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�-----------------------------:--:--
,1 I. L

9-593··-097
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sM
Harvard Business School
·¾.,. ,
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Murtaza Choolawala
Bajaj Auto Ltd. ---2-3
RahuJ Bajaj, chairman and CEO of Bajaj Auto Ltd. (BAL), reflected on the cban� that
bad taken place in the Indian market during the late 1980s and early 1990s and the challenges
that his company faced early in 1993. :aAL. an Indiar.1 manufacturer of two and tbree-wheekr

-•
vchicl�, faced a stagnant domestic mark:e.t that bad declined by 5% in 199t:-92 and increasing
� competition from the major Japanese two-wheeler manufacturers. Bajaj wondered what strategy
\\-ould both protect BAL's dominant share of the Indian market and permit exports. to rise to 15%

-
� of total sales by 1998..

Company Background
The _Bajaj family came from a trading community in Central India. The founder ot the
I!) current Bajaj Group, Jatnna.laJ Bajaj, set up a sugar factory and steel mill in the 1930s and his ron,
Kamalnayan Bajaj, established Bajaj E1ectricah in 1938 and Bajaj Auto in 1945. Between 1950
�
and .1956, Bajaj Auto imported scooters and tbrec-wbeden from Piaggio (the Italian
� manufacturer of the Vespa brand). In 1959, the company was granted a License from the Indian
government :o produce 6,0CXJ scooters and three-wheelers per annum. In 1%0, BAL enterr'.Cl into
�-
a technical collaboration with Piaggio to manufacture its products in India, set up a manufac.turing
t) unit at Akurdi (nca.r Pune), 170 bn south of Bombay, arid went public. In 1961, BAL b,�ga.n
manufacturing.
�

, During the 1%0;, the company concentrated on indigeniring components and c;stablishing
a dcalcr.uet\1/Drk i,n India. Initially, foc;J component ccnt=::Hw-...s �.Jy ·u�% but; due to-the t!}A,au
goverumcat's emphasis on iffiport substitution, this was gradually increased. By 1� BAL hsd
�1:1e the largest _Indian produce� of two-wheelers., and product demand exceedc.d supply. Ti1e
Piaggw collaborabon Irutcd unt.Il 1971, when new government regulations prol.iibit.ed a
continuation of the alliance.

Tbc cvrnpany', growth bad been restricted by the Indian �nomic and rmiitica.l
cr:vironmcnt s�ce its inapti� In 1%�, new regulatio� made it eve.'1 more difficult f�r !nrge
pnvate corz:i�am� to obt.un Iicense1 to increase prc<lucuon capacity. Restrictive,_, gu-,,"eTTl.luent
import poLJcics alro cre.ntai n protected market for BAL filld other dom�j»>-" tl.'-'n•vn':lc:-.ele-r

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manufacturers, permitting BAL to enjoy a hig� share of a sellers' market for 22 continuous yc:.an.
During this period, waiting lists for BAL vehicles averaged l O years. �

During the 1970s, both government licensing and price coatrols remained ia plai:.c. ln �

..
1975, BAL established a manufacturing joint venture with the state govcmment of M�ar�htra_
__
BAL held ;i 24% st.ake aad operating _control. In 1982, the gavernmeat permitted wfus,on of
further foreign technology.and expansion of capadty and, in 1985, BAL established a �nd
plant at Waluj (near A_utatigabad), 225 km north Qf the Akurdi planL The 1980s were a pcnod
of expiosive growth for'BAL: · production volumes increased from 172,000 in 1981 to 800,000
units a year by 1990. In addition, BAL entered both the motorcycle and moped segments of th c
two-wheeler market_ and established a technica.J collaboration with Kawasaki in 1984. Thi$ _
"
$
agreement ceotered on the devdopment and production of 2-stroke and 4-strolce motorcycles and
gave BAL a� to Kawasaki motorcycle desi n and production expertise. The collaboratioo f1
g
provided I3AL '9(it.h a full range of two-wheeler products and helped the company rc:spond quickly
to competition from other Japanese manufacturers. -· ·
_ .
Prior to 1993, BAL's busines.s strategy bad focused on four
obJectives: kee ping costs and
r
P i_� low; improving product quality; concentrating on two- and three-w
heeler vehiclc:s; and
stnvm� for -cconomic:s of scale. BAL's goals in the 1980s
bad been to in crease product d eman d
and build both volume and market share. As
Bajaj described it !he 1980s were a period of
groµ,1.b for the salce of growth.• · · ·

BAL In 1993
1n 1993, BAL was the world's larg
est manufi:lcturer of scooters and the
Jarg�t manufacturer of two- and tb.rl world's third-
X-wheeler vehicles. Annual reven
ues placed ·t th
top 10 manufacturing companies in the Indian private sector and fourteen h - . fil beamc:oag e
fTi'.r J..l
.U bft 1 reports past and
. . . • t m pro ts Lore tax..
\.I..JJU
projected wcome statements) · · Ba1· a1· J..l.lll.I::>C
o f Ind.Ja ,.s most succes
. . i..:._ __ lf �� ...-. 0-J ace1 aim
• ed as o □ e
sful cntrepreneun.

In 1993, BAL manufactu

red 12 different models:·
FE, Che� an? ?tridc); 3 5 scooter mod Is ( Cu b,_ Su�
motorcycle mod�I.s (M-80 , Super
model (the Bap13 Sunn , Kawas ili RTZ, and�
wasili 4S), 1 mo�
y); �d 3 three-wh ee .
Autoribha and a goods ler modell ( �-engin
carrier) Tb two- h e Au to ribha, front-engi
mnn--t. rr . I er market included scoot.e ne
. · � . w ee
..,�� '- a able A
� a brief dcscnpoon of th . n, mot.orr-.- t
•---1�cs.. and
from each product ese P roduCU., and Exh
category.) T b 1
ibi t 2 dep icts e::cam pl
erooomicalJy pric iroducts were re cs
ed, and had avera; latively simple in
;cm�. :. . tween 10 to 15 yea tec hn ology, .
15 yem, motorcycles 10 rs (scooters avera
ta 12 years and � ged 12 to
vehldes _v-.:ere used �to 10 years).
as low-cost P� Ninety p<:recnt
nger of thrcc-whcclc
used as light comm own
as Auto�has; the remaining
r
of t!JH:c'wbeeler produ
ercial vchic� (ExamyefilS_pies of both
arc shown m E:xhlbftJ.) 1 0% '\\'tte
cts wa, 10 The ave:ragc life
 -, 11 h / e A A v c r ;1r,r: l ' r od u c t J 11 u { J / e 1 VJi t l r i 1 1 t l , ·1 o - \V I , c k r

' � ! .i r le e r

lle t .a I I Pr I ce
_
P-n..d.oc
__-_ c ____1_
919
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-' -
' ti,,:aqe
· _
_ -=------�
�-·;_/l � I r-wc C�c I t y

( S Occ ) Mo t o r c yc l e s ) 4 . 000 fi S l r,/ I I t , r 7 IIP

( J OOc c ) Scoo t e r s 7 0 , 000 H l rl/ I l t e r 6 I l l' ( I SO c )
/",,_; � � 1 2 , 000 5S l in/ l t t er 2 . 5 IIP
------------------- --
" I n >- r l l l 99 J , U S S I - J l . 6 rupee s .

M a n ufa cturing

By Febru ary 1993, BAL was the world's l�t-cost manufacturer of two-w�eelcri, u. paoic
of prod ucing at a rate of over 3 ,000 vehicles a day in t\1/0 (rather lhan three) shifts , s -� d e!()� a
wt'.e r. Th e Akurdi plant employed 5,800 direct workers and manufactured four scooter c:1�k·« ,
the M-80 motorcycle, and the front-engine Autoribha goods carriers. Toe Waluj plan t with 4,800
u.,:irkc� made three of the scooter models, the KB 100 '1--Ild 4S motorcycles, the rear-e c t£�
Au toribha. and Sunny moped. Since 1 990, bo th pianis had been :.:node rnize.d and procioctkm
efficiencies increased Som e s tages of the manufacturing proces.s such as s tam ping, v.-e :Ji.n g,
painting, and asscrnbty were flc:xibk: and could accommodate lin e changes fairly easily. Ma.chinrng
huv.-ever, required special-purpose equipment which was less fk::cibie to line chaog�.
Approrimately 50% of components were sourced from outsi.d e vendors ·with whom Bf..L
engineers worked h ar_d to achieve consistently high quali ty. As Karnath, BAL's ge ne ral manager
of man ufacturing, c::xpfaincd.; To lndi� it takes a long time to train and educate- sup pliers so tb:; t
tb cy can reliably deliver the righ t quality. •

Recen t production ch anges, influenced by the technical agreement with Kawasaki &11d
outside cons ul t.ants, -wc:re based on J apanele manufacturing models.. Karnath described t.be
production organization in 1 993 : "Our goal i3 continuous improvemenL • Throughout the Akurdi
plant, large posters b<:.aring the slogans _"Zero Defects '" and Tuinl: Quality" we re i_n evid �nc�­
"We have worker qwlity circlci and pay qur wur�er"S much higher than the average wage, V, c
b .n-e practically no turnover and there's virt ually life-time employment at BAL" Due to the l ar ge
volumes, 005t benefits were achieved by d edica ting certain equipment, th� reducing cb;.:n ­
time from changeovers.. The use of CAD/CAM (compu t cr� aided design/compu tc: i• nid( i
manufacturing) and CNC (co mputer numerically con trolled) equipment Weil widespread.

Industry Stn1cture

Between tlJ c 1 950s and the 1 98-0s, India's ind us trial dev-elop m c ri t po li cy was· c b 3racteriz.ed
by �ive regulatio n. Initially ict up to avoid 0'1letcapacity in a capiul-s- cn rce CUJ oomy, it
spa-wned a m aze of regula tions govemirig product, capacity, technology, s.nd foQ:igu o:, c bmge
availab ility. In the 1 9805, inflows of foreign techno logy nnd equity were pcrmi t tctl sod
man ufacturing capaci tj cons traints lift ed. lliis gradual ope nin g of the l.Qdian economy re.suited
in lhc entry of foreign competi tors a n d apandcd production by domestic maoufac tu n: rs_ By the
1 9<.X>s, th e Indian economy · was undergoing s t ructur a l change, a nd im ports v.-er� l argdy
u nregula t ed. Though in 1 cass ior. tn :he cady 1 9905 , the cco1� 0 1 ny was �ected to 1 coover and

