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Royal Enfield: A Masstige Brand
Introduction
“Royal Enfield” is not a bike, it is a “pure motorcycling” experience. The synonym of thundering roar and a
thrilling riding experience, this legendary ride is holding its place for close to 60 years in the country. For its
owners, it is more than a means of transportation, instead it's a lifelong romance. Royal Enfield is amongst the
oldest motorcycles in the world, which are still in production.

Royal Enfield is now a subsidiary of the Indian automobile stalwart Eicher Motors Limited. Dr. Venki
Padmanabhan is the CEO of Royal Enfield India.

Royal Enfield has its headquarters at Chennai in India. Bullet bikes are famous for their power, stability and
rugged looks. Bullet became known for sheer power, matchless stability, and rugged looks. It looked tailor-
made for Indian roads. Motorcyclists in the country dreamt to drive it. It was particularly a favorite of the
Army and Police personnel.

Royal Enfield has one manufacturing and assembly facility in Chennai, Tamil Nadu. This manufacturing plant
has been functional since 1955 and still produces the Royal Enfield Bullet 350cc and 500cc models.

Royal Enfield: Evolution

In 1891, entrepreneurs Bob Walker Smith and Albert Eadiebought George Townsend & Co. of Hunt End,
Redditch a needle manufacturer that had recently begun producing bicycles. In 1893, after winning a major
order, they renamed their and began calling their bicycles, the Enfield. The following year, their bicycles were
renamed Royal Enfield and started using the trademark ‘Made Like A Gun’.

As motorcycles began gaining popularity in England, the first Royal Enfield motorcycle was introduced to the
world which was designed by Bob Walker Smith and Frenchman Jules Gotiet.

In 1909,Royal Enfield’s first V-twin that used a 297cc Swiss-made Motosacoche engine was launched. The bike
was very well received by the British public and went on to win several awards. The company continued selling
bikes and ramped up production. During World War I, the company became a supplier of motorcycles to the
British, Belgian, French, United States and Imperial Russian armies. In this manner, it created its image as a
sturdy and powerful brand. 8 years later, Enfield introduced the its most iconic bike, the legendary Bullet
motorcycle, a bike that still enjoys immense popularity.

Enfield’s close association with India began in 1952, when Madras Motors (Indian company that imported
British motorcycles) received an order for 800 350 cc Bullets from the Indian Government for the Army. A few
years later, Madras Motors made an alliance with the Redditch Company and formed a partnership company
named Enfield India which manufactured Enfield motorcycles in India using imported parts. By 1962, all
components were made in India. Later, the Redditch Company closed, but Enfield India continued to
manufacture motorcycles which grew in popularity as it came to be viewed as a classic bike among
motorcycles fans.

The Eicher Group, an Indian based automotive company acquired Enfield India in 1994. Enfield India was
renamed as Royal Enfield Motors, a name that has achieved cult status among motorcycles enthusiasts in
India.

How the ‘Royal Enfield’ brand was rejuvenated

Royal Enfield (RE) is an example of a company that has successfully met one of the biggest marketing
challenges: rejuvenating a struggling brand. In 2000, the company was in deficit and threatened to collapse,

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with monthly sales stagnating at 2,000, compared with a capacity of 6,000. Since then, the brand has
multiplied by 30 and has become an urban phenomenon in India.

To achieve this turning point, the team used an approach that we call "upside down". They dug deep inside
themselves to find the deep meaning of the mark, dying about what really mattered to them.
Siddhartha Lal (the CEO) changed the positioning of this brand to an experiential product. The team then had
to look outside to match this branded truth to a human truth, as explained here:

1. The fundamentals of the product were fixed

In the early 2000s, RE was considered an iconic brand with a strong legacy. But there were a lot of complaints
about quality (e.g. engine seizure, broken clutch cables, oil leaks). The bikes were heavy to handle, and the
gear lever was positioned on the right side, while the other bikes had it on the left side.
The first step of brand rejuvenation was therefore to correct the fundamentals of the product: no amount of
emotional "sizzling "compensates an unreliable" sausage". A modern aluminum engine was developed which
had 30% fewer parts and 30% greater power with better fuel efficiency. This change was opposed by
unconditional fans, but the company had to focus on penetration by getting new customers.

