Traditionally, two-wheelers have been associated with convenience and mobility, a step up from travelling in rickety overcrowded buses or bumping around in auto-rickshaws and rickshaws. The first step towards self-owned mobility, the aspiration for cars is often put on the backburner due to rampaging inflation, high interest rates and steep hikes in fuel prices.
Even as the car market has struggled in the backdrop of a tough economic context, two-wheeler sales kept the momentum going. In fiscal 2011-2012, as many as 12 plus million two-wheelers were sold in India. In a little over a decade, the the Indian two-wheeler industry has turned on its head, with new entrants hungrily eating up market share, expanding the market and diversifying the market by demography and purchasing power.
The next horizon for the industry is the vast rural and semi-urban markets, with the focus being the fast-growing tier II and tier III cities and towns. The potential of the market is evident from the well-directed efforts of virtually every major player in the commuter motorcycle segment (100–125cc) which comprises 50 per cent of the sales of all motorcycles and is the preferred choice in tier II and tier III cities and towns.
Building a trusted brand in a value, price and brand conscious market is invariably challenging in the midst of cut-throat competition However, the actual category consumer is driven by three fundamental benchmarks, namely, quality, service, and price. Two-wheelers in India have become a first step-up in the aspiration ladder. A constrained budget does not imply any acceptance of compromise in the quality of product given that he has a choice among competing brands. Quality must not be understood merely from a product capability and dependability point of view. It encompasses seminal issues such as mileage, durability, compatibility with after-market conditions and relevant levels of technology. Second, the ease of after sales service and the cost of maintenance dominates his purchase decision as he battles with rising fuel costs. Third, the customer in the mass market is a stickler for the best price proposition, unwilling to shell out more for frills and unnecessary accessorisation.
Customers in tier II and tier III cities have relatively higher disposable incomes and more spending power than before but are still extremely price-conservative. Technology and aesthetic appeal take a back seat when compared to fuel efficiency and cost effectiveness of the vehicle. This trend is more evident as we move down the socio-economic ladder.
However, there is no trade-off between the customers’ need for quality and the price he is willing to pay. Even as companies seek to create the ‘nano effect’ in the two-wheeler space by driving down price points through competitive sourcing, it is evident that the customer has range and category options that make mere price positions untenable. Presence of multiple models in similar engine capacity provides consumers the flexibility of a wide choice between an array of products. Factors such as quality and durability occupy centre-stage in the minds of buyers. Since the best publicity for product quality remains word-of-mouth, companies are investing in strengthening the technology proposition that works to deliver high quality relevant platforms at competitive prices.
While international automobile brands ride on the advantage of their proficiency in research and development, Indian two-wheeler companies are tying up with foreign companies in an attempt to leverage their expertise in innovation and technology.
The third pivotal aspect is that of service. The automobile industry largely hinges on servicing since vehicles call for regular maintenance to ensure longevity and reliable functioning. Virtually all two-wheeler companies are extending their reach through dealerships equipped with the 3S – sales, service and spare parts.
Developing a penetrating network not only gives companies an edge in terms of higher sales, but also enable companies to touch base with customers, thereby helping to build equity with customers and to nurture brand loyalty. While companies make inroads into the two-wheeler market, they must emphasise on achieving a high level of customer satisfaction.
Companies at the heart of the Indian two-wheeler market need to weigh all the three aspects of quality, service and price and thus strategise accordingly. There is need to defy the adage “Price, Quality and Service. Pick any two” and prove their mettle in all three aspects. With cut-throat competition and each company looking at dislodging the current market favourites, ignoring any one aspect in favour of two others can prove potentially damaging to their business. It is of paramount importance to deliver impeccably on all three fronts in order to get a higher share of the market pie.
