Vol-1, Issue-I Amity Journal of Strategic Management 2017

Case Study
Journey of Royal Enfield from Dusk to Down along with Various Strategies Adopted

Neha Bharti, Student, NIFT, New Delhi and Manish Nangia, Assistant Professor, NIFT, New Delhi.

Abstract

Royal Enfield is the oldest surviving brand of motorcycles in the world. The brand which is more than 100 years old has been in India since 1949.
The manufacturer Enfield India was bought over by Eicher Motors Limited in 1994. Since then, the brand is owned by Eicher Motors. Eicher
Motors faced a tough choice in early 2000. This was the time when the company gave one final chance to revive its loss-making brand Royal
Enfield, company’s motorcycle division. To materialize the opportunity, they wanted to modernize the bikes to appeal to a wider customer base.
However, the manufacturer faced challenges as the existing customers wanted their Bullets just the way they had always been. By modernizing,
Royal Enfield risked losing traditional fans without possibly gaining any new customers. The case study details how it met the challenge by
focusing on different types of strategies.

Key Words: Royal Enfield, branding, Eicher Motors, Marketing Strategy.

JEL Codes: L1, M31

Introduction

Royal Enfield is the oldest surviving brand of motorcycles in the world. The brand which is more than 100 years old
has been in India since 1949. The manufacturer Enfield India was bought over by Eicher Motors Limited in 1994.
Since then, the brand is owned by Eicher Motors. Thus, it is now an Indian brand. Once considered as the king of
the world, the kingdom of Royal Enfield was on the verge of getting snatched away at one point of time in late 1990.
Beating the odds, Royal Enfield, the oldest motorcycle brand, is still in production. The legendary bike brand was
facing a loss of Rs. 20 crore and was on the edge of a shutdown in 2000. The manner in which the fortunes of the
brand turned can be an excellent example of brilliant product planning, process and brand management coupled with
excellent marketing strategies.

History

In the year 1890, Enfield Manufacturing Company Limited was set up in England. The Company started
manufacturing its product Royal Enfield as brand name. Soon the brand decided to focus on other vehicles as well.
In 1899, it started manufacturing a quadricycle called “Royal Enfield Quadricycle.” Despite being an innovative
concept, the product had limited market potential. In the year 1901, the Company launched its first motorcycle fitted
with a 239-cc engine. In 1909, introduction of a small Motorcycle with a 2 ¼ HP V twin Motosacoche engine of
Swiss origin pleasantly surprised the motorcycling world. The next was in 1911, powered by a 2 ¾ HP engine and
boasted of the well known Enfield 2-speed gear. In 1912 was the year for iconic JAP 6 HP 770 CC V twin with a
sidecar combination which made Enfield a household name. In 1914 world experienced the ride of 3 HP
motorcycles with Enfield’s own engine which having the standardised Enfield paint scheme of black enameled parts
and green tank with gold trim.

In 1949, Enfield started selling its motorcycles in the Indian market as a strategic move for its global expansion
serving the need of Indian Army. The Royal Enfield motorcycles were considered an ideal choice for the Indian
army for patrolling the country’s border and as a result of that in 1955 the Indian government placed an order of 800
350-cc Royal Enfield motorcycles. Soon after receiving a thumbs up from Indian customers, the company also
started manufacturing 500 cc Bullet for Indian markets.

In 1955, the company partnered with Madras Motors in India to form 'Enfield India' to assemble, under license, the
350-cc Royal Enfield Bullet motorcycle in Madras (now called Chennai). The tooling was sold to Enfield India so
that they could manufacture components. By 1962, all components were made in India. The Indian Enfield uses the
1960 engine (with metric bearing sizes), Royal Enfield still makes an essentially similar bike in 350 cc and 500 cc
forms today, along with several different models for different market segments. In 1990, Royal Enfield collaborated
with the Eicher Group, an automotive company in India, and merged with it in 1994. Apart from bikes, Eicher
Group is involved in the production and sale of tractors, commercial vehicles and automotive gears. Royal Enfield
experienced difficulties in the 1990s, and ceased motorcycle production at their Jaipur factory in 2002.

