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The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance. The group's flagship company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Bajaj Auto was founded in 1945.It is India's second largest two wheeler manufacturer and the world's 4th largest two and threewheeler manufacturer. It is based in Pune. with plants in Akurdi and Chakan (Pune), Waluj and Pantnagar in Uttaranchal Currently It holds a market share of 22% over all two wheeler industry and a phenomenon 71% share in 125- 250 cc category. It has a joint venture with Kawasaki and 31.72 % stake in Australian based company KTM Key markets : Bajaj auto is Dominant player in Indian market . The best selling market being Punjab, Delhi & NCR, UP , Bangalore and Maharashtra. The company exports its products to Sri Lanka, Bangladesh, Philippines, Latin America, Colombia, Peru, Mexico, Africa and the Middle East. The Company affirms that its competitiveness is interlinked with the well being of all sections of the Indian society. The Company believes that equal opportunity in employment for all sections of the society is a component of its growth and competitiveness. It further believes that inclusive growth is a component of growth and development of the country. The Company affirms the recognition that diversity to reflect socially disadvantages sections of the society in the workplace has a positive impact on business. The Company will not practice nor support conscious discrimination in any form. The Company does not bias employment away from applicants belonging to disadvantaged sections of society if such applicants possess competitive skills and job credentials. The Company's selection of business partners is not based on any considerations other than normal business parameters. In case of equal business offers, the Company will select a business partner belonging to a socially disadvantaged section of society. This Code of Conduct for Affirmative Action will be put up on the company web-site to encourage applications from socially disadvantaged sections of society. The Company makes all efforts for upskilling and continual training of all its employees in order to enhance their capabilities and competitive skills. No discrimination of any type will be shown in this process. The Company may have a partnership programme with educational institution/s to support and aid students from socially disadvantaged sections of society. The Company will maintain records of Affirmative Action. The Company has nominated Mr. Amrut Kumar Rath, Vice President (HR), to oversee and promote the
Affirmative Action policies and programmes. He will be accountable to the Chairman. The Company will make available its learning and experiences as a good corporate citizen in Affirmative Action to other companies desiring to incorporate such policies in their own business.
The division of a market into different homogeneous groups of consumers is known as market segmentation. Rather than offer the same marketing mix to vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying customer needs. Not all elements of the marketing mix are necessarily changed from one segment to the next. For example, in some cases only the promotional campaigns would differ. A market segment should be:
• • • • •
measurable accessible by communication and distribution channels different in its response to a marketing mix durable (not changing too quickly) substantial enough to be profitable
A market can be segmented by various bases, and industrial markets are segmented somewhat differently from consumer markets, as described below.
Consumer Market Segmentation A basis for segmentation is a factor that varies among groups within a market, but that is consistent within groups. One can identify four primary bases on which to segment a consumer market:
• • • •
Geographic segmentation is based on regional variables such as region, climate, population density, and population growth rate. Demographic segmentation is based on variables such as age, gender, ethnicity, education, occupation, income, and family status. Psychographic segmentation is based on variables such as values, attitudes, and lifestyle. Behavioral segmentation is based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought.
The optimal bases on which to segment the market depend on the particular situation and are determined by marketing research, market trends, and managerial judgment.
Business Market Segmentation While many of the consumer market segmentation bases can be applied to businesses and organizations, the different nature of business markets often leads to segmentation on the following bases:
• • •
Geographic segmentation - based on regional variables such as customer concentration, regional industrial growth rate, and international macroeconomic factors. Customer type - based on factors such as the size of the organization, its industry, position in the value chain, etc. Buyer behavior - based on factors such as loyalty to suppliers, usage patterns, and order size.
The following are the advantages of Market Segmentation for a firm:
• • • •
Helps in better understanding of the customers’ needs and wants. Better targeting and position of the product. Encourages two-way communication among the potential buyer and the organization. Maintaining effective relationship with the customers. Retaining the existing customers and attracting new ones. Improving service delivery standards. Reducing cost / expenses on various marketing activities and increases market share; resulting in higher profits.
