Project Report on Marketing: RiDeRsCycles

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RiDeRs Cycles
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For the fulfilment of Project Work of Term II, National Management Programme - 29

At M.D.I. Gurgaon

SUBMITTED BY: GUIDED BY:

SEC A: GROUP-7 DR. SHAPHALI GUPTA

ANURAG SHARMA
(FACULTY MARKETING AREA)
DEEPESH KUMAR
DISHANK JHARIWAL
HIMANSHU S TIWARI
NISHU JAIN
RAVI KANAUJIA

Executive Summary

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Indian Bicycle Industry is very large with India producing almost 10% of
total Bicycle production of the world and exporting around $200 million of
it. Out of the completed sales of bicycle, around 13% constitute by the
kids segment with CAGR (Compounded Annual Growth Rate) of around
15%. With many brands present in the bicycle industry, a new approach
towards marketing is needed and also to penetrate competitive market
cost competitiveness is required.

With the changing lifestyle, growing lifestyle diseases, worsening

environment and taxing times on the roads, urbanities are looking for a
paradigm shift, in the way of life. We have approached to the fill this need,
with a bicycle, embedded with health features, to address the concerns to
the extent possible.

To develop a marketing plan for this product, we started with an

environment analysis on various factors like environment, legal, health
and economic situation, for assessing the bearing on the demand of the
proposed new offering. Thereafter, we have done identification of the
market needs for the specific health bicycle.

Next, we carried out the segmentation of the market, based on criteria like
benefits, geography, demographics, psychographics etc. We then
identified our target market as health segment in NCR, based on the
attractiveness of the segment, as this segment was not catered to directly
till now & had a potential for higher margins. Accordingly, the positioning
of the bicycle, as a healthy lifestyle product to the youth, has been
planned.

In order to design the marketing mix, we next scanned the consumer

behavior for bikes purchasers. Then the marketing mix comprising,
Product, Price, Place & promotion were planned in order to market the
product successfully to the target segment.

We have concluded to market the bicycle with health features, in NCR

region, to high-income segment, through positioning the product as a
healthy lifestyle product, which also caters to cleaner environment.

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 Table of Contents
SITUATION ANALYSIS.............................................................................................. 4
Environment....................................................................................................... 4
Legal................................................................................................................... 4
Health................................................................................................................. 4
Economic............................................................................................................ 5
Technological....................................................................................................... .
CONSUMER MARKET AND BUYING BEHAVIOUR......................................................5
Indian Bicycle Industry....................................................................................... 5
Global Bicycle Industry....................................................................................... 7
Identification of Market Needs...............................................................................9
Segmentation of Bicycle markets........................................................................13
Target Segment................................................................................................... 15
Behaviors:..................................................................................................... 15
Segments within the Indian Bicycle Industry........................................................
Target Segment................................................................................................... .
Behaviors:........................................................................................................ .
SWAT ANALYSIS.................................................................................................... 16
PORTERS ANALYSIS FOR BICYCLE INDUSTRY....................................................17
COST TO REACH................................................................................................... 18
Positioning........................................................................................................ 19
Positioning statement:...................................................................................... 20
Buying behavior............................................................................................... 20
Buying Roles..................................................................................................... 21
Influences on buying behavior..........................................................................21
Types of buying behavior.................................................................................. 21
4 Ps OF MARKETING MIX..................................................................................... 21
Place - Marketing Channels..............................................................................25
Promotion......................................................................................................... 25

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 Survey Analysis................................................................................................ 26
Conclusion........................................................................................................... 27
References........................................................................................................... 39

SITUATION ANALYSIS

Environment
There are many environmental issues in India. Air pollution, water pollution, noise pollution,
deforestation, and soil pollution etc. major challenges for India. The importance of
environmental issues in India can be gauged by active involvement of Supreme Court of
India in resolving the environmental issues. Of these air pollution affects our daily lifestyle
and directly affects the HDI (Human Development Indicator) parameter of life expectancy.

