india two-wheeler segment market analysis

7/29/2019 India Two-Wheeler Segment market analysis

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Lal Bahadur Shastri Institute of Management, New Delhi Page 1

Chapter 1

Introduction

1.1) Historical Background

Motorcycle history begins in the second half of the 19th century. These are

descended from the "safety bicycle," a bicycle with front and rear wheels of the

same size and a pedal crank mechanism to drive the rear wheel.

The history of the motorcycles in India dates back to the year 1955, when the

Government of India required strong, rough, and tough motorcycles for the

Indian Army and the police force in the western part of the country which had arough and craggy terrain.

The motorcycles in India cater to a variety of needs of the consumers. The

motorcycle has become one of the most popular modes of transportation, and is

preferred by the daily commuters. The segment of motorcycles in India went

through a tremendous change in the 90s and the two wheeler market, especially

the motorcycle market was filled with options.

1.2) Scope of Study-

Our study is limited as we have conducted the survey in Delhi regions and

analysed the market scenario in terms of Segmentation and Target market of

Bajaj Motorcycles, SWOT analysis, Porters five force analysis and Marketing

Mix for the same. We have also done a competitor analysis of Bajaj

motorcycles with other brands in two-wheeler segment.

1.3)Method of Data Collection-

The data has been collected with the help of Surveys carried out with the

working professionals and students. Feedbacks were collected by us with the

help of a questionnaire & it contained various questions regarding two wheeler

motorcycle segments. Feedback on the basis of their experience helped us in

carrying out market research for Bajaj motorcycles and competitor analysis.
http://en.wikipedia.org/wiki/Safety_bicyclehttp://en.wikipedia.org/wiki/Safety_bicycle


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Chapter 2

Indian Two Wheeler Industry

2.1) Indian Automobile Industry-

The Automotive industry in India is one of the largest in the world and one of

the fastest growing globally. India manufactures over 20 million vehicles

(including 2 wheelers, 3 wheelers and 4 wheelers) and exports more than 2.9

million in the year 2011-2012. At present, the dominant products of the

automobile industry are Two Wheelers with a market share of over 77%,

passenger cars with a market share of about 15%, Commercial vehicles with amarket share of over 5%, and three wheelers share about 3% of the market

between them.

2.2) Categorization of Two Wheeler Segment-

The two-wheeler industry consists of three segments viz., scooters, motorcycles,

and mopeds. The major players in the 2-wheeler industry are Bajaj Auto Ltd

(Bajaj Auto), Hero Moto Corp, TVS Motor Company Ltd (TVS) and Honda

Motorcycle and Scooter India, Private Limited (HMSI) accounting for over

93% of the sale in the domestic two wheeler market.

2.3) Market share in Motorcycle Segment-

Based on market research, around 70% of the motorcycles sold in India in 2011-12 belonged to the 75-125cc (engine capacity) segment, bikes which are

positioned for the mass commuter segment where better fuel economy and low

price are the prime customer considerations.

However, the volume share of this segment has been coming down over the

years with the share gradually being taken away by bikes in the 125cc and

150cc segments.


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2.4) About the Company-

Bajaj Auto is a major Indian vehicle manufacturer headed by Rajiv Bajaj. It isbased in Pune, Maharashtra, with plants in Chakan (Pune), Waluj (near

Aurangabad) and Pantnagar (Uttaranchal). The oldest plant at Akurdi (Pune)

now houses the R&D centre ahead. Bajaj Auto makes and exports automobiles

scooters, motorcycles and the auto rickshaw.

Bajaj Auto came into existence on 29 November 1945 as M/s Bachraj Trading

Corporation Private Limited. It started off by selling imported two- and three-

wheelers in India. In 1959, it obtained license from the Government of India to

manufacture two- and three-wheelers and it went public in 1960. In 1970, it

rolled out its 100,000th vehicle. In 1977, it managed to produce and sell

100,000 vehicles in a single financial year. In 1985, it started producing at

Waluj near Aurangabad. In 1986, it managed to produce and sell 500,000

vehicles in a single financial year. In 1995, it rolled out its ten millionth vehicle

and produced and sold one million vehicles in a year.

