Corporate: Marketing - Hamara Bajaj?

MARKETING
Hamara Bajaj?

Bajaj Auto is driving into the most crucial period in its 36-year-long existence.

By Roop Karnani

The buzz in the street is becoming a drone for the country's largest two-wheeler manufacturer: can you beat a Bajaj? The answer, unthinkable for the 36 years that Bajaj Auto has undisputedly led the two- and three-wheeler industry, is: 'perhaps', 'maybe', and 'yes'. As declining sales in its key segment of two-wheelers becomes more and more apparent, a spluttering Bajaj is now desperately searching for ideas and products to fire up the image-and sales-of a once-undisputed market leader.

Danger is around the corner-in 1999-2000, Bajaj's two-wheeler sales did not grow at all. Arch-rival Hero Honda's actually grew by a hefty 40 per cent. If this trend continues-in April and May 2000, Hero Honda's sales shot up by 55 per cent, while Bajaj's grew by barely 10 per cent-Hero Honda should end up with sales of 1.1 million units against Bajaj's 1.3 million. Confirms Atul Sobti, 46, Senior Vice-President (Sales & Marketing), Hero Honda: ''Our target in the current year is to comfortably exceed the 1 million mark and from there on grow at least 25 per cent per annum.'' And with Honda and Piaggio waiting in the wings, Bajaj is now under threat in its mainstay business.

But it all began with motorcycles. In the last 10 years, the two-wheeler market has undergone a drastic change: motorcycles now account for 43 per cent of total two-wheeler sales, while scooters take up only 29 per cent. Bajaj-traditionally, a large scooter manufacturer-completely drove around this trend. It entered the segment as late as 1992-93, seven years after the three Japanese giants-Honda, Yamaha, and Suzuki-had already proved there is a market for sleek, fuel-efficient bikes in India. In fact, till 1996-97, Bajaj's bikes raked in barely 10 per cent of its total two-wheeler sales.

Something Rajiv Bajaj, President, Bajaj admits readily: ''Till then, we never really focused on motorcycles.'' Interestingly, even today Bajaj refuses to believe that motorcycles will continue to outsell scooters. Says Bajaj: ''In markets like Europe and USA scooters even today outsell motorcycles by 2:1.'' Well, Honda, the top two-wheeler maker in the world, sells more motorcycles than scooters. Says Sulajja Firodia Motwani, 29, CEO, Kinetic Motor Company: ''There is a clear shift in the market in favour of motorcycles. That's why we too are entering the motorcycle market.''Agrees Venu Srinivasan, 45, CEO, TVS-Suzuki: ''I don't think the swing in favour of motorcycles is a temporary phenomenon.''

The motorcycle strategy

Till last year, Bajaj had two four-stroke models-the 4S Champion (Rs 45,300) and the Caliber (Rs 47,800). This miscued pricing strategy pushed up Caliber's sales at the cost of 4s Champion's. It was only last year that Bajaj began redefining its motorcycle strategy. It launched a four-stroke bike, Boxer at, priced at Rs 36,000. The Boxer at was a hit, notching up sales of 71,108 units in the last nine months of 1999-2000. And, in the first two months of the current fiscal, Bajaj saw its motorcycle sales shoot up by 50 per cent.

'''We are now able to sell 28,500 motorcycles per month,'' says R.L. Ravichandran, 50, Vice-President (Business & Product Development), Bajaj. ''However, with these models we can at best sell 35,000 units a month, after which it becomes difficult to push further.'' Hero Honda leads the market with sales of 81,000 motorcycles a month. The No. 2 player, TVS Suzuki, sells much less at 29,500 per month.

Bajaj is now concentrating on the price range between its mainstay bikes, the Boxer at and the Caliber. ''There is room for one more model in between these two'', says Rajiv. So, Bajaj is revamping the 4S Champion into a more sleeker, fuel-efficient bike. Dubbed the Acer, this model will be launched in October, 2000. Bajaj also plans to launch two more models this year. The two-stroke, 175cc, Eliminator will take on Hero Honda CBZ. And the 175cc Pulsar, a four-stroke bike, '''is more a statement of technology from Bajaj. We expect the real volumes to come from the Acer, and to some extent from the Eliminator'' says Rajiv. Basically, Bajaj will try to straddle all segments of the motorcycle space.

The scooter strategy

The scooter market still forms two-thirds of Bajaj's two-wheeler sales. Not only is the market shrinking, Bajaj is steadily losing marketshare. However, even though the overall scooter market shrank by about 10 per cent-Bajaj and LML paid the price-both Kinetic Motor Co. and TVS Suzuki, which sell ungeared automatic transmission scooters with an electric push-button start, grew by 25 per cent. Says Sulajja Firodia Motwani: ''The current trend proves my point: consumers now want greater convenience.'' Agrees Venu Srinivasan: ''People are fed up of buying the old-looking scooter with gears and kick-start. They are looking for something more convenient and stylish.''

Bajaj has just 15 per cent of the scooterettes market. Recognising this, Bajaj is launching the 60-CC Sunny Spice. And it has already test-launched the Saffire, a 92-CC four-stroke scooter with auto-transmission and push-button start. Priced at Rs 33,000, it is expected to take on the Kinetic DX100 Y2K and Kinetic Marvel, which costs Rs 42,000. The launch will be in August. Rajiv himself doesn't expect the Saffire to set the markets on fire. He insists that there is hope for geared scooters. ''If we can design a scooter which is priced below Rs 30,000 and has a fuel-efficiency of 70 km per litre, we can get our customers back.''

A four-stroke model of the warhorse Chetak, which is slated for launch in the next three months, is Bajaj's weapon. Then there's fusion, ''an entirely new scooter'', which will be launched this year. Of course, Bajaj has a vested interest in milking the geared scooter market-but its attractive finance schemes will hit margins.

Then, Bajaj will also launch a four-stroke version of the step-thru-bike M80. At the same time, it is under pressure in the three-wheeler segment, thanks to Piaggio. Predicts Anupam Thareja, 29, Assistant Director (Research), ABN AMRO Asia Equities: ''I believe that in motorcycles, Bajaj will be the fastest-growing company in the current year. However, I expect Bajaj's sales of geared scooters to fall by 6 per cent.'' While Bajaj fights back, one thing's for sure: a 36-year-long party's over.

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