---:--------------___.:. _______________ j
 -- - um crs had fel t the
pe
- -·
d · - t he latte r half of the deca de. s·incc l 990 , coru (
grow -a t 5 %- a nd <?J nsum er
_ aged 1 3 % , . inte res t rates had shot u p,
r c.'.l r

of rc.c.es.s y
1on ; _
m ;��a ' Jn . bad aver
pL1 ch .
ably.
purcbasiog pow er bad dropped cons 1dcr
the seco ad-la rg� t in the worl d with
The Indian mark et for tv.o- and three -whe elers was l
-whee lers. (Chm a was t he_ ar �est
1 53 millio n new unit.s sold in 1 992 includ ing 66,000 three
re resen ted. 47% of thes e u mt s_a �•
11;;rkc t wit h 24 millio n unit sales ia 1 992.) · Scoote rs p
r1� 27%, and three -whee lers 2%. (Tnbl e. B s u mm arizes key ch_aractc rLS t ics
U]otor· cyc'• cs 24% ' mo� Y� · · d h
m1c rcccss ion an t e
of the �rsoa al transpo rt marl:et in India in 1 992.) Due . to t b e ecoo ?
co nsumcrs (suc_h . as
increas e in the range and volume of consum er goods availab le to fodian _
eclmcd sub_s t antl ally,
televisions , VCRs an·d washin g machin es), demarid for two-wh eelers had �
ae1 ty_
and in 1 993, the Indian two-,,whee ler vehicle ind us try suffered from chronic overcap

TabJe B · The P�rso□aJ

. . . . ! .
Transport
.
Market in India, 1 992 (figures in OOOs)

nr,1un of Tau l Un i ts I n Un I t P\.lrchascs Pro jcct.ed 11n i t

hrsDm 1 Tn1nsport Use f n 1 99'2 In 1992 . PurdlaSCS tn 1995
165 200
sao
Ca r s
380
3 , 000
3 , 900
900
"1o torcyc l e.s
Sc ooters 7 , 500 690
tb�<ls 407 500
6 9 ; 000 7 , 000
4 . 6-00
ff l cyc l e s 7 , 50-0

C oniuroonJ m nd Market Seg�

Of 844 million Inclians in 1 99 1 , 250 millio□ lived below the poverty line ( defined as 3,000
ru� per pc rro□ pe r year), 52% wcr� li terate, and 74% lived in rural areas. Consumer research
uod�rt.aken in 1 990 segm ented bqu:sebolds by earnin gs and id entified tb� gro u ps more likdy
ro purr...h a!e t\\P-Wbedcr products. Thes e data are. summarize i.n Tab le c.
d

In Indfa, two-wbeders were used for daily commuting as opposed to the leis ur e/fun �
�mmo� _ in ?evdoped co untries.. Public traruport in lnrua was in ad eq uate and, as housing cosl3
�n l?�ci ties mcreascd., larger numbers of pc(Jple moved to th e suburbs.. A major priori ty for many
md.ividuili entering the work force after school or college was to obtain means of personal
transport.

I Tn ble C Dis �:m tion of Indian Hous eholds by Incom e Grou ps and
Rel ated P urch ases o f
I Tr,.vo-\1/h eelers m 1990

�-l l � of
f.-om.-d:o Td I� Pet oe1l� of � of Per ct11Ltge of
xoott:n �- by lbtnrcyc 1 es �
( 000 ruptt3) lbrsdlo lds _ · I ncme , � Pbpros Owned by
by I � � - I ncome �
Up to 1 2 . 5 58% 8\
I Z . 5-25 27 8% ! 0--\
26
25--40 10 36
27 41
4 0�56 3 14
17 18
35
Abova 5-5 2 13 8
13 6
 ·1 lie e a r ly 1 9'X)s wi r u c s 1 cd .:1 1 :i 1 u r .1 1 io n of t h e m a rket, occs.s p n:x f u c i i o n c.:i p J c i ty a ,i d
in crc asc<l C0 mpc t i tion . DAL c.( C CU l ivd be l ieved t h a i pe n t - u µ dem a nd fo r t wo -whe ckr� had
s u bs ided by 1 993, aud t h a t t h e p r opo1 t ion o ( com u m c r s r e p lacing t h e i r c u r r r: 1 1 t ve hicles , a.:;
opposed l o fin t - titne buyers, wo u ld increase.. Co ncu neatty, the secondary or r c:sak market for
t.....a-whcclc.rs was increasingly s t rong. AJ lhough thi.s cannibalized BAL new prcxl uct s ales , it also
enab led e.ris ting_ BAL owners . to · change models regularly since they co uld reca p ture a good
portion of tbeir ·purchasc cos ts by. rC$elling in the secondary m ar k e L I n 1 992, 1 J 1c: re:sak v alue
of a five -year-o ld BAL s.cooter averaged 60% of t h e cu rren t re tail pr ice of a new B A L scooter.
( By com paruo11, the rc.•iale val ue of a ijve-year -old Kinetic Honda scooter a 11e r a ged 40% o[ tbc
c u rr c a t re t ail p rice.) By 1 993, i t was estimated that 6.5 million B A L two -whc..c k r s we r e ou ti}I;".
ro ad and t h a t al l brands of two-wbeelc:rs co mbined had penetra t ed 20% o f t i l e 1 X) t c 1 1 t i a l L 1 di�rn
m a rke t.

In 1992, 40% of BAL's domestic saJe5 (and 30% of its scoo ters., 45% of m6p<:ds, and 5 5 %
o f motorcycles) \VCre
made t o rural consumen. RuraJ cori.sumcrs were concerned p rim arily with
value for money, whereas qrban cus tomers were driven by a con�pt of value that included the
1,-hual appcru of tbe product. Although rural comumen tended to have lo-wer incomes than urban
coos� housing and food were less eo1tly in rural areas and tural consumer bad a b.ighc rthe
proportion of disposable income. Some BAL CXCCUtr\lC'3 believe:4 that, during the ne:xt deode,
most domestic sales growth would come from the rural segment Major regional dillerence.l
existed within India. In the North and East, ·consumers vvcre more trad itional; women did not
typically drive and men· usually made; the major household purchase de cis ions. In the major citks
of the South and West. womon pl ayed a more active role in the economy and society, and many
women could � :seen driving scooters and mopeds.

BAL crccutives described the target consumer groups for each �wheeler produ ct �
follows:

Scoota-s targeted the · "family m� • aged between ·27 and 38 years. 1be
scoo ter � a f� vehicl e that could be used to transport a whole family. .
Word of mouth recoi:nmei;:Idations, brand name, and fea tures such as mileage
(foe! e�cicncy), low m ain ten ance, · and hjgb resale value were itn po rtant to
these consumers. · · · ··

·uotorcyck consin:ners either lived in the coun tryskle, where the rough road
conditions reqtiired a s turdy vehlcl� or were -young _s ingle men. Seven ty
percent of BAL's M--80 s.a.Ics were made to rural consµmer-s , co ncerned with
fuel efficiency and prod uct durability. Younger, single male CQ nsumen
. , l
between 2 1 lUld 30 years of age, looked for povver ruid s tyle, nod the K2IvY'cl5aii
� 1 00 appealed to them,. 2-strolte mo torcycle.:s v.--ere more pov.-t!rful and
were often Jargetcd a t yo ung males. · 4-stroke motorcycl es , r e g an.kd a$
'W'Orkborses; were more fuel efficient and :gave the con.rumer be t ter vah.! e for
the money. .· ·

Jrfopen.s appealed to a b ro ader Ct.13 tomer $Cgmen t because t hey were the
cheapest two-w�Ien available. In r�ot · years, style and features h ad
b<:co m e more im po rtan t to the urban moped custom_er who acco u n t ed fo r
55 % of all moped sales. Produco such as the B ajaj Sunny -were targeted at
teenagers and "NO::ncu whp Jookcd for style: and trendy fea t ures. Second ary
----- - - - -
 �...,. .__... . .

an tcd a )ow -cos t means of

targets included consum e rs over 55 yea rs w h O w
i personal transport.
, · r b low ma in tcn anye nccru and
!

In 1 993, consum ers s o ught reliable and robwt prod ucts

u� t f;ea t ures inc l udcd Wl . o cy ' s ty!� , . a nd riding
fu c 1- c ffi,e1c
a Jong life, a t a low cosL Im portan t P rod .
comfort Indian cons um e rs were - charactenzed by one "of , deale rs as bei ng tra di t ion ::tl ; ·
B�m g .sup wi t h the aci
ghbo rs" were
sc�ki11g to buy proven p roducu. Peer pr�urc aad. kccp ·b ,.,.lcr
. . . .
i□crea.s ingly importan t DeaJen believed that an add rt10aa " I k cy success fact or for t ..."'_w •
n u m oc r O f s-crv,c .c
I.A.,

and
Y't\.J

m a n u fa c t ur e rs was service reacb, as -defined by spare parts avail.ab ility

loca t ions.

Compeifton1
t in 1 99 3 :
. B ajaj d escnbc-..d th.� compe titive environment in the Indian t wo-wh eeler mark: �
me o
�t of the wo rld are here and th ey 're here to 3 tay." Si:t Indian � ups d rruna tet'� tbc
domestic mari:e t, all -with foreign collaborators. BAL was the only co m pc a to r manufactunng �
full range o f two-whede r- produ cts and three-wheele rs. It m anufa ctured two of i ts m o torcycld
in t cdmicnJ collaboration with Kawasaki. . �tic manufa ctured both scooters and mopcru and
h a d an eq uity collaboratio n . with Honda for seo0ters.. Hao man ufactured motorcycl <::3 and
mopeds and h ad an equity co lJaboration with . Honda for motorcycles. LML m anufa �ed
scoolc� in roIJabora tion with Piaggio. Escorts manufactured . mo.torcyclcs in a t..echni �
collaborn tio□ with Yam aha. TVS man ufactured mopeds and motorcycles and bad an eqwty
cvllatx:,ra tion with Suzuki for motorcycles. (&hlb lt 4 summarizes these companies' shares of tbc
twu-wbcder market over time.)

1bc m ajor Japanese brands had all been marketed in India siney 1984. AJI production
\vas dom� tic, _with tb� � rce n ta g� qf_iJnpcirted parts varying with the number of y-wIS siuec lo�
proc u c don b!::gan. Imported components could constitute up to 45% of a p roduct's val u e during
f

t h e fint year of production; b u t had to faJ1 to a maximum of 5% by the fifth year, according to
loca l con tent requireme n ts se t by the Indian govemmenl Tariffs on iin fX) rtcd co mfX)nc: n � were
30% in 1 993. Ja p an� products were �rce � by Indian consumers M being higbcr�U:.ch, more
modern, and bet1 er finished · than domestic producu.. However, tbey also had a reputa tio□ for
being le::;s fuel cffici _ent and more cos tly both to purchase and m aintain, with limited spare paru
availabili ty. In co n tra5 t, BAL products were renowned for being ru� reliable, and fuel
efficien L Perceived as reason ably priced, BAL products 'WefC also known fur their lo-w
m aintenance C03 t, good s p are p artl availability, and good :resale value..