Product Portfolio

Bajaj Pulsar 150 DTSi. Bajaj Discover. Bajaj Avenger. Bajaj Platina. Bajaj Kawasaki KB 100 RTZ. Bajaj Boxer. Bajaj Caliber. Bajaj Pulsar 220 DTS-Fi. Bajaj Krystal. Bajaj Pulsar 180 DTSi.

In FY2012, Bajaj Auto sold over 3.83 m

motorcycles in India and abroad. In doing so, it

sales by 13.2% over FY2011, which was lower th

the previous two years.

However, as mentioned earlier, sales growth

muted for the industry as a whole, which gre

13.7% versus over 24% in the last couple of

Thus, despite lower growth, Bajaj Auto held on

share of over 32%.


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Chapter 3

Segmentation ,Targeting and Positioning

Market segmentation divides a market into well defined slices which consists of

a group of customers who share similar needs and wants.

In our survey, we have taken the responses and segmented the motorcycle

market according to demographic and Psychographic factors. Geographical

factors are not taken into account since our study is conducted in Delhi region.Before moving towards market segmentation, we will try to find out the

perception of people (on a scale of 1 to 5, where importance increases from 1 to

5) for various factors affecting their buying decision for motorcycles.

Fig 1

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Factors Affecting Consumer Buying

Behaviour

Factors Affecting Consumer Buying Behaviour


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Thus it is clear from the graph that, style and design is the most important factor

in buying a motorcycle. Comfort level is the least important factor.

From our analysis of the responses, we have drawn a comparison between

satisfaction levels of Bajaj bike owners and others on various parameters of the

bike they own on a scale of 1 to 5, where level of satisfaction increases as one

moves from 1 to 5.

Fig 2

Thus it is clear from the above graph that, Bajaj motorcycle owners are highly

satisfied in comparison to its competitors on

o Performanceo Style and Designo Insurance facility.

Bajaj motorcycle owners are dissatisfied in comparison to its competitors on

o MileageHowever on any other parameter, Bajaj is almost comparable to its competitors.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Bajaj Competitors


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3.1) SEGMENTATION:-

According to Demographic factors:-

1) Age

Fig 3

A sample of 80 respondents was collected, out of which 29% were of 18-24

years of age.71% were of age 25-30 years of age.

Fig 4

1921

4 3

8

0

5

10

15

20

25

Respondents in Age group of 18-24 years

No of Respondents

71%

29%

Total No of Respondents(80)

18-24 year

25-30 year


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It is clear from the figure that Hero is the leading motorcycle brand in 18-24

years of age group. However Bajaj is giving tough competition to Hero with

second leading position.

Fig 5

For age group 25-30 years, Bajaj and Hero stand equally in terms of market

share.

2) Marital Status

Fig 6

9 9

4

1

0

2

4

6

8

10

Bajaj Hero RoyalEnfield

Yamaha

Respondents in the Age group 25-30 years

No of Respondents

82%

18%

No of Respondents(80)

Single

Married


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Marital Status: Single

Fig 7

Fig 8

30%

70%

Respondents using BajajMotorcycle(23)

Discover

Pulsar

65%

21%

3%9% 2%

Respondents using other

motorcycles(43)

Hero

Yamaha

TVS

Honda

Royal Enfield

As per our responses,

unmarried consumers which

are using Bajaj motorcycles, a

large part of this market

segment i.e.70% are using

Pulsar and 30% are using

Discover.

As per our responses,

unmarried consumers which

are using other motorcycles, a

large part of this market

segment i.e.65% are using

Hero bikes and Yamaha

constitutes 21% of marketshare.


