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Bajaj
The Bajaj Group is amongst the top 10 business houses in India. Its footprint
stretches over a wide range of industries, spanning automobiles (two-wheelers and
three-wheelers), home appliances, lighting, iron and steel, insurance, travel and
finance. The group's flagship company, Bajaj Auto, is ranked as the world's fourth
largest two- and three- wheeler manufacturer and the Bajaj brand is well-known
across several countries in Latin America, Africa, Middle East, South and South East
Asia. Bajaj Auto was founded in 1945.It is India's second largest two wheeler
manufacturer and the world's 4th largest two and threewheeler manufacturer. It is
based in Pune. with plants in Akurdi and Chakan (Pune), Waluj and Pantnagar in
Uttaranchal Currently It holds a market share of 22% over all two wheeler industry
and a phenomenon 71% share in 125- 250 cc category. It has a joint venture with
Kawasaki and 31.72 % stake in Australian based company KTM Key markets : Bajaj
auto is Dominant player in Indian market . The best selling market being Punjab,
Delhi & NCR, UP , Bangalore and Maharashtra. The company exports its products to
Sri Lanka, Bangladesh, Philippines, Latin America, Colombia, Peru, Mexico, Africa
and the Middle East.
The Company affirms that its competitiveness is interlinked with the well being of all
sections of the Indian society. The Company believes that equal opportunity in
employment for all sections of the society is a component of its growth and
competitiveness. It further believes that inclusive growth is a component of growth
and development of the country. The Company affirms the recognition that diversity
to reflect socially disadvantages sections of the society in the workplace has a
positive impact on business. The Company will not practice nor support conscious
discrimination in any form. The Company does not bias employment away from
applicants belonging to disadvantaged sections of society if such applicants possess
competitive skills and job credentials. The Company's selection of business partners
is not based on any considerations other than normal business parameters. In case
of equal business offers, the Company will select a business partner belonging to a
socially disadvantaged section of society. This Code of Conduct for Affirmative
Action will be put up on the company web-site to encourage applications from
socially disadvantaged sections of society. The Company makes all efforts for
upskilling and continual training of all its employees in order to enhance their
capabilities and competitive skills. No discrimination of any type will be shown in
this process. The Company may have a partnership programme with educational
institution/s to support and aid students from socially disadvantaged sections of
society. The Company will maintain records of Affirmative Action. The Company has
nominated Mr. Amrut Kumar Rath, Vice President (HR), to oversee and promote the
Affirmative Action policies and programmes. He will be accountable to the
Chairman. The Company will make available its learning and experiences as a good
corporate citizen in Affirmative Action to other companies desiring to incorporate
such policies in their own business.
Market segmentation
Rather than offer the same marketing mix to vastly different customers, market
segmentation makes it possible for firms to tailor the marketing mix for specific
target markets, thus better satisfying customer needs. Not all elements of the
marketing mix are necessarily changed from one segment to the next. For example,
in some cases only the promotional campaigns would differ.
• measurable
• accessible by communication and distribution channels
• different in its response to a marketing mix
• durable (not changing too quickly)
• substantial enough to be profitable
A basis for segmentation is a factor that varies among groups within a market, but
that is consistent within groups. One can identify four primary bases on which to
segment a consumer market:
1. Demographic Segmentation
2. Psychographic Segmentation
Engine
Alloy Wheels
Electricals
• 12 V full DC.
• Better starting & uniform illumination at variable speed even at stand still.
Frame
These features of the bajaj pulsar 150 dtsi gave it an distinct advantage over its
segment competitors
Though Indian motorcycle industry fell by almost 14.4 percent in the April-August
period from a year ago. Scooters is witnessing a robust growth, it rose by 19
percent during the same period. On an average 40000 scooters are sold every
month in india. TVS scooty plus, Honda Activa, Hero Honda pleasure and Bajaj
kristal are prominent players in this scooter segment. Recently, TVS unveiled an
electric variant of scooty. Yamaha is mulling seriously to foray into the scooter
segment. TVS also plans a new scooter next year.
In August 2007, Kinetic Sym introduced India’s first 125cc scooter flyte. Suzuki’s
access will compete with the flyte. The flyte is priced around Rs37000. Suzuki’s
125cc access is expected to be priced on a similar front.
The Honda Activa currently dominates the scooter market in India. Together with
the Dio, a differently styled version of essentially the same scooter, Honda
Motorcycle and Scooter India (HMSI) controls over 58 per cent of the scooter market
in the 75cc to 125cc category. But while Honda has a stranglehold over the 100cc
category, with these two scooters, its experience with the Eterno, a 150cc, metal-
bodied, geared scooter has been pretty ordinary.
But the brand equity that Honda has built itself with the Activa has made it
extremely difficult for other two-wheeler makers to break into the buyer’s mind
space in this segment, prompting them to look at the 125cc category.
