The essence of Rajiv Bajaj’s business philosophy was recently demonstrated when the company he heads launched the sporty, more powerful Discover 100T (Tourer). Bajaj Auto's 47-year-old managing director says this bike promises to the ‘ultimate 100cc’ with 30 percent more power
than its peers.
“What we have discovered from our repeated failures is that, let’s say, there’s a motorcycle known for mileage. And you improve the mileage by 10 percent. What we have come to realise is that the consumer doesn’t feel it. We find that when you hit 33 percent differentiation, then the consumer is willing to acknowledge that you have made something different. So, that’s why we actually aimed for a 30 percent increase,” says Bajaj in a candid Q&A session.
With the launch of the Discover 100T, Team Bajaj is confident of success. The company’s earlier efforts with models like the XCD and the Wind didn’t quite take off and the CT100 was successful for a relatively short period.
A key reason for the failures could be that they were seen as ‘me-too’ products. Now with the Discover 100T, the company wants to sell around 45,000 units a month.
Different strokes
While the Discover 100T is aimed at earning that “acknowledgement” from customers that the company has offered something different, it is more than likely that the margin of differentiation could be higher for products in the other end of the company’s portfolio.
A key addition will be the KTM Duke 390, which will “masquerade” as a 400cc. A Pulsar version of it is also expected. “We can then think about a 600cc offering. When you make something that’s at least 50 percent different, the consumer says ‘it’s not only different, it’s different enough to be the opposite’,” says Rajiv.
Bajaj attributes the success of the Pulsar to this “differentiator” strategy. The Pulsar 150 delivered 12bhp, compared to 8bhp by 100cc bikes. “For us, these numbers are sacrosanct and all our planning takes this into account," he explains.
Bajaj Auto’s current success ride didn’t come easy. It had to struggle, in the below-150cc segment, to get the volumes. A revised strategy enabled this. Bajaj says, “Around December 2008, our domestic motorcycle sales were under 70,000 units (per month). That was achieved with a lot of push."
So, what has changed? The success mantra was aligning strategy with what the brand stands for. Bajaj Auto is aiming to ride the success wave by marrying “some insight of psychology in the front-end” with “the physics of the back-end of R&D.”
Segmentation comes of age in India
Segmentation is a reflection of a maturing market. The Indian two-wheeler market is witnessing that phenomenon. It is this trend that Bajaj Auto wants to take further with the Discover 100T by offering 30 percent more power (than its peers) for a five percent price premium.
The strategy is to create “the perception of a new category”. Building the power/performance attribute is also the objective. Bajaj Auto experienced the benefit of this attribute in the 100cc segment with the Discover 100. To understand the buyer’s requirement, Rajiv says, "We probed them more deeply. Their comments such as 'this is a junior Pulsar', 'this is a domesticated Pulsar' helped us strategise. When they started saying things like that, we understood, in a way we have two brands, or in a way we have only one brand. Two branches coming out of the same trunk."
Rajiv says that in his view, power/performance can be the key attribute associated with Bajaj products, the way perhaps ‘mileage’ is associated with Hero, ‘leadership’ with Honda, ‘value for money’ with TVS Motor and ‘style’ with Yamaha.
At present, Bajaj Auto’s share in the entry-level bike segment is 19 percent during the April-December 2012 period, a two percentage-point improvement over the year-earlier period. Its share in this segment is half of what it enjoys in the above-125cc segment. According to Rajiv, even if the Discover sells 20,000 additional bikes, it is a lot in a flat or slightly negative market.
Bajaj Auto currently sells around 80,000 100cc bikes (around 35,000 units of the Platina in the A1 segment and around 50,000 units of the Discover 100 in the A2 segment) per month.
The Discover 100T falls in a sub-segment which currently sees sales of around 150,000 units (Passion Pro – 105,000, Dream Yuga – 45,000).
With the Discover 100T, Bajaj hopes to further enhance its performance in the motorcycle segment, which contributes to over 70 percent of the total two-wheeler industry. But scooters are coming back too. During the April- December 2012 period and on a smaller base than bikes, scooters grew 18.4 percent versus a flat motorcycle market.
Asked if the scooter market is now an attractive proposition, here is Bajaj’s response: “When the market matures and buyers have a choice, then the only way you can actually stand out is by doing one thing well. You have to create the perception of specialisation. We would like to create the perception that we are a specialist of motorcycles.” And he cites Maruti’s success as a small car manufacturer.
For the near future, Bajaj Auto’s focus seems to be exclusively on motorcycles. And going by the strategy of the company, the market can expect products that come with “differentiation that is credible.”
SUMANTRA BAROOAH