Ifon�s � BAL's mast illlportant competitor in 1993. Its scooter product, the Kinetic
Honda, compe ted directly with BAL and held 14% of the scooter market in 1 992 It b ad a
tech nical advan t.a gc over the BAL swefers with feature.<; �uch as electric s tarter and a modern
au toma tic drive which a ppealed particularly to womet1, and _wru priced at a 1 5% premium to BAL
It took KincUc Honda five yean to overcome initial consumer percep tions tha t it was J ess �htrdy
· and safe th an n B ajaj scooter. It was, however, positionc:d primariJy as an urban prod�ct In
1 985, Honda bad also launched the first 4-s�kc: motorcyc l e, the Hero Honda, which raul ted in
s u bs tafi ifal fud (.'COnornies for the consumer. In 1 992, Hero Hon dB wiu mar"��t i�d�� in thethe
m o torcycle market, with a 3 3 % sh�

In 1 993, Honda increased its equity in Kinetic to 5 1 % and s�ted publicly that it aimed
to cap ture 50'% of th e scooter
.
market_ and a number one pos i tion · rn
.
the Indian two-wbeder
 lli,H k c l ov- · .
. ,, rall
• · J Jon < I 11 's ex 1 c:n.,; 1vc 1 me of two-wheeler pru<lucll, both i n scrXJters and 1notcm;vd
' es '
1
a . 1 awe d 1 t to laun ch n r cgu I ar s t rcam of new product..s ,
m the 50- 1 50cc category. For e:x:uuple.,
H.0 °.d a alre.a dY h ad 8 p roven 4-strokc 1 25cc ,coater that could be ada ted to the Indian 1n
- s..,. t
erL"'
Wl l1l lil tv.-o years. I n n deli"Uon,
_ p
. . by 1 993, Honda had gained significant experience of the Indian
m ar .leet rbro ug� its two:- coUaboratio ns and had access to both Ki netic and H e ro clealen
t hro ugh o u t India. In 1 993, Hero Honda gw.u sold th rough 2 1 8 excl usive '·dcaJers
o nd Kinetic
� � o da througb 390 exclusive dcalers. 1
H onda's strategy had bet: n to incre ase its mm,�r of
uca..cr-1 and provide th � m with average m argins o f 4.5%.

r �amaha had a technical lia:nsing agreement with Escorts , simil ar to the one between
Kawasaki and BAL, and beJd 15% of the: motorcycle market with the Escort RX 100. The
. �rod uct line was distributed through 490 exclusive Escort dealers. Al though Yamaha had a good
line of motorcycles and scooters that could be adapted to the Indian market, Escorts was losing
�� ket share and profitability. Yamaha nnd Escorts were thought likely to form a n equity-bas•.d
Jom t venture, and _the &corn group bad sufficient financial resources to do so.

. Sa.zuld had a join_t venture with the 1VS group and held 8% of the nmtorcycle market.
Prod ucts were d.istnouted 'through 337 c:xclusive dealers. Suzuki also bad appropriate scooter and
_
motorcycle products for the Indian market and bad recently acquirt.d a controlling in ter�t b1 its
four�wheeJer joint venture in India. Although, in 1993, the IVS-SU.2-uki venture wa.c; not yet
turning a pro.fi� the TVS gr9up a.1 a whole bad substantial financial resources .

Piaggfo bad recently acq uired . an increased' sta.ke in its Indian lir.erisec, L1iL, and had
taken complete managem�nt control Piaggio's scooters were similar to BAL's products and held
an 1 1 % share of the scooter market Llv{L was in a relatively w�:'i:k marke t position in 1 992

. In India
BAL Marketing Strategy

For many years,

.BAL djd not have a m arketing department since demand outstripped
capacity and BAL enjoyeda protected sellers' market As competition increased in the mid-1980s
aod capacity constrain ts were lifted, a marketing department evolved from the exis ting distribution
and s ervice organization. 1n 1993, the marketing dep artment's objectives were to increase annual
s ales to 1 million units (ret.ai.o.ing at least a 50% domestic market share) and achieve share
leadership in all three �whee ler subcateg ories as well as in the three-wh eeler segme nt.:.

Prod uct Une Dew�

In 1 993, BAL's produc t s�tegy was to provide cons�m ers with a full line of_ compctitively
priced t:v;o.. and three-wheeler products. The objectives governing produc t develop ment were to
pro tect market sbar� by ( 1 ) p roviding comum trs with whacth ey wanted..·(2 � n:atc.hing co1 � r;etltor
· p roduct fea tures by constantly improving c:xisting produc ts, and (3) pc nod1cally mtr � ucmg new
p rod ucu. In 1 993, 30% of p roduct develo p ment r.eso�rces
were allocated to incremental
irn provc�nt1 on current producu and 70% to com p kidy new product develo pmen t. It wa5
hoped tha t, even tually, th � pe rcent.a g es would be revers ed.. Older sroote ( models were phsst:d ·

l . Dc.aJcn were c:xciusive in lbe u u.SC lb.a! Ibey did oot �u oompetjco , pf\Xfud.s, with t h� c.ta:ptid.1f o( L'1e I.nd,�10
oartocr'l Cf'odu cu.
 o u t -fo l lowi n g a new model ) a u n c h-w h c 1 1 mo n t hly ulc.1 vo l u m c..s fe l l be low 2, 500 u n i � • n
r e p l aced by n ewer modc b t a t b c t t e. r fi t c us t o me r pr d r e nc� . I n 1 98 5 , BAL h ad 9 t wo.- a u
h nd
t br-ec-w h ecl e r mod e b o a t be m a r ke t ; by 1 992 t h il nu mbe r h a d i n c r e a5 c.d t o 1 2 a � d wu oPect�
t o h o � d co_r u t a n t io t n 1 995. R � n:j< i t G \ l p t a, gen e r a l m a 11 11 gc r f r p r od 1 1 c t d cvc l o p rn c o t, d�bed
5 t
t h e t u a 1 1o n : · B A L i"' u nder p r � u r e from c o rn pc. t i t or :s t o co n t i n uo u � l y i m prove c:riltin g
p � ucls. H -e ve r, we wa n
� t t o le.ad wi t b new p r od u c t in t r od u c t io n "' , a n d h Id s h a r e: t hrough
c� u R l i ty and p r ice... ·

Pr io r 1 0 1 h e 1 990s , m a rket i ng, m a n ufac

. t u ring, a nd R & D we re orga r1 i z.c<l a l ong f u n c t i,J n ;i I
h r i :- , . A 1 99 2 r corg aniz.a t ion a imed
_ to nchieve grea t e r crm.s - fun c J ion aJ coor dina tion � nd to
an c k . � a l e r li c prod uct d evciop ment
cycle: Engineering thereafter worked cl�ely 'w'i t b marb: 1.1:i g
. ,
1
._, _ 1 , l , , u
', ' I 1r,, /·
.,,• .( · •h
,�. J:i !lu/� t _;,1 ... A , ·
f�'ij IIP.J fo tt�t:Q Jau:. tbeu: Jfi tO new product p ro w typct t.'- a � ��
- -
co n tin u o us ly t es ted b-y dealers and cons umers. In 1 992, BAL e m p l ed 346 st aII and 1 24
oy
wo r kmen in R&D, and R&D �ditures - totaled 1 % of sales., compared with 0.5% of s a 1 Cl in
1 990. BAL's n ew product devdopm ent program was comprc:be nsiyc and ambitious, comproing
_
� th substant1aJ technical deve lopments and n� body designs, fcarures and s .tyling. for all product
lines. R&D resources were allocated to each product line roughly in proportio n to it:3 sales.
Gupta explained tha t it was' not that easy to build BAL's R&D capability: -rbe issue is not just
a q u� tion of thruvvi.ng money at R&D; we nee<l to develop the n ecessary human n:source3-. •

. For many years, BAL products w-cre b<Ued on Piaggio's designs for the 1 50cc scooter and
t hr�-wheelers . When the government curtailed BAL's technical coll aboration with P iaggjo in
1 97 1 , BAL con tinued to develop scooters along the snmc basic desi� Toe 1 970s saw the need
fo r a bigger wheel in response to rougher roads and driving con9itions., and the Baj aj Chelll:: v.--n
dcvdoped Other n� s:uch as a higher n umber of gears . for better fuel efficiency and
fl �oility, and a n:.ar-eogine thr�-wheeler for increased driver and taxi-passenger corn.fa� v.-ere
also addressed d urin g the 1970:s.. In the early 1980s, �AL entered the motorcycle segment -with
tJ1 e Jauncb of the first Indian motorcycle, the M-80, adapted from c:risting s tep-through
motorcycle desi gns p ioneered by . the J apancc;e: Th_e technical collaboration with Kawasaki
res u l t ed in tbe la unch o f a 2-stroke motorcycle in 1 984 , the Kawasaki RTZ in 1 986, and a
4 -s t roke motorcycle, the Ka� aki 4S, in 1 99 1 . �ore recent product in trodu ctions included the
B aj aj S u nny, a moped Jaunched in 1 99 1 , that enabled BAL to enter tlili se gment of the t-wo­
wbee,er marlet; and the Super FE (Fuel Efficient) :scooter l a unched in 1 � which increased fucl
efficiency by 1 0% . Gu p ta d �bed the current importance of p roduct development fo r BAL:
.. In t h e p as t, product de-velopment was �or fun;· now .it's fo r survival.•

- lil 1 993; p roduct deveicptiierit efforts v.-ere focused on �ters. Fuel economy was an
i n cre_.aj ingJy im pd run t consumer requirement due to a 30% increase in fuel p rices in 1 9'12. BAL
Wa5 deYdo ping im provements in power and fuel efficiency, a new body s tJling, an im p roved
e l ectric.aJ �te_m, better ligh ting, an electronic ignition, and improvc4 suspens ion � t c: m. The
r a tioo_ale behind t h is ·�ter upgrade program• was to deliver increa5cd value fo r money to the
co nsumer wi th the objective of defendin g BAL's marcet share against compe titor products that
already offered m any of thc:5e feJ1tures.. Toe retail price increase required for the ·upgnde
· program• wm estimated at 7%: � ·, .

Futull"! p roduct develo p ment p l aru 'w-cr e iuf1 uenccd by fu rthcr tigh tenin g o f Indian
e miss ions regul ations between 1 996 and 200 1 . 1bc:5 e regul a t ions \vo u ld m a k e i t �otial to
c h an ge from 2-s t rok:e engi rf6 to more fud -e fficie o t 4--s trokc: c: o gi□es and/or to aovanccd fod
..
•
i 1 1j u r iun l <:c hn o l )f.Y- ·1 1 i c l l W ti . ... 1 , o k .1 ( )( ) ( C D \Wt )t i ! d l ire pr iL d a t :1 l ,. 'i'.o p1 r
1 1 1 1 11111 I -,� r tl1�
cul t i 1 1 g 2 - s l w k c 1 1 1 l x l l .s .

Despi t e be i n g os t mpe t i t ivc, B A L I k d d ·ig n capab i l i t y and t he ability l o lumtate

new prod ucts fr o m 011co p l to commcr ia liu r ion u rut as ill hpa ne.K p ompr, t i l o n . BAL',
Etvc r .1gc cycle 1 i 1 1 1 c f r a 1 1 w 1 1 1 od c l was fo u r to five y ar- -s , com p -J ed w i t h l...,"O to t l u ce )''t'l n for
t he J a p a n elc rn a n u fa - 1 1 1 1 c L. J I N ,'.• m a i 1 1 coru l r a i i : t i were L,clc o f 1 u fTi. i c rl t k il l ed R &. n
pe r so nn e l and t h e s low ropomc o f &upplicn. T he rnai11 o p t ioru fur developing H A L's P, ! d J
u p ::i b i l i t i -.�1 c 1 c t n b , 1 i l c l in - hou.1c: cx-perience by develop ing a m! tc:; t i 1 1r, tno r c: p r >d u e. � wi t h th-­
;:id o f CAD/CA M 1 cchn9logy nm.Vor to establish specific collaboratio11 a gr u m c r1 � - U j aj bc lic--,vJ
t h a t t h e re was li ttle chance of fm1hcr aUiaace.1 with BAL's major co m pe t i tor s a n d tJ, t R &. I J
capa b i l i t ies wo uld have to be developed in-house, supplemented by specific r c.�"r ch ag:rec wrnts
and 1 ec hnology a<XJuisitioru involving outside organ.iz.a4oru such · as Orbital. Orb i tal Wa.1 a,:i
Aus trali an company working on fuel injection technology for 2-stroke engines th at wouJd f� c,::,
_
bo lh fuel co nsu mption and emission levels. BAL's agreement with Orbital called for specific
t argets in fuel efficiency and emission levels to be reached at a predefined maximum unit cost
Some BAL executives however, beli�ed that opportunities for technically u pgrading two-wbwer
vehic lCj were limited, that the rate of° obsolescencc wadow: and tha t the technical perfo rrn en�
gap between Honda and BAL was not large.