In 2016 WHO assessed 3000 cities worldwide for Particulate Matter pollution in air and
found India home to 10 of the 20 cities with most polluted air. The Environmental Preference
Index 2016, ranked India 141 out of the 178 countries for Air Quality (Exhibit2)

Out of these, Delhi Figures out at 11th Position and consistently ranked among top 20 most
polluted cities across the globe for the past couple of years (Exhibit1). In fact ODD-EVEN
Trial by Delhi Govt. had not much effect on soaring pollution levels. The WHO says the vast
majority of Indians breathe unsafe air. The human cost is seen in soaring asthma rates,
including among children. PM2.5 contributes to cancer and it kills by triggering heart attacks
and strokes. Air pollution is likely to cause vastly more deaths, as Indians grow older and
more obese. Indoor and outdoor pollution combined is the biggest cause of death, claiming
over 1.6m lives a year. 1

Use of personal motorized vehicles and its significant contribution to air pollution,
greenhouse gas emissions, and fossil fuel consumption are well accepted. In this scenario, in
recent years, many world cities have been promoting cycling as a way to help alleviate
troublesome traffic congestion, air pollution, and other environmental ills related to
increasing urbanization.

Legal
The National Urban Transport Policy, 2014 has emphasized that cycle should become safe
mode of Urban transport & is essential to reduce congestion, improve mobility & air quality.
Further in the planning for modes, Non-motorized transport (NMT) has been accorded the
highest priority for future infrastructure planning. Suitable provisions have been planned to
be included in motor vehicle act for better enforcement. Further cycle lanes to be promoted
within 500m of public stations/stops, to improve last mile connectivity. Govt. of India
intends to support NMT through financial measures also.

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Thus the future legal framework is expected to promote NMT & cycle as a product is
expected to get a statutory boost.

Health
A report on Health by Planning Commission of India states that 25% of the morbidity is due
to life style disorders 2.

During a last survey on urban health conducted by NDTV 3, it came out the life style diseases
like diabetes; cardio-vascular diseases, obesity etc. are on the rise in India. The statics of
Obesity in India is enclosed as Exhibit 3.

The growing health concerns have increased the inclination of urbanities towards healthier
life styles and environment, which is evident for people connecting with cycling during
events like Rahagiri day in Delhi, Gurgaon, and Bangaloreetc.

Economic
The improvement in per capita income in India will positively affect the cycle demand, as
more and more families can afford to buy cycles. Higher disposable income levels coupled
with the need for healthy lifestyles & clean environment would improve the demand for
sophisticated bicycles.

Thus the overall environment scan indicates a growing need for bicycles, which is supported
by economic development and statutory policies, and a dire need for healthy lifestyles &
cleaner environment.

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 CONSUMER MARKET AND BUYING BEHAVIOUR
Indian Bicycle Industry

The size of the Indian bicycle industry stands at US $1.2 billion. The number of units
(finished bicycles including all segments) produced is around 12 million, according to an
industry source. Of this, the number of units exported annually is about two to three million,
which points to a huge demand in the domestic market. According to figures from the
Engineering Exports Promotion Council, in 2007-08 India exported bicycles and components
worth US $185.42 million.

The market for the premium or the lifestyle bikes targeted towards the lifestyle consumer is
just about emerging. The definition of high-end bikes itself is changing. Earlier the high-end
bikes were considered as those selling between Rs. 5000 to 8000. However now with global
brands moving into the country this definition is also changing with price-points starting from
Rs.15000 to as high as a few lakhs!

The country today is on the threshold of globalisation and teaming million are looking for
higher level of growth together with equitable distribution of income to improve their lots.
Generally the economic signs appear to be favourable for the country to improve its
performance and in turn improve the lot of its people. Obviously; this improvement is going
to reflect upon the Bicycle Industry in particular and transport segment in general. With
customers of the country aspiring for higher and higher the current Bicycles users will be
graduating to auto two-wheelers, but there will be a new population looking to the bicycle as
means of transport. Similarly a new generation of buyer will look to bicycle as a mean of
leisure recreation and good way to keep fit.

We, therefore, see a healthy sustained growth of cycle industry. Presuming that growth of last
3-4 years is sustained for next 10 years i.e. the time we reach the year 2010, the Indian
bicycle industry would need to produce about 1.75 crore bicycles to plug the demand and

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supply gap. However, there will be a change in the demand pattern linked with consumer
changing aspiration and choice giving way to latest technology and newer marketing
concepts. Industryis already witnessing this to some extent.

The new millennium has brought new challenge of opening up of import of Cycles. The
manufacturers in India agree to the point that Indian Bicycle Industry does not foresee any
problem as the product offered today by Indian manufacturers in the market are best suited to
Indian conditions and are most economical and value for money products.

On the whole the future for Indian industry including Bicycle will be challenging. The
domestic market will be open to good and services from global companies with low tariffs.
Protection will be a thing of the past. The companies that will survive will be those, which
successfully restructure and modernise to achieve global competitiveness in terms of quality,
cost and distribution system.

