Looks to create product differentiation across segments
Bajaj Auto has indicated that it would continue to drive its brand positioning and differentiation strategy to become stronger in 100 cc segment amid growing competition and expects to see equal sales contribution from 100 cc and other segments in the future.
“Our strategy is not based on cc, but about the brand and its positioning. Our aim is to have a strong position in the customers’ minds. We will be in all segments of bikes, but our offering would be very much different from the existing ones in each segment. So, we will continue to create that differentiation in all the segments we play,” K Srinivas, president – motorcycles, Bajaj Auto told Financial Chronicle.
“We have been successful in creating that differentiation with Pulsar range and now with Discover range. May be, we have not done that strongly in 100 cc segment, but we will create that product differentiation in that segment too soon. We expect the sales contribution to be 50:50 between 100 cc and non-100 cc bikes over a period of time,” he added.
“Bajaj Auto had lowered its focus on the lower cc motorcycle segment in 2008-09, to focus more on the Pulsar brand in the higher cc performance bike segment. However, the exit from the 100 cc segment lasted only for a brief, while the company staged a comeback soon thereafter through the launch of Discover100 realising that the market for lower-priced commuter bikes was unlikely to fade away at the pace envisaged. Although the Discover100 is now amongst the top three selling bikes in India, Bajaj Auto remains a distant second ranker in the 100 cc bikes segment. The company has recently initiated a fresh marketing campaign positioning the Discover100 as a superior product to challenge the leadership of Hero MotoCorp. However, its ability to grow market share and sustain it thereafter remains to be seen in the backdrop of its past record of strategy flip-flop and multiple product portfolio realignments,” Subrata Ray, senior VP – corporate ratings, Icra said.
“Adopting a clear product and brand strategy is all the more imperative for Bajaj Auto now given that it may be difficult for it to compete with the likes of Hero MotoCorp and Honda on the basis of other factors such as product strength, distribution network strength or lower price. If it could do so, Bajaj Auto would enhance its ability to remain a relevant competitor in the 100cc segment,” he added.
Meanwhile, Bajaj Auto is now gearing up to boost volumes this year, with a slew of new launches lined up for this financial year amid intense competition in the bike segment. Last year was a tough one for the company, but it is hopeful of registering strong growth close to double-digit in current year, through the new launches. The recent launch of Discover 125 Sports Tourer is aimed at maintaining its leadership in the 125cc+ segment. It is also betting big on its next generation Pulsar 200 NS, which will hit the roads shortly.
“From a strategic perspective, the ability of Bajaj Auto to sustain its leadership position in the 150-220cc segment of bikes holds a critical importance for it; something which can have a virtuous effect on its Discover brand as well. To strengthen its position in the above 150cc segment of bikes, in India and internationally, Bajaj Auto had acquired 14.7 per cent equity stake in the Austria-based KTM Power Sports AG in 2007 and has gradually increased its equity ownership in the company to around 47 per cent. The company also launched the KTM Duke200 in India in January 2007 at a price tag of Rs 1.17 lakh (ex-showroom, Delhi) and the new Pulsar 200NS, a model that uses the same platform and engine as the Duke200. Bajaj Auto and KTM plan to take their synergistic product development partnership further and are understood to be currently developing several new bikes for the domestic and global markets. These initiatives are likely to enable Bajaj Auto maintain its stronghold in the premium motorcycles space over the medium term, said Ray.
In the above 125cc segment of motorcycles, while Bajaj Auto continues to garner nearly half the segment’s volumes (48 per cent in 2011-12), it has been ceding market share to Honda and Yamaha, whose volumes in the above 125cc segment grew significantly by 28 per cent and 39 per cent respectively in 2011-12.
