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Bajaj Auto Limited: Synergizing Product Engineering and Market Engineering

Initiatives

Article  in  Asian Case Research Journal · February 2014

DOI: 10.1142/S0218927513500144

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 ASIAN CASE RESEARCH JOURNAL, VOL. 17, issue 2, 305–338 (2013)
acrj
This case was prepared by
Assistant Professor Manit
Mishra
Management
of International
Institute,
Gothapatna, Bhubaneswar,
India and Professor S. C.
Sahoo of Mahendra Institute
of Management & Technical
Studies, Bhubaneswar, India
as a basis for class discussion
rather than to illustrate
either effective or ineffective
handling of an administrative
or business situation.
Please send all corre-
spondence to Assistant
Professor M. Mishra, IMI
Bhubaneswar – 751003,
Odisha, India. E-mail:
manitmishra@rediffmail.com
© 2013 by World Scientific Publishing Co. DOI: 10.1142/S0218927513500144
S0218927513500144.indd 305
Bajaj Auto Limited: Synergizing
Product Engineering and Market
Engineering Initiatives
INTRODUCTION
Any mention of the brand “Bajaj” to an Indian consumer
evokes a range of associations. The depth and diversity of
these brand associations underscore the many different ways
in which Bajaj, an iconic brand, has touched the lives of the
common people in India. This case brings to light the trials
and tribulations of Bajaj in its crusade against obsolescence
through innovation in product engineering and market
engineering. It is always a difficult proposition to create a
customer-centered company through synergistic assimila-
tion of innovations in product engineering skills and market
engineering acumen. Innovation, through product engi-
neering, is vital to enhance the prospects of an organization;
but is it reliable and compatible with existing consump-
tion patterns of the target market? Understanding the needs
of consumers, through market engineering, is indispens-
able; but is the consumer always explicit? The top man-
agement of any organization often faces this kind of a
dilemma and has to make a decision regarding whether
or not to commercialize an innovative idea. This is the pre-
dicament that demands greater synergy between product
engineering and market engineering initiatives. Integration
between these two vital domains establishes a viable fit
between the benefits offered by the innovation and consumer
requirements, ultimately leading to a faster rate of diffusion.
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 306  ACRJ

However, for any organization, achieving such a synergy is

easier said than done. Bajaj was no exception.
In the backdrop of product and market engineering
perspective, the history of the two-wheeler industry in India
can be segregated into two phases:
1.  Phase I (pre-1985): This phase was marked by limited
effort on the part of major industry players towards product
or market engineering initiatives. The two-wheeler industry
comprised of scooter, motorcycle and moped manufacturers.
There were only two prominent scooter manufacturers —
Bajaj Auto which manufactured Vespa in technical col-
laboration with Piaggio and Automobile Products of India
which sold Lambretta. The motorcycle industry comprised of
Royal Enfield, Ideal Jawa and Escorts offering 350cc Bullet,
Yezdi and Rajdoot, respectively. The moped brands avail-
able were Suvega from Moped India Ltd. and Luna from
Kinetic Engineering. Subsequently, TVS Motor Company
(TVS) and Hero joined the moped segment in 1978 and 1980,
respectively.
Scooter was the vehicle of choice for a large majority of
middle-class consumers. Motorcycle was perceived as rugged
but raw whereas moped had a proletarian association. During
this phase, an archaic licensing regime prevented free entry
of new players or additions in manufacturing capacities of
existing players without a supplementary license. The entry
of foreign players was restricted and therefore, the transfer of
technology was minimal. The Indian two-wheeler manufac-
turers lacked in technological competence but were fortunate
to have a readily available market, irrespective of the quality
of offering. As a result, Indian consumers had a few techno-
logically obsolescent options to choose from and the Indian
market remained underserved by a huge margin. In such
a seller-dominated market, the two-wheeler manufacturers
had modest resources and meager motivation to engage in
extensive product or market engineering.
Bajaj was the largest-selling two-wheeler brand with
huge demand and limited competition. The company’s order
book exceeded its annual production capacity by a huge
margin. Product engineering initiatives were restricted to

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 bajaj auto limited  307

indigenization of components and marketing engineering was

an alien concept. In fact, in 1982, Rahul Bajaj, the Chairman
of Bajaj Auto, is reported to have remarked: “My marketing
department? I don’t require it. I have a dispatch department. I don’t
go from house to house to sell.”1
2.  Phase II (post-1985): This phase commenced with the entry
of the world’s leading two-wheeler manufacturers as a result
of liberalization of economic policies by the Government of
India. The initial period was characterized by effective
product engineering initiatives but comparatively lesser market
engineering endeavors. The foreign players pitched in with
technology and manufacturing, whereas the Indian partners
assisted in terms of local knowledge, sales and distribution.
The era saw the introduction of India’s first 100cc motor-
cycle (Ind-Suzuki) by TVS, first 100cc 4-stroke motorcycle
(CD 100) by Hero Honda Motors Ltd. (Hero Honda), first
switch-start gearless scooter (Kinetic Honda 100) by Kinetic
Engineering, and first 4-stroke scooter (Legend) by Bajaj,
among other innovations. The products were fuel efficient
and user friendly. A long era of restrictions during Phase I
ensured a huge pent up demand for two-wheelers. The
demand outnumbered supply and therefore, while product
engineering was in full swing, market engineering was as
yet a concept in infancy. However, as competition intensi-
fied, the two-wheeler companies started giving more attention
to market engineering: at first in isolation and thereafter in
integration with product engineering.
At the beginning of this phase, Bajaj emphasized on
product engineering. Bajaj was still the dominant scooter
manufacturer and leading two-wheeler manufacturer but the
challenge, initially from LML and later from Hero Honda
was getting intense. The competition forced Bajaj to engage in
extensive product engineering but it was not enough. Conse-
quently, Bajaj lost its two-wheeler market leadership to Hero
Honda in 2002. For the FY 2001-02, Bajaj sold 1,198,296 units
(market share 27.7%) against Hero Honda’s 1,425,302 units
(market share 33%)2.
This was a watershed in the history of Bajaj which
could have become its Waterloo. Bajaj was at the crossroads.

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Hero Honda had taken the lead while TVS was breathing
down its neck. Scooter, the product category in which Bajaj
had pioneer and product engineering advantage, had lost its
charm. Motorcycle, which was a relatively new area for Bajaj,
had captured the Indian consumers’ imagination. The changes
and challenges, concerns and constraints posed serious ques-
tions before Rahul and later Rajiv Bajaj, the Chairman and
Managing Director of Bajaj, respectively. Should Bajaj con-
tinue to focus on scooter in the hope of favorable consumer
sentiments in future or reinforce its motorcycle manufac-
turing capabilities in accordance with changing consumer
preference? What market engineering acumen would enable
Bajaj to sense the pulse of Indian consumers? Which product
engineering skills would facilitate Bajaj to respond appropri-
ately to the stated and unstated needs of consumers? How
should the market engineering acumen be integrated with the
product engineering skills so as to create, communicate and
deliver superior value to consumers?

