Project Report on Bullet

PROJECT REPORT ON

BUSINESS STATEGY

A BRAND ANALYSIS OF ROYAL ENFIELD

“MASTER IN BUSINESS ADMINISTRATION”

2014-2015

Submitted by:- Submitted to:-

Miss Simran Kapoor

MBA 3rd Sem Asst Manager

CPU, KOTA

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TABLE OF CONTENT

1) Executive summary2) Introduction3) Product line4) Dark Phase during 1990-20005) Strategies to be framed for outcome6) Change in strategy after 20057) Communication and Distribution8) Conclusion and Recommendation9) Why we Love ROYAL ENFIELD

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EXECUTIVE SUMMARY

The Research is aimed at the study of Royal Enfield Brand in Indian Markets – So far how they have performed and suggestions for them to grab more market share and be profitable. Every year, they have sold modest numbers but despite low numbers, they continue to command a position of respect and awe in the Indian motorcycle market. The objective of the study was to study the different product lines, marketing strategy and Brand Management of Royal Enfield Bullets in Indian market.

1) Bullet riders are mostly Value-Expressive, with an internal locus of control and a strong sense of independence.

2) The company has been cashing in on the iconic status it has and has done little to reinforce its image amongst an exploding two-wheeler market.

3) The pricing of the motorcycle might also be looked upon as conservative.

Royal Enfield has for a while now targeted the youth market with lure of freedom. However, they have done little to reinforce their position. Maybe advertising campaigns targeted at the Value-expressive customer would enable the brand to reap the benefits of its iconic position in a much more productive way. Also, most users find it imperative for the company to improve its After Sales Service and Spares availability.

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INTRODUCTION INDIAN AUTOMOBILE HISTORYThe automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.Since the last four to five years, the two wheelers segment has driven the overall volume growth on account of the spurt in the sales of motorcycles. However, lately the passenger cars and commercial vehicles segment has also seen a good growth due to high discounts, lower financing rates and a pickup in industrial activity respectively. Major automobile manufacturers in India include Maruti Udyog Ltd., General Motors India, Ford India Ltd., Eicher Motors, Bajaj Auto, Daewoo Motors India, Hero Honda Motors, Hindustan Motors, Hyundai Motor India Ltd., Royal Enfield Motors, TVS Motors and Swaraj Mazda Ltd. With the economy growing at 9% per annum and increasing purchasing power there has been a continuous increase in demand for automobiles. This, along with being the second largest populated country, makes the automobile industry in India a very promising one.

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INDIAN TWO WHEELER MARKET

Ever since the old Lambretta scooter was replaced with the flurry of vibrant two wheeler models, Indian two wheeler industry has seen a phenomenal change in the way they perceive the Indian market. Two wheeler manufacturers are now competing in an ever growing consumer market by bringing out new products and features.The country has now grown into the second largest producer of two wheelers in the world. Currently there are around 10 two-wheeler manufacturers in the country, and they are Bajaj, Hero, Hero Honda, Honda, Mahindra/Kinetic, Royal Enfield, Suzuki, TVS, and Yamaha.There have been various reasons behind this growth. Because of poor public transport system, the citizens found convenience in two wheelers. Added to this is the fact that the average Indian still does not have the purchasing capacity for a more expensive, four wheeler. The Indian two wheeler industry can be divided into motorcycles, scooters and mopeds. The consumer has changed his preference from mopeds to scooters and then to motorcycles. The trends seen in the past few years include females increasingly using two-wheelers for their personal commutation and various two wheeler manufacturers designing vehicles specially to cater to needs of this segment.One of the earliest revolutions in this industry was Kinetic’s introduction of the concept of electronic/self-start and automatic gears which made two wheelers comfortable and useable by women, when compared to old Bajaj Chetak advertisements which showed middle aged females riding a Bajaj Chetak scooter. A recent trend in the industry has been electric vehicles, which mostly leverage on their eco-friendliness and low operating costs, but

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is still not accepted well due to the lack of reputation of the manufacturers and lack of trust on technology, which is still being perceived in the nascent stages, especially battery and inverters which prove to be very expensive components. TVS recently leveraged this opportunity by launching a hybrid model of their non geared scooter – TVS Scooty. The end of the last decade saw Bajaj taking a radical decision to do away with the Scooter range and completely concentrate on motorcycles, especially stating change in customers preference as the main reason. The customers are left without a choice in most cases than to migrate from the traditional scooters of the Indian family to the all youthful bikes that one’s son rides to college.