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Marital Status: Married

Fig 9

Fig 10

40%

60%

Respondents using Bajaj (5)

DiscoverPulsar

44%

56%

Respondents using other

brands(9)

Hero

Royal Enfield

As per our responses, married

consumers which are using

Bajaj motorcycles, a large

part of this market segment

i.e.60% are using Pulsar and

Discover constitutes 40% of

market share.

As per our responses, married

consumers which are using

other motorcycles, a large

part of this market segment

i.e.56% are using Royal

Enfield and Hero constitutes44% of market share.


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3) Family Annual Income-

Fig 11

< 2 lacs: Consumers prefer to have other motorcycles. 2-5 lacs: 10 consumers own Bajaj while 19 out of 22 other users have Hero. 5-8 lacs: 7 consumers own Bajaj while 6 own Hero and 6 own Yamaha out

of 17 other users.

> 8 lacs: 9 consumers use Bajaj bikesThus, its clear that the present market segment of Bajaj motorcycles comprises

of consumers which have annual family income more than 5 lacs.

2

107

9

5

2217

8

0

5

10

15

20

25

less than 2 lacs 2- 5 lacs 5- 8 lacs more than 8

lacs

Bajaj

Others


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4) Profession-

Fig 12

Profession: Business Class

Fig 13

Profession: Service Class

Fig 14

9%

44%

47%

No of respondents(80)

Business

Service

Student

29%

71%

Business class consumers (7)

Bajaj Pulsar

Royal Enfield

46%54%

Service class respondents using Bajaj (13)

Discover

Pulsar

Business class customers

whom we surveyed, 71%owned Royal Enfield and

29% constitutes Bajaj

Pulsar

In service class sector,

Pulsar constitutes 56%

while 46% own Discover


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Fig 15

Profession: Student

Fig 16

Fig 17

86%

9% 5%

Service class customers using other

bikes (22)

Hero

Honda

Yamaha

23%

77%

Student using Bajaj(13)

Discover Pulsar

52%

8%4%

4%

32%

Student using other bikes(25)

Hero

Honda

Royal Enfield

TVS

Yamaha

In service classconsumers, a large

part of consumers

(86%) own Hero

As is clear, Students

using Bajaj

motorcycles prefer

Pulsar as compared

As is clear, Studentsusing other

motorcycles prefer

Hero and Yamaha as

compared to Honda,

Royal Enfield and

TVS.


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3.2) TARGETING:

On the basis of segmentation of market, Bajaj target:

Consumers with age group 18-30 years. Consumers with family income more than 5 lacs. Consumers which are students and business class people.

Out of this segment market, Bajaj should focus on a target group which best

suits their interests for Bajaj motorcycles. Since Bajaj motorcycles have high

price, it should target consumers with high annual income specially business

class consumers with age group of 18-30 years.

3.3) POSITIONING:

Bajaj has positioned Pulsar in the High Style High Price segment alongwith Hero Honda Karizma, Hero Honda CBZ, Royal Enfield Bullet.

It also has positioned CT 100 in the Low Style Low Price segmentalong with Hero Honda Splendor, TVS Star City.


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Chapter 4

SWOT Analysis1.Strengths

Focus on Extensive Research & Development High performance products across all categories High export to domestic sales ratio(1:2) Legacy of brand name Highly experienced management

Great finance support network Product design and development capabilities Widespread distribution network

2.Weaknesses Has presence mostly in higher segment (150cc,180cc) Less variety of products in lower segment(100cc,125cc) Still not a very established name in the global market

Hasnt employed the excess cash for long

3.Opportunities Growing two-wheeler market in India and across globe Growing gearless trendy scooters market More maturity in moving towards higher end segment(Above 200cc) Can use the existing R&D capabilities for new models in lower

segment

4.Threats Tough competition from domestic as well as foreign players Tough competition from Hero which has large market share (~ 56%) Margin squeezes from all the directions(Price as well as cost) The competition catches up with any new innovation in no time


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Chapter 5

BCG Matrix Analysis

Fig 18

1)Star (high growth, high market share)-Stars use large amounts of cash: As the Discover, Pulsar 150 and 180 cc are

the star performer of Bajaj so Bajaj has to invest on advertisement to capturemaximum market share.