TWO-WHEELER MARKET IN INDIA

Current Scenario

The Indian two-wheeler industry reported double digit

growth rate for six consecutive years till 2006–07 on the
back of rising disposable income and easy availability of
consumer finance3. India was the second largest manufac-
turer of 2-wheelers in the world in 2008–094 and witnessed
a compounded annual growth rate (CAGR) of 7% during
the period 2004–095. In the year 2009–10, India’s two-wheeler
sales crossed the 10 million mark for the first time by selling
10.5 million vehicles6. The two-wheeler market has achieved
an almost 100% growth, in terms of units, between the
period 2003–04 and 2009–107 (Exhibit 1). The industry land-
scape though has evolved in terms of competitive intensity
and consumption preferences since its humble beginning.
The leading two-wheeler manufacturers have adopted a cali-
brated approach against such changing market paradigms.
They repositioned products and realigned their portfolios,

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 bajaj auto limited  309

created products to serve new market segments, and placed

greater emphasis on the rural and semi-urban consumers to
achieve growth8. A deep commitment and huge investment
in R&D and marketing research resulted in augmentation of
product engineering skills and market engineering acumen,
respectively. While product engineering culminating in new
product introductions at regular intervals rejuvenated con-
sumer interest; market engineering resulting into new market
creation ensured sustained growth for the manufacturers.

Market Segmentation

The demanding nature of Indian consumers has forced the

two-wheeler manufacturers to perennially look for means
to enhance the customer delivered value. Traditionally,
the 2-wheeler market in India has been segmented on the
basis of product features across three prominent product
categories — Scooter, Motorcycle and Moped (Exhibit 2).
Even though features of a product and benefits from a
product are like two sides of the same coin, a benefit-based
segmentation provides more diagnostic information and is
a better reflection of the consumer value system9. A benefit
segmentation of two-wheeler market is an upshot of what fea-
tures are of importance to consumers and how they perceive
different two-wheelers to be performing on these features.
Thus, a focus on benefits brings to the fore not just “what”
consumers see, but also “how” they perceive it. It is vital to
understand the varying consumer needs since there is sub-
stantial heterogeneity in the perceived importance of different
attributes offered by different two-wheeler products. Research
suggests that even as most people would like as many
benefits as possible, the relative importance they attach to
individual benefits can vary significantly10.
Until 2000, the two-wheeler market was segmented
on the basis of whether the benefit sought was utilitarian or
value-expressive. Most of the two-wheelers (scooters, mopeds
and even motorcycles, e.g., Escort’s Rajdoot, Hero Honda’s
Splendor and Bajaj’s 4S Champion) provided the former
benefit while a few motorcycle brands (Royal Enfield’s Bullet,

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 310  ACRJ

Ideal Java’s Yezdi and later Hero Honda’s CBZ) satiated the
latter benefit. Post-2000, the increasing traffic on road and
rising fuel prices divided the consumers seeking utilitarian
benefit into convenience-seekers (in terms of ease of driving)
and performance-seekers (in terms of fuel efficiency), respec-
tively. Thus, the three dominant benefits sought by Indian
two-wheeler consumers’ post-2000 have been convenience
(provided by gearless scooters e.g. Honda’s Activa and TVS’s
Scooty), performance (provided by motorcycles, e.g., Hero
Honda’s Splendor, Bajaj’s Discover and TVS’s Star) and value-
expression (provided by motorcycles e.g. Royal Enfield’s
Thunderbird, Hero Honda’s Karizma and Bajaj’s Pulsar).
Competition and consumers have forced the two-wheeler
players to have a footprint in every possible segment. It is the
performance segment that influences volumes, while the con-
venience and value-expressive segments drive value for the
manufacturers. The incessantly evolving consumer preference
is mainly responsible for this periodic segment redefinition of
India’s two-wheeler market.

Evolving Contours of Consumer Preference

The Indian consumers’ preference has gradually shifted from

an inclination towards scooter to a predilection for motor-
cycle. Until the middle of the 1980s, the scooter was the tra-
ditional war-horse of a middle-class Indian consumer. The
ubiquitous scooter was in demand for its ability to carry pas-
sengers as well as freight. Scooter was perceived as a conve-
nient family vehicle which offered functional value such as
spacious seat, bigger storage space and comfortable drive.
Accordingly, the sales pitch emphasized upon reliability,
price, comfort and utilitarian value of the product. However,
over the last two-and-half decades, and in synchronization
with the commencement of Phase II of product and market
engineering, the consumer preference gradually veered away
from scooter and to motorcycle. The new-age motorcycles
embodied seamless integration of advanced technology,
fuel economy and aesthetic appeal. While longer wheelbase,
better ground clearance and superior suspension made riding

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 bajaj auto limited  311

smoother on pot-hole infested Indian roads, frequent product

engineering leading to ergonomically designed attributes
made riding a pleasure. Its superior style quotient contrib-
uted towards attracting eye balls for the rider. Furthermore,
decreasing price difference between motorcycle and scooter,
and relatively significant resale value also added to the con-
sumers’ preference for motorcycle. In a nutshell, it provided
great value for money to the transformed Indian consumers
for whom acceleration and styling had become as important
as comfort and utility.
The success of motorcycle as a product category
rested on the manufacturers’ ability to assimilate market
engineering with product engineering. By offering more
perceived-value-for-money products, motorcycle manufac-
turers were able to attract the next level of urban price sensi-
tive buyers while at the same time captured the fast growing
rural market. Unlike motorcycles from Phase I era, the motor-
cycles in Phase II were not just a product but an extension of
the rider’s personality. The dominance of motorcycle in the
two-wheeler industry was finally established in 2000 when it
overtook scooter in terms of volume of sale. The number of
motorcycles sold in 1999–2000 was 1,612,895 units as against
1,357,483 units of scooters (Exhibit 3). In 2010, this dominance
has taken the shape of hegemony as motorcycles comprised
approximately 80% of the two-wheeler market. The number
of motorcycles sold in 2009–10 was 8,446,591 units as against
1,542,507 units of scooters (Exhibit 3).
Notwithstanding the supremacy of motorcycle, there
was a gradual amelioration in the popularity of gearless
scooter vis-à-vis geared scooter (Exhibit 4). The convenience
of driving a gearless scooter in an increasingly congested
urban India made it an attractive option, more so for niches
with special requirements, e.g., women and the elderly.
Overall, in 2009–10, 80% of the two-wheeler market share
belonged to motorcycles; gearless scooters contributed around
15% while the rest (5%) belonged to mopeds and others. This
is in complete contrast with the scenario in 1994–95 when
motorcycles had only 24% market share against a formidable
52% market share of scooters and a respectable 25% market
share of mopeds and others (Exhibit 3). Indeed, Indian

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 312  ACRJ

consumers’ preferences have evolved. However, this meta-

morphosing consumer behavior is a manifestation of not just
availability of product-oriented options, but also of several
market-oriented determinants.
The demographic factors have contributed their bit
towards this shift. India has a demographic profile with an
average age of 25 years which is 9, 12 and 19 years younger
than China, USA and Japan, respectively. Around 33% of
India’s population of 1.2 billion in 2011 belongs to the age
bracket of 20–40 years. In this age group, the population of
males (key target market for motorcycle) is estimated to be
206 million whereas the population of females (key target
market for gearless scooter) is estimated to be 189 million11.
These demographics have aided in generating a sustainable
demand for two-wheelers.
The socio-economic factors have ensured that the
two-wheeler consumption cycle is replicable. The number
of households in India having income between Rs. 200,000
(US$4000 approx.) and Rs. 500,000 (US$10000 approx.) is esti-
mated to have increased to 22 million in 2009–10, as com-
pared to approximately 9 million in 2001–0212. India’s per
capita disposable income in 2015 vis-à-vis 2011 is expected
to rise by 106%13. It is the increasing income that has fuelled
demand for even high-end two-wheelers14. The process was
further facilitated by software boom and coming of age of a
generation that had grown up watching western materialistic
culture on satellite television15.
The political factors too have contributed their bit.
The Government of India displayed an inclination towards
liberalization of economic policies in the 1980s and thus,
brought about a fresh wave of joint-venture companies with
minority foreign participation (Exhibit 5). These players
enlightened the Indian consumers to the possibility of con-
veyance using a fuel-efficient, hassle-free and elegantly built
100cc motorcycle. At the same time, a sales tax rationaliza-
tion in 2001 led to rise in duties on geared scooters and even-
tually affected its price16. The price of scooters was rendered
further unattractive by environmental norms that forced
scooter manufacturers to install catalytic converters while most
motorcycles were already in accordance with these norms.