PROFILE OF THE ORGANISATION

In 1893, the Enfield Manufacturing Company Ltd was registered to manufacture bicycles by 1893, as Enfield Manufacturing Co. Ltd. By 1899, Enfield were producing quadricycles [ with De Dion engines and experimenting with a heavy bicycle frame fitted with a Minerva engine clamped to the front down tube. In 1912, the Royal Enfield Model 180 sidecar combination was introduced with a 770 cc V-twin JAP engine which was raced successfully. Royal Enfield motorcycles made in England were being sold in India from 1949. In 1955, the Indian government looked for a suitable motorcycle for its police and army, for patrolling the country's border. The Bullet was chosen as the most suitable bike for the job. The Indian government ordered 800 350 cc model Bullets. In 1955, the Redditch

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company partnered with Madras Motors in India to form 'Enfield India' to assemble, under licence, the 350 cc Royal Enfield Bullet motorcycle in Madras (now called Chennai). The first machines were assembled entirely from components shipped from England. Royal Enfield are the makers of the famous Bullet brand in India. Established in 1955, Royal Enfield (India) is among the oldest bike companies.. Bullet bikes are famous for their power, stability and rugged looks.

It started in India for the Indian Army 350cc bikes were imported in kits from the UK and assembled in Chennai. After a few years, on the insistence of Pandit Jawaharlal Nehru, the company started producing the bikes in India and added the 500cc Bullet to its line. Within no time, Bullet became popular in India. Bullet became known for sheer power, matchless

stability, and rugged looks. It looked tailor-made for Indian roads. Motorcyclists in the country dreamt to drive it.It was particularly a favorite of the Army and Police personnel. In 1990, Royal Enfield ventured into collaboration with the Eicher Group, a leading automotive group in India, in 1990, and merged with it in 1994. Apart from bikes, Eicher Group is involved in the production and sales of Tractors, Commercial Vehicles, and Automotive Gears. Royal Enfield made continuously incorporating new technology and systems in its bikes.In 1996, when the Government of India imposed stringent norms for emission, Royal Enfield was the first motorcycle manufacturer to comply. It was among the few companies in India to obtain the WVTA (Whole Vehicle

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Type Approval) for meeting the European Community norms. Today, Royal Enfield is considered the oldest motorcycle model in the world,spanning 3 centuries and still in production and Bullet is the longest production run model. The company is marching on with its tagline- "Made like a gun, goes like a bullet".

Profile of the Products Royal Enfield Bullet 350 One can be a part of classical prominence by having a ride on Royal Enfield Bullet 350, a macho bike which is stylish as well. The brawny is laden with plenty of attention grabbing features like traditional designing, astonishing power of 18 bhp from air cooled, 4 stroke engine, large wheels, and better sitting for superior riding. This has been the classical offering from Royal Enfield and the engineering and the design has remained unchanged over the years. It has remained the flagship product with the other products being perceived more as derivatives of this motorcycle rather than standalone products.

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Royal Enfield Bullet 500 (Cast Iron)

Royal Enfield Bullet 500 is a classic bike having vintage styling. The bike has hand-painted pin stripes, a 4-speed transmission, double leading shoe front brake and was touted as the powerhouse model with a whopping 27 bhp output. While the bike looked mostly similar to the Standard 350cc offering, its bigger engine made it a more potent vehicle to have on long rides.

Royal Enfield Bullet Electra

Royal Enfield motorcycles were renowned for having problems starting because of their CB Point Ignition systems. In an attempt to break this negative image, the company came up with Electra. Electra was in effect a Standard 350cc but had a CDI Ignition system. This paved the way for the newer bikes from Royal Enfield which now have Digital TCI as a a part of the standard package.

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Royal Enfield Bullet Machismo

Machismo is Royal Enfield’s “chrome monster”. Resplendent with chrome, they are available in both 350cc and 500cc variants. They were the first bikes to have the now legendary Lean Burn AVL Engines. These were the result of Royal Enfield’s collaboration with an Austrian Engine manufacturer, AVL.

Royal Enfield Thunderbird Bike

Royal Enfield Thunderbird is a powerful bike which for the first time broke off from the ‘Bullet’look. They were modeled similar to the cruisers available worldwide and were positioned as a tourer’s choice. It has developed into a strong marquee itself and continues to remain a brand name despite engineering changes that went into it. It started as a 350cc AVL Single-Spark Engine. Today the Thunderbird Twinspark is a 350cc Unit Construction Twin-spark Engine with about 20 bhp output.

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Royal Enfield Classic

In 2008, Royal Enfield unveiled its latest offerings – the Classic 350 and the Classic 500.Styled in the vintage 50’s look, they came with 18 inch tyres, Unit Construction engines and the look and feel of a vintage. Priced at 1.3 lakhs and 1.7 lakhs respectively, the 350cc and the 500cc variants are slowly gaining popularity amongst users for the lower ride height, the greater power and above all, the vintage feel of the bike.