Stars are leaders in the business: Today Bajaj Pulsar 180 and 150 cc areleaders in market. As they are first choice of the youth those are interested in

looks, technology and performance.Stars usually generate cash for the company. Pulsar generates maximum cash

for Bajaj auto ltd. Pulsar is having 47% of market share in its segment.

It is critical that Stars should hold the market share, because the future rewards

are generally cash cows.

G

R

O

W

T

H

R

A

T

E

H

i

g

h

MARKET SHARE

Pulsar 150 and 180ccDiscover

XCD 125

Pulsar 200 and 220cc

Blade

L

o

w

Platina

CT 100

Avenger

Kristal

High Low


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2)Cash Cows (low growth, high market share)-Profits and cash generation should be high: Platina and CT 100 are themodels which generates high profits for Bajaj auto ltd.

Low market growth does not attract new competitors: Now, the market sharegrowth of Platina and CT 100 are very less, they are unable to attract new

customer in the market.

Low market growth, call for less investments: It is of no use to invest more

on these models of Bajaj motorcycles. It is better to invest on R&D, or some

other star performer.

Cash Cows are often the stars of yesterday and they are the foundation of a

company.

3)Dogs (low growth, low market share)-Avoid and minimize the number of Dogs: Avengers and Kristal now becomes

the dog for Bajaj auto ltd. They have to stop the production for these models

and rather use this investment in designing of some new model.

Watch out for expensive 'rescue plans': Bajaj should stop further investing in

these models and save the investment for some other purpose.

Low growth coupled with low market share is generally a loss making

proposition for a company.Dogs must deliver cash, otherwise they must be liquidated.

4)Question Marks (high growth, low market share)Question Marks have high cash demands (High Market Growth): Pulsar

200 and 220 cc are in high demand but their market share is low. The customer

which come the segmentation for these models are less in number, so it difficult

to say whether is wise to invest further in these models.

Question Marks generate low returns, (Low Market Share):The market

share of XCD 125, Pulsar 200, 220 cc, Blade have very less market share. The

customer which come the segmentation for these models are less in number, so

it difficult to say whether is wise to invest further in these models.

If the market share remains unchanged, Question Marks will simply absorb

great amounts of cash. Either invests heavily, or sells off, or invests nothing and

generates any cash that you can.


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Outcomes of such a strategy:

Cash Cows Business Units will reach their profit target easily. They are oftenallowed to reinvest substantial cash amounts in their mature business.

Dogs Business Units are fighting an impossible battle and, even worse, now andthen investments are made.

Question Marks and Stars receive only mediocre investment funds; hence they

can never become Cash Cows (or Stars).


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Chapter 6

PORTERS FIVE FORCES

Porters model of competitive forcesassumes that there arefive competitive

forcesthat identify the competitive power in a business situation or these help

us to find the attractiveness of a market segment. These five competitive forces

identified by the Michael Porterare:

Fig 19

1. Threat of substitute products- There are many substitute products available like Yamaha R15 and Fazer,

Hero Splendor and Passion Pro.

Customer can easily find the product that youre offering at the same or lessprice.

Quality of the competitors product is better- Hero is still known for itsmileage and technology.

Substitute product is by a company earning high profits so it can reduceprices or can give discount offers to the lowest level. Hero as of now acts asthe strongest competitor to Bajaj motorcycles.


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2. Threat of new entrants- The market runs on high economies of scale and on high economies of scope

as well.

Need for technical expertise is high and thus a new entrant will have a hugeuphill task. Owning a strong distribution network is very important and is very costly

which certainly takes a lot of time and energy. There is also involvement of

huge cost.

All these make the barrier high enough to be restraining for any new entrantsin the market.