79
Vol-1, Issue-I Amity Journal of Strategic Management 2017

Year Strategies adopted by Royal Enfield in various years

1890 Enfield Manufacturing Company Limited was set up in England
1899 Started manufacturing “Royal Enfield Quadricycle”
1901 Launched its first motorcycle fitted with a 239-cc engine
1909 Introduction of small Motorcycle with a 2 ¼ HP V twin Motosacoche engine of Swiss origin
1911 Next model powered by a 2 ¾ HP engine and boasted of Enfield 2-speed gear
1912 JAP 6 HP 770 CC V twin with a sidecar combination, motorcycle which made Enfield a
household name
1914 3 HP motorcycles this time with Enfield’s own engine which now had the standardized
Enfield paint scheme of black enameled parts and green tank with gold trim
1949 Started selling its motorcycles in the Indian market as a part of its global expansion
1955 Indian government placed an order of 800 350-cc Royal Enfield motorcycles, the company
started manufacturing 500 cc Bullet for Indian markets
1955 Company partnered with Madras Motors in India to form 'Enfield India' to assemble,
under license, the 350-cc Royal Enfield Bullet motorcycle
1965 Reached efficiency of manufacturing all components in India
1990 Royal Enfield collaborated with the Eicher Group
1994 Merged with Eicher Group
2000 Sales of the bike were down to 2,000 units a month against the plant's capacity of 6,000
2001 Electra was launched as Indian market only model with 346 cc classic engine. 4-speed or 5-
speed gearbox
2002 Ceased motorcycle production at their Jaipur factory
2002 Launched models of Thunderbird 350
2008 Classic models were launched - inspired by J2, a 1950 model Bullet
2011 Fury: A flat-track style version of the 500cc Bullet Electra EFI, sold exclusively in the UK by
importer Watsonian Squire
2013 500 cc variant of the Thunderbird. Fuel injection, digital console, electronic fuel gauge,
projector headlamps and 18-inch wheels. Currently the flagship model of Royal Enfield India

2014 Continental GT: Cafe Racer styling. Fuel injection, Digital console, electronic fuel gauge,
projector headlamps Twin downtube cradle frame, Paioli, Twin gas charged shock absorbers
with adjustable preload, 80mm travel
2015 Eicher Motors had become one of the most expensive automobile stocks in India
2016 Himalayan: Launched as all terrain, all weather bike promising both adventure and comfort

Marketing and Networking Strategies adopted by Royal Enfield

1990 was the year for Enfield to enter into a strategic alliance with the Eicher Group in India, and later merged with
it in 1994. Royal Enfield positions itself in 'lifestyle' category of the motorcycles market. The year 2000 could have
been decisive. That was when the board of directors at Eicher Motors decided to either shut down or sell off Royal
Enfield – the company's oldest Chennai-based motorcycle division. For all its reputation, the sales of the bike were
down to 2,000 units a month against the plant's capacity of 6,000. Though the bikes had diehard followers, there
were also frequent complaints about them with regard to engine seizures, snapping of the accelerator or clutch
cables, electrical failures and oil leakages. Many found them too heavy, difficult to maintain, with the gear lever
inconveniently positioned and a daunting kick-start. In 2010, 113 lakh motorcycles were sold in India of which the
company sold only 52,000. Since the brand is a niche brand, it cannot target the mass market. But in order to survive
in the market place they were faced with the daunting task of ensuring that the sales grow gradually and the margins
keep on increasing due to increased cost of overheads.

80
Vol-1, Issue-I Amity Journal of Strategic Management 2017

Newspaper reports were of the opinion that there is an increasing demand of high end bikes in India. Kawasaki
Ninja, Ducati, Honda all are seeing a spike in sales. Even the legendary brand Harley Davidson is now in India. All
these brands are in the 500 cc plus segment. The competition is the last problem for the brand. The only competition
to Royal Enfield is Royal Enfield itself. The competitors cannot cause much problem because they are far too costly.
While Ninja comes at Rs. 4 to 5 lakh, Harley is available at Rs 7 lakh. Compared to this, the price range at Enfield is
Rs. 95,000 to Rs. 1, 70,000 only.

