BAJAJ AUTO LIMITED

TO

Founded in 1926 Bajaj Auto came into existence on November 29,1945 as M/s Bachraj

Trading Corporation Private Limited .

It started off by selling imported two- and three-wheelers in India.

In1959, it obtained license from the Government of India to manufacture two- and three-

wheelers and it went public as Bajaj Auto Ltd (BAL) in1960 .

It started producing at Waluj in Aurangabad. In1986, it managed to produce and sell

500,000 vehicles in a single financial year. In1995, it rolled out its ten millionth vehicle

and produced and sold 1 million vehicles in a year.

Bajaj has made a number of motorcycles, scooters and cars. Motorcycles in current

production are the XCD Platina Discover Pulsar Avenger & Ninja Cars include the Bajaj

ULC ultra-low-cost car.

With the demerger of Bajaj Auto Ltd, following separate corporate entities came into

existence in May’ 2008 Bajaj Finserve Ltd (BFL), Bajaj Auto Ltd (BAL), and Bajaj

Holdings and Investment Ltd (BHIL)

BUSINESS:

Bajaj Auto makes five kinds of motorcycles, two kinds of Scooters and eight kinds of

three wheelers.

PARTERSHIP:

Bajaj Auto has a technical tie-up with Kawasaki Heavy Industries of Japan to

produce a range of the latest, state-of-art two-wheelers in India.

LOCATION:

Bajaj Auto has three plants in Maharashtra, at Akurdi, Waluj and Chakan.

Mission, Vision, Objective & Goal

Key Policies

April 2010 BAL will continuously specialize in Motorcycle and commercial vehicle

though its strategy of differentiations TO “Defend” its brands , BAL will continuously

improve its core competencies in all its functions, as also across its supply chain,

including its suppliers and dealers. BAL’s core competencies rest on its values of

innovations, Perfections & supply.

BAL has adopted TPM. TPM shall provide a holistic, structured and quantifiable

methodology for deeper and wider continuous improvements in an integrated way

aligned to BAL’s business vision. TPM ensures that individually and collectively, every

employee of BAL and its business partners strive to keep BAL Distinctly Ahead.

Bajaj Image

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 company has

successfully changed its image from a scooter manufacturer to a two wheeler

manufacturer. Its product range encompasses scooterettes, scooters and motorcycles. Its

real growth in numbers has come in the last four years after successful introduction of a few

models in the motorcycle segment. Bajaj brand is well-known across several countries in

Latin America, Africa, Middle East, South and South East Asia . The integrity, dedication,

resourcefulness and determination to succeed are the characteristic of the group today .

The present Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under

his leadership, the turnover of the Bajaj Auto the flagship company has gone up from INR.72

million to INR. 120 billion, its product portfolio has expanded and the brand has found a

global market.   Rahul Bajaj is one of India’s most distinguished business leaders and

internationally respected for his business acumen and entrepreneurial spirit.

Key Players in Market

Hero Honda Motors India Limited

Bajaj Auto Ltd. (BAL)

TVS Motor Company Honda Motorcycle Scooter India (P) Ltd.

Yamaha Motors India Pvt. Ltd.

Suzuki Motor Corporation LML (India) Limited

Royal Enfield Motors India Limited

Human Resource Concern:-

The world's 4th largest two- and three-wheeler company live their brand by its values of

Innovation, Perfection, and Speed. They are distinctly ahead through excitement engineering.

Innovation is how they create the future. It is a value that provokes them to reach beyond

the obvious in pursuit of that which exceeds the ordinary.

Perfection is how they set new standards. It is a value that exhibits there determination to

excel by endeavouring to establish new benchmarks all the time.

Speed is how they convey clear conviction. It is a value that keeps them sharply

responsive, mirroring their commitment towards there goals and processes

Bajaj to stop scooter production, focus on motorcycles. Bajaj find there is enough market space

for making motor cycles than scooters. Bajaj Auto are in talk with Nissan to manufacture

passenger cars below US$ 3000 .Customers do have a perception problem about firms. To

become an passenger car manufacturer overnight is difficult , without having any prior

experience of manufacturing cars. Keeping in mind the Passenger Car market, Bajaj

rightly walked out from manufacturing Scooters, which was considered to the darling of the

great Indian middle class and was amongst one of first Indian manufactures to sell FINISHED

goods in the international market. Strategic move that Mr. Rajeev Bajaj have taken to stop

manufacturing scooters.

Paradigm Shift……

• In 2000 BAL lost its No.1 position to HHL.

• Geared Scooter Sales drop by 41% in 2001.

• Growing popularity of Motorcycles.

• Change in consumer preference, “from scooters to 4-stroke engine motorcycle”.