Dtwl butlon t11 nd S enie1t

In February 1 993, B AL had to ensure the_ effective distnou tion o f i ts products t o 3 .3 0

adu.sive dealers across the country. Physical distribution of BAL vehicles was subccntr actd I �
75 private transport companies who managed a total fleet o f 1 ,400 trucks, e3ch truer: c.:·,
capable o f transportin g 45 vehicles. Transport took between 3 and 2 1 days t o reacl..1 a de."!!er.
The dis tribution system was computerized v..ith 30% bf dealers cou neeted by .modem link, i,:d
orders were fed dircct.1y into BAL's production scbc:dule. In 199Z 76 people ·were employed :11
rna.rk:c:tin& sales, and distribu tion.

Forty BAL sal�pcople, organized gcographicaUy, helped the·dealc::rs plan product-sp��

s ales targets, provided . them wi th services an d .advertising support, md trained their s ta.ili. BAL
s�rvice �ngineers were deployed at dealers hips · to upgrade the tc:cboir.al capability o f d .:. rJrr
�mce pcrsonnc:L who -were also trained at BAL factori� Spare parts s al es had in�
_
s u bs t an tially through the service and dealer nctv,,ork::s, and in 1 990 an addit ional parts dis trfb , t c r
c h annel was opened . to serve the c:rtensive independc:n t retail parts network ais t.ui , ia t1; ...,
cou n t ry. In 1992, 180 pd)ple v,,crc e·m ploycd in service activities and 42 in spare p!irts. Prictn
Hn tcgy for : pare parts aimed to offer the CO�Llf.ua •readily available pru t:i aup-.·h� tt
rc�n � blc pnc:�: � 1m 53 1 m �on rupees (at wholes.ale prices) of BAL spare .p arts re sokl
_
t o � rv1ce the 6.J IDJ1lion BAL vehx:Ies currently on the roacL In 1 992, i t was es t im a ted t h a t 40%
of all two-wheeler .spare parts sold in Imlia vvere made by BAL

D � � t--l ai�"'Or1c

By 1 993, BAL h ad dcvcio p� a netwo r k o f 330 author iLed dealers hi s

.
l 8,f in 1 989, and 800 licens_ p in lndfa1 up from
ed s e r v ice center s. BAL dcalc n so ld only BAL two-- and thre-e­
wheeler p rod ucts and d id not carry co m pe titor b rands; a
few sold other a utomo ti ve p roduct1; !uch
a.s ea� and ! ru c b. ":'J I deale rs m a in t a i n ed service
_ centers and s pare p a rts inven tori
· es in· additio t1
to ve luclc mvc n toncs a t tb c i· r d ea I � rs h 1p · ·
' I ocat 1oru. IxaJc nh1ps were . o f te□ fanuly-tu n or
 partnenhips tli at enjoyed a high s tatus in the ir commu nities. Averag e s a les were I SO ve hi �� a
month with �ealcr inventories averaging 25 weeks of s a les. On ·_ average, s a l es of n ew ve c cs
represented 80% of d�er revenues, w hile se rvice and parts· r�pres ent ed 2�% . '. An ave:8ge
dealershlp would turn over 1ts vehicle inventory 20 timCj a yea r and spare parts rn:-e � tory 4 t � Cl
n year. Unit margins -were 3 % of sugge5ted retail pri� ; dealers suppl emen ted thei r rncorncs with
scn-ice and parts s'.31cs and the sale of used vehicles.

In 1 993, B AL �eakrs were facing increasing competition, profitab ility press ures, more
dem a nding a nd sophisticated co ns u me rs, and a drop in average · sales volum es of aro un d 2_0%.
Dealen felt competition bad intensified: the -Kinetic Hond a la�chcd in 1 987 h ad gam �_
a�ptance by 1 990 in : the Scooter' �egment; and Hero Honda 's 4-s troke was s tro ng in the
motorcycle s.egmenL They felt that BAL had not kept up wi th competito r prod uct in trod uctio m
_an�_ t�Ja! re.fe.IH . B AL ne.w product. launcbe$ bad experienced a number -of tcchui ca1 probl etIU.
!!C.Om umen :nwJ a probl�•fr� prod uct,• explained one BAL d�cr in Punc. B.AL provided
t10 tt&1lt to lu de2 fen on vehlde-purc:b&ej, and·BAL d�� bafto fin ance tbc:ir inve n t ories
from their own 'WOrk::ing capital De al e r interest ra t� on working capita_) loans wer e in the order
of 22%, and t he cos t associated with sending funds to BAL could be as high as 25% of the
dealer's absolute m argin per vehicle.. To improve dealer profitability and redu ce trapsit time,
B ...\L began, in 1 99 1 , to set up regional depo� management of which was subco n tra cted to
carrying an d forwarding agents. Effectively, a stock transfer was made to the depo ts fro m which
dealen in the arc.a sourced BAL ve hicles , thereby cutting down th eir lead tim es to o ne or two
d ays. By 1 993, th e re wer e e ight s uch depots� accounting for 40% of total ve hk le sales to dealers.
By 1 994, it was expected that these and addition al depots in high-volume m arkets a long way from
the production plan�, vrould account for fu l ly 50% 9f BAL's domestic sales. · Al l major
competitors bad already cit,abfubed similar depot systems throughout the country.

BAL bdk:ved th at its dealer network represen ted a k ey competitive advantage and tha t
the c.ornpany enjoyed considerable dealer loyalty. The key to dealer profitability and satisfaction,
according to BAL, was · a full range of tW(r and three-wheeler vehicles and rapid inven tory
turnover. BAL planned to ap and it5 dealer aet:work to 370 dcalets _ �r the nat two yea.n,
particularly in rural areas.. Jn all large tawllS , l3AL bad authorized more than one dealer. In
recent years., many competitor dealers had s-witcbed to BAL but the r�rse had never occurred
ln 1993, BAL � also considering authorizing different dealers for sal� of tv,,o.. and three·
wheelen..

Coniu� Flru! ncing

The Indian government, whi � contro lled the banki ng sector, did not encou rage . bank
! oaru_ for two-wb � ler purcb ase5, and, m 1m only 15% o f two-wheeler purch ases \Vere financed
m this way. To increase � BAL established Bajaj Auto Fmance Ltd (BAFL)
· 1988 to
provide roosu 1� cr finan ce.. By 1 992, BAFL had � anced over 100,000 vcltlcks throu;
the BAL
dealer pctworl. Dealers were responsible for credit evaluations and coll.ecting p
. . aym en on '�
ts -�
a.>dl.U
and h ad to cover .JV7o
c:AOf. o f .
the ro:5t .
, o"r b. ad loam. . This required substan tial deale r peno
. ; nncl
tnurun g, In FdJ � ary 1 � , � 60 t?f the 330 deale fS operated BAFL -� umer financ
e schema .
and B AfL execu tivcS l?elieved that 1_?% -of al fu tu.re BAL salci cotild be fin an ced
l
in this. w-a-··
ru _
Oi'l cc all d ea}er5 ps Vlefe pro pc rly tra med and organ..iftd.
J
 /1.d v a< f tw, l n g 1 1 ,<l P r o11 1 o l lo 11

l J 1\ L 's a d v , l i.s i 1 1 .v. · ' I 1 1J 1 t 1 1 1 • I i , J d ub ·k d i 1 1 t l ,� I '., }( . f r ',{fc l H i l l i o n 1 \I { _ ,:.� i 11 l <JJO

:i m l I I l o I I O ni i l l i o n 1 u 1 c-; i r i 1 <- :>2, n r r ' l ">< l l H l i 1 1 , I n 1 ¾ o f t o ., l �i i · . { 11 l 'J'J 1 , B 1 . w ·•
a rn 11g I l i c co u 11 1 1 y ·.s l ., 1 g , 1 l 1 1 \ 1 1 1 11 r d 1 1 r ,1 hl n d v r t i � , � . ;1 1 1 d l ·' J J w 1 l 01 · d ,Id r :1 : 1 1 -: ·.- i: l
m a ny mc:m r a lil I d v · i J I I u J 11 1 1 1 1 c 1 i n h . Adv r t i.� i 1 1 "' n i rn cl t n 1r1 ,i 1 n a i r i l L j . j J r ml a·. il r w-.,
J o u p , c fc : c n cc :rn d :1 '50 a nr 1 01 1 n c. new p r od u c t i n 1 r od u c t i o 1 • /\ d v I i.� i 1 1 • 1 . � �- ,, i r . ·,.
Jn I rc u i n t l l .1 l ' 0 1 :1 1 i o11 ,...., j r l , 1 1 1 d a l c r s and fo LL-,.ed on ·l .1 1 i f 1rn r. p r u l w v , :; i : i ( , . ; ;-; �-; i : 1
r I ( < m u r n- r 11c L I -. . ( W i b l t 5 o u t l i n es t h e advc 1 t i · i 1 1 g bjc. 1 . t i , --; r d VI · t r ' -: :r,
f H s c k t c<l H A L p r c x J uct5 . T a b l� D s u u un a ri.zcs adve r t is i n g c x pc r 1 d 1 1 1 c-; J 'f �) r u l 1 1<1

;:;. -d i � ::1: in I ) )

Ta b le D B AL Advertising Expeadi turCl by Product and Med i u m : 1992 ( m i l l i n • if c<: J

Ttree- !l)J._ Dea l.er

Scootes s . Sunny J:��k l 4S � �len Corpa--i te fW1. � 1 ut
TV 21 10.0 9.0 4;5 0 2.S l 2
Pr r1 s 15 7.0 12.Q 0.5 2 2.5 3 7 0
lu d i ci 1 o.o o.o 0.0 0 0.0 1 1" 3
� ga z l ne i _Ll -1.:i 0.0 Q 1 .0 l I _!
TO TAL 39 18.S 22 . 5 5.0 2 G.O 6 11 11�

