100... 125... 150... vroooooom!

looks at what is it doing to get lucky the third time around.

Six months after two teams of nine members each from Honda and Hero Honda began working on it, the 150cc CBZ Xtreme was launched in October this year by Hero Honda Motors.

The CBZ Xtreme is the market leader's third attempt to carve for itself a meaningful share in the rapidly growing 150cc performance bike segment, a segment which is dominated by its arch-rival Bajaj Auto's Pulsar (see graphic for overall share in each segment).

Ironically, the performance bike category was created by Hero Honda close to a decade ago, when it first launched the CBZ. But things are different now.

Bajaj's 150cc Pulsar, which was launched in 2001, is clearly the leader in the segment selling more than 35,000 units a month, with little threat to its position as it controls nearly 60 per cent of the market.

TVS' 150cc Apache, the number two, does under half at 15,000 a month; Honda Motorcycle and Scooter India's "" Honda's wholly-owned company in India "" very first bike, the 150cc Unicorn, is number three with around 8,000 machines a month; the overall leader in the motorcycle segment, Hero Honda, is a distant fourth with its 150cc CBZ.

Its Achiever, launched in 2003, failed to impress buyers, a fate similar to TVS' (TVS is the number three player in the industry) Fiero, which was launched in 2000, and the Fiero F2 that was launched in 2003.

TVS, of course, came back with a roar last December with its Apache, and even as Hero Honda launched the Xtreme, it is already talking about another bike to be launched in this segment within a year.

But why are bike manufacturers attracted to this segment that has claimed more failures than successes? There are many reasons. The 150cc performance bike segment is where the industry's biggest growth is coming from "" from around 14,000 bikes a month in 2001, the segment grew to nearly 60,000 bikes in September 2006.

The 125-250cc segment as a whole grew from around 17,000 bikes per month in 2001-02 to over 80,000 in 2005-06. The share of such bikes grew from 7 per cent of the motorcycle market to over 17 per cent during this period. The share of the 75-125cc segment, correspondingly, fell from 89 to 82 per cent.

"The premium segment is growing rapidly and it will outgrow all other segments," says Anil Dua, vice president, sales and marketing, Hero Honda Motors. Yet, while the company dominates the 75 to 125cc segment with a 59 per cent market share, its share in the 125-250cc market is a mere 8 per cent.

As a result, in overall terms, the company's market share has fallen from 53 per cent in 2004-05 to 44 per cent in 2005-06. The CBZ Xtreme is Hero Honda's chance to rectify this.

More important, this segment is where the money is. According to analysts, the Pulsar, for instance, gives Bajaj a 12 per cent profit (on an EBITDA basis) margin in comparison with around 4-6 per cent on its 100cc brands.

Which is why, while Bajaj Auto sold under two-thirds the number of two-wheelers (including scooters and scooterettes) that Hero Honda did in 2005-06, its net profit was only 17 per cent less "" Bajaj's PBT was Rs 1,183 crore as against Hero Honda's Rs 1,412 crore.

Also, as TVS' CMD Venu Srinivasan puts it, "Customers tend to look at the technical capabilities of a company through the lens of its brands or products and in this segment, companies have greater scope to showcase their capabilities."

A sentiment echoed by Hero Honda's Dua who says, "The bikes offered in this segment build the company's image. A success in this segment will have a positive rub-off on other segments."

Since margins, market growth and machismo is what this segment offers, market strategy is very important, and that includes the right looks and styling since, as Hero Honda Motor's managing director and CEO Pawan Munjal puts it, the bike is a lifestyle statement.

"It should tell them I am fast, sporty and fun to be with," and, "when I stop at a red light people should feel intimidated" were some of the most common responses voiced in the qualitative study Hero Honda had conducted across the top 10 cities in India.

Hence, a never-seen-before look is one of the key drivers for consumers. And features like disc brakes, electric start, and alloy wheels bring in the glamour quotient.

