06-02-2013, 10:25 AM
Report on Indian two-wheeler industry
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INTRODUCTION OF THE COMPANY:
The history of the Indian two-wheeler industry, comprising scooters, motorcycles, and mopeds, had its beginnings in the late 1940s, when Bajaj Auto started selling imported scooters (1948) and Automobile Products of India (API) along with Royal Enfield started manufacturing scooters (1955) and motor cycles respectively in India. In the evolution stage, the Indian two-wheeler industry was highly regulated by the Government of India (GOI) and was largely structured by Indian industrial policies. The License Raj system imposed a strict control on the industry by regulating the entry of new players, imports, and foreign investments.
History of Bajaj Auto:
Founded in 1956, at the height of India’s movement for independence from the British, the group has an illustrious history. The integrity, dedication, resourcefulness and determination to succeed which are characteristics o the group today are often tracked back to its birth during those days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was close confidant and disciple of Mahatma Gandhi. In fact Gandhiji had adopted him as his son. The close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture.
His son, Kamalnayan Bajaj, then 27, took over the reins of business in 1942. He too was close to Ghandhiji and it was only after independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, built also diversified into various manufacturing activities. The present chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from Rs. 72 million to Rs. 46.16 billion, its product portfolio has expanded from one to and the brand has found a global market. He is one of the India’s most distinguish business leaders and internationally respected for his business acumen and entrepreneurial spirit.
Managerial Style at Bajaj Auto:
Off late Bajaj Auto Ltd has emphasized a lot on organizational restructuring for the auto business. With this restructuring the exiting business roles and responsibilities at the company has strengthened and enhanced to ensure greater operational empowerment and effective management. The five pillars of this new structure (strategic units) are R&D, Engineering, Two Wheeler Business Unit, Commercial Vehicles Business Unit and International Business Unit. These pillars are being supported by functions of finance, MIS, HR, Business development and Commercial.
Market Trends and Development
The Indian two-wheeler industry has come a long way since its humble beginning in 1948 when Bajaj Auto started importing and selling Vespa Scooters in India. Since then, the customer preferences have changed in favor of motorcycles and gearless scooterettes that score higher on technology, fuel economy and visual appeal, at the expense of metal-bodied geared scooters and mopeds. These changes in customer preferences have had an impact on fortunes of the players. The erstwhile leaders have either perished or have significantly lost market share, whereas new leaders have emerged.
Rising income levels, reducing excise duties, higher loan tenure and loan-to-value offered by the financing companies have all fuelled the growth of two-wheeler sales in the country. Besides, mounting traffic chaos and limited parking space has also increased the demand for two-wheelers from households that can afford or actually do own a car. Furthermore, with increasing women working population, changing social philosophy and broad-mindedness, the penetration of two-wheelers that is currently at awfully low level is expected to increase significantly going forward.
Brand Strategies of Bajaj auto Ltd:
Rajiv Bajaj after taking over the management of Bajaj Auto Ltd. adopted the new branding strategy and with this strategy Bajaj Auto has been doing quite well compared to how they were performing in the market. While analyzing the two-brand strategy it is found that the major focus of this strategy is to redefine the positioning of the Bajaj Auto Products. Theoretically describing positioning refers to how the brand is perceived in the mind of the customer. In other words, what does the customer think of the brand. Positioning is all about creating a perception of the brand in the mind of the customer or providing an experience to the customer that develops the brand image in customer mind. In other word we can say positioning is what we do to the mind of the customer and not what we do to the product in the factory.
The positioning helps to create unique image of the particular brand. Bajaj was making a lot of different items starting from bikes to lights to fans to insurance to finance, auto rickshaw. This was creating confusion in the mind of customers. To change this situation Rajiv Bajaj wanted to change the positioning of Bajaj Bikes. The Bajaj umbrella was only providing financial advantage but it was not allowing forming a distinct image of its product in mind of customer and it is in the mind of the customers where all the marketing battles are lost and won and not in the retail stores. The essence of branding and positioning is to distinguish the product from other products. In case of Bajaj, its own wide range of products was creating confusion in the customer’s mind. Moreover, Bajaj was synonymous to Chetak Scooter and the auto rickshaws and from the various data also we have seen that due to shift in the customer preference, the sale of scooter was declining and the sale of motor bike was increasing. The Bajaj Umbrella was giving too many meaning and because of this the customer’s point of view was confusing. This was not helping the cause of Bajaj Auto. The competition was increasing and the sales of Bajaj were declining.