In 1 99'2, it was estimated that 20 million color televisions and 5-0 million black-and-wru e
televisions were in use
in India. Two cbarineb cxistJ!,d : chmflel that broadra5t Hkdi a iiauonai m
and English, and a local channel that broadcast i� the language of the region . BAL tek·,is io n
advertisin g re p �nted 45% of to tal m ed i a cos ts, and ea ch commercial focu.sro on e rin le
p roduct, de p ictin g a slice-of-life scene. A fu rther 45 % of advertb in g expe n d i tu res was dedica ted
t o p ress advertising an d the rem aining 1 0 % to magazine ads and radio co mm e r ci a ls . 1'-iotof;;)t.c
p rin t �m en ts had a strong no-nonsense p�uct focus and a t tem p ted to differen ti a t e BAL
p roducts from th e com pe tition on the basis of technical features. The Kawasaki brand name "J.""
em p hasized by BAL because of consumer percep tio ns tha t Japanese mo to rcyc les were of _tt ... :­
g u ali ty. Other p rin t advertisements addressed the dep ressed economy wi th the slogan : '1in: cs
are bad, but, if you b uy today, the rugh fC) ale val ue of Baj aj is like a blank check. It's n
in� tm�n t • (Exhibit � «:produc.es a number of BAL prirl t advertisem ent.!.. )

In adclition to natio nal advertising, BAL O'.XJpcrated wi th dalers locally, matd1ii1g locnl
a dvertising and promotion ape oses incurred by dta.lers on a 1 : 1 b asis . �alers ,,�� t e broken
down in to fo ur ca tt;gorics based on their i;ak:s volurn� and members of e:1ch group v, re
all<X4 t.cd ·rm tching· budgetl for � prCSJ advertising. BAL ,vu uld aho m a t c h dealer G�r...-:�.J
r �--' rom ·
ior appr CJ'y'OJ
· · •
o bco.s m wnp.1ncton WI·•!.:J t.. 1oc-2.1I r�
r !JY'
· 61J
, B..r1 u •_ r
c,-cn f �. Tn OJ.PJ .ntsrn a �rx·� -d.J · •
p ..J

c0n ��trn t ima gr; aeros., tbc co wH s ; .!11 dealer pdzn t ..,D f.,zk
y fX}: !.::n z.rx! brcd; urc.1 ',!.✓ � e p :C":'{1!�:.<l
by BAL_ Howcvcr, the � tcncc of 1 5 diffqCf) t)a_11 gua&'C'j in _
lrxff a . rn can t 1h.1t the H11,.:�
co mmcrq a ,1 could not always be used throu l1o
g u t fo dia.

. �dvertis ing �a d i turcsof 200 nu1 Joo rupees �re p l a nned in 1 993 to reinfo rce fu rthe r
· th e BaJaJ brand
tq 'J t ty. BAL p?ann erl to be more a gi ��ive �n its
6 adve rtisin g, · posit ionin g its
produ cts more clearfy, d�b ing
addi tfoaal fea tures and addressing compe t itor claims head
on.
 . m a i ns: the first to
t n g ca p l g
� 00 7

a l a r i rnal businesses with

. u d -A c;.u twO
d ;ur ect m i mecoke n d ' to s
m c l th e s
pla a� ed fo� Jfo 993 l o ecs · '.
N ew pro m otio a.s . r groups o f emp -wyheel e rs.
co mp anies, o f:en ng tbrec
� : i° co u l d be rn e t by - H o n d a s pe nt
36
po rt req ern d H
t r ans 1992 were as fo ll o�: ru al
peCS ( 1 % of s es);
e ra
ts

r
en

fo · . 1o n
mr

. . • · nd itu r cs t 23 m 1l1
Compe titor adve rus111 g � 5 al · TVS-Suzu ki spc a
ing t � % f ! )
millio n rupees (co rrc:s po nd n J1Jp� (3 % o
f s al es ).
0

nda spe nt 35 mil lio ··

and Kin etic- Ho

Pri cing av era ge

c n s u rcd a n -
.
ed a
·
pn
·
cm
·
g str tea gy th a t
p u t a t ·
1 0 0 v.,,.. t n.
ta in ca t cd · a r c
In . t he pas t, B-AL h a d m ain ·
c re t u rn. a n· d cr
dea lers an a d u a t J B AL ,;1,'a.S
man ufac turer's margin of 1 5 � , g ave , �t at a reasona bl pria. Ln . 1 9'J e · ' rnarlce t
_
,.

. a g e: 1Jl eve;
tt_;t-dti-;"a�r; (J{ 'a wmpwyttliltig_ a- g� uw p�odt q 7 in t ain a pr i ce a dva n t
at
t h e ind us t1y'.1 law-ro.s t prod ucc: r m Ind1a _and
rum
bc� een °: e ls th
_o � rice diffe rences
segm ent of two-whee Jer$. - In t:ro0 le � , �
B �tablisb . P B AL s coo t e rs we re p n cc ·
d I ower
·
reflec ted the value to con:.s u.men of mcremental f� tu rc:s . All s t e p- .i.. U u gh m
___,. oto rcyc le on
. _
Ba" a • M --80 was _ th e o n1y an �
t h an com para ble compc��or prod ucts. Th e . . J J a t SO% o f co m p arab le Jap
Ull

le bike, p "ced
the ma.r lcet and was pos1 tlooed as a rugged. simp t s truct ure ·LD 1 99 3 . did
no t allow for
es, BAL 's cos . ,. h tly
n

mot orcycles. However, on I(awas ki. a mot orcyc 1

, tbe BaJ • a •
1 Su nn was pri ced sliy--
moped cate gory
· a simi1ar lowe r price . stra tegy and, rn the _ fferc:u mo re fea. y ..,L� .��- (Exhfbl t 7
beca use Jt
· o _...1 co osum en
high er th an coavc: ntioo al mopeds . . · . tito rs )
ines 1 992 retail prices and deal er mar giru by p rodu ct for both BAL and com pe
· outl
.
. ted
ra by s .coa ters an d three-wb ed ers_
In 1 993 the majo rity of BAL 's p rofits were gene . . • .
d/
profi ts �rm ittc:d the: othe r prod ucts in the line to be priced l� r m orde r to �t � �:;
1bese J U.S t
, M--80, and BaJaJ Sunny -were
gain mark et share. In 1 993, tbe -KE:was aki mo�o rcycl�
breakin g even.

Exports

H �" t orl ea I P tITTJ pe{:t lve

Fo r m any � due to high domestic demand and restricted p roductioll.i BAL h ad not
. .

actively p romoted c:xport.s. In 1975, for the firs t time, BAL � rtcd 1 ,500 three-wheeler vehicles
to BangJade:;h and COID.IIlCl;1ced talks in other South-Ea5t Asian countries: the · same yeir, the · rn·
com p a ny concluded techn.ica.J Hc.eming agreements with p rivate sector licernccs in Indonesia and
Taiwan. The license . arrangement wi tb the Indonesian collaborator covered assembly-mm­
p rogre53ive manufactl!!"e of two �odels, the Baj aj Chetak and· the B ajaj Su per, as vteil as
-� ��r
2
�f thtee�-.-w becler·· model. The agreement with the Taiwanese licensee covered assembly-rom­
p ro gressive manufacture of Bajaj Cbetak sc;ooten. Between 1 976 and 1982, over 60,000 unitl of
CKD (completely knocked� down) scooten and over 1 4,000 units of three-wh eel� were am
c:xpo !1ed to Indonesia, �ting in sm:war unit margins to __gomcstic product s ales. Over the wne
period, 80,000 ubits of CKD 13ajij Chetu·� ters were exported to Taiwan. In addition to CKD
saJcs, BAL earned tecbni� biow-how fees fur helping both li�nsees �t.abli.sh their a1SCtDbly

2- k.scmbty-01.m-progrcssivc manu�urc agreements required BAL to Initially suppty all vcbidc paru to be .wc:mbled,
gradoally rt<ludn5 tbc nu m�r oC_ pirts supplied � I.he � beome apable or rn.,nur.act uri□g fu own paru.
 p l . 1 : 1 !:; . ·1 1 1 ,:: l 1 1 c lu 1 1 s i : 1 1 1 hcr I 1 �r r , 1 1 1 1 :i u l e t o r c m 11 i u p r o l:i t J t, l c d u e l o t h , c rn . ·. fr, c c l cva, l u a ti un o f
r h c J a J011cs i a n I l l ! I I .y , o ni b i 1 1 d wi r h R O Vf: l l lt tlC" l l l p I c:1 u r c fc ; r fll() I C l<Y- a l HI fl l l r t u t e r
co n ! c o t , wiu fo r c d 1 0 s l op pr 1 x f o rion i n J � ·n,c Taiw n · c 11<..c rucc , u � 1 d r. r p r � � � f : frnm
t l, c Taiwa nc�c govc r 1 1 1 1 1 c r 1 r, ' 1 1 1 ic r ly d c velop<d h .1 own o m pt:Jne n l p r od 1 1 c t i r 111 -' JJ <t l > 1 l t l"°- A
l

s i m i l a r licc ru cc a g r cc m o f w,H c 1 .:1 1 ,l i .s lied I n B a 11 ,c l 11d \ h ; 1 h i :1 w a B A L', ,o n l y C'..X' i s t i 1 1 � l icc:: 1 � C'­

a g r cc m c n t in J Y9 1 . B A L s u pp lied r h is I i e r cc wi t h nv r 2,000 1 1 1 1 i t � o f CK I J t l r c - w h cd n i n
1 992

B A L ' a F on! i,g n O tffl ib l11 orw

In J 9 79, l11e firs t BAL foreign distributo rship wu establishe d i n S r i L a n k. a ,rn :J the:: x µ 1 t
o f com p l e t e vchide:5 was in i tia t ed. During the 1 980:s, distributorsr ups were ec.; t a b li.shc.d o n '
opport u nis tic basis in the United States, Germany, · Soutbcast Asia and North Afr ica. HOINc-• r ,
B AL 's a t tempts t o oport t o developed countries, in North America and Eu rope we r e cu t i , r t
by a lawsuit ins ti_g a ted by Piaggio which threa tened B AL deaJcrs in those countriel with \eg .. l
action. Piaggio allegcif · th a t BAL was illegally copy�g unregistered trademarks of the exterior
design and s'bape of the Vespa Scooter and wing technology received fro m Pi-lggio befo r e t b e
c.ana:llation o f th e technical agreeme □ L Th e threat o f litigation hindered the growth o f �:.0r ll
to developed coun tries for :i d�de. Meanwhile; Japanoe ptodu.ters entereq �hose m arJ:.!:!.l arid
q uickly Cl t.ablisbed dominant sh.an:s. Ultimately, the lawsuits v.-ere �ttkd to BAL's sali.sfact�:m
b u t., u ri ti1 1 985, exports were li:mited.
When production capacity constraints in India were lifted tbe mid - 1 980:s, B P.l ooc� in
again turned- to developing apGrts. Anned with a wider product · range., BAL e:cp lo red �71
apart marl:cts an� by 1992, rold vehicles to 52 countries through nonaclusive and 1 7 34
c:xclusive d.irlnoutorships.. Nineteen o f the _ distnlrntor agreement! had .been s i gn ed ·within the
previous year. Overseas distnoutorsdection criteria'were sinµlar to those used in India, and BAL
- � the help of local Indian Embassies to establish short list5 of po tential distnou tors. BAL
gran ted th� distnoutois c:n:lusive rightl con tingent on �e3 performance. To ensure morr,ratio a.,
BAL es tablished agreemen ts with one dis tributor per country at a time. Mexico was an �.ep tio n
wi th . two dis tributors: one for two-wheeler vebick:s and another for three-wheeiers. BAL'i
foreign distnoutors o�rated essentially as wbblesalen, tedistnlmting to dealers that typksHy
Advertising in export markeu was left up to clis tribu ton. �b i t
s tocked a ·:n um ber o f b rands..
8 .s umm arizes the main point.;s o f BAL's foreign cllitnou torship agreemen t3.) As l\f.r. N u lkar, hc:ad
of BAL's e:rpa rt departinen� !3-ld; 9Ma.rket development takes time, you need to go step-by...;t�p
and ere.ate a solid base.." In 1992, export sales rep�entcd 2% total with rea:n t q.-0i t of sales,
growth °?min g �ostly �m- u tin America. (Exb(hft 9 '1.lm1ll.arizes expqrts by p rod uct w \
gcograplliC:! 1 marke t in 1992) Oue of BAL's c.orpcm1te objectives was to inc-r�e ccports la 1 5 71
of sab b-j 1 9<J8.