Global Bicycle Industry

The bicycle is an important means of transportation in most developing and under-developed

countries like China, India and Vietnam. In the developed world, especially in the European
and North American countries, however, bicycles encompass multiple functions from basic
transportation to sports. Consequently, the bicycles utility varies depending on the region,
nationality and level of economic development.

Global economic prosperity and seasonal factors heavily influence the bicycle industry.
Economic downturns affect bicycle demand as well. Moreover, traditionally, spring and
autumn are peak seasons for bicycle sales worldwide. Therefore, manufacturers adjust their
output accordingly in order to avoid excess inventory.

China, with a population of around 1.32 billion, consumes 25-30 million bicycles a year and
in addition, exports around 15 million units. USA and Japan, with an estimated population of
270 million and 125 million respectively, consume around 20 million and 7 million bicycles a
year respectively. In contrast, India, with a population of 1.21 billion only consumes around
12 million bicycles a year, which indicates its low penetration levels.

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Global bicycle production, which is today estimated at approximately 100 million units per
annum, has grown at a CAGR of 0.94% between 1990 and 2000. China, which is known as
the kingdom of bicycles, is the worlds largest producer of bicycles and accounted for 52% of
the worlds bicycle production in 2000, followed by India (11%), Taiwan (7%) and Japan
(5%).

Globally, urban activists have formed organizations in metropolitans, to promote bicycling as

a form of daily exercise, well-being and cleaner environment. For instance, a 12 % growth in
American adults who ride a bicycle at least 110 days a year has been observed between 2000
to 2010.

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Thus India resembles the global uptrend towards bicycles among the urbanities. We intend to
tap this growing health conscious segment, through our new age bicycle.

Identification of Market Needs

The need of transportation and sports has been catered to the existing players in the market.
However, there exists a need for a bicycle with a focus on health owing to the following

1. Healthy life style: Maintaining a healthy weight is essential to good health. Obesity is
associated with many illnesses and shortens life expectancy. Being overweight can lead
to higher risks of:

Diabetes

High blood pressure

Breathlessness

Coronary heart disease

Osteoarthritis in the knees

Negative effects on wellbeing and self-esteem.

By losing weight, your risk of developing any of these problems is greatly reduced and your
self-esteem and confidence is increased!

Use of bicycle reduces the risk of above diseases and helps towards building a happy, healthy
life. Reduced stress helps in achieving excellence in work and other areas.

The health and wellness centres in India have registered a growth of 20-23 % in the past few
years, which is also evident from the mushrooming Gym/wellness centres at around Indian
cities.

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 This growing tend towards, even in global context is depicted in the following stats -

It is paradoxical, that while people go for indoor cycling in the Gym, they use mostly use
car/motor cycles to reach the nearest gym.

1. Clean Environment:The detrimental health effects of degrading environment, has

triggered people to opt for a healthy lifestyle. The trend towards car-free days among the
urbanites in India & the world depicts this need or necessity of the present & all the more
of the future.

2. Statutory obligations: Statutory obligations are those obligations that do not arise out of
a contract, but are imposed by law. Its important to follow and satisfy these obligations

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 by the product. Bicycle and its used is very much covered and protected by laws. Its
actually promoted under environment laws and help in pollution reduction.

An effort has been done by U.P. Govt. at Lucknow, Noida, Ghaziabad cities and
Municipal Corporations of Vishakhapatnam&Vijayawada for promoting bicycle included
introduction on no motor vehicular zones across 20km of roads & are constructing
cycling tracks beside roads. Similarly, many countries like China, Holland, Japan etc.
have complete bicycle related infrastructure and laws related to cycle riders.

3. Decongesting the roads: Use of Bicycle actually frees up road and help in reducing road
congestion. It reduces problems of traffic jams and dont clog roads for emergencies.

A street survey depicting the efficiency of space utilization by bicycle usage on road.

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 Segmentation of Bicycle markets

The following survey forms the basis for segmentation on the basis of benefits -

Fun & fitness tops reasons to cycle, says YouGov report -

(http://www.bikebiz.com/news/read/fun-tops-reasons-to-cycle-says-yougov-report/013240 )

On the basis of market study, the segmentation on the primary basis of Benefits & the
corresponding linkages to demographics (Exhibit4), geography (Exhibit7), income
(Exhibit5), psychographics (Exhibit6) is placed below -

1. Transportation: Bicycle as a mode of transportation is the largest of the existing

segments. The standard bicycle caters to this need and has market size of around 8million
units, which has been showing a negligible or negative growth since the past few years.
This segment encompasses entire rural India&low-income groups in the urban areas.
Males form more than 75% of this segment, with limited usage by females. Age is no
barrier in this segment and attracts all age groups having a common primary purpose of
transportation. The users mostly prefer a standard bicycle, which is cheap, durable &
easy to repair. The bicycle is the primary source of daily movements for work or business

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 purpose. These fall under practical users category, with very high usage almost on a daily
basis. For Example, a typical rural milk vendor may be found utilizing the bicycle for
serving its customer.