• Reoriented business: launched series of new motorcycle in market.

• Bajaj faces fierce competition in home ground namely from hero Honda & TVS .

• Hero Honda has taken the lead in volumes and market share over Bajaj .

• Bajaj is strong in entry level and premium segment, but doesn't have a strong portfolio

in executive segment.

BAJAJ AUTO- A Myopic VISION

License Raj Syndrome.

No technological up gradation of products.

High disposable ideal cash.

Risk averse investment portfolio.

Didn’t foresee future trendz .

Bajaj was a late riser to the competition.

No long lasting foreign jv’s

Lack of professional management team.

What and why firms do Pruning of a Product

PRUNING, in other words winding up or discontinuing a product due to following reasons:-

Demand Shifts due to Consumers Behavioral Change:

Declining demand or shift of change in taste of the consumers.

Insufficient Financial Returns: Sometimes the pruning is done insufficient financial

returns.

High Sundry debtors, or large sales cycle time with low returns and high pressure on

bottom line will force the firms to go for product PRUNING.

Optimum Resources Utilization: Product PRUNING enables the Firm to dedicate its

resources to its best products, and optimally utilize all its resources.

Market or Segment Attractiveness: Certain price /market/segments become attractive

as because that segments growth is phenomenal. So firms operating in a particular

segment do a product PRUNING and slowly switch to that high growth segment.

Innovation and R & D: Successful firms continuously stress on innovation and R&D, in

order to value adds to its product line. Product innovation is also a process. Successful

innovation helps a firm to do existing product PRUNING.

Timing: Last but not the least the Timing is also a very important matter at the time in

PRUNING a product. A product may be pruned gradually by discontinuing all

promotion expenditures .

“Inspiring Confidence”

• Launched a series of motorcycle in an attempt to capture market share.

• In 2001, BAL showed ‘slice of life situations’ of ‘new age India’.

• Analyst felt that by 2004, BAL’s image had undergone considerable change.

• In spite of changing its focus & strategy from scooters to motorcycles BAL - MD felt

that:

• "Like Volkswagen Beetle, the product (Bajaj Chetak) had lost its relevance."

Rajiv Bajaj, MD, Bajaj Auto Ltd., in January

2006.

• "We believe it is not good enough to be better, it is important to be distinct.”

• Rajiv Bajaj, Managing Director, BAL.

• This Lead to the strategy of…………

“Distinctly Ahead”

• BAL announced new corporate strategy in mid 2007.

• USP – Styling & Technology.

• Repositioned itself – aggressive & fast-paced.

• ‘Distinctly Ahead’ focused on 3-core values:

Innovation, Speed & Perfection.

• The ad featured pay-off line,

“Alag Andaaz, Alag hai Khoj, Rakhe Aage, Hamari Soch.”

• Launched Bajaj Pulsar – flagship brand- based on this strategy.

Consumer Centric Steps by Bajaj

Now, let us look at some of the measures taken by Bajaj to influence consumer behavior in the

increasingly competitive market.

DEALERSHIP AND SERVICE NETWORK:

Bajaj Auto has an extensive network of about 485 dealers and 1500 service centers

around the country. Lately it has been concentrating on the rural front which has largely

been an untapped, growing market in terms of performance segment bikes. Bajaj has

identified a segment of customers 'Probikers', who are knowledgeable, appreciative of

contemporary technology, they are trendsetters and very choosy about what they ride.

Hence, Probikers need to be addressed in a meaningful way that goes beyond the product.

Bajaj Auto is in the process of expanding it’s chain of retail stores across the country

exclusively for high-end, performance bikes. These stores are called "Bajaj Probiking".

Many such stores have been opened throughout major cities in India.

A BAJAJ PROBIKING SHOWROOM

The “Probiking” stores have features like attractive spare parts display, a trial room

which is fully air-conditioned etc. The bikes are displayed in standing position which is

in itself a very novel way of attracting attention of the youngsters. Bajaj Auto has come

up with new initiative called “e-biking” to facilitate online booking of bikes. It’s the first

and only kind of online bike booking in India and expected to woo the prospective

customers. After bike has been booked, bike would be delivered at the doorstep of the

customer with attractive financing schemes made available to the customer. Bajaj Auto is

expecting that it would gain significant customer base from people in cities like

Bangalore, Hyderabad and Chennai, which are IT hubs of India and where people are

internet savvy.