3. Industry Rivalry- The industry rivalry is extremely high with any product being matched in a

few months by competitors. This instinct of the industry is primarily driven

by the technical capabilities acquired over years of development under the

technical collaboration with international players.

Exit barriers are high and rivals stay and compete-a large market share tocapture.

Fixed cost is high resulting huge production and reduction in prices.4. Bargaining power of suppliers- Suppliers are concentrated and well organized. Many substitutes available to suppliers. Suppliers of auto components are fragmented and are extremely critical for

this industry since most of the component work is outsourced.

Proper supply chain management is a costly yet a critical need.5. Bargaining power of Buyers- Product is not differentiated much. Buyers cost of switching to a competitors product is low as almost all

companies are producing at relatively same price.

Buyers are price sensitive and fully informed.


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Chapter 7

Marketing Mix

McCarthy classified various marketing activities into marketing-mix tools of

four broad kinds, which he called the four Ps of marketing, i.e. Product, Price,

Place, and Promotion.

Fig 20

PRODUCT MIX(width)-There are various segments which Bajaj auto is trying to serve. It is tryingto target lower level segment with Bajaj platina (100cc) & Bajaj discover

(125cc, 135cc) which targets the middle level segment customers. Apart

from this the premium segment is served by Bajaj pulsar (150cc, 180cc,

200cc, 220cc) and Bajaj avenger.

Marketing Mix

4 Ps

Product

Product Variety,

Quality, Design,

Features, Brand

Name, Packaging,

Sizes, Services,

Warranties,

Promotion

Sales Promotion,

Advertising,Sales Force,

Public Relations,

Direct Marketing

Place

Channels

Coverage,

Locations,

Inventory,

Transport

Price

Least Price,

Discounts,

Allowances,

Payment Period,

Credit Terms


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PRICE MIX- ECONOMY SEGMENT (100ccsegment): This segment is served

by Bajaj platina (100cc), Bajaj Discover (100cc), Bajaj ct100.The

ex-showroom price in Delhi of platina is around Rs 40000.

PREMIUM SEGMENT (125cc-200cc): This segment is served byBajaj Discover (125cc, 135cc), Bajaj pulsar (150cc, 180cc, 200cc).

The price of Discover is around Rs 52500.

PROMOTION MIX-o BAJAJ auto has got showrooms evenly spread all over india. Italso sells its premium segment bikes through probiking showrooms

owned by company.

o Promotional strategies adopted: The largest maker of premiumbikes in the country, which currently sells only one 100cc bike, is

already working on a plan to launch another low-cost bike, the

biggest motorcycle segment in the country

o Re-launching with improve features and advertising the lowersegment bikes such as platina and discover 100 will give furthercompetition to Hero Splendor and other motorcycle in lower

segment.

PLACE MIX-o Bajaj has a wide network of showrooms and has its has reached to

mass population in rural areas as well through its distributionnetwork and tried to tap the rural market.

o Through its innovative marketing strategy, it should target therural areas and market the lower segment of motorcycles such as

discover (100cc) and platina(100cc) which are also very much fuel

efficient which is an important factor for rural population of our

country.

o The premium segment motorcycle such as Ninja and Pulsar (200ccand 220 cc) is to be more promoted in urban areas where people go

more styling and less of fuel efficiency.


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CONCLUSION & RECOMMENDATIONS

1. From the analysis we can say that Pulsar and Discover are two products ofBajaj in motorcycle segment which contributes largely in its revenue.

2. Pulsar and Discover are two brands in motorcycle segment of Bajaj whichare preferred most and they did not use the phrase 'Bajaj Auto' to market

either. Highly differentiated target groups for Pulsar and Discover is the

prime reason behind the divorce of these sub-brands from the parent brand,

Bajaj Auto

3. Bajaj was correct in adopting the two brand strategy. This has increasemarket share of Bajaj Auto Ltd. Today the reason why consumers buy a

Pulsar is because it is a Pulsar, not because it belongs to Bajaj.