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 bajaj auto limited  313

The shift towards acquisition of a motorcycle as a

personalized transport was hastened by an overcrowded
and unreliable urban mass transport system. The area
occupied by roads in Class I cities (having a population
of more than 100,000) in India is only 16.1% of the total
developed area whereas the corresponding figure for USA
is 28.19%. The peak hour speed in central areas of many
major cities in India is as low as 4–5 km per hour17. For the
harassed commuter, a two-wheeler is the only recourse as it
needs less road space and can make its way forward through
the traffic jams. The increased potential of the rural market is
also owed to abysmal transport infrastructure. India’s total
road length is 3.3 million km, of which 2.65 million km (more
than 80%) is constituted by village roads18. These village
roads are a huge labyrinth providing accessibility in the vast
hinterlands of India. The rural consumer, therefore, demands
two-wheelers with larger wheel base and greater mileage.
To their credit, the motorcycle manufacturers encour-
aged consumption by making available fuel-efficient and low-
maintenance models with tangible features and intangible
associations.

MOTORCYCLE INDUSTRY IN INDIA

If the motorcycle gained the attention of Indian consumers

by the mid 1980s, post economic liberalization the atten-
tion got converted into inclination. The challenges before
motorcycle manufacturers were many and multifarious. The
motorcycle industry, by its very nature, is capital intensive.
In addition, India has some of the world’s most stringent
emission norms19; relatively expensive fuel when compared
to the cost of living; constant pricing pressure on manufac-
turers; and consumer expectations of high quality durable
vehicles. Experts have categorized the Indian motorcycle
industry products either on the basis of price or engine
capacity. On the basis of price, motorcycles have been catego-
rized into “entry segment” (price of up to US$800 approxi-
mately); “executive segment” (price between US$800 to
US$1100 approximately) and the “premium segment” (price

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 314  ACRJ

of US$1100 approximately and above). Categorization on the

basis of engine capacity results into three segments: 75–125cc;
125–250cc; and > 250cc. However, there is frequent attempt by
players to redraw categories and redefine competition.
The three leading players — Hero Honda, Bajaj and
TVS — have significant presence across different engine
capacities and price points within the motorcycle market. The
intensity of the competition between the “Big Three” of the
Indian two-wheeler industry has led to innovation, thereby
providing greater benefit to Indian consumers. Together, the
three companies command a highly respectable 80% market
share in the two-wheeler industry (Exhibit 6). Even as Hero
Honda enjoys market leadership, Bajaj has made every effort
to narrow down the gap. A comparison of the market share
of Bajaj vis-à-vis the market leader Hero Honda during 2008–
0920 and 2009–1021 (Exhibit 6) substantiates this notion. The
rivals, though, are not on a head-on collision course with
each other. A competitive brand mapping of the product mix
(Exhibit 7) revealed that while Hero Honda targeted volume
driven entry segment and Bajaj offered multiple options in
the premium segment, the honors were equitably shared in
the executive segment. It is pertinent to mention here that
Bajaj was the leading player in the executive segment with a
commendable market share of 45.9% in 2009–1022.

BAJAJ

“All of our innovations are directed at supporting our unique busi-

ness model, which rests on selling specialized brands at the front
end, derived from flexible platforms at the back end.”
— Rajiv Bajaj23

Bajaj has been a flag-bearer of the 2-wheeler market in

terms of brand equity and consumer satisfaction. The stra-
tegic product and market engineering outputs delivered by
Bajaj over its six-decade long life are described in the form
of a Timeline (Exhibit 8). A review of the Timeline indicates
that Bajaj was the leading player in the Indian two-wheeler

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 bajaj auto limited  315

industry until 2002. A combination of pioneer advantage

and patriotic brand associations (e.g., Hamara Bajaj) contrib-
uted towards significant brand recognition and brand recall
on the part of Indian consumers for the brand “Bajaj”. Bajaj
communicated to its consumers through a sentimental nation-
alistic tone which harped upon the consumer’s sense of iden-
tification with India24. It retained its dominant position in the
Indian 2-wheeler industry for more than three decades owing
to the reliability and durability of its products, which also
contributed towards its brand identity and brand equity. The
downfall came in 2002 when Bajaj lost its leadership position
to Hero Honda in the two-wheeler market. It is noteworthy
that in 1999, for the first time, market share of motorcy-
cles (34.6%) exceeded those of geared scooters (32.7%) in
India25. As if on a cue, in 2002, Bajaj, the vanguard of scooter
industry, lost the number 1 position in the two-wheeler
industry to Hero Honda, the harbinger of motorcycle revolu-
tion. Bajaj could not adapt to the changing times. Marketing
myopia blinded Bajaj towards the structural shift in consumer
demand. The market share of scooter started diminishing
from 1994 onwards; until in 1999 the motorcycle overtook
the scooter as the largest contributor to the two-wheeler
industry sales. However, the top management continued to
repose its faith in the ability of the scooter to attract Indian
consumers’ share of mind, heart and wallet. This was evident
when Rahul Bajaj, the Chairman of Bajaj posited in 2000, “A
country of a billion people shall always have enough families
who will begin their motoring lives with traditional, low-cost
scooters,”26 and then again in 2002, “I should be pardoned for
being sentimental about scooters.”27 In this intervening period
of two years the market share of scooter as a percentage of
the two-wheeler market declined from 25.9% in FY 1999–2000
to a mere 12.3% during the FY 2001–200228.
Even as the sellers’ market changed into buyers’
market (in its heydays in the 1980s, the waiting period for a
Bajaj Chetak scooter was 10 years29), complacency had set in
and Bajaj was sluggish in reacting to the changes in the
market. The new product development process was slow and
inadequate. The consumer orientation was shifting towards

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motorcycles and Hero Honda was capitalizing on it but until

the mid-1990s Bajaj was dependent only on Bajaj RTZ and 4S
Champion for its motorcycle sales (see Exhibit 8). Its response
to the onslaught of rivals in the gearless scooters market was
also feeble. The only product in the product portfolio of Bajaj
in the 1990s which made its mark was the refurbished 100cc,
4-stroke Bajaj Boxer commercialized in 1999.
The saga of Bajaj’s product and market engineering ini-
tiatives can be effectively divided into pre-2000 and post-2000
eras. The pre-2000 era is not short on product engineering
initiatives. Bajaj is credited with launching Vespa in technical
collaboration with Piaggio, Italy. The first scooter developed
indigenously for Indian consumers was Bajaj Chetak launched
in 1972. Bajaj launched its first motorcycle KB100 in 1986. It
offered its first 4-stroke motorcycle in the form of 4S Cham-
pion. It also launched India’s first 4-stroke geared scooter
Bajaj Legend. However, in the 1990s there emerged a gap
between innovation and diffusion due to insufficient attention
being paid to market engineering.
In the post-2000 era, Bajaj gradually moved towards
greater synergy between product innovation and market
requirement. It not only engineered new products but also
engineered new markets. Bajaj commenced the process of
transformation in 2001 and started focusing on motorcycles.
Successful product innovations such as Bajaj Pulsar were
launched. The product line upward stretching was carried
out by offering Bajaj Eliminator, a 175cc, 4-stroke chopper
with 5-speed gear box. The product performance was also
upgraded by technological inventions, e.g., DTSi (Digital
Twin Spark ignition). The extensiveness of product portfolio
was enhanced by products like CT 100 (entry segment), 125cc
Discover DTSi (executive segment) and Bajaj Pulsar 150cc/
180cc (premium segment).
During 2001–05, Bajaj was simultaneously treading
two distinct paths. On one hand, it came out with new
power brands (e.g., Pulsar, which was ranked 1st in the “Top
30 automobile brands of India” by the 4Ps Power Brand
Awards30) in the motorcycle category and practiced ingre-
dient branding (through DTSi); while on the other hand,

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 bajaj auto limited  317

it continued manufacturing scooters in the hope of revival.