Problems and issues faced by Royal Enfield

The problems they faced were manifold but the brand still commanded a loyal following. Most of the customers
were of the opinion that the bikes were too heavy and difficult to maintain. It was time to modernize the Bullet. The
marketing mavens at Royal Enfield understood the need for a complete makeover, but they faced a catch-22
situation; doing so could bring in a newer profile of buyers, but they also risked alienating their loyal audience that
defined the brand. It was a challenge they had to meet, and they did so in style. Siddhartha Lal, a third generation
member of the Delhi-based Lal family, was one of the key promoters of the Eicher group of companies. Lal, then
26, was an unabashed Bullet fan: he even rode a red-coloured Bullet while leading his baraat, instead of the
traditional horse. He was of the opinion that ‘You can feel the pulse of your customers, only if you get close to
them.’ This thought process has driven Royal Enfield to set up a wide network of 11 Brand Stores, 250 dealers in all
major cities and towns, and over 200 Authorised Service Centres. The Company also exports motorcycles to 42
countries including the Unites States, Japan, UAE, Korea, Bahrain, United Kingdom, France, Germany, and
Argentina through 40 importers and over 300 dealers across the globe.

Royal Enfield fans liked the bikes exactly the way they had always been but change was the need of the hour. The
mistaken notions of prospective customers had to be addressed, and any reservations about Bullet and Thunderbird,
which was launched in 2002, removed. At the same time, Lal and Ravichandran (joined in 2005 as CEO as part of
his revival strategy) were clear that the individuality of Royal Enfield bikes should not be compromised. The new
engine had 30 percent fewer parts and produced 30 per cent more power than the old, with better fuel efficiency. By
2010, all Royal Enfield models had begun to use the new engine. With the quality issues addressed, the management
focused on improving the customer’s experience of buying and owning the brand. To improve the sales experience,
Royal Enfield improved the look of the dealer outlets as well. They declared 2006 as the “year of getting back to the
basics” and also formed a field quality rapid action force to bridge the gap between customer expectations and the
reality. Slowly, the tide turned. Engine related problems and oil leakages in Royal Enfield products almost
disappeared. By 2008 dealers were reporting lower workloads. Warranty claims fell sharply. Malfunctioning of the
spark plug, on which the electric starter depends, declined, for instance, from 5 percent in 2005-06 to 0.2 percent in
2010-11. Royal Enfield also began conducting marquee rides to promote leisure biking.

Strategy to enter International Markets

In October 2008, Royal Enfield launched in Germany its newly designed 500 cc Classic model – inspired by J2, a
1950 model Bullet – with the new engine. It was a success, admired for its performance and fuel economy. The
same strategy was used to launch it in India in November 2009 initially as a 350 cc bike which was priced at Rs 1.20
lakh. This too proved to be a big hit. Even though the price of bullet were higher than that of the low powered
Japanese motorcycle brand sold in India but were cheaper than the major global brands. Even after the prospects of
the improvement of brand, the company refrains to revise its prices in order to keep the motorcycles affordable in
very price conscious Indian market.

The strong pricing of the brand with improved operating margins rapidly increased the valuation of the company. By
the year 2015, Eicher Motors had become one of the most expensive automobile stocks in India. In August 2015,
Royal Enfield Motors announced that it is establishing its North American headquarters and a dealership in
Milwaukee, Wisconsin, with the intention to offer three bikes, the Bullet 500, Classic 500 and Continental GT 535
Cafe Racer as they feel this engine size represents an underserved market. The dealership will be Royal Enfield's
first company-owned store in the U.S., according to Rod Copes, president of Royal Enfield North America.