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Royal Enfield Continental

Launched globally in 2013, and 2014 in India, the Royal Enfield Continental GT is the lightest, fastest, most powerful Royal Enfield in production. It’s a machine with a story, a nod to motorcycling’s finest hour; a painstaking collaboration. It is also the best expression yet of a cultural phenomenon that has simply refused to fade away - the café race.

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DARK PHASE DURING 1990-2000

The problem started when Royal Enfield wrongly identified them as its competitors and started to compete with them. They shifted their focus from the present loyal customers to the mass & much younger generation. Their “Bullet- Machismo” Ad clearly shows the confusion in their strategy. First time in the history a lady model was used, bullets was never shown as a tool to impress girls. They had shown the impossible stunts which are impossible with a bike like Bullet. Bullet was for “Joy of Riding”,”Adventure”,”Shaan”. Thus the phase from 1990 to 2000 can be called a dark phase and it nearly killed the “Royal Enfield” brand. Even the new masters of “Royal Enfield” who acquired them in 1994 were planning to shut down the Brand.

.But things change a young man who was a die hard fan of Royal Enfield Mr. Lal took charge of “Royal Enfield” he upgraded the bikes with modern technology but keeping intact the “Vintage” and “Macho” attributes of Brand. He promoted Fan Clubs, increased visibility through accessories, Organized events like “Himalayan Odyssey” and launched the Ad campaign in 2004 “JAB BULLET CHALE TU DUNIYA RASTA DE”. He re-launched the Bullet “Classic” series. And all this revived the brand “Royal Enfield”.Still there are some issues, which Royal Enfield has to solve but never the less it seems they are on the right track. The brand Analysis of Iconic Royal Enfield The year 2000 could have been decisive. That was when the board of directors at Eicher Motors decided to either shut down or sell off Royal Enfield - the company's Chennai-based motorcycle division, which manufactured the iconic Bullet motorbikes. For all its reputation, the sales of the bike was down to 2,000 units a month against the plant's installed capacity of 6,000; losses had been mounting for years. Though the bikes had diehard followers, there were also frequent complaints

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about them - of engine seizures, snapping of the accelerator or clutch cables, electrical failures and oil leakages.Many found them too heavy, difficult to maintain, with the gear lever inconveniently positioned and a daunting kick-start.

STRATEGIES TO BE FRAMED FOR COME BACK

Just one person stood up to the board, insisting Royal Enfield should get another chance. He was Siddhartha Lal, a third generation member of the Delhi-based Lal family, promoters of the Eicher group of companies. Lal, then 26, was an unabashed Bullet fan: he even rode a redcoloured Bullet while leading the baraat (procession) to his wedding venue, instead of the traditional horse.Lal felt Royal Enfield could still be saved.

The bike had its reputation, a cult following, an instantly recognisable build, and aspirational value. Changes had to be made to keep up with the times and make the bike more acceptable, and therein lay the problem. Royal Enfield fans liked the bikes exactly the way they had always been Retaining the bikes' rugged looks was a given, including the build, the design of the head lamp and the petrol tank. But should the gears be shifted close to the rider's left foot - as in most bikes - or retained on the right side? The question gave Lal and his team many sleepless nights, since long time users were dead opposed to the change.

The engine was another thorny question. The old cast iron engine was a relic of the past. Its separate gear box and oil sump design made it prone to oil leaks and it seized up very often. Its ability to meet

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increasingly strict emission norms was also suspect. A modern aluminium engine would eliminate these problems, but it would lack the old engine's pronounced vibrations and beat - which Royal Enfield customers loved. Laws of physics made it impossible to replicate these with the new engine.

But the new engine, unlike the old, had hydraulic tappets, a new engine arrangement, new metal and fewer moving parts. Obviously, it did not produce the vibrations and the beat of the old, but international experts were consulted and sound mapping carried out for over 1,000 hours to ensure it produced the maximum rhythmic vibrations possible and a beat, which was 70 per cent of the amplitude of the original. The new engine had 30 per cent fewer parts and produced 30 per cent more power than the old, with better fuel efficiency.

By 2010, all Royal Enfield models had begun to use the new engine. Two other problems needed to be addressed: the quality of some of the components Royal Enfield bikes were using, and the sales experience. To tackle the first, shop floor processes were fine-tuned, while suppliers were exhorted to improve quality levels. Royal Enfield also embarked on a large scale internal exercise to tone up performance.

The collection included biker apparel, bike and riding accessories. Every year, the Company conducts a study to develop a comprehensive 360° view on the opportunities, risks and threats to the business. These include areas such as markettrends, new competition, changing customer preferences, disruptions in supplies, product development, talent management etc.