4. Bajaj had designed Pulsar and Discover for two extreme ends of theconsumer spectrum. The target group for Discover was 'the commuter' as it

stands for balance, responsibility and all things homely. Conversely, Pulsar,

'the performer', symbolized arrogance, irreverence and attitude and hence

categorized in the sports category and is mainly preferred by youngsters.

5. From the analysis we can say that Style and design and Price are the twomost important factors influencing customer buying behavior. Pulsar andDiscover both ranked high on Style but a notch higher on price compared to

its competitors. Thus, Bajaj should try to reduce prices in this segment.

6. Respondents using Bajaj Motorcycles found to be less satisfied on Mileageas compared to its competitors. To capture large market segment and to

survive in the competition Bajaj should work on increasing the mileage in

this segment through better technology.


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LIST OF ILLUSTRATIONS

Fig 1 Factors affecting Consumer Buying Behavior

Fig.2 Bar graph showing Satisfaction of Bajaj and its competitors on various

parameters.

Fig 3 Total number of Respondents on the basis of Age.

Fig.4 Motorcycle owned by the Respondents in the Age group 18-24

Fig.5 Motorcycle owned by the Respondents in the Age group 25-30

Fig.6 Total number of Respondents on the basis of marital status .

Fig.7 Unmarried customers using different variants of Bajaj.

Fig.8 Unmarried customers using different variants of other motorcycles.

Fig.9 Married customers using different variants of Bajaj.

Fig.10 Married customers using different variants of other motorcycles.

Fig 11 Comparisons of Bajaj and its competitors on the basis of Annual FamilyIncome.

Fig.12 Total number of Respondents on the basis of Profession

Fig.13 Motorcycle owned by the Business class.

Fig.14 Service class customers using different variants of Bajaj.

Fig.15 Service class customers using different variants of other motorcycles.

Fig.16 Students using different variants of Bajaj.

Fig.17 Students using different variants of other brand motorcycles.

Fig.18 BCG Matrix

Fig.19 Porters five forces.

Fig.20 Marketing Mix

.


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LIST OF REFERENCES

1.http://business.mapsofindia.com/automobile/two-wheelers-manufacturers/motorcycles.html

2.http://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdf

3.https://www.crisilresearch.com4.http://www.siamindia.com/scripts/export-trend.aspx5.http://www.siamindia.com/scripts/market-share.aspx6.http://www.siamindia.com/scripts/production-trend.aspx7.http://www.siamindia.com/scripts/domestic-sales-trend.aspx8.http://www.bajajauto.com/en-in/
http://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdfhttp://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdfhttp://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdfhttp://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdfhttps://www.crisilresearch.com/http://www.siamindia.com/scripts/export-trend.aspxhttp://www.siamindia.com/scripts/market-share.aspxhttp://www.siamindia.com/scripts/production-trend.aspxhttp://www.siamindia.com/scripts/domestic-sales-trend.aspxhttp://www.bajajauto.com/en-in/http://www.bajajauto.com/en-in/http://www.siamindia.com/scripts/domestic-sales-trend.aspxhttp://www.siamindia.com/scripts/production-trend.aspxhttp://www.siamindia.com/scripts/market-share.aspxhttp://www.siamindia.com/scripts/export-trend.aspxhttps://www.crisilresearch.com/http://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdfhttp://www.moneycontrol.com/news_html_files/news_attachment/2012/Indian-2W-Industry_ICRA_280512.pdf


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BIBLIOGRAPHY

1. Introduction to Marketing Concepts; Graeme Drummond, John Ensor2. Marketing Management :South Asian perspective 14 e Philip Kotler,

Kevin Keller, Abraham Koshy & Mithileshwar Jha (Pearson)

3. Anderson, Sweeny, Williams (2007); Quantitative Methods for Managers4. Pindyck S Robert, Rubinfeld L Daniel, Mehta L Prem,(2009), Managerial

Economics

india two-wheeler segment market analysis

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