It was only in the year 2006 that Bajaj finally stopped
manufacturing the iconic Bajaj Chetak which had, by then,
sold 10 million units. It signaled the end of an era, the era
of Hamara Bajaj. Post-2005, the thrust on product and market
innovations and emphasis on their synergy continued. In
2007 and 2008, line modernization was the key strategy. Bajaj
leveraged its brand equity to the maximum through astute
use of sub-branding and modifiers (e.g., DTSi, DTS-Fi, and
DTS-Si). It not only distinguished different offerings but also
associated the Bajaj brand name with continuous techno-
logical up-gradation. In order to emphasize on its stature in
the two-wheeler industry, Bajaj changed its brand essence to
“Distinctly Ahea”31 meant to act as an effective lexicographic
heuristics.
The year 2009 brought the best out of Bajaj stable
in the form of XCD 135 DTS-Si, Pulsar 150 DTS-Si, Pulsar
180 DTS-Si, Pulsar 220 DTS-Si and 100cc Discover DTS-Si.
Bajaj concentrated on providing a ladder to the consumers
by making available Discover (100cc, 125cc), XCD (125cc,
135cc), and Pulsar (135cc, 150cc, 180cc and 220cc). The latest
additions to the Bajaj stable have been Discover 100 and
Pulsar 135. For example, Bajaj DTS-Si 100cc is a kaleidoscope
of contrasts. On one hand, it offered value to the aspiring
urban market through its high style quotient at optimum
price; while on the other hand, it offered the rural market
rational value through its features and price (Exhibit 8). No
wonder, it achieved a diffusion rate of 500,000 in just six
months after its launch. A comparative assessment of Dis-
cover 100cc against its closest rival Passion Plus from Hero
Honda (Exhibit 7) divulges a clear picture of its competitive
advantage (Exhibit 9).
The achievement of Bajaj post-2000 indicates that even
though the core competency of Bajaj was technology and
innovation, success came only when it combined its R&D
effort with its marketing research endeavors. Bajaj finally suc-
ceeded in synergizing its product engineering and market
engineering initiatives.

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PRODUCT ENGINEERING INITIATIVES

The competitiveness in the motorcycle market shortened the

product life cycle (PLC) catapulting the ability to offer new
models to meet fast changing consumer preferences into a
category point-of-parity. Instead of a lackadaisical approach
towards R&D, a calibrated initiative leading to forward
thinking and actionable insight was the need of the day. The
industry as a whole responded positively to such a call. The
cumulative R&D expenses of 10 major players32 in the auto-
mobile and ancillary industry during the period 2004–2008
increased at a CAGR of 47% from Rs. 4.3 billion to Rs. 20
billion and the average R&D expenditure during the period
as a percentage of net sales also went up from 1.2% to 2.1%33,
a good step forward by India Inc.
The Government of India also pitched in with a com-
prehensive Indian Auto Policy34 in March 2002. As per
the policy guidelines, the manufacturers were entitled to
a rebate on the applicable excise duty for every 1% of the
gross turnover of the company spent on R&D. Subsequently,
a weighted tax deduction of up to 150% for in-house R&D
activities was permitted35. To promote the use of environment
friendly low-emission auto fuel technology, adequate fiscal
incentives were proposed. In a nutshell, the policy encour-
aged R&D into product development, production and genera-
tion of environment-friendly auto fuel technology (Exhibit 10).
This fillip towards innovation was essential since his-
torically, the Indian two-wheeler industry has always looked
either East or West for technology. The three main modes of
transfer of technology have been joint ventures and technical
collaborations; foreign direct investment (FDI); and, 100%
owned subsidiary route. Bajaj has leveraged the technological
alliance route to augment its product engineering strategies
(Exhibit 11). The tie-up with Kawasaki Heavy Industries36 in
1986 resulted in many state-of-the-art two wheelers for the
Indian market such as KB series, 4S, 4S Champion, Boxer, the
Caliber series, and Wind125. Bajaj leveraged its core compe-
tency of R&D prowess to attain competitive advantage.
In 2003, Bajaj unveiled the Digital Twin Spark igni-
tion (DTSi) engine with a promise that these engines would

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 bajaj auto limited  319

deliver higher power, better fuel consumption and lower

emissions. The technology was first implemented in the
Pulsar model. Bajaj also introduced technologies such as
Exhaust TEC (Exhaust Torque Expansion Chamber), LED Tail
Lamps, LCD Display, innovative spare parts (Tubeless tires,
rear disk brakes), etc. Products like Boxer, Eliminator and the
Pulsar, all three winning products in their own right, show-
cased Bajaj’s technological competence and product designing
capabilities.
Bajaj continued with its quest during 2009–10 by cre-
ating facilities for timely execution of product engineering
initiatives. Not just the technology developed, but also the
cradle where these technologies were under gestation was
modernized. All the Bajaj manufacturing facilities have been
awarded as “TPM (Total Productive Maintenance) Excellence
Category — 1” winners by JIPM (Japan Institute of Plant
Maintenance). A world-class NVH (Noise, Vibration and
Harshness) laboratory was commissioned in 2010 for further
research. With an eye towards harnessing alternative tech-
nology, Bajaj partnered with Enegtek37 for technology that
would enable 2-wheelers to run on natural gas instead of
gasoline38.
The objective at Bajaj to produce Japanese-quality
motorcycles at Indian cost was ably supported by its inno-
vative manufacturing process which endeavored to “build
technology inside but parts outside”. Bajaj outsourced the
manufacturing of non-critical parts to a core group of trusted
suppliers capable of providing quality input. This core group
was reduced from 800 to a mere 180 so as to ensure greater
control over quality and adherence to timely supply norms.
It is indeed remarkable that just 15 vendors supplied 75%
of the components used at its Pantnagar facility whereas
in the Chakan facility, only 50 suppliers catered to its 100%
parts requirement. This strategic change in the production
process ensured a reduction in depreciation cost; cut down
on its variable cost component and improved manpower pro-
ductivity by five times in the period 2002–2010. A compar-
ison between 2000–01 and 2008–09 makes the success of the
strategy evident. While on 31 March 2001, the firm’s annual
capacity was approximately 2.32 million vehicles and the

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 320  ACRJ

depreciation cost was Rs. 177 crore (approx. US$35.4 million),

by 31 March 2009 the capacity had increased to approxi-
mately 4 million even as depreciation cost decreased to
Rs. 130 crore (approx. US$26 million)39.
The recognition and appreciation received by Bajaj’s
products Pulsar, Discover and Kawasaki Ninja at different
platforms during 2009–10 vindicate its holistic thrust upon
product engineering (Exhibit 12).