2. Sports: Bicycle as a sport is the second segment, primarily attracting Kids and Teens.
While urban kids & teens have been found to use sports category bicycles and market
size is around 3 million presently & is growing at a rate of around 10% annually. The
users are generally from middle &high-income groups, with a leaning towards sports&
leisure.A big group of sports enthusiast looks for mountain bike, racing bike and extreme
sports bike. These bikes are heavy on build, high on reliability and low on maintenance.

A sport is the main driving force in purchase of these high-end bikes. A lot of cycling
clubs have mushroomed on social networking sites.

3. Health: Health and nature loving enthusiasts form this segment, comprising of primarily
of youth or young at heart users. Another form of such user group is gym-going crowd
who uses Gym bike for muscles and strength development. Instead, if a bicycle with
specific health features is available, this segment has the potential to expand. People with
certain illness like Arthritis, blood sugar, and high blood pressure are fond of cycling
either gym or outside. This segment is in a nascent stage & is largely un-catered till now.
Bicycle, with primary focus on health features & as a medium of workout & health
monitor is yet to be explored. The growing urban population, with lifestyle diseases &
facing the environmental hazards, form the potential users of this segment. The users
typically belong to higher income groups, are socially active, highly aware & take part in
cycling campaigns like Rahagiri etc., for overall health & clean environment. Taking
cue from the developed countries, this segment is expected to grow at more than 10% per
annum, with proper marketing & supports of government & NGOs, in the urban areas.

Further, we did a survey, for a bicycle with features specific to health like health monitor,
heart meter, and inbuilt workout programs among Gym users of MDI. It was found that
more than 80% of the youth were willing to buy a bicycle with health features &
anticipated favourable outlook for the product in NCR.

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 Target Segment
We intend to target the Health segment, which is un-catered segment, through offering a bike,
which caters to the health requirements through health monitor, as it is expected to grow in
future & would be a premium segment. The other linkages plan to be targeted are

Geography: Since we are marketing a new product, our immediate geographic market is
NCR region to start with, as it the potential market, with high population density of more than
12000 persons/sq. km. We would further expand to other metros of India, as the product
succeeds and grows.

Demographics: Our general target market is male and female age 6-65, but we have
segmented our market into two smaller and more identifiable groups:

Families with children that have an average monthly per capita income of Rs.20000 or
higher
The avid rider, male and female, age 15-44 with an average income of Rs. 1,000,000 or
Higher.

Psychographics:

Health and fitness is a priority

Enjoys being outdoors and staying physically active

Socially active, aware & concerned about environment

Behaviors:

Regularly shop at sporting goods stores

Enjoy reading the sports section of the newspaper

Shop at high end retailers with higher quality merchandise

Watch sports on TV and listen to sports radio

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 Works out at local gym or health center

The attractiveness of this segment has been assessed on the following

parameters -

The estimated market size in NCR is 1-2 million, based on the youth population in the
region. Although the youth are expected to be the early adopter, the segment will expand,
as the product penetrates further in the society.

Growth in non-transportation segment is higher. This can be further prepared.

Today, India is the third largest exporter of bicycles in the world. The Indian bicycle
manufacturing and bicycle spares industry is well accepted and is also widely recognized for
its quality standards in international markets." By Cycling Federation of India

SWOT ANALYSIS

Strength

New product with distinct features

Help in improvement of fitness

Weakness

Price is on higher side

New brand unknown to population

Opportunities

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The future of the bicycle industry is premium & lifestyle segment growing at a CAGR of
over 30%. This segment is estimated to be over 0.25 million units annually." By Mr. Anil
Khurana (Managing Director, ADA Expo & Events)

This fiscal our sales will shoot up to Rs 30 crore. We are planning to grow by 40% next year to
achieve 2.5-5% market share in the country," Firefox Bikes Managing Director Shiv Inder
Singh told PTI here after launching the first outlet in eastern India.

Increasing trend of active lifestyle

Increasing number of lifestyle diseases and craze for gym and outdoor activities

More awareness about pollution and environment safety

Threat

Threat to high-end bicycles can be seen from below points

Retaliation by the existing player in the bicycle industry

High capital infusion

Cheap import from China supplying substandard products in the market is also threatening
our bicycle industry.

