How Bajaj won and lost in the scooters segment only to come from behind and learn the art of manufacturing and marketing motorcycles.
In late 2009, when Rajiv Bajaj, MD, Bajaj Auto, took the decision to exit the scooters segment, everyone, including his father Rahul Bajaj, Chairman, Bajaj Auto, missed a beat. For Bajaj Auto, the country’s second-largest maker of two-wheelers, whose name was synonymous with scooters in India for decades, the decision seemed to go against the grain of conventional wisdom.
In fact, the company’s tryst with scooters goes back decades. In the 1960s, Bajaj Auto got a manufacturing license from Italy’s Piaggio and began manufacturing and selling scooters under the brand name Vespa. In the 70s, when Piaggio refused to renew its license, Bajaj began manufacturing under its own brand. The company introduced Bajaj Chetak, its first home-produced scooter brand, which went on to become a huge success and was literally the mode of private transport for the middle and upper middle class Indians until 1998-99. The brand had the persona of a “work horse”. Its reasonable price and low maintenance cost made the product a huge hit and buyers had to fork out a hefty premium to own one, that too after a long waiting period.
Till the 1980s, Bajaj was a value for money brand, churning out scooters with names like Chetak, Super, Priya et al. They all looked the same and any one could tell they belonged to the same family. In fact, Bajaj had various brands under its umbrella and their brand identity remained “Humara Bajaj”. In the absence of any outside competition, the Bajaj brand name flourished, with Chetak ruling the two-wheeler scooter segment. Bajaj’s pithy but pitch-perfect base line, “Humara Bajaj” struck a chord in every Indian heart while the title song of “Buland Bharat Ki Buland Tasveer” added great value to its scooters.
During the ’80s and ’90s, Bajaj launched quite a few variants of Chetak and other newer models. But deviations from the main Piaggio design did not always prove successful. The failures started with the Bajaj Rave that the company promoted as a step-through design for an earler model, launched in the early 1990s. Next came the Stride, which was a more plasticky Chetak. The Bravo, too, was derived from the Chetak but did not go well with buyers. The Legend, which was a four stroke version of the Chetak, bombed miserably. Next in line was the Chetak 4 stroke, which again failed to stir the market. The death knell of Bajaj’s scooter business was sounded when the company officially stopped the production of its flagship Chetak in December 2005. In bringing the curtains down on Chetak the company said that the product no longer had any relevance to the customer, thus ending the saga of ‘Humara Bajaj’.
By the mid 80s and 90s, the two-wheeler segment had started shifting to motorcycles. Scooters were no longer the attractive option they once seemed to be. Motorcycle sales started rising in 1990’s and by 1999 motorcycles overtook scooters in sales for the first time. It was a clear indication of shift in consumer preference. Hero Honda, which was established in 1984 by Hero Group, and Honda Motor Corporation of Japan had been reaping the benefits of this trend. Bajaj entered the motorcycle space in 1986 with the launch of Kawasaki Bajaj KB100, in a tie-up with Kawasaki of Japan. But the company found itself lagging behind players such as Hero Honda, Yamaha and TVS, who dominated the market and had carved up the business amongst themselves. In order to succeed in the motorcycle segment it was important for Bajaj to shed its brand image from being a scooter manufacturer to a motorcycle maker.
For more articles, Click on IIPM Article
Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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In late 2009, when Rajiv Bajaj, MD, Bajaj Auto, took the decision to exit the scooters segment, everyone, including his father Rahul Bajaj, Chairman, Bajaj Auto, missed a beat. For Bajaj Auto, the country’s second-largest maker of two-wheelers, whose name was synonymous with scooters in India for decades, the decision seemed to go against the grain of conventional wisdom.
In fact, the company’s tryst with scooters goes back decades. In the 1960s, Bajaj Auto got a manufacturing license from Italy’s Piaggio and began manufacturing and selling scooters under the brand name Vespa. In the 70s, when Piaggio refused to renew its license, Bajaj began manufacturing under its own brand. The company introduced Bajaj Chetak, its first home-produced scooter brand, which went on to become a huge success and was literally the mode of private transport for the middle and upper middle class Indians until 1998-99. The brand had the persona of a “work horse”. Its reasonable price and low maintenance cost made the product a huge hit and buyers had to fork out a hefty premium to own one, that too after a long waiting period.
Till the 1980s, Bajaj was a value for money brand, churning out scooters with names like Chetak, Super, Priya et al. They all looked the same and any one could tell they belonged to the same family. In fact, Bajaj had various brands under its umbrella and their brand identity remained “Humara Bajaj”. In the absence of any outside competition, the Bajaj brand name flourished, with Chetak ruling the two-wheeler scooter segment. Bajaj’s pithy but pitch-perfect base line, “Humara Bajaj” struck a chord in every Indian heart while the title song of “Buland Bharat Ki Buland Tasveer” added great value to its scooters.
During the ’80s and ’90s, Bajaj launched quite a few variants of Chetak and other newer models. But deviations from the main Piaggio design did not always prove successful. The failures started with the Bajaj Rave that the company promoted as a step-through design for an earler model, launched in the early 1990s. Next came the Stride, which was a more plasticky Chetak. The Bravo, too, was derived from the Chetak but did not go well with buyers. The Legend, which was a four stroke version of the Chetak, bombed miserably. Next in line was the Chetak 4 stroke, which again failed to stir the market. The death knell of Bajaj’s scooter business was sounded when the company officially stopped the production of its flagship Chetak in December 2005. In bringing the curtains down on Chetak the company said that the product no longer had any relevance to the customer, thus ending the saga of ‘Humara Bajaj’.
By the mid 80s and 90s, the two-wheeler segment had started shifting to motorcycles. Scooters were no longer the attractive option they once seemed to be. Motorcycle sales started rising in 1990’s and by 1999 motorcycles overtook scooters in sales for the first time. It was a clear indication of shift in consumer preference. Hero Honda, which was established in 1984 by Hero Group, and Honda Motor Corporation of Japan had been reaping the benefits of this trend. Bajaj entered the motorcycle space in 1986 with the launch of Kawasaki Bajaj KB100, in a tie-up with Kawasaki of Japan. But the company found itself lagging behind players such as Hero Honda, Yamaha and TVS, who dominated the market and had carved up the business amongst themselves. In order to succeed in the motorcycle segment it was important for Bajaj to shed its brand image from being a scooter manufacturer to a motorcycle maker.
For more articles, Click on IIPM Article
Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
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