And so it is interesting to note that Suzuki has finally taken its first step into the
scooter segment with the new Access 125. This is Suzuki’s maiden attempt at
entering the scooter segment, including the time it was present in the Indian market
through its joint venture with TVS.
In keeping with its calculated and conservative approach to the market here, Suzuki
has chosen to mark its entry into the scooter segment with Access 125, a simple,
but well-designed and well-finished two-wheeler. The side profile of the Access is
very familiar and almost falls into a relatively predictable design trend that many
gearless scooters currently adopt.
Unique features
At a glance, the Access 125 is still attractive and has a number of features that will
be identified as being unique. But put together, there is no evident attempt at
building an image of novelty for the scooter. But again that can still be good enough
to attract a number of buyers in this segment. After all, the even more simplistic
Activa has managed to corner more than half the buyers in the category.
Considerable work has been put into keeping the Access’ overall quality levels high.
The quality of panel plastic, the paint job, panel integration, quality of switches and
electricals, etc., are all as good as the best among the competition.
Market economics
During the five past years, the Indian motorcycles market has seen some excellent
growth rates for both value and volume. Even the Chinese market has exhibited
weaker growth rates than the Indian market. Some deceleration of growth is
forecast, but India will remain a dynamic market for the next five years.
The Indian motorcycles market generated total revenues of $3.1 billion in 2005, this
representing a compound annual growth rate (CAGR) of 15.8% for the five-year
period spanning 2001-2005. In comparison, the Japanese and Chinese markets grew
with CAGRs of 2% and 10.2% over the same period, to reach respective values of
$1.5 billion and $8.1 billion in 2005.
The market consumption volumes increased with a CAGR of 13.4% between 2001-
2005, to reach a total of 7 million units in 2005. The market's volume is expected to
rise to 12.5 million units by the end of 2010, this representing a CAGR of 12.2% for
the 2005-2010 period.
Motorcycles sales proved the most attractive for the Taiwanese motorcycles market
in 2005, generating total sales of 5.8 million units, equivalent to 82.7% of the
market's overall volume. In comparison, sales of mopeds generated sales of 1.2
million units in 2005, equating to 17.2% of the market's aggregate volume.
Growth potentials
The Indian motorcycles market grew by 8.9% in 2005 to reach a value of $3.1
billion.
The compound annual growth rate of the market in the period 2001-2005 was
15.8%.
Table 1: India Motorcycles Market Value: $ billion, 2001-2005
Year $ billion INR billion % Growth
2001 1.7 77.0
2002 2.1 93.9 21.90%
2003 2.5 110.8 18.00%
2004 2.9 127.0 14.70%
2005 3.1 138.3 8.90%
CAGR, 2001-2005: 15.8%
Market segmentation
Hero Honda Motors Ltd. leads the Indian motorcycles market with a share of 42.8%.
In comparison, Bajaj Auto Ltd. generates 28% of the market share.
Table 5: India Motorcycles Market Share: % Share, by Volume, 2005
Company % Share
Hero Honda Motors Ltd. 42.80%
Bajaj Auto Ltd. 28.00%
Yamaha 5.00%
Other 24.20%
Total 100.0%
COMPETITIVE LANDSCAPE
However, the company has identified three risk factors that could influence the
growth
of the company moving forward: slowing growth in the premium and deluxe sectors;
increased competition from countries such as China and the rising cost of steel and
aluminum.
LEADING COMPANIES
Hero Honda Motors is a manufacturer and marketer of motorcycles and spare parts.
The company is a joint venture between Hero Group, India and Honda Motors
Company of Japan. Hero Honda is headquartered in New Delhi, India.
In the 2005 fiscal year, Hero Honda generated revenues of $8,596.8 million. The
company made a net profit of $810.4 million in the 2005 fiscal year.
Bajaj Auto is a manufacturer and marketer of a wide range of two and three
wheeled
vehicles. The company also trades auto spare parts and is a subsidiary of the Bajaj
Group. Bajaj Auto is headquartered in Pune, India.
For the fiscal year ended March 2006, the company generated revenues of $1,937.8
million, an increase of 30.7% over fiscal 2005. Net profits were recorded at $254.6
million, an increase of 46.8% over the previous year.
For the fiscal year ended December 2005, the company generated revenues of
$12.49 billion, an increase of 35.9% on the previous year. The company saw a net
income of $581.4 million during fiscal 2005, an increase of 67.8% on fiscal 2004.
There is a lot of scope for Bajaj auto hence the market is really very open to their
125 cc 150 cc segment
Bajaj Auto is in the process of setting up a chain of retail stores across the
country exclusively for high-end, performance bikes. These stores are called “Bajaj
Probiking". Fifty two such stores have been opened across the India. Catering to
demand in this sector requires a strong and effective distribution network as
consumers are more demanding and expect delivery on time. Early delivery is a
cause of delight for customers. With such vast global and Indian rural presence,
designing an efficient distribution system becomes a complex task even for a
company like Bajaj Auto. Lot of time and effort goes into designing a strategy based
efficient distribution system.