Market segmentation plan for Bajaj 150 CC Pulsar motorcycle
Market segmentation used by Bajaj to make pulsar a success were as follows 1. Demographic Segmentation 2. Psychographic Segmentation Key features of Bajaj pulsar were as follows
Style • • • • •
All Black Engine. Aerodynamic tank flaps. Aggressive masked fairing with wolf eyed headlamps. Back-lit LCD digital speedo & tachometer console. Twin slashed L.E.D tail lamp.
Engine • • • 4 stoke, DTS-i 150 cc, 14.09 Ps. Exhaus TEC (Torque Expansion Chamber) Technology* for the exhaust technology. State of the art feature at the heart of Digital Biking: Digital C.D.I. Unit, Digital Twin Spak Ignition, TRICS III
Alloy Wheels • • High performance 17" alloy wheels. Lighter, Stronger and Safer giving superior agility.
Electricals • • Frame • • Beefed up frame with 1320 mm wheelbase. More strength and high stability with exceptionally tight turning radius. 12 V full DC. Better starting & uniform illumination at variable speed even at stand still.
These features of the bajaj pulsar 150 dtsi gave it an distinct advantage over its segment competitors
Suzuki’s 125cc Access
Suzuki launched in its much expected 125cc Variomatic scooter the ‘Access’ on September. Access is the third product from the Suzuki stable in India after Heat and Zeus motorcycles. 125cc Access is the third product from the Suzuki stable in India after Heat and Zeus motorcycles. 125cc Access is powered by a 125-cc aircooled four-stroke engine with automatic transmission. Suzuki’s access features contemporary telescopic front suspension and a rust free body. 125cc access also features central locking system and provision for fitting a spare rear tyre at the
back similar to the one found in Kinetic honda. Suzuki’s 125cc excess has an unique shutter mechanism for a single control point for the entire machine to avoid theft. Suzuki’s 125cc access is available in five colours – red, blue, black, grey and silver. 125cc Access will hit the stores by the first week of next October. Suzuki will announce the price after a pan-India roll out within two weeks time. According to Suzuki,125cc access scooter will give a mileage/fuel efficiency of 65kpl. Booming scooter segment: Though Indian motorcycle industry fell by almost 14.4 percent in the April-August period from a year ago. Scooters is witnessing a robust growth, it rose by 19 percent during the same period. On an average 40000 scooters are sold every month in india. TVS scooty plus, Honda Activa, Hero Honda pleasure and Bajaj kristal are prominent players in this scooter segment. Recently, TVS unveiled an electric variant of scooty. Yamaha is mulling seriously to foray into the scooter segment. TVS also plans a new scooter next year. In August 2007, Kinetic Sym introduced India’s first 125cc scooter flyte. Suzuki’s access will compete with the flyte. The flyte is priced around Rs37000. Suzuki’s 125cc access is expected to be priced on a similar front. There seems to be a parallel development in the scooter and motorcycle segments of the two-wheeler market in the country. Even as there is a step-up in the engine capacity of bikes in the entry-level motorcycle segment from the currently popular 100cc to the next upgrade, namely, the 125cc, there seems to be a similar shift in preference in the scooter segment too. The Honda Activa currently dominates the scooter market in India. Together with the Dio, a differently styled version of essentially the same scooter, Honda Motorcycle and Scooter India (HMSI) controls over 58 per cent of the scooter market in the 75cc to 125cc category. But while Honda has a stranglehold over the 100cc category, with these two scooters, its experience with the Eterno, a 150cc, metalbodied, geared scooter has been pretty ordinary. Of course, it is a fact that the metal-bodied, geared scooter as a segment is facing a kind of extinction situation. But it is also a fact that the absence of Honda in the 100cc to 150cc segment has been a reason why the competition is quickly attempting to nudge into it. All of the new scooters in this emerging segment have their own strong points and compelling value and should be able to stand up and be noticed. But the brand equity that Honda has built itself with the Activa has made it extremely difficult for other two-wheeler makers to break into the buyer’s mind space in this segment, prompting them to look at the 125cc category. And so it is interesting to note that Suzuki has finally taken its first step into the scooter segment with the new Access 125. This is Suzuki’s maiden attempt at
entering the scooter segment, including the time it was present in the Indian market through its joint venture with TVS. In keeping with its calculated and conservative approach to the market here, Suzuki has chosen to mark its entry into the scooter segment with Access 125, a simple, but well-designed and well-finished two-wheeler. The side profile of the Access is very familiar and almost falls into a relatively predictable design trend that many gearless scooters currently adopt. Unique features At a glance, the Access 125 is still attractive and has a number of features that will be identified as being unique. But put together, there is no evident attempt at building an image of novelty for the scooter. But again that can still be good enough to attract a number of buyers in this segment. After all, the even more simplistic Activa has managed to corner more than half the buyers in the category. Considerable work has been put into keeping the Access’ overall quality levels high. The quality of panel plastic, the paint job, panel integration, quality of switches and electricals, etc., are all as good as the best among the competition.