Steel Prices are changing on regular basis and there is a wide fluctuation in chemical
industry and other metals including Nickels, Brass etc., which are governed by some
external forces.

Increase uses of Gym, Yoga other mode of exercises which will act as substitues.

PORTERS ANALYSIS FOR BICYCLE INDUSTRY

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1. Rivalry among existing competitors - HIGH

High exit barriers.

High fixed cost.

Difficult for the company to show product differentiation.

2. Threat of new entrants LOW

Capital-intensive industry requires huge capital to enter in the market.

Cost of existing player is lower therefore a threat from new entrants is quite low.

Chinese bicycle manufacturers are entering into the domestic market therefore it is
difficult for the new entrant to earn profit.

3. Threat of substitute LOW

Consumers are highly aware about environmental problems; therefore they don't
want to substitute other mode of transportation completely with bicycle.

Cost of other modes of transportation is pretty higher than a bicycle.

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 Now a days consumer are health conscious and cycling is good for health
therefore they are not trying to substitute it with another mode of transportation.

Gym fees are increasing with increasing gym-going population.

4. Bargaining power of consumers- HIGH

Consumers are price sensitive and cost to them in switching from one product to
other is less therefore their bargaining power is high.

5. Bargaining power of supplier LOW

India is developing country therefore labors and raw materials are abundant.

No product differentiation available as such.

COST TO REACH

NCR is right mix of population, high income and health conscious population. Below data
confirms our claim

The NCR, with the inclusion of Delhi, Gurgaon, Faridabad, Noida and Ghaziabad, has
a total population of over 2.17 crore (21.7 million).

The per capita annual income in the national capital has increased to Rs. 2.8 lakh in
2016-17 compared to Rs 1.73 lakh 3 years back, which is three times the national
average and highest in the country.

This makes the overall cost to reach low in-comparison to other cities of India.

Positioning

Segment Type Pros Cons

Largest existing segment.
TRASPORTATION Poor rural transport infrastructure.
Hence demand from rural region is
expected to remain in future
Kids and teens are the major users
& the existing demand is expected
Slow growth
Existing players hold strong pockets
in this segment & it is very difficult
to dislodge them
Emergence of alternative fun
activities, like online games etc. are

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 continue in future weaning away kids from cycling.
FUN Higher replacement & service
demand in this segment, due to
poor upkeep by kids.
With economic growth & changing Inadequate cycling infrastructure is
life styles, this segment is expected a deterrent
to have highest growth.
The growing awareness towards Erratic traffic habits & lousy traffic
environment friendly lifestyle will regulations/implementation, makes
attract more and more people cycling highly unsafe
towards cycling. This can be
leveraged through proper
promotion, to encourage more
number of people towards cycling.
Cycling is the most efficient form Usage is dependent on weather viz
of human locomotion, providing a cannot be used during rains etc.
boost to our heart health, muscle
strength and coordination. In
addition, cyclers report lower stress
and greater feelings of excitement
and relaxation than car commuters
HEALTH The increasing interest shown by US National Highway Traffic and
governments, local bodies etc., to Safety Administration have
promote cycling, would lead to estimated 700 cyclist deaths per
statutory incentives to producers & year, with thousands of injuries.
bindings on users. For example in Thus safety is a negative associated
Denmark there is 180% tax on cars with cycling.
and government has invested in
bicycle infrastructure.
Presently transportation segment
comprises the major share.
However with the growing public
transport, this segment is declining.
Health segment is expected to be
the growth driver of future.
With the features proposed in our
product, a better margin compared
to other segments is expected.

Positioning statement:

TO : Health conscious & fun loving youthful consumers

Our Brand : Eco-cycle

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 Is ( PoP) : a workout bicycle
That ( PoD) : nurtures health & environment.

Buying behavior

We intend to market a special bicycle with health specific features. Although we could not get
the consumer behaviour data on bicycles per se, but in order to get insights about the Buying
behaviour, we have used the research done on motor bikes 5, which might indicate the typical
information -

Search TV was found to be main source of information for bikes. The proposed
product is expected to target health conscious youth. Hence Internet & TV would to
the likely search areas for these people.
Alternatives The alternatives, which would compete with the proposed product, are
Gym Cycle & high-end bicycles.
Evaluation Health & environmental conscious individuals consider these benefits
the basis for evaluation. Accordingly, we need to focus on these benefits.
Decision A survey of USPs determining the purchase decision 6 is placed below

USPs Determining Purchase Behaviour

60 48
35 32
40 25 20
20
0

Thus features in the cycle seem to be critical in decision-making & accordingly the product
features would be the basis for promotion.