Product Segmentation
Entry Segment: These are typically 100 cc motorcycles at a price point in the
neighbourhood of Rs.35000. Bajaj Auto has a presence in this segment through the
Platina. Here, Bajaj Auto has been a major player and despite an overall market de-
growth, it accounted for 34% of this segment in India in 2008-09.
These are sleek, high performance bikes with price points in excess of
Rs.50000. They are present here with their flagship brand, the Pulsar and cruiser,
the Avenger. They dominate this space with a domestic market share of more than
47%.
Organization Structure
Supplier Detail
Key suppliers:
Bajaj auto has approximately 198 suppliers for their raw materials.
JBM - Frames
MRF & Dunlop – tires
Minda - locks & ignition system
Reinder – headlamps & lights
Endurance – brakes, clutch & Cast wheel
Varroc – Plastic parts & Digital Meter
Max auto components – ignition system and switches
Silco cable – wires and cables
Makino industry – Brake shoes . Brake lining, clutch center
Inventory policy-
Bajaj auto maintains seven days inventory . Demand Estimations were based
on Panel Regression, which takes into account both time series and cross section
variation in data .All the Mediators are connected with each other through IT linkage
to know exact status of delivery of goods
They include:
Training in sales, service and spare parts management based on the Bajaj
distribution system
Distribution Detail
For distribution bajaj auto uses mix of depots and Cnf agents. This is
completely dependent on the distance of manufacturing location from dealer
point .For example due to extensive distance from manufacturing plant from west
Bengal to north-east India ,there exist a depot in Khadakpur with capacity of
housing 800vehicles. There are similar depots in Punjab , Rajasthan and southern
India.
Dealers
Like mentioned above, the company has a network of 498 dealers and over
1,500 authorised service centres and 162 exclusive three-wheeler dealers spread
across the country. Around 1,400 rural outlets have been created in towns with
population of 25,000 and below. The current dealer network is servicing these
outlets. Dealers can be classified under 3 heads. They are as follows:
COCO-
These are Company Owned & Company Operated showrooms. These concepts exist
only for Pro-Biking showrooms. Here Bajaj Auto has tried showcasing their muscle
power in high end biking segment. The concept has evolved very fast and now there
are 52 Pro-Biking showrooms in the country. The company itself does not take any
order from the customer in these showrooms. The giant dealer of the region who is
acting as a logistics partner for the pro-biking concept takes the order on behalf of
the company and fulfils the customer requirement.
CODO-
These are Company Owned & Dealer Operated showrooms. In case of this concept,
showrooms are owned by the company but the operations in the showroom are
managed by the dealer. This is generally the case where Bajaj wants to provide the
dealer financial benefits considering the high working capital requirement of the
company.
DODO-
These are Dealer Owned & Dealer Operated. These dealers are fewer in number
because they are generally the giant dealers who are the financial muscle for the
company. In our talks, the management indicated that the top management wants
to do away with this concept. The reason behind this is that the bargaining power
increases in the hands of the dealer, which puts the company in an knotty situation.
This function of distribution is not owned by the company in any form. This is
outsourced in toto to the third party vendors. The third party here is Transport
Corporation of India (TCI) and a few other private vendors. The fleet to be
transported is custom-designed for Bajaj Auto by the vendor.
Key Facts
There are twenty vendors all across India
OSL
Jamuna Transport
Sumit Transport
A Transit Insurance Compliance Letter(TICL) is signed between the two parties
The local level sub-dealer sometimes gets to decide the last mile logistics, as he
can decide to pick up the vehicles himself or have it transported to him
Logistics of the vendor is decided by the company
Freight charge is built-in in the product price
Bajaj selects those suppliers who provides majority of the required raw
materials together. The company believes in situation so if any suppliers do not
keep their requirement so at that time bajaj left the contract.
Workshop Training
In a month:
30-40 Mechanics can be trained per dealer
15-20 Sales personnel can be trained per dealer
New Product Launch
Information is percolated around a month before the product is to be launched
The date of launch can be rescheduled in case the current stocks of the dealer
are not getting cleared.
Promotional Activities
The cost of sending the staff to the Pune branch for training is borne by the
dealer.
Trail balance of ABC Auto as on 30.3.2009
Debit(amount) Credit(amount)
Particular RS(000) RS(000)
Cash 11700
Capital 13,000
Rates 1,880
Purchases 12,400
Trade creditors 11200
Sales 14600
Sundry creditors 1,620
Debtors 12,000
Vehicles 2,020