Comparing Features of 100cc segment Model Multireflector Headlamp Puncture Resistant (Tuff up) tube Storage Capacity Hero TVS TVS Honda Honda Suzuki Kinetic Bajaj Honda Scooty Scooty Activa Aviator Access Flyte Kristal Pleasure Pep+ Streak Yes Yes Yes Yes Yes Yes NA NA Yes 15 lt Yes 15 lt Yes 20 lt No 20 lt No 22 lt No 22 lt No 12 lt No
Front Fueling system
Central Control/Lock Mobile Charging Disc Brake option Front Telescopic suspension
No No No No
No No No No
No No Yes Yes
No No No Yes
Yes Yes No Yes
Yes No No No
12 lt No (but seat No need not be opened) No No No No No Yes No No
The above comparison chart clearly shows Honda, Hero Honda and Suzuki as manufacturer who concentrates on core product and no extra features. whereas, TVS, Bajaj and Kinetic wants to add features which differentiate itself from other products in the market with features like central lock/control system, anti theft system, mobile charging etc.
The Real market Picture During the five past years, the Indian motorcycles market has seen some excellent growth rates for both value and volume. Even the Chinese market has exhibited weaker growth rates than the Indian market. Some deceleration of growth is forecast, but India will remain a dynamic market for the next five years. The Indian motorcycles market generated total revenues of $3.1 billion in 2005, this representing a compound annual growth rate (CAGR) of 15.8% for the five-year period spanning 2001-2005. In comparison, the Japanese and Chinese markets grew with CAGRs of 2% and 10.2% over the same period, to reach respective values of $1.5 billion and $8.1 billion in 2005. The market consumption volumes increased with a CAGR of 13.4% between 20012005, to reach a total of 7 million units in 2005. The market's volume is expected to rise to 12.5 million units by the end of 2010, this representing a CAGR of 12.2% for the 2005-2010 period. Motorcycles sales proved the most attractive for the Taiwanese motorcycles market in 2005, generating total sales of 5.8 million units, equivalent to 82.7% of the market's overall volume. In comparison, sales of mopeds generated sales of 1.2 million units in 2005, equating to 17.2% of the market's aggregate volume. The performance of the market is forecast to accelerate, with an anticipated CAGR of 12.5% for the five-year period 2005-2010 expected to drive the market to a value of $5.6 billion by the end of 2010. Comparatively, the Japanese and Chinese markets will grow with CAGRs of 3.5% and 16.9% respectively over the same period, to reach respective values of $1.7 billion and $17.7 billion in 2010.
Growth potentials The Indian motorcycles market grew by 8.9% in 2005 to reach a value of $3.1 billion. The compound annual growth rate of the market in the period 2001-2005 was 15.8%. Table 1: India Motorcycles Market Value: $ billion, 2001-2005 Year $ billion INR billion % Growth 2001 1.7 77.0
2002 2.1 93.9 21.90% 2003 2.5 110.8 18.00% 2004 2.9 127.0 14.70% 2005 3.1 138.3 8.90% CAGR, 2001-2005: 15.8% Market segmentation Hero Honda Motors Ltd. leads the Indian motorcycles market with a share of 42.8%. In comparison, Bajaj Auto Ltd. generates 28% of the market share. Table 5: India Motorcycles Market Share: % Share, by Volume, 2005 Company % Share Hero Honda Motors Ltd. 42.80% Bajaj Auto Ltd. 28.00% Yamaha 5.00% Other 24.20% Total 100.0% COMPETITIVE LANDSCAPE Hero Honda continues to maintain its position as the lead manufacturer of motorcycle transport in India. In the fiscal year ended March 2006, the company continued to post double-digit growth figures of 14% bringing the companies net profit to $220.2 million. However, the company has identified three risk factors that could influence the growth of the company moving forward: slowing growth in the premium and deluxe sectors; increased competition from countries such as China and the rising cost of steel and aluminum. LEADING COMPANIES Hero Honda Motors Limited Hero Honda Motors is a manufacturer and marketer of motorcycles and spare parts. The company is a joint venture between Hero Group, India and Honda Motors Company of Japan. Hero Honda is headquartered in New Delhi, India. In the 2005 fiscal year, Hero Honda generated revenues of $8,596.8 million. The company made a net profit of $810.4 million in the 2005 fiscal year. Bajaj Auto Limited Bajaj Auto is a manufacturer and marketer of a wide range of two and three wheeled vehicles. The company also trades auto spare parts and is a subsidiary of the Bajaj Group. Bajaj Auto is headquartered in Pune, India.