MARKET ENGINEERING INITIATIVES

As a pioneer and market leader for more than five decades,

Bajaj built a reputation for itself as manufacturer of affordable
products wherein “affordability” meant the monthly cost of
ownership of a two-wheeler adjusted for its resale value. The
endeavor by Bajaj to identify latent markets and create new
markets gained momentum in the 1990s. In 1998, it launched
India’s first 4-stroke geared scooter to satisfy the needs of
environmentally conscious consumers who wanted greater
mileage. Thereafter, in 2001 Bajaj Eliminator was offered for
the niche Indian motorcycle rider market looking for a cruiser
bike at an affordable price. The brand essence “Distinctly
Ahead” was introduced and one of the brand elements — the
logo was altered in 2007, to make it look more contemporary
and representative of its changing business philosophy. In
relation to segmentation of the market, Bajaj adopted an inge-
nious approach by classifying the Indian motorcycle market
as “commuter standard”, “commuter deluxe” and “sporty”.
An assessment of the resulting product lines revealed the
competitive scope of each of the brands of Bajaj vis-à-vis its
respective competitors in each segment (Exhibit 13).
At the same time, not all efforts at market engi-
neering in the last decade have been equally successful. Bajaj
launched the utility versions of Chetak and Super in order to
revive the sagging geared scooter market. However, despite
all efforts, the production of Chetak had to be stopped in
2006 when scooters contributed a mere 0.3% to the total
two-wheeler market. In the entry segment of the motorcycle
market, Bajaj had a market share of 49% in 2004–05 when it

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 bajaj auto limited  321

decided to move away from this segment citing low oper-

ating margins. The decision resulted in lack of footprint in the
volume-based entry segment. Bajaj continued to believe that
the segment is unprofitable and declining and therefore, it is
not of any concern if it lost share in a market that does not
seem to have a future. This strategic blunder resulted in the
decline in the overall market share of Bajaj40.
However, Bajaj was quick to learn from its mistakes. It
reentered into the 100cc entry segment with a bang when it
launched Discover DTS-Si 100cc in 2009 (Exhibit 8). The posi-
tioning as an aesthetically endowed bike for “discovering
India” appealed to the urban markets while a larger wheel
base and greater mileage attracted the rural markets. In con-
trast to segmenting the motorcycle market, Bajaj carried out
counter-segmentation to create a super-segment of those users
who looked for both, style and performance. Similarly, by
launching Pulsar 150cc and Pulsar 135cc a completely new
“sporty-commuter” segment was created. This was not some-
thing new to Bajaj. Even in 2007, Bajaj had launched XCD 125
DTS-Si which had the best of all the worlds — 150cc features,
125cc performance and 100cc mileage.
Even as Bajaj offered a rich product portfolio, the price
points were chosen so as to minimize overlap and maximize
the range, thereby reducing the chance of cannibalization. An
analysis of the product portfolio pricing revealed that Bajaj
offered products at distinctive price points. On one hand,
there was kamikaze pricing in case of Platina, whereas on the
other hand, there was perceived value pricing as in the case
of Pulsar 220 (Exhibit 14).
Bajaj adopted a very effective branding strategy con-
gruent to the overall corporate strategy that focused on
highlighting the brand identity of individual offerings while
understating the “Bajaj” corporate identity41. Bajaj attempted
to separate its name from its models to ensure greater accept-
ability not just locally but even in overseas markets such as
Europe and the US. The decision was on the basis of strength
of its two brands “Pulsar” and “Discover” which dominated
its product portfolio by contributing 70% to its total two-
wheeler sales. Pulsar was positioned as a performance ori-
ented motorcycle with a heavy dose of style thrown into it,

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 322  ACRJ

serving mostly the younger buyers. Discover, on the contrary,

was positioned as a fuel efficient bike targeted at those con-
sumers who looked for high mileage and lower maintenance
cost along with aesthetics. Bajaj, in association with its Euro-
pean partner KTM, 42 practiced the principle of sharply posi-
tioning a brand as opposed to promoting a rather diffused
brand.
The logic for promoting individual brand names at the
cost of the family name was also based on two additional
reasons. First, Pulsar and Discover had a loyal customer base
and no longer needed the support of “Bajaj” the umbrella
brand; and secondly, even though the strength of Bajaj’s
brand identity was undeniable, its equity was not focused.
Rajiv Bajaj was assured about the success of this rebranding
strategy when he said, “Today if you talk to people … they
say that they wish to buy a ‘Hero Honda’ but when it comes
to Bajaj the buyer will say that he wishes to buy a ‘Pulsar’ or
‘Discover’; he won’t say I want to buy a ‘Bajaj’. This tells me
we have succeeded in separating and specializing.”43
Bajaj also generated tremendous amount of symbi-
osis between its marketing and distribution strategies. The
rebranding exercise included all consumer touch points.
Fitch44 was roped in for ensuring consistency and upgrading
aesthetics at Bajaj showrooms across the country. To enhance
its market presence in tier 2 and tier 3 cities, Bajaj increased
the number of dealers and service centers to a more respect-
able figure of 600 and 1100, respectively. Bajaj endeavored to
build a responsive supply chain as opposed to a rigid one45.
The market engineering efforts have reinforced Bajaj’s
image as a customer-centric organization. The honors
received by Bajaj and its various marketing initiatives at
different platforms validate its quest towards innovation
through market engineering (Exhibit 15).

COMPETITORS’ PRODUCT AND MARKET

ENGINEERING STRATEGIES

The two-wheeler market in India, for last two decades, has

been dominated by Bajaj, Hero Honda and TVS. The product

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 bajaj auto limited  323

and market engineering strategies of all these three players is

intertwined to a great extent, thereby influencing each other’s
fortune. Therefore, Bajaj’s strategies need to be analyzed in
view of the product and market engineering strategies of
Hero Honda and TVS.

Hero Honda

The Hero Group and Honda Motor of Japan set up the

joint-venture Hero Honda in 1984. When the joint-venture
company was established, the scooter was the most popular
two-wheeler in the country. Therefore, it is to the credit of
Hero Honda that it created a market where none existed.
Hero Honda turned out to be way ahead of its competitors
in terms of integrating the product and market engineering
initiatives. In 1985, it launched its first motorcycle CD 100.
It was a 4-stroke, 100cc motorcycle which set the benchmark
for fuel efficiency (80 km/liter), quality, pollution control
and low maintenance cost46. The CD 100 came as a blessing
for the aspiring and existing two-wheeler owners who were
burdened with myriad liabilities, e.g. low fuel efficiency, poor
performance, negligible aesthetics and non-existent ergo-
nomics. CD 100 went on to sell 1 lakh (0.1 million) units in
two years after its launch47. The moment of truth for Hero
Honda, however, arrived in 1994 with the launch of the iconic
brand Splendor. The right proportion of performance and
aesthetics caught the imagination of Indian consumers. The
brand essence, “fill it, shut it, forget it” struck a chord with
millions of riders. In 2000, Splendor became the largest selling
motorcycle model in the world. Splendor firmly established
Hero Honda as the largest two-wheeler manufacturer in
India. In accordance with the evolving consumer preferences
towards high-end aesthetic bikes, Hero Honda launched
its heavy-duty yet stylish CBZ. Hrithik Roshan, the Indian
movie star who is highly popular for his super-human roles,
was roped in to reinforce the knowledge structure of the
brand in the minds of consumers as young and energetic. In
recent times, Hero Honda also attempted to associate patriotic
feelings with the corporate brand through its tagline “Hero

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 324  ACRJ

Honda — Desh ki dhadkan” (Hero Honda — Heartbeat of

India). A synergistic assimilation of product and market engi-
neering skills ensured the dominance of Hero Honda48 in the
two-wheeler industry over the last decade (Exhibit 6).