W orld Mltrlc eu �-or Two- • nd· Thr&&--Wl)ee lefS

. In 1 9C)Z tbc global tlirec-wbcdcr market was broken down a.s follaw·s: D,\L held a 33%
,
m� cct sfulre with 55, (XXJ
vehiclCl; Piaggio an 1 8 % share; Tuck-Tuel (Thaila nd) a 3% share· swJ
�= e ma? ufactu rc:� a 38% . share. · In the three -whee ler ruark 1
e � BAL 's expo rts w-ere m
� g coun tnes wher e tb-e vehic les vtere used aJ ta:m. In 1 OCY>
CG U

r - - L bo
f
gh
Bang lad es h and S•--1·
ma1or apart mark ets for thtec - whee lers import "ing"over. 4,500 BAL
LA.1.11.. a remarncd BAL 's
· 7 1

. . 1 m._ 1 tbcs . e mar �cts , BAL _hdd 90% and 95% 1 units
;� ree-w b eenl crs as passeng er veh mar k:et shar es resp-ective �. The co ncep t of
icles was not wel l developeri outs ide Asi a.
 In 1 982, t he world m arket fo r two-wheele r vehic les was. pp
a roxim at e ly_ 1 5 millio n u n i ts � "t.1:
perce n t o f the: gtoba l m � r ,ct 1.).-a_s
by 1 992., t his ha d decli ned lo 1 1 millio n u nits. Seve n ly-fiv e
e in 1992, up from 4;5% in 1982 ;
domi nated by five m anufa cturers : H o nda wi th 3 1 % m arket shar
;; m aba wit h 24% in 1 � up from 1 7.5%; Suzuki with 7% in 1� down f:°m 1 0..5 % ; � AL with
' "
01
up from 1 .5 % ; and Piagg10 with 6%, down slightly from 6. 5%. (Ex.hJb 1 t 1 0 s u m maru.es two-
w he e ler uni t p rod uct ion ·a nd sales by coun try over time. ) Expcru believed th a t the decline of
l \l.-o-wheelc: r s ales bad stabilized in m a ture mar.kc ts a nd t h a t fu t u r e s ales growth wo u l d CXX.7l r
� y � 1 As i a, o clucling J a p � which would account for 65% of glob a l s ales by the mid - 1 990s.
� ��
1 )3 l
] : po� t figu res
ind icated that Europe as a whole accounted fo r 5 3 % of al l imports in 1992,
�o�-t-i 2 1 %, an ? the rest of the
�r id (incl u_d � g Asia,_ Africa, Sou th Am e rica., a nd
. !
Oc.c a o i � )m�� 'WO _
co u n tri � dis tinc t segments c:osted in t he mtcmat10nal m arket: · the developed
m ts m
divi d ed f�� p� urope,_ Japan, North America, and Australasi a ; and developin g a::mn tri c; ,
m t o t;ee rcg10 ns: Soutbea5t A.5ia and China; Africa a od the Middle E.u t; and
La t.in Ameri��
· ·
Dit ve � ·
··-· · 6 J-m pe ti to 11i b·- �.
- tlte___ _Uniled _States, ,.the 50cJ: market Wa1 domin a ted by Japanoc
�;;;;��L ft no productJ 1D.
. In Japan, tho nbove-250co ca tegory-the other large U.s. two­
wli eeli...et
: r.c, m
� ' en l 71 % of two-w heelcr u_ni t salC$ wcre of models of � chara cterized
'--
uy f� wo. n a o l e., n u to ma ti<; m · • · � ·
. _ _� · gl e-sea tcr p roducu with many plastic paru. The four m am Japan�
rn a. 1 1 u fact u rtu bc)d 80 � of the Ja pane1c marke t String ent Japan�c prod uc t s tandard_$ md the
_
cos t o f fre 1 gbt made this market difficult to penetrate. In Europe, the .50cc market � also the
l a.rg � t segment, an � · recent trends in Europe showed that mopcqs were being repl a ced by
fashi ? n able automauc scoo ters. � developed countries in general, product perfo rm an ce
_
req u� cme nts � exacting, and vehicles b a d to meet tough regulatioru on cm.issi. ons., no�
.
braking and ek:ctricals. In addition, d is tnbution reach and after :sales servi ce . were critical. �
mar k:e t for tbree-w heelers in developed countries was virtually none:.xis
- · tent.; in� re gula tio rn
o ften prevented_ their us.c on major roads.
. .

Eastern: Euro pean countries followed m any of the product standards set in Wc:stcm
Europe but did not, in 1993, have adequate buying power, so their man:e� remained small BAL
e:.te::u t� b<-.li c:ved that, with the right political. and economic eh an gcs, th � co un trio 'WOttld
emerge as important marketi aro und 1 997. In particuliµ-, Hungary, · Poland, and the Southern
·
C!S ccuntrics mi ght be targeted in the future. ·
3

DtV0k}phi,g c01.mtrle11 In Soutbeast kia, imports of two-whcdcr.s wcn: -restri cted either by
t2riff banieu or im po rt bans, and Japanese �ufacturers had � ·established local joint­
venture production facilities.. China was the l�t market in the world and all tbe major two­
'\Vhceler manufacturen, p articularly the Japan � had set up plants in China. Compe tition in
China was alrea dy in tense. .The major p roblem with African countries was the difficult
y of access .
for
to fore ign c::xi:h angc an d low consum er purchas ing power. Some potenti al b �r > �
per capita - was high_er.
expo rting ·CRD urut3 to the .Middle East and North� Africa, where GDP
er produ cts. In general, dcvdop mg
La tin Ame rica Vial an attractive market, particularly for scoot
rmance. regulations were less strin gent than
coun tries vJCre mo re price s.emt tive_ but product perfo
in developed coun tri�-
 ..,, .. '-"" '

Ta ble E provides a s u mm ary of the cons umer a nd prod u c t c h a r a c t c r i5 t ics fo r t wo -whcdct ,

_
i:1 lx1 th Jc vc lopcJ aud <lcvc lvpiu g cou n l ric.s in com p a r is o n to t he I n d i a n m .1 r .: c t .

Ta ble E Cons u mer R eq uirements and Pnxi uct C11 aracte r is t' in by Region

� I aped Countr I C5 : � lop l r-; Co.nrtr les :

[ur-q>e/U . s . / .l3pan lnd la,/Bu�ladesh/Sr l lanh L a t i n � i u , A f r l c�/M I • -

� s . und�r 50cc . Two-whee l trs and thrtt ­ Two -whe� l e r s; a r , I t h r r. � -

�Jers . whi!-e Jen .

T tt Mger Nrke t . Scooters 1s the fam i ly veh i c l e . Veh i c l e I s t t -1'! �rk l1crs� .
P eppy , good s ty l i ng and fue l e f f i c i ent a nd re l i a b l e . Low pr i c e , f t.� l e f f i c i e n t ,
�rfor111111nce . durab i l i t y o r 1 0 - 1 5 �•M .

Qu i ck aode l c�a�s uld J 1 t es t
fe• turu ; auto- lube, e l ec tr i c '
s u rt . . •
�rv f ce uld d I s tr I.but I on
ex tens lve. Dea ten have
product J fa b f J l ty.
Luxury/fun veh lcle uRd for
short d l s ta�s w i th i n c: t t t es .
Up-to�t• f u turn for the
� pr ice.
Jr,creas f 119 product cc:rpct l t Ion.
Searth to d i fferentiate
products .
Persona l transporut lon.
Sp.are p.sru aod s�rv � f � •�c.en
er I t tea 1 . Mod e 1 c!1anges a
nega t IV1! .
I n i t ia l cos t a nd ab i l i ty lo
rep.a ir product cheap l y
cr f t lc4 I .
F i rs t ard on ly � l c l e .
E s sent i a l for ltl'Ork a nd
tni nsporut I on.

"Deve lop I� coon tr fes acre e.xpoud to f n� t lon.1 1 �cts and COM�r 9Q<)ds d l sp hyed cons�
�h.!v f ors 11'.>re s fra l lar to those foond f n deve loped coon tr f � .

Europe

In 1992, the total Euro� m arl:et for two--;;.t ederl v.,a:; estimated- 2 millicm · \.tlic! � at
a year, with the: under-SOcc segment accounting for 60% o f unit sales and the 125cc �gment for
1 0%. Europe imported 500,000 two-wh�Iers a year, of which 65% were in the under-50cc
moped segment Indian vehlcle1 imported into Western Europe benefited froPl the Generalized
System of Preferen� - and did not pay import duties. Japanese vehicles however, bad to p gy
import duties of 9%. The 1 992 regulatory harmoniza tion of technical standards fo r t'.,u-w bc.ele�
in the: Europe:m Comrii1:Jllity promised to reduce the need_ to meet diverse coun try regu l ations...
Hov.--evcr, it was estim ated th a t complete harmonization 'W'Ould not take effect until 1 995 n t the
earliest

In 1990, BAL adapted its moped prcxluct-the Bajaj Sunny, BAL's only product
in the
u n ? cr. 50cc-segmcnt-for the W�t European marke t. Produc
t adapta tio n o f the B;-;.j ·y Sunny ,
�hicb consu � ed some 8% of total C()lllpanJ R&D . resourecs over the oeve
l o p meut period,
1.nclud ed engine and s ilencer modificatioru, the usage of
approved electr icals, modi fi� tkm o f
compouq? t!, nnd brake !l!d ' cfotcl! lin!r� BAL
ini ti tlhJr � t.Eh - d . d,.•l--z�"
- •l ish- � '\... 11· 1·'
n-(• :.1
1 1 n"-. ...... .....l]
.....t
Sv.'C(I� and . �ran ee. Th� Baj� Sunny hdd
V- -.I L . '\t,,..l '--'6-LLJ Q..ll

a coru idcra ble price advan tage in the. moped

segmen t, r�ta1 1ing nt 2,000 DM m Germany,
com pared witl1 Piaggio's --sre ra" whic h n: ta.iled
4 , 000 D M. However, ·the �unny nt
h ad fewe r feat urel ttnd lac� �d the S fera 's au
to-lu be-, ,electric

4. USS J � 1 . 6 DM , 1 993.
 'l'J ) <J / f .

. ds) . (Exh i b i t
. . . . . II l luw c r sp<:c
, t a r t , and v;1 r io rn a t ic t r a1um1� 1o n (whJch p r ovided lx t t c r II cc l c r a l i o n
_ o t e r ' a . a p t c d fro m l. u
d ,.
J J de pic u t l , c two produc u . ) B A L h � d a lso d ev e I oix d a 1 2.x.c sco
e t of co u m� � W1' t, h
r radi tioa a l 1 5 0cc scoo t e r, t h a t appea led to a l i m i t ed · nos t a l g i a · nic h e: m a r k �
1 ,5 vc JC I � r n
a d�irc fo r a n old - fas hioned-style prod uct. Ry 1 992 , B A L h a c! wld a t o t a l o f
t h e u n d e r -50cc a n d 200 vchicks i n t he 1 25cc SC:jtme n t in Eu ro pe..