For the fiscal year ended March 2006, the company generated revenues of $1,937.8 million, an increase of 30.7% over fiscal 2005. Net profits were recorded at $254.6 million, an increase of 46.8% over the previous year. Yamaha Motor Co., Ltd. Yamaha Motor manufactures a large variety of products. It is famed for its Motorcycles, boats, snowmobiles, jet skis and generators. Yamaha Motor provides land sport and sea sport vehicles as well as common use and industrial use products. It operates many plants in countries around the world, through its subsidiaries and affiliates and is headquartered in Shizuoka, Japan. For the fiscal year ended December 2005, the company generated revenues of $12.49 billion, an increase of 35.9% on the previous year. The company saw a net income of $581.4 million during fiscal 2005, an increase of 67.8% on fiscal 2004. There is a lot of scope for Bajaj auto hence the market is really very open to their 125 cc 150 cc segment
Bajaj Auto is in the process of setting up a chain of retail stores across the country exclusively for high-end, performance bikes. These stores are called “Bajaj Probiking". Fifty two such stores have been opened across the India. Catering to demand in this sector requires a strong and effective distribution network as consumers are more demanding and expect delivery on time. Early delivery is a cause of delight for customers. With such vast global and Indian rural presence, designing an efficient distribution system becomes a complex task even for a
company like Bajaj Auto. Lot of time and effort goes into designing a strategy based efficient distribution system. Product Segmentation The company classifies motorcycles into three segments, based on consumer categories and approximate price points. These are: Entry Segment: These are typically 100 cc motorcycles at a price point in the neighbourhood of Rs.35000. Bajaj Auto has a presence in this segment through the Platina. Here, Bajaj Auto has been a major player and despite an overall market degrowth, it accounted for 34% of this segment in India in 2008-09. Executive segment: This largely comprises 100 cc to 135 cc motorcycles, priced between Rs.40000 to Rs.50000. Bajaj Auto has two brands in this segment, namely XCD and Discover. These are sleek, high performance bikes with price points in excess of Rs.50000. They are present here with their flagship brand, the Pulsar and cruiser, the Avenger. They dominate this space with a domestic market share of more than 47%.
Key competitors (3 wheeler) Bajaj manufactures commercial vehicles for passenger carrier as well as goods carrier other players in the three-wheeler segment in India are Mahindra and Mahindra , Piaggio and atul auto. Bajaj is facing tough competition by aggressively launched Mahindra gio
Supplier Detail Key suppliers: Bajaj auto has approximately 198 suppliers for their raw materials. Some of the key suppliers are:JBM MRF & Dunlop – Minda Reinder – Endurance – Varroc – Max auto components – Silco cable – Makino industry – Inventory policyBajaj auto maintains seven days inventory . Demand Estimations were based on Panel Regression, which takes into account both time series and cross section variation in data .All the Mediators are connected with each other through IT linkage to know exact status of delivery of goods With operations spanning to such vast geographies, managing a supply chain globally becomes more and more complex. In countries where Bajaj perceives Frames tires locks & ignition system headlamps & lights brakes, clutch & Cast wheel Plastic parts & Digital Meter ignition system and switches wires and cables Brake shoes . Brake lining, clutch center
a strong market potential, they establish a tie up with one major industrial establishment eager to invest in the project. This investment may include setting up strategic manufacturing or assembly units, apart from a well-established nationwide network for marketing, distribution and after sales services. These investors who form alliances with Bajaj Auto are termed as “Business Partners”. Bajaj Auto offers a number of services to its business partners. They include: Training in sales, service and spare parts management based on the Bajaj distribution system Active support for setting up manufacturing facilities overseas including transfer of technical know-how Assistance in setting up an assembly plant for assembly of vehicles from complete knocked down (CKD) kits Selecting of machinery and equipment and training of technical personnel, all in a phased manner as required by the regulations in the recipient country Active support in setting nation-wide dealer network, also involving identification and recommending suitable partner who would assist the distributor in Business growth
For distribution bajaj auto uses mix of depots and Cnf agents. This is completely dependent on the distance of manufacturing location from dealer point .For example due to extensive distance from manufacturing plant from west Bengal to north-east India ,there exist a depot in Khadakpur with capacity of housing 800vehicles. There are similar depots in Punjab , Rajasthan and southern India.