2. The Brand positioning

Looking inside and deepening the re brand, they highlighted a series of potentially powerful "brand truths".
The bikes had an authentic and sturdy look, without flair or sophisticated designs. Key features included the
recognizable look of the front lamp and fuel tank. Enthusiastic riders described the design of the bike as
"naked", almost as if it were a natural extension of the rider himself and his "intimacy". The experience
focused on the runner and how he got involved with the bike and the other riders.
The idea of a robust bike built for self-discovery trips was perhaps best captured in the Himalayan model,
specially designed to explore the Himalayan mountain range.

3. The Hedonics and sensory marketing strategy to change brand perception:

A map of the state of the needs of the Indian motorcycle market in the mid-2000s showed a growth of the
needs more expressive: "Potency" and "Liberation" (Exhibit 2). It should be noted that these requirements
represented only 15% of the actual market share at the time: the supply of brands in the market lagged behind
the "desire" of consumers.

Liberation represented the need for expression by freeing oneself from everyday life, generally in the company
of like-minded friends. And most importantly, the need for liberation corresponded tothe brand's truth about
a bike centred on the biker's self-expression and self-exploration.

Visual: To appeal the visual part of our brain, the Royal Enfield’s idea was to keep it as close to classic
“motorcycle” as possible. The Headlight and the Fuel tanks placement makes this quite evident.

Sound: The iconic “Thump” sound of the “Bullet” motorcycle was sustained even after empirical changes in the
engine. This sound will always be associated with this bike.

4. The new brand development:

The positioning of the brand is summarized by the following idea: "masculinity, viscerally experienced". Brand
values were designed to help the team "talk about the brand" every day, both internally with employees and
externally with consumers, including:
- One Ride: associate Man, machine and terrain in a unique motorcycle experience
- Hands-On: engage with the bike, with rides, with the biker community.
- Inner 'Thump': launch an eternal thirst for one of the most authentic physical experience.

5. Implementation
Brand positioning and new business techniques inspired and guided the team to create a distinct marketing
mix, with a series of critical choices:
- Giving priority to the role of the guts over the mind
- Focus on the presence in the moment on the presentation and show
- Focus on experience rather than speed

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- Follow your "inner compass" on visible achievements.
You can see this approach in their latest advertisement campaign. It tells the story of an advertising agency
executive who inherited a bike RE, went to the Himalayas for an exploratory trip, opened a mountain pavilion
and never came back.
Of course, many, if not most, ER owners can use their bikes for more everyday driving, while maintaining the
feeling of riding a robust and authentic bike associated with liberation and adventure.

Royal Enfield: A Masstige brand

In essence Masstige Branding is achieved with following minimum attributes:

The user experience: The Royal Enfield bikes are all about the experience they offer to the rider. The feeling
of liberation and potency is imbibed in the motorcycle and felt by the rider.

Promotion of Passion:“To Encourage, Enable and Kick-start the Active, Life-long Pursuit of Exploration”-CEO,
Eicher Motors. They understood the ambition and passion of their riders and they built their entire brand on
the shoulders of these passionate riders.

Branding: “PURE MOTORCYCLING” is the brand image they pursued to create an aura of unadulterated biking
experience in the minds of their customers. The branding is so strong that the general consensus does not
want the brand to even advertise.

Product: The Brand image “Pure Motorcycling” is clearly visible in design quotient of the bike. The product
boasts of classic headlamps and fuel tank designs to apprise this image in the minds of the customers. The
“thump” sound of the engine imbibes a sense of uniqueness in the customer.

A daring price (The thin red line) : Royal Enfield focused on the bike explorers and moderately aged youths
who love to catch up with the new hard style bikes and focuses more on quality than the price. So, with this,
Royal Enfield follows a premium pricing strategy in its marketing mix by delivering its customers quality
products at a premium when compared to other popular brands. However, the bikes are considered worth the
value when compared to luxury brands like BMW, KTM and Harley Davidson.

An ecosystem in itself: Offering a particularly masculine motorcycle with a distinctive thump sound, Enfield
has created a legacy brand with its heavy all - terrain motorcycle-Bullet. Enfield has a highly developed
network of drivers, service mechanics and designers and modifiers who also offer creative customizations on
the bike. An ecosystem in itself and very social.