BAL's fu t u r e: s t r a tegy in Euro p e which 1101 eve r y o n e: i n t h e fJ rn p t1 n 1 ;i g,r ccd wi t h , wa.s o

�
i.1 1 l rn<l uce l b c S u n ny i n M m a ny Eu ropean coun t r ie3 a.s pou iblc, s t i'l r t in g a t t h e I CJ'Ne r e � d o f t e
moped aud s, GOO t e r m a rkets and, over t i me, adding vebkle3 wi 1 h m o r e fe.;:i t t i r � a nd unp roved
pc r formana: . However, the technical certifica tions neces5 ary to export ve h icle..� to Europe had
t a .k en B AL lim e and re.so� to understand an d execute.

Lattn America
I
1n 1992, �� �rt� 4;2W �nits tb cllitnoutorship$ in Peru, Venezuela, Argen tina,
Paraguay, and Colombia. Two-wb�Jers ....-ere ,rupped in �mi-knocked dawn
Mexico, Chile,
(SKD) condition to reduce freight costs. Re�assembJy from SKD Wal simpl� and undertaken by
di.s tnoutor mechanics. Three-wheelers were shlppcd complete on special car canier VC1Sel5.. All
s h.ipmen t.s were m ade directly to individual distnl>utors from India. Both two- and three-wb eela
_
vc hkl� had been in demand, and BAL believed that these markets would continu·e to apenence
s t rong and steady growth. There � no competition in three-wheelers, and BAL held a price
aq__van tage -�r -I_a Qanese two-wheeler products. (Exhibit U SQOWS product-price compariso�
in Mexico.) Japanese -produ- cts appeared too sophis ticated for these markets, r1:9uiring substanbal
s e rvicing ·by the consumer. BAL was hoping to capture significan t mark�t shares iri both Mexico
and Argen��a ½' J99�.
BAL was also evalua ting the possibility of estab lis hing technical licensin g a greements and
th e cxporn of CKD llllit:s, simHa r to the arrangements that had �n es tablished in Taiwan and
Indonesia. A licensing agreemen t became attractive for BAL when ( 1 ) a particular market's size
a nd po tential jw tified the investment required for a plan t (th a t would' follow an assembly-rum­
progressive-rri anufacture s tra tegy), (2) the difference in im po rt duties o n complete or SKD units
and CKD units was large enough to make CKD im po ro su�tantially more competitive, anq (3 )
when BAL desired to have a long-term manufacturing presence in a particular market P�ible
tic.em� oo tio ns included Merico.

,.-:.strategic Options · For Growth

B ajaj wondered bow _focused his company should mnain in the fuhm:. S ince the l a te
1 960s many Indian companies with the financial resources to do so b a d diversified in to other
indw tlid. A few BAL �tivcs believed that, g:ive"n the �trength of competitors in the two-­
wheeler market, BAL would do �tter to in-vest in other Indian consumer goods markctl and
foo.Jj on the fu ture econo1n.ic :m.d industrial developm.en t o f Indi a. Otha ·B AL cxccutivo
rl1 ough t lha t the comp any should rlivenify geogra p hical1y by dcvdopin g its npo rt markets further
fo r bo th two- and t4r'ee-wbeekr productt. A third group of crecu tivcs ca u tioned that BAL would
n eed to foe� all its resou� on protecting the co m p my's currtnt share of the lrldian two- �d
tbrr:e -wheder markel ·
 . o;o...aa

DAL execu t ives we r e c ru idc ring t hr ee option.1 for i n l c m a t ional m a r kct.s . n ot, BAI
c.o u lJ remain focused on rbe domes tic m ar k e t nnd aport onty on a n oppo r t u nistic basu. Second
BAL cou ld pur.; ue cxportl ir1 dcvc l pi.ng couo t r ie.1 t hat would requ ire minimal ada pta tion of tbt
current product line. Thircf 1 D A L couJd try to pr omote exports to developed cou n tri�, initi all;
fOCilling oo t b c lower e n d of the moped m arket in Europe.
 •tG ..,.-,- -··
19'fijJFNlllfil
,rlh ,w
� ��

un - 01 1

te ro e o l.1 : 1 986- 1 996

Exh i b i t 1 B AL In co m e S t.A

1ml 19'XI
Jg,Jl
rw EPtl � ;J,rdl "''' 1186 1m
1 2 . 1 08 1 7 , 39 1 2 3 , 36 2
4 . 997 1 0, 09 5
� J es (RL a f 1 1 f on ) 4 , 2 02 1 4 , 02 2 1 8 , 99 0
9 , 396 3 . 7 34
3 , 7 80 7 , 6-4 9
2, 181 2 , 800
Ttl"O -�t l ! n 3 , 308 1 , 92 9 5-09 6 J8
T h rce -�te ltrs 742 1 , 0 23 53 1
1 9"4 31 7
Spa re p u t s 1 52 1 . 1 82
809 1 . O S4
467 510 805
$.d i es (OOOs un i t s ) 1 , 09 4
739 · 975
ho -� J�rs -429 4 60 731 6 78 748
6-4 1 S8 7 207
Scoo ters 38 7 4 05 181
-55 90 117 1 )9
Ho torcyc Jes "2 3-4 1 16
�s 0 Q 0 79 88
50 74 70
Three-� ltrs 38

Aver·f9e � t u Pr i ce ( R.s . }
1 0 , 74 5 12 . 72 1 1 4 , 388 1 7 , 36 7
ho -tithee Jen 7 . 709 8 , 2 12
� 2 . 63 0
Thr�� lm 1 9 , 405 20 , 645 26, 036 3 1 , 200 3 5 , 2 l2

�ri t f nr; experrl f t.lln! $ 3 , 415 4 , 562 8 , 766 10 , 788 1 5 , 878 21 . 1 76

�rH f ng prof f t 787 435 1 , 329 1 , 32 0 1 ,·5 1 3 2 , 1 86

He t pro f I t � f t�
cfopr�d • t f on ,
f ntere-1 t ind tues 297 293 650 «7 831 1 , 5 20

Soorce : ·t�ttr �rrls • .

I \• • ,. \ I I I

1 1 1 1 p ! r ·, f l l I I / I I • 1 ',• 11, r l• r , l.1 1, '

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M
5 U H H T

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603--ein

Ed1lblf ,1 Co m peti tor Market S harCl by Product Type in Ind ia: 1985-1 'Y.12

1 965 1 906 1 967 1988 1989 1990 l �- 1991

�
To u l &�J 78 83 69 73 73 73 77 74
Cub 8 il 13 g 7 6 - s. - - - 2 . 5.
Super 34 32 21 26 27 23 22 28
Super H NA HA HA NA ttA NA 1
Che t a� 21 25 21 27 28 36 36 4L5
Strl� HA NA HA ttA MA HA 0 2
HSl Pr lya 15 15 H 11 11 8 13 DIS

To t.6 f Others
K i ne t i c Hord.1
Utt. Vesp1
22
17
2
10
•
11 · 31
5
21
27
17
fi
. 27
1
17
27
8
17
23
11
il '
25
14
11
Others 3 3 s 4 3 2 1 0

KTTlltCTO..ES
To fi l �J 14.S 15 20 20 . 5 21 2� 27.5 28
H-80 14 8 12 . 5 12 12 16 19 19
�awasd: I R TZ . 0.5 7, 7.5 8.5 9 10 6 2
Kawa�k f 4S M NA KA AA M KA 2.5 1

To u I (}tJ;ers 85 . 5 65 19 79 . 5 79 74· n.s n

£scor t i RX 1 00 6.5 12 12 12 14 14.5 15 13
£scor U R1djoo t 25 24 22 23 24 18.5 12.5 13
TVS Suz uk I 20 15 14 lj g 8 8 8
1-kro Horrla 20 20 23 23- 23 26 31 33
Enf i e l d 8 9 6 6 6 - 6 6 4.5
�-wa - Yez d f 6 5. 2 2.5, 3 1 0 0.5

,o,rns
&}dj
Sunny HA HA HA NA AA KA 8 14
To a l � 1 00 1 00 1 00 1 00 100 100 92 86
K fno t f c .co 41 51 , 55 so �5 35 32
ws « -4 1 31 28 33 31
Avan t I
33
3
38
5 5 .. 4 a 4 2
Hero 14 12 0 0 14 17 18 19
E n f f e ld 4 4 0 0 1 2 2 2

PA)tJ TOTN.. . .

Two� l er 40 40 36 -41 . �2 • . u 46 �G- s'

Thrtt 11hee l tr so · 81 8J 87 .·. 89 - 89 9i 90 : ) · . .
�
,.
.)(XJrtc : r,-�•IY recor-tll • . . . - - - .. . ..
 Exh ib i t 5 Adve rtising Objectivel and Televisi on Comme rci al Copy S t r atcgi� for BAL Product \,
Line: 1 992 \

S C OOTERS

ObJect tve. lncr c.a.se awareness or'dominant leadership posi t ion. Crea te demand in and c::ipand
rur al/s emi-ur ba n mar kets. .

]. Depict slice-of-life scenes throughout Indi a, including aJI age groups, wi t b

t h e slogan: 'This is my earth. Th e destiny of Bajaj nnd India a r c
.w·ur'.*v�.. B-3J$j ii IDd.ia ud IDdia a Bapj.. Past and· pr�cnc. •
• I •

2. A child �b Im father, who come$ to pick him up froni school, why they
don't have a SCCX>ter when all his friends' fathers do·. The next day the
father picb up his son from school on a Bajaj scooter.

3. 1be .Bajaj Cub is positioned as a value-for�money producl A trader,

renowned for being very careful with his money, explains his purchase of
a Bajaj Cub: "I know what money means. I'm tight-fisted and Baj aj is
value for money:

4. A wife scolds her husband for buying a Bajaj scoo ter without her adV1ce..
When the hwband e:q,Iains the benefits of the pro<luct, she tells him:
-You•ve done the right thing, band me the SC?O ter keys:

M OTORCYCLES

ObJ�ctlves Create s trong p roduct p(X)itions: · M -80 as a rugged, low-cost vehicle for s.emi-
urban/rural m arkets; Kawasaki 4S as highly fud
efficient with good driveabili � .

