers/Retailers. Dealers are the main part of Yamahas distribution management. Yamaha works on one level distribution and dealers works between customer and IYM. According to IYM their Brand Image speaks for itself, and their dealer network is the backbone of their vital marketing operations. Recent initiatives have been launched by Yamaha in the field of business-to-business as well as business-to-consumer cooperation with


India Yamaha Motor Pvt. Ltd

Dealers. The new showrooms based on YAMAHA VISUAL IDENTITY are one of the many steps in this direction. Yamahas dealer network works on the "3S" fundamentals of -SALES SERVICE and SPARE PARTS under one roof. With a strongly dedicated team of Sales and Service engineers, IYM targets the fulfilment of customer's needs. (Yamaha Ltd., 2010) Place is biggest draw back in the marketing mix of Yamaha FZ-S as Yamaha have less dealers/Retailers across India as compare to its competitors like Hero Honda and Bajaj. Now Yamaha is planning to improve its Dealership network in most parts of India mainly in rural Parts. (Market Line)



Product Life Cycle

This concept is based on the idea that a new product enters a life cycle once it is launched on the market. By thinking of product in this manner it is possible to devise different marketing strategies for relevant stages in the products life. Product life cycle helps plan the resources and investment in a product.

Figure:- 5 Product Life Cycle (Source: - Value Based Management)


India Yamaha Motor Pvt. Ltd

Yamaha FZ-S lunched only one and half year back and it is doing very well in the market but to make FZ-S exclusive Yamaha produce less FZ-S bikes due to this FZ-S bikes are somewhere between his end of growth stage and start of maturity stage.


Boston Matrix

Boston Consulting Group (BCG) developed Boston Matrix which is also known as BCG growth shear matrix. Boston matrix helps to classify the product into four basic types: (a) Star have good growth rate with a dominant share of market (b) Cash cow have dominant share of market but with low growth rate (c) Dogs have small share of market with low growth rate (d) Problem child or question mark have small share of market with good growth rate (Hutchings, A. 1995)

Figure:- 6 Boston Matrix (Adapted from: - Hutchings, A. 1995, pg. 117)

In first quarter of 2010 Yamaha sold more than one lakh FZ bikes which was the 40% of their total sell. (The Economics Times, 2010)


India Yamaha Motor Pvt. Ltd

AS FZ-S is growing well in the Indian automobile market whereby increasing a considerable market share for the organisation positioning the FZ-S as a star in BCG Matrix for India Yamaha Motor.


Ansoff Matrix

Figure:- 7 Ansoffs Matrix

(Source: - Hutchings, A. 1995, pg. 116)

Ansoff matrix helps a company to identify their area between four key areas of marketing activity. These four key areas are Market Penetration is done for continuation of the exiting product to an existing market to increase market share and customer base. Market Development plan is done when an existing product enters a new market seeking to exploit new market opportunity and ideas. Product development plan is done to launch a new product into an existing market by capitalise the knowledge of existing market. Total diversification plan focuses on a totally new product into a new market. (Hutchings, A. 1995) 18

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As Yamaha launched FZ-S after its successful FZ 16 bike so FZ-S falls in a category of existing product into the existing market .Yamaha FZ-S finds a place in ansoff matrix at Market Penetration.



Yamaha did really well with the marketing of FZ-S and the bike established itself in the Indian automobile market. FZ-S have an exclusivity and youth are going for it but Despite all of that the fact is that Yamaha still havent make its position well in Indian market i.e. they have only 2.3% share of Indian two wheeler market. Some recommendations for IYM to achieve a good position in Indian automobile market are as follow: As at the present time Yamaha got most of its sale from FZ-S, so they should increase the production and make it easily available to the customer. As we know all products have only certain life (PLC) and it will be decline by the market one day so they should make most of that product at its peak time which is now for FZ-S. Yamaha can increase the number of dealers in Indian market, as they have less reach in the market when compare to their competitors Fuel Mileage is a key issue in the Indian market and there people have a perception about Yamahas bikes that they are not fuel economical, IYM can work on this aspect and produce some fuel economical bikes As we find in the report IYM is trying to expand its network to the rural areas of India as well. But it doesnt seems promising to use bikes like FZ-S into the rural market as the need of peoples there are different and if IYM wants to get a good share in Indian market they must concentrate on the other segment of bike buyers like family as they cant depend on the youth to get a big market share. IYM must develop a fuel economical family motorbike for better position in Indian automobile market.


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