Consider this: for the chips, a root access to the machine is granted, which allows the crowd to imagine and
grow to create new personalized offers and thereby mark everyone's talent. This process also generates
money. For many companies, bullet's customization allows you to instantly give it a retro and cooler look than
your partner's.

Positioning therefore helps the company to target mass consumers with a "prestige" product

Comparison with Harley Davidson

Royal Enfield, in recent years, has entered the luxury market with its ‘Café racer’ series. Since then, it has
introduced two other products in the 650cc segments, trying to establish itself as a Masstige brand. At the
same time, Harley Davidson has also launched Street 750 and Street Rod for its Indian aspirational customers.
The following parameters are used to compare both brands in terms of luxury:

 Price:Price is an important metric which sends strong signals about the brand. Royal Enfield bikes
were never meant for the absolute mass market. However, they are not meant only for the affluent
class either. Royal Enfield comfortably sits somewhere around the everyday commuter bikes like
Splendor and highly expensive luxury/sports bikes like Ducati/Harley Davidson. In that sense, Royal

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 Enfield is treated as affordable premium, while Harley Davidson is treated as a luxury. Royal Enfield
comes close to Harley Davidson in terms of looks and the promise of experience, but it is priced
towards the ‘luxury for the masses’ segments.

 Quality: Harley Davidson is considered to provide the best of the quality machines. It is believed that
Harley Davidson worldwide has stringent quality control. They have stricter recalls in case of any
mechanical failures. Overall, Harley Davidsons are considered a better quality in terms of product and
customer service. Royal Enfield bikes also offer high quality but very close to Harley. However
considering the huge price difference, it is perceived of great value.

 Place of Origin:It is a general perception that ‘American Made’ brands are associated with higher
prestige in India than ‘Made in India’ brands. That’s why it can observed that most of the luxury
brands are openly advertising their place of origin. Royal Enfield used to hold the British Origin.
However, today, Royal Enfield is associated more with Indian than being a British Brand. While both
the Brands are known for their long history, Harleys are still considered to be more premium due to
their continued heritage of ‘Being American’ vs Royal Enfield getting down to being an ‘Indian Brand
with British Origins’

 Exclusivity: Exclusivity could be based on models and dealerships. Harley’s dealerships are considered
very exclusive and are only offered to those who had extensive knowledge over automobiles
dealerships. So, Harley Davidson maintains Exclusive Dealership, while Royal Enfield maintains
Selective dealership. Maintaining exclusive dealership helps in maintain brand image.

 R&D: Eicher Motors has announced Rs 700 crores of R&D for FY-2020. But, most of the R&D was to
enter into the other ASEAN markets and to establish a plant in Thailand. In the case of Harley
Davidson, most of the research is based on future endeavours like electric sporty bikes which will be
the trend soon.

Royal Enfield: Performance

Royal Enfield with its motorcycle that combine modern-day elements with the brand’s heritage, garners
immense enthusiasm amongst global motorcyclist. It has modern product development centres at
Leicestershire, UK and Chennai, India where expert technical team conceptualise next-generation motorcycles.

Since the Revamp in 2000, the Royal Enfield bikes in India have become a phenomenon with 20-30% CAGR in
sales, revenue and profit. Except some minor slump from time to time, it has grown more than 3000% in the
past 18 years and is a cash cow for Eicher motors (Exhibit 1).

Royal Enfield sold 822,724 motorcycles in the year, largely flat from 820,121 motorcycles sold last year. In
2018-19, we added 90 dealers in India and the Royal Enfield network strength was 915 dealerships as of March
2019. They now have 42 exclusive stores outside of India, spread across 19 countries and they just began sales
in South Korea with their first exclusive store in Seoul.

What the future planning looks like?

To transform RE into an experiential brand, selling a motorcycle has to be seen only as a start of the
relationship with the customer. Their ambition is to become #1 in customer satisfaction in 2019-20 (ranked #2
last year for customer satisfaction by JD Power) and to maintain that position over time. To do so, they plan to
dramatically change the entire ownership experience for the riders. There are various initiatives underway
that will give the riders more support and confidence in this brand.