TVS

The TVS Motor Company is the third largest two-wheeler

manufacturer in India49. The company enjoys a strong rep-
utation for its product engineering capabilities. It has a
product engineering team of 400 engineers and spends about
2.5–3% of its turnover on R&D every year50. It is credited
with offering TVS 50 in 1980, India’s first indigenously built
two-seater moped. The joint-venture of TVS and Suzuki
Motors is credited with offering India’s first 5-speed, 140cc
motorcycle — Suzuki Shaolin. In 2002, TVS received the
National Award for Successful Commercialization of Indige-
nous Technology from Technology Board, Ministry of Science
and Technology, Government of India for the indigenously
developed TVS Victor GL 110cc motorcycle. TVS Victor was
also awarded the best two-wheeler in the Rs. 30,000–40,000
price range by BBC in 2003.
The ultimate paradigm of symbiotic integration
between product engineering and market engineering on the
part of TVS was Scooty. Such has been the craze and satis-
faction of consumers, primarily female consumers that the
name “Scooty” is often treated as a verb to refer to all brands
of gearless scooters in India. Evidently, it is the leading gear-
less scooter brand in India. Likewise, TVS offered the moped
TVS XL Heavy Duty to satisfy the needs of self-employed
working class individuals (e.g., vegetable vendors) in terms
of a two-wheeler having power and durability to transport
human beings as well as goods. TVS has endeavored to sup-
plement its established reputation in product engineering
with out-of-box thinking in market engineering. Unlike its
competitors, TVS emphasized upon building fun-filled emo-
tional connection through its tag line “More smiles per hour.”
A marketing masterstroke was achieved when TVS signed the
cricket legend Sachin Tendulkar as its brand ambassador. For

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 bajaj auto limited  325

millions of Indians, Sachin personifies confidence, trust, sin-

cerity and humility, and these are precisely the associations
that TVS wanted to be identified with. To enhance the cus-
tomer experience at every touch point, the company laid
down standing orders on how employees should interact
with customers. The showrooms were refurbished in terms of
design and color so as to ventilate a unique but shared cor-
porate identity51. Indeed, TVS epitomized Trust, Value and
Service.

CONCLUSION

Bajaj ensured that innovation in terms of product engi-

neering and market engineering, unlike in its early years,
are not carried out in isolation of each other. The competi-
tion from Hero Honda and TVS necessitated it. The evolving
consumer preference demanded it. Hence, synergies were
sought and resources were leveraged to create competitive
advantage vis-à-vis its more proactive rivals. Bajaj integrated
its front-end and back-end operations to augment symbiosis.
It did not clutter the consumer’s mind with a complicated
brand-mix. Rather, it kept the front-end simple with just two
brands catering to two broad segments of Indian consumers.
Bajaj banked upon Pulsar to cater to the “Sporty” segment
whereas Discover catered to the “Commuter” segment.
Emphasis on just two versions kept even the back-end, com-
prising designing, manufacturing and product development,
rather simple. While on one hand Bajaj covered the needs and
desires of Indian consumers in terms of performance and aes-
thetics; on the other hand, the symbiosis between the offer-
ings at the back-end ensured greater profitability. The launch
of variants of Bajaj Pulsar and Discover (e.g. 100cc Discover
and 135cc Pulsar) further ensured windfalls52.
In terms of product engineering, Bajaj focused its R&D
machinery on three main areas: fuel economy, environmental
compliance, and performance. In terms of market engineering
Bajaj focused on fulfillment of aspirations of a young India,
urban as well as rural. According to Rajiv Bajaj, “The road
ahead for next few years is to keep our eyes absolutely

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 326  ACRJ

focused on the motorcycle industry.”53 The entire saga of

Bajaj exemplified the continuous endeavor towards product
and market engineering either through anticipation or
through assessment of consumer wants. Bajaj, the pedigreed
but plodding pioneer finally rediscovered its sublime touch
and in the process, earned the distinction of catering t
hrough its products to both — Bharat54 as well as India.

REFERENCES

1. Harish, R., 2011. Bajaj auto: From Chetak to Pulsar and beyond.
The IUP Journal of Marketing Management, February.
2. Ibid.
3. Ghosh, A., Ray, S. and Makkar, J., 2010. Indian two-wheeler
industry: Back on growth path. ICRA Rating Feature — February.
4. Automobile industry in India — Two-wheeler segment in India.
http://india-reports.in, February 20, 2010.
5. Revving up! Indian automotive industry — A perspective.
http://www.ibef.org, 2009.
6. Harish R., op. cit.
7. http://www.siamindia.com/scripts/domestic-sales-trend.aspx.
8. Ghosh, A., Ray, S. and Makkar, J., op. cit.
9. Bhatnagar, A. and Ghose, S., 2004. A latent class segmentation
analysis of e-shoppers. Journal of Business Research, Vol. 57,
pp. 758–767.
10. Haley, R. I., 1968. Benefit segmentation: A decision-oriented
research tool. Journal of Marketing, Vol. 32, pp. 30–35.
11. Kanojia, A. K., 2011. Analyzing the state of competition in the
Indian two-wheeler industry. Report submitted to Competition
Commission of India, New Delhi on July 8. http://www.
cci.gov.in/images/media/ResearchReports/AnujInt200711.pdf,
p. 23.
12. Ibid., p. 21.
13. Ibid., p. 7.
14. http://indiamicrofinance.com/mckinsey-report-urban-india-
2030-projections-statistics.html.
15. Prasuna, D. G., 2001. Indian two-wheeler industry: Changing
gears. The Analyst, March.
16. Ibid.
17. Singh, S. K., 2005. Review of urban transportation in India.
Journal of Public Transportation, Vol. 8, No. 1, pp. 79–97.

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 bajaj auto limited  327

18. Anantaram, R., 2010. Developing India’s surface transport

capability: The case of road infrastructure (ARI).
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/
Content? WCM_GLOBAL_ CONTEXT=/ elcano/elcano_in/zonas_in/
ari37-2010, 25 February.
19. http://www.siamindia.com/scripts/technicalregulations.aspx.
20. Chakraborty, B. and Gupta, V., 2009. Bajaj Auto Limited’s
business strategy: From market leader to follower. Case Folio,
October 2009, pp. 40–55.
21. Baggonkar, S., 2011. Life without Bajaj. Business Standard — The
Strategist, 24 January 2011, p. 4.
22. Bhattacharyya, A., 2011. Most respected companies 2011: Sector
winners: Two wheelers — A strategic plan for success. http://
www.businessworld.in/bw/2011_02_04_A_Strategic_Plan_For_
Success.html, 9 February.
23. “Rajiv Bajaj” is the Managing Director of Bajaj Auto Ltd. He
is believed to be the major contributor towards Bajaj’s perfect
alignment of branding and production strategies.
24. Bruce de Pyssler, 1992. The cultural and political economy of
the Indian two-wheeler. Advances in Consumer Research, Vol. 19,
pp. 437–442.
25. Bajaj Auto Ltd. Annual report, 2002–2003.
26. Ibid., 1999–2000.
27. Ibid., 2001–2002.
28. Ibid., 2002–2003.
29. http://en.wikipedia.org/wiki/Rahul_Bajaj.
30. http://www.bajajauto.com/bajaj_awards_08-07.asp.
31. The “Distinctly Ahead” vision was released in 2007 and
communicated in an aggressive manner with one 220 Pulsar
DTS-Fi morphing into many other Pulsar 220′s and racing against
each other. The visualization and lyrics — “Alag Andaaz, Alag
hai khoj, Rakhe Aage,  Hamari soch” — clearly conveyed that
Bajaj sets its own standards and competes only with itself.
32. The ten major players are: Tata Motors; Mahindra and Mahindra;
Bajaj Auto; TVS Motors; Eicher Motors; Ashok Leyland; Maruti
Suzuki; Hero Honda; Bosch; Bharat Forge.
33. See Ref. 5.
34. http://www.dhi.nic.in/autopolicy.htm.
35. See Ref. 5.
36. “Kawasaki Heavy Industries” is a Fortune 500 MNC with a
turnover of US$10 billion. It has business interests in ATVs,
motorcycles, utility vehicles and personal watercraft.
37. “Energtek” is involved in development and commercialization of
Absorbed Natural Gas (ANG).