Dealers Like mentioned above, the company has a network of 498 dealers and over 1,500 authorised service centres and 162 exclusive three-wheeler dealers spread across the country. Around 1,400 rural outlets have been created in towns with
population of 25,000 and below. The current dealer network is servicing these outlets. Dealers can be classified under 3 heads. They are as follows: COCOThese are Company Owned & Company Operated showrooms. These concepts exist only for Pro-Biking showrooms. Here Bajaj Auto has tried showcasing their muscle power in high end biking segment. The concept has evolved very fast and now there are 52 Pro-Biking showrooms in the country. The company itself does not take any order from the customer in these showrooms. The giant dealer of the region who is acting as a logistics partner for the pro-biking concept takes the order on behalf of the company and fulfils the customer requirement.
CODOThese are Company Owned & Dealer Operated showrooms. In case of this concept, showrooms are owned by the company but the operations in the showroom are managed by the dealer. This is generally the case where Bajaj wants to provide the dealer financial benefits considering the high working capital requirement of the company. DODOThese are Dealer Owned & Dealer Operated. These dealers are fewer in number because they are generally the giant dealers who are the financial muscle for the company. In our talks, the management indicated that the top management wants to do away with this concept. The reason behind this is that the bargaining power increases in the hands of the dealer, which puts the company in an knotty situation. National Level Partnerships There is an exisisting generic channel which is used for segmentation of this category of two-wheelers and three wheelers. Transport & Logistics This function of distribution is not owned by the company in any form. This is outsourced in toto to the third party vendors. The third party here is Transport Corporation of India (TCI) and a few other private vendors. The fleet to be transported is custom-designed for Bajaj Auto by the vendor. Key Facts There are twenty vendors all across India OSL Jamuna Transport Sumit Transport A Transit Insurance Compliance Letter(TICL) is signed between the two parties The local level sub-dealer sometimes gets to decide the last mile logistics, as he can decide to pick up the vehicles himself or have it transported to him Logistics of the vendor is decided by the company Freight charge is built-in in the product price
Bajaj selects those suppliers who provides majority of the required raw materials together. The company believes in situation so if any suppliers do not keep their requirement so at that time bajaj left the contract. Relation with the supplier firm : B.ajaj auto lt believes in good relationship with its suppliers and customers. The suppliers who supply raw material to the company, Bajaj auto pay them regularly. If any when advanced payment required Bajaj also pay advance for bulky consumption. During annual day of the company, Philips rewarded those suppliers who contracted with company for whole year and survive company without any problems. Services provided by Bajaj Auto to the dealer Workshop Training In a month: 30-40 Mechanics can be trained per dealer 15-20 Sales personnel can be trained per dealer New Product Launch Information is percolated around a month before the product is to be launched The date of launch can be rescheduled in case the current stocks of the dealer are not getting cleared. Promotional Activities The cost of sending the staff to the Pune branch for training is borne by the dealer.
Trail balance of ABC Auto as on 30.3.2009 Debit(amount) Particular Bank loan RS(000) Credit(amount) RS(000) 12,000
Capital Rates Purchases Trade creditors Sales Sundry creditors Debtors Banks loan interest Other expenses Vehicles 1,880 12,400
11200 14600 1,620 12,000 1,400 11,020 2,020
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