As we look ahead into the longer term, we see that they are in the perfect space in the motorcycle industry
globally. I believe the trend for premiumization of mass products, including motorcycles, in India and
developing markets will continue for the next few decades; and they are very well positioned for that. In
addition to outstanding and distinctive motorcycles, the brand experience, distribution, and organisational
approach are all upmarket - creating a unique and desirable positioning in people’s minds.

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References
https://en.wikipedia.org/wiki/Eicher_Motors

https://en.wikipedia.org/wiki/Royal_Enfield_(India)

https://en.wikipedia.org/wiki/Royal_Enfield

https://www.royalenfield.com/in/en/our-world/since-1901/

https://www.youtube.com/watch?v=EmYv9WY3MB0

Eicher Motors Ltd. Earnings Report

Eicher Motors Ltd. Annual Report

Exhibit 1

BalanceSheet- Stand alone

(Rs. Crores)
31.03.2019 31.03.2018 31.03.2017 31.03.2016
Net Fixed Assets (Property plant & equipment, 2,320.55 1,830.49 1,243.82 887.54
Intangibles, CWIP and Investment property)
Investment in subsidiaries & Joint ventures 67.93 49.43 300.42 243.81
Investment in mutual funds, bonds & fixed deposits 5,896.60 4,925.50 3,241.31 1,825.24
Other non-current assets 199.75 207.17 277.96 200.78
current assets
Inventories 605.34 379.23 322.45 300.36
Debtors 112.65 78.02 48.94 46.13
Cash and Bank Balances (excluding fixed deposits) 22.07 99.88 20.61 44.52
Other current assets 252.52 224.95 84.75 75.53
total assets 9,477.41 7,794.67 5,540.26 3,623.91
Equity share capital 27.28 27.26 27.21 27.16
Other equity 7,099.17 5,344.97 3,895.38 2,309.25
net worth 7,126.45 5,372.23 3,922.59 2,336.41
Non-current liabilities 372.58 227.81 135.71 78.57
Current liabilities 1,978.38 2,194.63 1,481.96 1,208.93
total equity and liabilities 9,477.41 7,794.67 5,540.26 3,623.91

Profit and Loss account

(Rs. Crores)
2018-19 2017-18 2016-17 2015-16
Apr'18 - Mar'19 Apr'17 - Mar'18 Apr'16 - Mar'17 Apr'15 - Mar'16
Sales Volume :
Motorcycles (Nos.) 8,23,828 8,20,492 6,66,493 5,08,099
Net Revenue from operations 9,794.48 8,957.51 7,037.97 5,223.47
Manufacturing and other expenses 6,850.10 6,104.31 4,832.16 3,763.32
Earnings before interest, depreciation & tax (EBidta) 2,944.38 2,853.20 2,205.81 1,460.15
EBidta to net revenue (%) 30.1% 31.9% 31.3% 28.0%
Depreciation 298.93 222.34 153.34 118.20
Earnings before interest & tax (EBit) 2,645.45 2,630.86 2,052.47 1,341.95
EBit to net revenue (%) 27.0% 29.4% 29.2% 25.7%
Finance Cost 2.99 3.04 2.79 1.57
Other Income 508.04 332.43 227.31 212.59

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Profit before exceptional item and tax 3,150.50 2,960.25 2,276.99 1,552.97
Exceptional item (Discontinued operation-EPPL)* 17.52 311.98 - -
Profit before tax 3,132.98 2,648.27 2,276.99 1,552.97
Provision for taxation 1,078.54 935.36 716.97 463.94
Profit after taxation (PAT) 2,054.44 1,712.91 1,560.02 1,089.04
Other comprehensive income -5.77 10.85 -0.08 -0.83
total comprehensive income 2,048.67 1,723.76 1,559.94 1,088.20
total comprehensive income excluding exceptional 21.1% 22.7% 22.2% 20.8%
item to net revenue (%)
Dividend for 2015-16, paid in 2015-16 - - - 271.61
Dividend for 2016-17, paid in 2017-18 - - 272.22 -
Dividend for 2017-18, paid in 2018-19 - 299.93 - -
Dividend proposed for 2018-19 341.03 - - -
Basic Earnings per Share (Rs.) 753.37 629.07 573.75 401.20
Diluted Earnings per Share (Rs.) 752.54 627.88 572.17 399.73

Exhibit 2

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