Post purchase behaviour Proper advertising would be done, to reduce dissonance-

reducing behaviour in the consumers.

Buying Roles

Initiator/Influencer: Family members may act as initiator, for shift to healthy life
style & preference for cycle.
Decider/User The ultimate user, i.e. the youth or young at heart people.

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Influences on buying behavior

Lifestyle: People engaged in hectic jobs with little time for health, would want to
switch to healthy & fun option of cycling.

Socio-Cultural: A effort done by Vishakhapatnam & Vijayawada Municipal Councils

7,
for promoting bicycle, included introduction on no motor vehicular zones across
20km of roads & plans to earmark cycling tracks on roads. Such socio-cultural efforts
would positively influence the potential consumers.

Types of buying behavior

This bicycle purchase will fall under Variety seeking Buying behaviour where a user will get
benefited for Gym (health benefits) along with basic benefit of a cycle (transportation and
fun).

We would use the buying behavior analysis, to for designing the marketing mix.

4 Ps OF MARKETING MIX

Product: A new product in the existing category of cycles has been planned to introduce
in the market. Product features proposed

Goods part Bicycle, with health monitor, milometer, battery (The health
monitor will provide the calorie burn meter, heart rate, inbuilt workout programs).
The bicycle would be convertible to be used as an indoor cycle also.

Services part Warranty of 1 year & AMC thereafter

Type of product: The proposed bicycle will fall under shopping goods. Hence we would
be focusing on communication to emphasize the differentiation in our proposal.

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 Relative Advantage: The next generation bike would give advantage of Gym as well as
traditional mode of transportation. The bicycle can be used in both indoor and outdoor use
for health benefits with added components to measure the performed activities.

The proposed mode of bicycle has mix of two different needs and is cost effective when
someone goes for both.

Compatibility: Now a days health related activities are very popular. Also increase number
of vehicles and increased the traffic which is making short distance travels very
cumbersome and time consuming. The low space requirement with daily usability makes
the bicycle very compatible.

Complexity: Use of bicycle is already very popular in India and almost every kid and youth
knows how to ride a bike. The complexity involve in the product is very low.

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 There is no change in the way of operation of a typical cycle to this next generation bicycle.
On complicity scale it will place on the same number as traditional mode of cycle in
transport.

However it will reduce complexity of Gym benefits which require additional travel to Gym
premises.

Trialability:This new bicycle is very easy for trail. It can easily be transported from places to
places. Can be kept in malls and schools for demo. Anyone can take a ride and know about
the features. High awareness about health benefits with use of cycle makes it very effective
on trailability index.

Observability: The benefits related to use of bicycle could very easily be quantifiable.
People can notice the health benefits in two to three weeks of time. Others can notice the
change as well. Commutation easiness can be expressed easily and can measure with
respect to time possibly.

Branding -This product has to be branded as eco-friendly, healthy open with fun filled life
style product. We can brand it as Riders Cycles brand in bicycle.

. >> . >
RiDeRs Cycles
Price:

Perceived Value Surveys were conducted to estimate the perceived value of the
offering & the price is the range of

Total economic Value

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Total economic value = Cost of next best alternative + Value performance differential

Cost of Next Best Alternative

Moving on to determine the price of the product, let us have a look at the next best
alternatives to our product.

Alternative One: Gym Cycle

As fitness equipment, a gym cycle is convenient product for consumers who look for
alternatives to a Cycle.

The price of a gym cycle typically starts from Rs 12,500.

Alternative Two: High End Gear Bicycles.

The high-end bicycles with gears and sturdy looks are also an alternative to our product.

The price of high-end gear bicycles starts with Rs 15,000.

(*The price of the above mentioned products have been quoted from e Commerce Websites,
www.amazon.co.in and www.askmebazaar.com

Value performance differential

Here is a mention of the differentials, which are going to add value to the product.

Health Meter

To bring value proposition to the Bicycle, a health meter will serve the purpose. A survey of
the available Health Meters gives us a starting price of Rs 1,500.

Milo Meter

Another device to add value is the Milo Meter. A survey of the available Milo Meters gives us
a starting price of it as Rs 1,000.

