ANALYSIS ON BAJAJ AUTO LTDCASE STUDY

SUBMITTED TO

: - MS TRIPTI GHOSH

SUBMITTED BY

: - Harshit Thareja

ROLL NO

: - FT-11-1041

Course

: - PGDM-A

INTRODUCTION
In the given case Rahul Bajaj, chairman and CEO of bajaj auto ltd gave us the facts and figures on which this case study is based upon. In the case he has focused on the changes that had took place in the Indian market in late 1980and early 1990 and the challenges faced by the company in early 1990. Details provided in the case are about the facts and figures which was briefly discussed in the presence of my subject teacher Ms Tripti Ghosh. My analysis is all about the companys history, Its profile, policies, Competitors, 4ps of marketing, its working strategy and my brief analysis to industry, since establishment.

Company Background
Bajaj Auto is a major Indian vehicle manufacturer started by Jamnalal Bajaj from Rajasthan in the 1930s. Bajaj auto started in 1945. Between 1950 and 1956 Bajaj auto imported scooters and three wheelers from piaggio (the itallian manufacturer of the vespa brand). In 1961 bajaj started manufacturing unit at Akurdi (near pune). In 1966 Bajaj had become the largest Indian producer of two wheelers as to which product demand exceeded supply. The piaggio collaboration lasted till 1971. The company growth was restricted by the Indian economic and political environment.in 1969 new regulations introduced which made much more difficult for large private companies to obtain licenses to increase production capacity. These restrictive government policies had protected market of Bajaj, Bajaj enjoyed a high share of sellers market for 22 continuous years which resulted in waiting list of Bajaj vehicles averaged 10 years In 1975 Bajaj established a joint venture with the state government of Maharashtra. In 1980s their goal is to increase product demand and build both volume as well as market share. In addition, bajaj entered into motorcycle and moped segments by collaborating with Kawasaki. In 1985 Bajaj established a second plant at Walnuj.

Bajaj Business Strategys Objective

1. 2. 3. 4. Keeping Cost and Price Low Improving Product Quality Focusing on two and three wheeler vehicles Striving for economies of scale

Market Structure
In 1950 to 1980 indias policy was known by excessive regulation. Initially policy was setup to avoid overcapacity in the capital scarce economy. In 1980 there was inflow of foreign competitor with new technology and manufacturing constraints were lifted leading to gradual opening of the Indian economy. Since 1990 consumers had felt the pinch of recession inflation had averaged 13%, interest rate had shot upand consumers purchasing power had dropped considerably. Due to economic recession and increase in the range of consumer goods available to Indian consumers, demand for two wheelers had declined substantially, in 1993 Indian two wheeler vehicle industry suffered from chronic overcapacity.

Manufacturing
In 1993 Bajaj was the worlds lowest cost manufacturers of two wheelers,capable of producing at a rate of over 3000vehicles a day in two shifts. In Akurdi plant, 5800 direct workers employed who manufacture 4 scooter models and an auto riksha carrier. The Wlnuj plant with 4800 workers manufacture 3 scooter models, a motorcycle, auto riksha, and a moped. In 1993production organisation described as Our goal is continous improvement with a slogan of Zero defects and think quality.

Products
In 1993, Bajaj manufactured 12 different models 5 scooter models like club, super, super FE, chetak and stride 3 motorcycle models like M80, Kawasaki RTZ & 4S 1 moped model like Sunny 3 three wheeler models like autoriksha and a good carrier

Market Segmentation Consumer Targetting and Positioning

Bajaj had segmented the market demographically and geographically. Bajaj had segmented the consumers on the basis of age and gender. Geographically bajaj had focussed on countryside consumers. Bajajhad basically targeted on the persons aging between 27 to 38 by providing scooters. Motorcycles for countryside persons and youngsters as motorcycles have long life and durable on rough roads. Moped targeted a broader segment of customers like teenagers, girls or old age persons as mopeds had a very low weight. Bajaj had differentiated its product from competitors by providing the product at a very low cost and a quality product. Bajaj had position them in consumer mind by giving attractive advertisement like wise tagging the slogan HAMARA BAJAJ. This slogan psychologycally affect the mind of consumers.