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 328  ACRJ

38. Bajaj Auto Ltd. Annual report, 2009–2010.

39. Sheth, S., 2010. Bajaj Auto gains from outsourced non-critical
manufacturing. http://www.livemint.com, April 13.
40. Doyal, P., 2008. Bike market: Bajaj trails Hero Honda. http://
timesofindia.indiatimes.com/business/india-business/Bike-
market-Bajaj-trails-Hero-Honda/articleshow/3369408.cms#
ixzz0yHy0rFVH, August 16.
41. Gopalan, M., 2010. Bajaj to ride on Pulsar, Discover
Brand Identities. http://www.blonnet.com/2010/11/20/stories/
2010112053280200.htm, November 19.
42. “KTM” is an Austria-based auto company where Bajaj Auto
holds 38% stake through a subsidiary.
43. Baggonkar, S., op. cit.
44. “Fitch” is a global design consultancy and is part of the WPP
Company.
45 . Narasimhan, L., 2010. Learning from emerging markets:
An interview with Bajaj Auto’s Rajiv Bajaj. http://www.
mckinseyquarterly.com, September.
46. Samanta, S., 2004. The Indian two-wheeler industry: A long ride
to freedom. Executive Decision, IUP Publication, April.
47. The Analyst 2011. Hero-Honda split: End of a legend. IUP
Publication, January.
48. “Hero” and “Honda” parted ways in December 2010 to pursue
independent operations in India.
49. Shah, S. and Bhaskar, A. S., 2011. Suppliers to dealers:
Stakeholders’ Management at TVS Motor Company Ltd. The IUP
Journal of Supply Chain Management, March.
50. Samanta, S., op. cit.
51. Madhav, P., 2003. Marketing Motorcycles: Exploring emotional
connections. Marketing Mastermind, April.
52. Gopalan, M., 2010. http://www.blonnet.com/2010/01/12/
stories/2010011250130300.htm, January 11.
53. Doval, P., 2009. Bajaj shifts gears to motorbikes. http://
timesofindia.indiatimes.com, June 24.
54. “Bharat” is the other name for India in Hindi, the national
language of India. It symbolizes the great Indian middle class as
opposed to the upper strata of the Indian social system.

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 bajaj auto limited  329

Exhibit 1

Growth in Sale of Two-Wheelers

Year 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10

Number of 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231
Units Sold
Source: Society of Indian Automobile Manufacturers.

Exhibit 2

Segment Share in Two-Wheelers (2008–09)

Type of Vehicle Market Share (%)

Motorcycle 80.6
Scooters 13.9
Moped 5.2
Electric vehicles 0.3
Source: Society of Indian Automobile Manufacturers.

Exhibit 3

Shift in India’s Two-Wheeler Market from Scooters to Motorcycles

Year Sale (In Units/Percentage of Total Sales)

Motorcycles Scooters Mopeds and Total
Step-Throughs Two-Wheelers
Units Percent Units Percent Units Percent Units
1994–95 528,043 24 1,130,248 51 549,940 25 2,208,231
1999–00 1,612,895 43 1,357,483 36 806,341 21 3,776,719
2004–05 5,217,996 80 983,097 15 351,169 05 6,552,262
2009–10 8,446,591 80 1,542,507 15 522,686 05 10,511,784
Source: Society of Indian Automobile Manufacturers.

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 330  ACRJ

Exhibit 4

Shift in India’s Scooter Market from Geared Scooters to Gearless Scooters

Year Sale (In Units)

Geared Scooters Gearless Scooters Total Scooters
2000–01 592,411 408,261 1,000,672
2001–02 531,179 410,260 941,439
2002–03 335,917 532,410 868,327
Source: Society of Indian Automobile Manufacturers.

Exhibit 5

Joint Ventures in India’s Two-Wheeler Industry

Sl. Year of Indian Foreign Company Product Engineering Outputs

No. JV Company

1. 1983 TVS Motors Suzuki Motors, Japan Ind-Suzuki motorcycle

2. 1984 Hero Motors Honda Motor Co., Japan CD 100 motorcycle

3. 1984 LML Piaggio, Italy Vespa scooter

4. 1985 Escorts Yamaha Motor Co., Japan Yamaha RX 100 motorcycle

5. 1985 Kinetic Motors Honda Motor Co., Japan Kinetic Honda 100 gearless scooter
Source: Compiled by authors.

Exhibit 6

Market Share (%) by Volume

2008–09 2009–10
Company Motorcycle Industry Two-Wheeler Industry Two-Wheeler Industry
Hero Honda 52.8 48.95 44.23
Bajaj 28.3 17.29 20.68
TVS 9.4 15.28 15.20
Total 90.5 81.52 80.11
Source: Society of Indian Automobile Manufacturers and http://autos.sify.com.

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 bajaj auto limited  331

Exhibit 7

ExhibitBrand Mapping
7: Brand — Bajaj
Mapping vs. Hero
- Bajaj vs.Honda
Hero Honda
PULSAR 220*KARIZMA**
PULSAR 180*

US $1100 PULSAR 150* CBZ XTREME**

PULSAR 135*

SUPER SPLENDOR**
PASSION PRO**
P
R DISCOVER DTS‐Si 100* PASSION +**
I US $800 SPLENDOR +**
C SPLENDOR NXG**
E CD DELUXE**

PLATINA*

CD DAWN**

US $600

*: BAJAJ 75cc 125cc 250cc

**: HERO HONDA ENGINE CAPACITY
Source: Compiled by authors.

Source: Compiled by authors 

Exhibit 8: Timeline of events at Bajaj Auto Ltd.

Year Event Remarks
1945 Kamalnayan Bajaj established BTCL – Bachraj Trading Corporation Ltd
1960 Bajaj Auto founded
Technical collaboration with Piaggio and introduced Vespa
1960 Akurdi First scooter production facility
1972 Bajaj Chetak Launched
Year Event Remarks
1976 Bajaj Super Launched
1984 Waluj Second scooter production facility
1986 Technical collaboration with Kawasaki Heavy Industries Ltd.
KB 100 Launched
1990 Bajaj Sunny Launched
1994 Bajaj Classic Launched
1997 Bajaj Boxer Launched
1998
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 332  ACRJ

Exhibit 8

Timeline of Events at Bajaj Auto Ltd.