The newly launched, CBZ Xtreme also boasts of LED tail lights, split rear grip and a fuel tank lid inspired by an aircraft. TVS' Apache too made sure that consumers noted its features such as its new chassis, I E surge and canister shox.

Post-launch upgrades are equally important to keep the romance alive. The Pulsar has regularly upgraded itself.

In 2003, it re-launched itself with the DTSI technology, and sales rose from 15,000 a month in 2003 to more than 24,000 the next year. A new upgraded 150cc Pulsar was launched this month.

Indeed, analysts believe one of the reasons the Unicorn was not able to sustain its initial burst is because the company has not upgraded the bike except for new graphics and an electric start option. Not surprisingly, TVS is already talking about upgrading its eight-month-old Apache.

With macho performance being the in thing, the old fill it-shut it-forget it campaign is now history. Bajaj's Pulsar is a good example of the change. At launch, the company spent more than Rs 20 crore on the Pulsar's "Definitely male" campaign.

The ad featured two nurses doing rounds of a maternity ward, lifting the sheets off a Bajaj Pulsar, and shouting "It's a boy, it's a boy!" Another showed the Pulsar playing pranks, like pulling a young girl's dupatta, with the tag line "Bajaj Pulsar ... definitely male".

Says S Sridhar, vice president, marketing and sales, Bajaj Auto, "One of the biggest contributors to the Pulsar's success is the 'Definitely Male' campaign. Women may not mind using a male product, but the vice versa would never work."

TVS employed a similar strategy for Apache, and plastered the country's top 10 cities with hoardings exhorting consumers to "Do what older guys can't. Ogle publicly" and "Flirt now. Or you'll grow up to be a dirty old man". TV spots had young men revving up their engines and being disrespectful to their elders and betters.

As Prasad Narasimhan, vice president, marketing, TVS Motor Company, puts it, "When addressing the youth, you have to be slightly over the edge, or you risk going unnoticed." A second campaign launched recently by TVS takes off from where the last one left.

The Honda Unicorn is an exception to this rule, and targeted itself at the more reliability-oriented consumer. Its advertising spoke of the focused executive, a doctor, who is goal-oriented and chooses to stay with his patient rather than going on a date with his girlfriend.

While, the bike started well, selling nearly 12,000 pieces a month, sales are down to around half at the moment. But to be fair, the drop in sales is also due to production problems faced by the company.

The Xtreme strategy seems to be entirely different. The company is trying to gain from the brand value created by the original CBZ. Its current campaign shows glimpses of the bikes and invites its viewers to check out the bike.

But its communication, on hoardings and on its website, link the bike to the original CBZ ("It defined the rules, and its back to redefine them"). While it's too early to say, if the campaign works, we'll witness an interesting race between the Apache and the CBZ Xtreme. Whether either will ever threaten the Pulsar remains to be seen.

QUICKBITE: MARKET'S PULSAR

Apart from narrowing down the gap between itself and market leader Hero Honda from 26 per cent in 2005-06 to around 11 per cent last month, Bajaj Auto has stolen Hero Honda's thunder by announcing that by next September it will exit the entry level 100 cc segment and manufacture, by implication, more macho bikes.

The strategy behind this is clear. Larger bikes are clearly the future (see graphic on page 1) with rising aspirations matching consumer incomes, and even though they're still less than a fifth of the market, the profit margins are at least twice as high.

Considering that price differences between the 125cc and 100cc motorcycles lie anywhere between Rs 5,000 and Rs 8,000, Bajaj plans to position its 125cc bikes at lower price differences and attract the entry level consumers to this segment as well.

S Sridhar, vice president, marketing and sales, Bajaj Auto, says, "The consumer is demanding a better product today and we believe that his interests will be best served by 125scc bikes."

It helps that Bajaj has a market share of over 70 per cent in the larger bike segment as compared to Hero Honda's 8 per cent or so.

In terms of capacity, smaller bikes such as the Platina and the CT100 comprise just around half Bajaj's capacity as compared to nearly 95 per cent in the case of market leader Hero Honda.