Later in August 2015, Eicher announced its entry in Indonesia as a part of its global expansion strategy in the mid-
sized (250-750cc) motorcycle segment, initially started retail operations from a dealership in Jakarta. From April to
September 2015, Royal Enfield's domestic sales were up 50 percent over the previous year, despite a declining
motorcycle market in India. In 2016, the all new model “Royal Enfield Himalayan” with 440cc engine Single

81
Vol-1, Issue-I Amity Journal of Strategic Management 2017

cylinder, air-cooled, 4 stroke, SOHC inspired to flow in perfect harmony with the mountain. The most versatile
model, able to take riders almost everywhere be it the off-road or on-road. Positioning itself as the all-weather, all
terrain motorcycle, promising both adventure and comfort. The company markets its model to two different markets
‘India and Bharat’. India captures the urban population and the youth of urban areas and offers light weight and new
models with advanced features. The rural population who follow the legacy and the attitude of tough models were
termed as ‘Bharat’ and served by continuing production of existing heavy models.

The unique and open culture of the Company, make Royal Enfield a vibrant and responsive workplace. To its
customers in India or elsewhere in the world, Royal Enfield means more than just motorcycles; it maintains a
relationship, a sense of belonging to an exclusive community with unfading passion, emotion and interest. The
Company augments its leadership position, be it in the power and leisure bike segment in India or the classic bike
segment elsewhere in the world, by introducing distinctively styled and higher-powered motorcycles, strengthening
existing communities around its products, expanding its network, and delivering a unique motorcycling experience.
There is a sense of aura around the brand. It is very heavy, tough to drive and thus remains elusive to the very few
'men' which can wield it. Very few people drive Bullet but many more aspire for it. The brand offers a riding
experience which no other bike can. The thumping sound, the road presence, the sheer 'ego' boost which the brand
gives its rider makes him feel 'arrived.'

As the only motorcycle manufactured in India synonymous with adventure and leisure riding, Royal Enfield has
more recently stayed away from regular mass media advertising and has concentrated more on building its brand
around the values that the brand stands for. Having a cult status the Royal Enfield motorcycle is known for its
versatility, uniqueness and is built to last. Royal Enfield strongly promotes leisure motorcycling as a lifestyle and
encourages the Royal Enfield riders/owners to keep riding. In this regard, the company organizes annual events and
rides such as the Himalayan Odyssey, The Tour of Rann of Kutch, The Tour of NH 17 (Mumbai to Goa), the Tour
of Rajasthan and the Southern Odyssey. It also organizes the Annual festival of biking, Rider Mania in Goa which
attracts Royal Enfield riders from all over.

Conclusion

It can be said that the brand dealt with some of its problems but yet to overcome with some of a different nature.
The big question here is - How should it scale up without diluting its brand equity? With other options available,
will its customers be ready to wait for a 6-month period it takes to provide deliveries? Challenges are also from the
global brands such as Harley-Davidson which has entered the Indian market and what if Japanese version of classic
bikes starts being assembled in India? The challenges continue to test Brand Royal Enfield and going by its image of
moving towards down and not fading in dusk of difficult times, Royal Enfield will continue its monarchy in this
segment.

Today, the brand is on a roll. If count famous names, Katrina Kaif drove it in the movie Zindagi Na Milegi Dobara,
Ajay Devgan in Singham, Kangana Ranaut in Tanu Weds Manu, South African cricketer Jonty Rhodes also got
media attention for having a flair for Royal Enfield and so do actress-turned politician Gul Panag. Even if the brand
ignite the passion of coming generation by new models, manages to protect its heritage, maintains the quality,
capacity expansions will be a need for Royal Enfield in future.

Discussion Questions

1. Discuss the existing problems of Royal Enfield.

2. What are the management strategies that have been used by Royal Enfield. Suggest a new one, if required.
3. Identify the plan to reduce delivery delays and to improve pre- and post-sale customer services.

References:
1) http://royalenfield.com/
2) http://www.icmrindia.org/casestudies/catalogue/Marketing/Royal_Enfield_Revival-Excerpts.htm#
3) https://wethriveindia.wordpress.com/tag/royal-enfield-case-study/

82