Year Event Remarks

1945 Kamalnayan Bajaj established BTCL — Bachraj Trading Corporation Ltd
1960 Bajaj Auto founded
Technical collaboration with Piaggio and introduced Vespa
1960 Akurdi First scooter production facility
1972 Bajaj Chetak Launched
1976 Bajaj Super Launched
1984 Waluj Second scooter production facility
1986 Technical collaboration with Kawasaki Heavy Industries Ltd.
KB 100 Launched
1990 Bajaj Sunny Launched
1994 Bajaj Classic Launched
1997 Bajaj Boxer Launched
1998 Bajaj Caliber 111-cc, 4-stroke motorcycle launched
Bajaj Spirit 60cc model launched
Bajaj Legend India’s first 4-stroke geared scooter launched
1986–97 Bajaj RTZ 02-stroke motorcycle launched
4S Champion Launched
A. 1999: Motorcycles (34.7%) overtook scooters (32.7%) as bigger contributor to 2-wheeler sales
2000 Saffire/Sunny Spice Gearless scooters launched
B. 2001: Started the process of transformation
2001 Bajaj Eliminator 175cc, 4-stroke chopper with 5-speed gearbox
launched
2002 Bajaj Pulsar 150cc and 180cc launched
Bajaj BYK Launched
C. In 2002 Bajaj became market leader in entry and premium segments due to success of Bajaj BYK and
Bajaj Pulsar.
2003 DTSi (Digital Twin Spark Ignition) Higher power, better fuel consumption,
lower emissions engine introduced

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Year Event Remarks

D. Sales 2002–03 = Rs. 47.44 billion
2004 CT 100 Entry segment bike launched
125cc Discover DTSi Bike of the year 2005
Best indigenous design of the year 2005 in the
Executive segment
(Awarded by Overdrive magazine)
E. Sales 2003–04 = Rs. 54.18 billion; Market share in motorcycle segment = 23.7%
2003–04 market share in entry segment = 34.7% (Hero Honda’s market share = 43.8%)
F. 2004–05 market share in entry segment = 49% (Impact of launch of CT 100)
2005 Rajiv Bajaj appointed MD
G. Reduced focus on entry segment citing low operating margins even though entry segment accounted
for 50% of sales volume.
2006 Stopped production of Bajaj Chetak 10 million units sold so far
2006 100cc Bajaj Platina Entry segment bike launched
H. 2005–06 sales = Rs. 85.5 billion
2007 Pulsar 220 DTS-Fi (Digital Twin Indian motorcycle of the year 2008
Spark Fuel Injected)
DTS-Si 125cc engine Mileage of 109 km/liter

XCD 125 DTS-Si Best of all worlds — 150cc features/125cc

performance/100cc mileage
“Distinctly Ahead” campaign Launched

2009 XCD 135 DTS-Si Launched

Pulsar — 150 DTS-Si/180 DTS-Si/
220 DTSi
2009 100cc Discover DTS-Si Launched
Product engineering: Market engineering:
DTS-Si/Nitrox suspension Not seen as a 100cc bike
Longest wheelbase/5-speed gear Value for money
Maintenance free battery Suitable for long distance driving
Source: Adapted and tabulated from “Bajaj Auto Limited’s Business Strategy from Market Leader to Follower” Case Folio,
October 2009, pp. 48–55.

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Exhibit 9

Bajaj Discover DTS-Si 100 vs. Hero Honda Passion Plus

Brand Displacement Power Torque Engine Wheel- Mileage Brand

(cc) (bhp) (Nm) Type base Essence
(mm)
Discover 94.38 7.70 7.85 DTS-Si 1305 85 km per Discover
DTS-Si liter India
100cc
Passion 92.70 7.50 7.50 4-Stroke 1235 60 km per A Whole
Plus OHC liter New World
of Style
Source: Compiled by authors from respective websites: http://www.bajajauto.com and http://www.herohonda.com/.

Exhibit 10

Technologies for Meeting the Emission Norms for Spark Ignited Vehicles

Level of Emission 2-Stroke Technology 4-Stroke Technology

Euro I/India 2000
Euro II/Bharat Stage II
Euro III/Bharat Stage III
Euro IV/Bharat Stage IV
Source: “National Auto Fuel Policy,” http://pib.nic.in/archieve/1re1eng/1yr2003/roct2003/06102003/r0610200313.html,
03 October 2003.
Intake, exhaust, combustion
optimization catalytic converter
Secondary air injection catalytic
converter
Fuel injection catalytic converter
To be developed
4-stroke engine technology
Hot tube secondary air injection
Fuel injection carburetor +
catalytic
Lean burn fuel injection +
catalytic converter

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Exhibit 11

Technological Alliances

Company Product
Kawasaki Heavy Industries, Japan Motorcycles
Tokya R&D Co. Ltd., Japan Two-wheelers
Kubota Corp., Japan Diesel Engine
Source: Adapted from Indian Two-wheeler industry — ICRA Sectoral Analysis — 2005 quoting INGRES.

Exhibit 12

Awards Received in FY 2009–10 for Product Engineering

Awarded For Awarded To Awarding Body Award

Product & Pulsar 135 LS ET Now — Zigwheels Bike of the Year
Technology
ET Now — Zigwheels Technology of the
Year — 4 Valve
UTV Bloomberg — Auto Car Bike of the Year
UTV Bloomberg — Auto Car Viewer’s Choice Bike of
the Year
Discover DTS-Si ET Now — Zigwheels 100cc Bike of the Year
ET Now — Zigwheels Most Value for Money
Bike of the Year
NDTV Profit — Car India & Motorcycle of the Year —
Bike India Up to 125cc
Kawasaki Ninja IMOTY 2010 Indian Motorcycle of the
250 R Year
ET Now — Zigwheels 2009 250cc Bike of the Year
NDTV Profit — Car India & Motorcycle of the Year
Bike India 201 up to 250cc
NDTV Profit — Car India & Two-wheeler of the Year
Bike India 2010
CNBC — Overdrive 2010 Bike of the Year
Business Standard Motoring Bike of the Year
Source: Bajaj Auto Ltd., Annual Report 2009–10.

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Exhibit 13

Bajaj and Its Competitors

Segment Bajaj Hero Honda TVS

Commuter standard Platina CD series Star
Commuter Deluxe Discover Splendor, Passion, Glamour Fiero
Sports Pulsar CBZ, Hunk, Karizma Apache
Source: Compiled by Authors.

Exhibit 14

Product Portfolio Pricing

Model Engine Capacity (in cc) Price (in Indian Rs.)

Platina AW 100 37,595
Platina 125 125 40,140
Discover DTS-Si 100 41,470–43,570
Discover 150 48,977
Pulsar 135 135 55,780
Pulsar 150 150 64,663
Pulsar 180 180 68235–68644
Avenger 220 75,342
Pulsar 220 220 79,510–80,050
Source: Compiled by Authors — Price Ex-showroom at Bhubaneswar, Orissa, India as on 01 March 2011.

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Exhibit 15

Awards Received in FY 2009–10 for Market Engineering

Awarded For Model Awarding Body Award

Brand & Communication Bajaj Auto Global Youth Marketing Most Popular
Forum 2010 Two-Wheeler among
Youth
Brand Equity 2nd Most Trusted
Brand for Auto Two
Wheelers
Discover NDTV Profit — Car India Best Integrated
DTS-Si & Bike India Campaign —
Two-Wheelers
CNBC Overdrive 2010 Storyboard Auto
Commercial of the
Year — Bike
Auto India Best Advertising
Pulsar Effie Silver Effie for
Pulsar Mania ad
(Category: Consumer
Durables)
ABBY Best Film in Auto
Category for the
‘Fastest Indian’.
Pulsar AME 2010 Award for Effective
Mania use of Branded
Content: Pulsar MTV
Stunt Mania
XCD 135 ABBY Best Film in Auto
Category for ‘Twisted
Sisters’.

Source: Bajaj Auto Ltd., Annual Report 2009–10.

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Exhibit 16

Achievements in the Year 2009–10

Product Product Engineering Market Engineering

Pulsar 220F Enhanced power More affordable performance bike

Reduced fuel consumption

Pulsar 180UG Features/style Expanded >150cc segment

Pulsar 150UG Powerful engine Best seller in its category

Clip on handle bars

Tank flaps

Pulsar 135LS 4V DTSi engine Performance and fuel economy

Discover DTS-Si DTS-Si engine blended twin Fuel economy with crisp throttle response
plug ignition with swirl motion
Source: Compiled and adapted by authors.

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