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POSITION OF COMPANY AFTER COME BACK STRATEGY

The Company has robust ERP systems based on SAP platform. This ensures high degree of systems based checks and control. The Royal Enfield unit was able to produce and sell 42% more motorcycles in 2011 as compared to 2010. Total sales volume of Royal Enfield in 2011 was 74626 motorcycles as compared to 52576 in 2010. Total income for the year was 6,709.5 MINR, 51.6% growth over previous year1. Even during 2008 recession, when auto sector was severely damaged, Royal Enfield Bullets had very good performance in terms of sales. It can be seen from the below bar graph Conclusion and Recommendations.

CHANGE IN STRATEGY AFTER YEAR 2000

Marketing Mix: Product: Product which is the ruff & tuff all terrain motorcycle. It has been upgraded with technology such as EFI (Electronic Fuel Injection) for better response, heavy cast iron diesel engine of the earlier model has been replaced by a lighter but equally power full single cylinder four strike petrol engine which is made from aluminum. The gears have removed from the right side to left side to need general standards. But it was ensured that the “VINTAGE” and “Macho” appeal of the bike is not damaged. Place: The market of Royal Enfield can be divided basically into two segments:

1) Metropolitans: Teir 1 &Teir 2 Cities.2) Small Cities: Teir 3 &DH (District Headquarters)

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But in both the market it commands premium position. Hence the showrooms must be opened in the prime locations of the cities irrespective of metropolitans or small cities.

PROMOTION :

It is promoted in MENs magazines, Adventure magazines, local print media, adventure trips ie. Himalayan Odyssey and Fan Clubs.

CONCLUSION AND RECOMMENDATION

1. The buying behavior is governed predominantly by the need for Power and respect for the iconic Brand.

2. The internal locus of control is by and large dependent on the Sense of Control the motorcycle offers and also on the Sense of Freedom that users associate with it.

3. Users are mostly Professional Males, 25-45 years of age, including some students.

4. Users’ display mostly Value-Expressive behavior and Ego-defensive behavior is not seen amongst responses.

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5. People who choose not to buy Bullets do so because of high price, maintenance and spares hassles and also because some feel they are not built for it.

6. Advertisements are rarely recalled and are highly ineffective amongst non-Bullet riders.

7. Bullets are perceived as low on cost-effectiveness, but high on ride comfort and reliability.

RECOMMENDATIONS

1. Improved Sales and Service Network by Franchise or dealership on Profit Sharing Basis Royal Enfield doesn’t have a very good sales and service network. Marketing the product is not limited to sales only. There should be extensive network of service centers so that customers have a very good bullet experience The customer should get the service network similar to that of Maruti –Suzuki. Also a helpline number should be launched, and on calling this, customers can avail of service even in some remote localities .

2. Marketing Communication should focus on satisfying the needs for Respect, Power and Comfort.

3. A non-flamboyant well-built brand ambassador may be chosen to represent the Brand. John Abraham was choosen as Brand ambassador for 1 yr but some macho personality like- Sanjay Dutt or Akshya Kumar should be chosen to give a young and adventurous personality to the brand. They should display bullet in some action movie, as it was shown in Sholay to attract the young towards it.

4. RE should tie up with adventurous students or corporate executives and arrange adventurous trips on weekends to locations- like Cherapunji, lonaval etc. brand Amabsaddor should join them occasionally to promote the event. Television Commercial spots are more remembered than Print Advertisements even when they are over 6 years old. So

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5. Users should be given the chance to video shoot their trips and share with other TV viewers. Lucky users should be offered a chance to meet the Brand executive on next trip

6. They should tie-up with adventurous brands like Thumps Up or Mountain dew to give a complete revamp of branding.

7. The RE Apparels available on their exclusive stores should be made available in college counters to make them available to the young students. It will create awareness among youth and more of them will feel proud using the apparels like- bag, jacket, boots etc 7. They can plan to export RE to other developing economies like- Brazil, China and Russia to capture the market there Royal Enfield should concentrate on building around the iconic status it already enjoys if it plans to attract customers migrating to other manufacturers.

WHY WE LOVE ROYAL ENFIELD

1. You can see curious faces turning towards you when you are riding a Royal Enfield.

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2. Once you accelerate the bike, you can feel the thrill and excitement.

3. It becomes a part of your life and you take care of it like your family

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4. Once you accelerate the bike, you can feel the thrill and excitement.

5. The moment you own a Royal Enfield, you want to ride it to Ladakh.

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6. Girls love bikers and particularly the one riding Royal Enfield.

7. You represent masculinity, stability and strength.

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8. You become a part of RE group and travel places around the country.

9. You become a part of RE group and travel places around the country.

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10. And the tagline of the Royal Enfield Bullet “Jab Bullet Chale toh Duniya Rasta De” is so true. Bullet is not just an eye-catcher but everyone makes the way for it. You don’t even need to honk.

8.

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