Competitors
There are six indian groups, with foreign collaboration,dominating in indian market. Bajaj was the only company who manufacture the full range of two and three wheeler vehicles. Japanese brands were there in indian market since 1984. All its production was domestic and other parts being imported. Japanese products were perceived by indian consumers as high tec, more modern,and better finish then domestic products but they lack in fuel efficiency and were costly to purchase and maintain. As Bajaj productswere well known for being rugged,reliable, and fuel efficient with low maintenance, good resale value and sood spare parts availability. Various Other competitors were Hero honda Yamaha TVS Suzuki Lml

Honda was completely directly with Bajaj held 14% of scooter market share in 1992 and its product were technology driven. Honda launched motorcycle which affectively affected the two wheeler market Yamaha with 15% Of motorcycle market share TVS with 8%of motorcycle market share LML with 11% of scooter market share

Marketting Mix of Bajaj

Product
In the year 1993 Bajaj was producing 12 different models for scooters, motorcycle and three wheelers. Scooters:- there are 5 models club, super, super FE, Chetak aand stride Motorcycle:-M80, Kawasaki RTZ, Kawasaki 4S Moped:- Sunny Three wheeler models:-rear angine autorikshaw, front engine autorickshaw, good carrier

Prices
Bajaj was the industrys low cost producer Scooter: priced at a very low than competitor product like wise Bjaj super was priced at Rs 20000. Motorcycle:Bajaj M80 was positionedas simple bike , priced at 50%of competing japanese motorcycle. Kawasaki motorcycle, bajaj cost structure did not allow lower price strategy Mopeds; its price were slightly higher than conventional mopeds, as it has offered many more features. In 1993, most profits of bajaj was generated through scooters and three wheelers, which permitted the lower prices of other products in line

Place
Bajaj had to ensure effective distribution to 330 dealer across country. Physical distribution of bajaj vehicles was subcontracted to 75 private

companies who managed a total fleet of 1400 trucks. Transporting took between 3-21 days to reach the dealer. Bajaj products were exported to bangladesh, srilanka which are developing countries and latin america, south and south east asia and some parts of africa

Promotion
In early 1990 bajaj focussed on promotion of its product due to increase in competition in market. Bajaj doubled the expenditure of advertising expense in 1990 from 54 million to 110 million rupees in 1992. The telivision advertisement was 45% ,45%were press advertisement and the rest 10% radio and magazine commercials.

International Market
In 1975 for the first time, it exported 1500 3 wheeler vehicles to bangladesh and commenced talks in south east asian countries.in 1980 Distributorship were established on an opportunistic basis in the USA, Germany, south east asia and north africa. Bajaj exported in developed countries like north america and europe. Bajaj expanded internationally to diversify and not rely on domestic market, to survive in long run and to gain competitors knowledge.

Developing Countries
In southeast asia , import of two wheeler were restricted either by tarrif barrier or import bans, japenese manufacturer had already established local joint venture production facilities. China was the largest market in the international market so competition in china was very intense. The major problem of african countries was the difficulty of access to foreign exchange and low consumer purchasing power. Latin america was an attractive market for scooter products. In general developing countries were more price sencitive, but product performance regulation were less strignent than in developed countries.

Developed Countries
In the United states, the 50cc market was dominated by japanese competitors. In japan 71% of two wheeler unit sales were of models of 50 cc . strignant japanese product standards and the cost of freight made this market difficult to penetrate. Recent trend in europe showed that mopeds were being replaced by automative scooters. In general product performance requirementwere exacting, and vehicles had to meettough regulations on emissions, noise, braking and electricals.the market for three wheelers was nonexistent.

Current Scenario
Bajaj is current scenario focusing on providing best product to customers like giving best motorcycles as fuel efficient and at low cost like Platina and discover at a cost of 40000 to 50000. The medium models like pulsar dtsi at a cost of 60000 to 80000 the premium model. The upcomming products are as bajaj is planning to launch a car with renault and nissan motors. Bajaj is present in over 50 countries. To attract customers it has a huge network of showrooms and advertising through different media to become the market leader.

Conclusion
Through this case study we came to know about the problem faced by the bajaj in 1993 and the strategies planned by bajaj to become the leader in existing market.