Battery, etc. - The cost would be around Rs 4000/-

Thus the TEV is as below

1. On e the basis of GYM cycle 12500+1500+1000+4000 = Rs

19000/

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 2. On the basis of gear cycle - 15000+1500+1000+4000 = Rs 21500/

PERCEIVED VALUE

Now in order to capture the perceived value of the Product, surveys were conducted to
estimate the value of offerings and the range of price. The identified places for the survey
were the MDI Gym and the nearby stores of the peripheral region. Upon a close scrutiny of
the available alternatives and need of the customers and keeping in mind the value of
offerings, the perceived price of our Product came out to be Rs 20000-25000/

Cost of Goods Sold

Based on the COGS for Hero cycle, the estimated COGS for our proposed product is Rs
10000/ per cycle.

Thus we would price the models based on Perceived value in the range of RS 20000-
25000/-

Place - Marketing Channels

Zero level distribution planned i.e. directly from producer to consumer, as a limited
geographical segment has been planned. The next step is to have an organized network of
agencies and institutions, which in combination would perform all the functions required to
link the production end with the customers. Keeping in mind the geography of sale, which is
the National Capital Region, in the introductory phase of the new product, the channels
planned are as follows:

1. Retail Outlets who keep Regular Cycle

2. Retail Outlets who keep Gym Cycle

3. Online Platform

The retail outlets chosen would be located in premium places, where our target segment
moves.

Promotion

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On the basis of innovation-adoption model, the following steps of communication would be
followed

Awareness We would participate in major rahagiri events in the region, with the new
bicycle being used by a celebrity (Bollywood, sports, political, social heavy weights).
Further, local TV channels would be utilized to create awareness. Health magazines would
also be utilized to create awareness. We would also tie up with save environment NGOs to
create awareness of the product.

Interest Regular participation in major mass events on health, environment & promotion of
such events would be used to create interest. Local Delhi government would also be
approached, to promote our cycle for decongesting the roads, cleaner environment & health
Delhi.

Evaluation The distinct features of the bicycle i.e. health monitor, milometer, battery etc.
would be highlighted, to create the distinctiveness of the brand.

Trial Rahagiri days, environmental & health events would be utilized to give trials to
maximum people. Further, all GYM centers around NCR would be covered in a phased
manner, to promote trials among potential users.

Adoption Early adopters would be encouraged to share their experiences, to expand the
market base.

Communication Mix The following channels would to used, to emphasize the product
differentiation and allow the customers to evaluate the new offering

Advertisement - TV advertisement, communicating a healthy lifestyle & a socially

responsible role. Health features would be the basis for What to advertise , youthfulness
for How to advertise & TV, health magazines for Where to advertise

Public relations This would be utilized to juxtapose the clean environment & socially
responsible association with the Brand, which would provide a favorable impression for the
brand.

Survey Analysis

26
A questionnaire was prepared and asked to the parents & students. The objective of the
questionnaire was to understand the consumers behaviour towards healthy lifestyle. A total
of 50+ respondents were recorded for initial study. Random Sampling was used and the
survey was conducted in MDI Gurgaon (NCR region). The indicators for healthy life pointing
towards positive environment for bicycle with health benefits.

Below questions were asked about lifestyle analysis:

1. What activities you prefer in leisure time

2. The appeal of Gym has been increasing in the 21st century
3. The appeal of Yoga has been increasing in the 21st century

The responses of these questionnaires are positive towards adoption of healthy lifestyle and
some form of exercise towards fitness.

Conclusion

In order to cater to the unsatisfied need of the market, for a bicycle with health features, has
been designed, based on the customer feedback & alignment of the marketing mix, in line
with market needs.

Exhibit 1

27
28
Exhibit 2

29
30
 Exhibit 3

Obesity in India -

31
 Exhibit 4

A typical demographic profile of US cyclists (No such profile available

for India, hence the indicative profile of US taken for reference)

Overall Indian demographics

32
 Census 2011

Subgro
Total Unit up 2001 2011
1028618
Population size Number Persons 821 1210854977
5321610
Population size Number Males 79 623270258
4964577
Population size Number Females 42 587584719

Rural & Urban Breakup

o

33
 Exhibit 5

A typical income profile of US cyclists (No such profile available

for India, hence the indicative profile of US taken for reference)

Overall Income distribution of India

On the basis of the monthly per capita expenditure, the grouping is

as boloows

Low-income groups MPCE of < RS 1000 per month

Middle Income groups MPCE of Rs 1000 to RS 2000 per month
High Income groups MPCE of Rs > RS 2000 per month