CUSTOMER RETENTION

Lifecycle of bike is relatively large (compared to other products like grocery items, clothes, etc.)

and it is not that sort of product that people will buy twice a year or even once every year. So

customer retention is not limited to the act of customers coming back to buy the same product

again and again. Here, it takes a broad meaning and encompasses customer satisfaction with its

usage; service by the vendors and service centers; and as a result customers who have already

bought the product recommending the same to other prospective customers, users forming clubs

to support the brand and also helping in testing etc of any new launches. We must say Bajaj has

done extremely well in this area also. Sales of Pulsar as well as its popularity have been leading

those of other bikes. Also in cities like Pune there are bikers clubs, which owe serious allegiance

to the brand Bajaj. People who had bought it and were happy with it started a Website

www.pulsarclub.com. This all is testimony to the successful customer retention for Pulsar by the

Bajaj Auto. Another initiative taken by Bajaj Auto is “Bajaj Confidence – Extended Warranty

Plans”, which extends basic 2-year/30000km warranty coming with the purchase of new Bajaj

Bike at a very nominal price. This extended warranty gets activated as soon as the basic warranty

expires. This initiative has been taken to provide better service to the existing customers and

hence focuses on customer retention and better customer relationship management. It needs to be

seen how this new initiative does in achieving goals of customer retention. Marketing

management is often described as the art and science of choosing target markets and getting,

keeping and growing customers through creating, delivering, and communicating superior

customer value. While “DEALERSHIP AND SERVICE NETWORK” is focusing on getting and

growing customers, “CUSTOMER RETENTION” focuses on keeping customers through

superior customer value.

Research & Development

Bajaj Auto has a huge, extensive and very well-equipped Research and Development

wing geared to meet two critical organizational goals:

1. Development of exciting new products that anticipate and meet emerging customer needs

in India and abroad

2. Development of eco-friendly automobile technologies

The company has also been investing heavily in the latest, sophisticated technologies to

scale down product development lifecycles and enhance testing capabilities.

Bajaj Auto R&D also enjoys access to the specialized expertise of leading international

design and automobile engineering companies working in specific areas.

Marketing Strategies

Being the leading manufacturer of two & three wheelers market BAL(Bajaj Auto Ltd.)

has been providing the best of the class models at competitive prices.

Most of the Bajaj models come loaded with the latest features within the price band

acceptable by the market.

They regularly update the low price bikes with the latest features like disk-brakes, anti-

skid technology and dual suspension, etc.

Bajaj Auto's entire product portfolio, from the entry-level to the premium, is being sold

by the same dealers. The restructuring will involve separate dealer networks catering to

the urban and rural markets as well as its three-wheeler and premium bikes segments.

Bajaj Auto also plans to set-up an independent network of dealers for the rural areas. The

needs of financing, selling, distribution and even after-sales service are completely

different in the rural areas and do not makes sense for city dealers to control this

SWOT Analysis

Strengths:

1. Highly experienced management Product design and development capabilities

2. Extensive R & D focus

3. Widespread distribution network

4. High performance products across all categories

5. High export to domestic sales ratio

6. Great financial support network (For financing the automobile)

7. High economies of scale High economies of scope

Weaknesses:

1. Hasn't employed the excess cash for long.

2. Still has to establish a brand to match Hero Honda's Splendor in commuter segment.

3. Not a globally recognizable brand (unlike the JV partner Kwasaki)

Opportunities:

1. Double-digit growth in two-wheeler market.

2. Untapped market above 180 cc in motorcycles.

3. More maturity and movement towards higher-end motorcycles.

4. The growing gearless trendy scooters and scoottee market.

5. Growing world demand for entry-level motorcycles especially in emerging markets. It is

also proposing to launch motorcycles from Austrian bike maker KTM, in which Bajaj

Auto has over 25 per cent stake

Threats:

1. The competition catches-up any new innovation in no time.

2. Threat of cheap imported motorcycles from China.

3. Margins getting squeezed from both the directions (Price as well as Cost) TATA Ace is a

serious competition for the three-wheeler cargo segment.

FUTURE GOALS

1. Continuously launching bikes with new technologies like ‘Digital Twin Spark - Swirl

induction’ (DTS-Si) engine.

2. Along with Renault they are ready to launch there new concept car ‘Bajaj lite’.

Conclusion

They should have introduced new products across segments.

The company should have anticipated the change in market dynamics and introduce

bikes earlier then they did.

They should have increased the customer –centric initiatives and command more

loyalty.

Bajaj should have discarded the notion of being the numero- uno and should have moved

with times.

Investments should have been made in high yeilding avenues.

The company should have sustained their JV’s for long term synergies.

Bajaj is India’s largest automobile manufacturer.

They firmly believe in providing the customer “ VALUE FOR MONEY,FOR YEARS”

through there products & services.

Quality, safety & service has been given as much considerations as productivity, cost &

delivery