Copy s-t:-ai eg m . . 1,1-80 commercials carry the slo� "lbe tough one for the road.• They use
hv6 ch.aractcn from a pop ular µ:Ievuion
·· detective series in. a variety of dangero�crimirial�ing
situa tions.
-- .-.. . ----•-,. . .. .
. ·.. ... . . . · . ···- .

MOP EDS

Obfectfye11 Crea te a :strong position for S unny with"teenagers as a s tylish first-vehicle p urc1™-e.

Commcrciab are based on youth love seen� and de p ict brief romantic stqrks-

Sou� Company recorlh.

 F x h ihi r 6 ♦
n .,\ l- p n. n t /\ d v c: r c is c:
---:
m en C s
'.rage
l an

I-I - y
Y O U J UST C

B AJAJ
-- A N ' T O E AT A

TERRIFIC PIC�UP
 µbJblt 7 �etaiJ Prices and Dealer Profit Margins by Product:
j992 (rupees)

f.
Ret.11 1 1 Prlci, (b . ) � 1 er Prof It ":n:::9I n
SCOOTOlS
Bajaj
Che t�lc 20 , no 650
Suptr FE � . 050 6SO
S tr Id-, 21 .m �5-0
Cub · 1 8 , 900 65-0
K t oie t lc-Uond.a 25 , 818 l , 000

U . 34 9 775 - -· ··- . . . - - .
Z4, 027 850

,mi�
Ba jaj
hwu ak I RTZ 32 , 1 50 1 . 000
JC1wuat I 4S 33 , 950 1 . 100
Sl �J � 1 6 , 200 550
Escorts
l'miha Ill 1 00 35 , 058 l , 055
Ridjoot 25 , 1 S7 835
Hero Hondi
c., � SS 3-1 , l54 1 . 1 30
Culdy CU 3J , l3 1 1 , 1 3-0
S l eek 3-4 , 821 1 , 1 30

, TVS-Sunde I
AX 1 00 32 , 800 1 , 4 00
Supra 24 � 051 l , � 0-0
Satrura l 13 , 97� l , � 00

,� 350-
Bajaj Sunny 11 . 100
K i ne t i c
�u� Super 10,232 650
L LHll � 11 , 335- 650.
Hero Puch . !5 f 212 �50

TVS
XI. 10 , 151 325
� 11 , 221 450

Source : · Coq,any reco, eh .

 Exh i b i t 8 P rin cip a l Te rm
s of D A-I � 1 :01 c 1gn
. D 1.,
. l t 1. b 1 1 r o r :. b 1 p A g t cc m ,: n c s : l VY2

• Th e dis t nb u tor m ay not

ca rry com pe tin g p r od u cts .
• B AL vehi cles can be sold o n l wi thin th e d is t rib u t o r 's s pcc i fi t rrit y/
y
ev u o uy.
•
All products m us t be sold under the Bnj aj brand name .

• Marke ting and aqvertising expe nses arc ·to · be borne by the d is tribu tor.
• The dis tributor should esuiblish sbowroo� and service statio ns conforming
to BAL standards in the main towns within its territory.

• The distribu tor may appoint,subdeaJed and authorized V10rkshops for product
repairs.
• Renewal of the apJX)intment of the distributor is not _automatic..

Sou� Company records.

..
 ,,,
ii
:1
•--.; .j J 47
�1:n ou r o.p, kna \ .;

:1 )
Ex h l b H 9 BAL U n i t Export.J by Co u n try and Prod uct Line: 1 992
'
'
Tou l �
Scooters lll() � J es

'
T�-W- l �n \
ii
T a u l Un i ts (lu _ CXXh )
H�W Pf
C}1, ni s

''
2 0 0 2 I7
I f , : r-.-:: ,,
�- � '.'. " JO
0
29
0
36
0
95
0
I . il 5
t
u�
I

It 18 0 0 18 261 C
u - , .. .
n!l f l '.!. 1B a 0 26 �2
Ne t h -t r l a �j s J 0 1 4 55 C
Po ! e M 20 3 34 57 l . 667
s�ifon 4 0 0 4 0
T .;d Ey 1 . 1 00 .0 0 1 . 1 00 1 4 ,072
U n i t e<! l( l ogdom 0 2 0 2 24
Htt t C-� r:m ny 6� 0 0 666 6 . �o
r o t-1 1 l ; 85 1 �2 71 1 , 974 2 4 .)'%
AS I A
8� ng l ada$.h 1 3ti 200 l , a58 2 , 1 9-4 3 7 , 608
.up,1n 6 0 1 7 9-4
HI l ays f a 0 0 1 1 37
P h i l tpp f nes 0 0 160 1 60 3 , 381
Sr i .L a nk a 131 779 2 , 60 3 , SSJ 7 1 , 8-1 2
s 1 r11 poro 6 4-4 0 5-0 1 , 074
Tn: ll:nd · 610 0 0 610 7 , H8
V l o t r..a• 1 0 0 l ll
"io t.:i i 890 1 , 02 3 4 , 663 6 . 576 1 2 1 .295
M I OOl E EAST
� h nd n 22 10 4 36 592
Dd.� ! 5 70 0 75 1 . 1 &6
E gyp t SOO 0 0 %) 6 . CO'.J
I ra n 2 l 1 4 45
S-!ud l A.r ab l a 0 0 1 1 !2
1( 1� l t 43 14 69 131 3 , 251
L eba r�o n 18 � 0 H m
� r. 25 l .5 8 �9 855
To ta 1 621 116 83 820 1 2 , 2 71
l AT lfl .A.iiflt I Ci,
1'.rotnt I na l . 1 Z8 l , 02 1 5 2 , 1 55 35 . 520
e� i l z r., 4 2 � 10 176
Ch I l o 0 0 0 0 0
C o l OZ>iJ I a 6 4 0 10 B.\
�x l w 1 , 122 1 . 2 99 252 2 . 67 3 4 1 . 000
P :i 1- : gw1y 23 101 0 124 1 , 907
f' c nJ· 9.t 0 612 ] Of) 2 3 , 00 7
\.'!'l r 1� 1- D-e la H7 0 0 lU 1 , 9S-4
To t � 1 2 , 52 4 2 , 42 7 874 5 , 82 5 1 0-4 , � 98
F
! R I CA N° fJ OTI£R
�h 0 0 191 191 s.�
�n l n 0 2 0 2 24
P . N . Gu f nea e 0 3 11 2.1 2
K tny1 0 0 � 3 115
tta ur l t l us 24 6-4 0 e:a 1 . 4� 7
�- Ze4 land 0 0 0 0
,i l no,.-. t " ... 59 - - ··- ··- -· ·-- ·· --
0 5
· : • • ,r -• .. .. · H 1 , 111
R'!i'"8 tlJI 2 4 -4 10 251
S l i!rra Lc-om 5 6 10 22 Sl l
St,dtn 1 08 0 0 1� 1 . «a
Taru a n 1 n 0 0 1 \ )J
l>qa llda 42 7 0 ◄9 700
z-, 1 a 0 46 42 88 l . �4
To h l 2 59 1 29 259 �7 1 2 , 650
T O T AL ( A 1 1 R �'ii I o n s ) 6 , 1 55 3 ,/37 5 . 95-0 1 5 , 6-U 2 7 5 , 710
Sourto : � ny �ardL
 Ex hl blt l o
Two -- Wh cc lc
· r lJ ni. r P roc.J u c t 1on n nd SaleJ . . u n t ry:
by Co
. 1 9'd 1 - 1 990

<hi f b
,�, � 1 96 1
t loo � 1� Prod::ctloo
1 965
s.aJes Ji11ox:doo \
1 990
s.alcs \
JJp .a n
J /');j f a 7,413 3 , 06 2 4 , 536 2 , 80 7 27\
r, I wa n 499 4 76 1 . 126
2 , 096
1 . 107 1 . 891 18
l .6l9
1 . B68
1 �\
10
Ch i na 66 9 6!12 6$6 685 1 , 062 10 997 10
l ta Jy l◄ HI>. 1 . 035 N/A �5 9 N/A M/A
Tha 1 l a rd 1 , 24 0 857 .608 569 910 g 575 i.
V

1 l)jo l'k! S I a 305 284 229 202 4 34 . 4 522 5

Spa f n 503 678 22 ? 2j0 4 09 4 415
l<or�,1 188 1 85 1 68 110 385 4 4 30 ,i
M.i l ays I i 1 24 126 1 71 71 283 3 2�
U.S . A . 1 74 1 70 . 182 159 220 2 2� 1
1 25 828 130 722 1 20 1 -2!U 3
Wes t � nro ny
21 7 451 86 ii s 56 -1 171 i
.,'rnLO TOTAL • 14• .368 H , 368 12, 761 ll,
·'·
76 1- 1 0,467 100% " t0 , 467 1 0v'"'%

Source : �rry records .

"1for- Jd to ta l fnc ludes product f on ard s.a les fn coontr f ts f n 1<ii f t foo to thos-o l l sb!d .
.. . -··
 · n: c B aJ- rlJ. S u nny
. a n d P i il gg1- 0 S fe r a
I'
;�

I
I ,.
; i'

.,I

PIAGGIO s1:rnA ,:3

,__ ..,,,. _
_. .
:, - �..., . •-''
:,,,-j;�
-
..

�-,
•
" , 1 .

_s

28
 -I

.,J�
: · .-:o
"-l"kl hc�
�.
::�
�. P'r l Qt
•t.,l
· ��
Produc t Reta I I
SCoomts
. - -· � Ja j
�
[ Cub Sl ,037
Super 1 , 028
� HQnd a Chetak l , 083
SA SO 1 , 282
SA SO 2l1 1 . }40
�
Af. R 1 00 1 . s«
Suzuk I E 1 1 t e 80 . l , 91 3
� AJ. 1 00 1 , 784
AG 1 00 2. 131
� P l agg i o T S 185 2 . 268
STD 1 SO . i . 807
Yu.sh1 L it 1 50 . 2 . «a
� Ax i s 90 .z .010
tygni� 2 . 800
lf:.t "1llRCYO.£s
� Ba ja j 955
H-00
Kawasak I RTZ t . «9
I) K.awasak i 4 S 1 . 632
uri.be 1 h" Deluxe . 1 . sss
� STD 175 1 . 7 47
Y ursh.! RXI 100 L 897
RXZ 135 2 . 436
� OT 1 75 2 . 436
�m t Kt 100 1 . 915
� KH 12S 2* 339
KV 175 · 2 , 804
tS g,z 305 3,95�

•
Hc-nd� CG 125 -- . 2,2,1- . . . . -- ..

ct 1 2 5 2 , �5
CB 250 3�088
' ,mns
SR 250 3 , 321

f Ba ja j Sunny 74-4
, urzbe 1 1 a O d s pa-60
C i ty 60
830
!30
Run�r 6-0 �s
) Yarah� P1.l 50 cc . 1 , 150
NIA SH 50 1 , 174-
Horrla SA 50 1 , 282
SA 5-0 2 N 1 , 3-\0 -� .· f :
�
:r
:::

C 90 1 , 51 5
Stizuk I i.E. 50 cc 1 ,418

$otJr CC ! �rry r-ecot ds .

•A loc.t 1- �ru-hcturer o f hio-� len .