34
The income distribution, based on socio-economic statistics of India
for 2004-05 is placed below -

35
 Exhibit 6

Psychographics of Bicycle users, based on research conducted on Craze for

cycling by National University, Taiwan

Exhibit 7

Geographical fact of India

36
 Population distribution in India by states
Area
State / Rural [32] Urban [32]
[33]
Population % Males Females
Union
Population Population (Km)
Territory
Uttar 16.
Pradesh 199,812,341 5 104,480,510 95,331,831 131,658,339 34,539,582 240,928
Maharashtr 9.2
a 112,374,333 8 58,243,056 54,131,277 55,777,647 41,100,980 307,713
Bihar 104,099,452 8.6 54,278,157 49,821,295 74,316,709 8,681,800 94,163

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West 7.5
Bengal 91,276,115 4 46,809,027 44,467,088 57,748,946 22,427,251 88,752
Andhra 6.9
Pradesh 84,580,777 9 42,442,146 42,138,631 55,401,067 20,808,940 275,045
Madhya
Pradesh 72,626,809 6 37,612,306 35,014,503 44,380,878 15,967,145 308,245
5.9
Tamil Nadu 72,147,030 6 36,137,975 36,009,055 34,921,681 27,483,998 130,058
5.6
Rajasthan 68,548,437 6 35,550,997 32,997,440 43,292,813 13,214,375 342,239
5.0
Karnataka 61,095,297 5 30,966,657 30,128,640 34,889,033 17,961,529 191,791
4.9
Gujarat 60,439,692 9 31,491,260 28,948,432 31,740,767 18,930,250 196,024
3.4
Orissa 41,974,218 7 21,212,136 20,762,082 31,287,422 5,517,238 155,707
2.7
Kerala 33,406,061 6 16,027,412 17,378,649 23,574,449 8,266,925 38,863
2.7
Jharkhand 32,988,134 2 16,930,315 16,057,819 20,952,088 5,993,741 79,714
2.5
Assam 31,205,576 8 15,939,443 15,266,133 23,216,288 3,439,240 78,438
2.2
Punjab 27,743,338 9 14,639,465 13,103,873 16,096,488 8,262,511 50,362
Chhattisgar
h 25,545,198 2.11 12,832,895 12,712,303 16,648,056 4,185,747 135,191
2.0
Haryana 25,351,462 9 13,494,734 11,856,728 15,029,260 6,115,304 44,212
1.3
Delhi 16,787,941 9 8,987,326 7,800,615 944,727 12,905,780 1,484
Jammu and 1.0
Kashmir 12,541,302 4 6,640,662 5,900,640 7,627,062 2,516,638 222,236
Uttarakhan 0.8
d 10,086,292 3 5,137,773 4,948,519 6,310,275 2,179,074 53,483
Himachal 0.5
Pradesh 6,864,602 7 3,481,873 3,382,729 5,482,319 595,581 55,673
Tripura 3,673,917 0.3 1,874,376 1,799,541 2,653,453 545,750 10,486
0.2
Meghalaya 2,966,889 5 1,491,832 1,475,057 1,864,711 454,111 22,429
0.2
Manipur 2,570,390 1 1,290,171 1,280,219 1,590,820 575,968 22,327
0.1
Nagaland 1,978,502 6 1,024,649 953,853 1,647,249 342,787 16,579
0.1
Goa 1,458,545 2 739,140 719,405 677,091 670,577 3,702
Arunachal
Pradesh 1,383,727 0.11 713,912 669,815 870,087 227,881 83,743
Pondicherr
y 1,247,953 0.1 612,511 635,442 325,726 648,619 479
0.0
Mizoram 1,097,206 9 555,339 541,867 447,567 441,006 21,081
Chandigarh 1,055,450 0.0 580,663 474,787 92,120 808,515 114

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 9
0.0
Sikkim 610,577 5 323,070 287,507 480,981 59,870 7,096
1,210,854,97 586,469,17 377,105,76
India 7 100 623,724,248 4 833,087,662 0 3,287,240

References
1. http://epi.yale.edu/country-rankings
2. http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(14)60460-8/abstract

3. http://www.ndtv.com/india-news/lifestyle-diseases
4. http://www.managementparadise.com/vamsiyn/documents/1946/factors-influencing- consumer-
buying-behavior-on-bikes/
5. http://gulzar05.blogspot.in/2012/03/bicycle-usage-in-indian-cities.html

6. http://www.slideshare.net/ankitag9/bicyle-industry
7. http://www.economist.com/news/asia/21642224-air-indians-breathe-dangerously-toxic- breathe-
uneasy

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