These are the codewords Bajaj Auto staff use for Discover and Pulsar, the two brands that have turned around the company’s fortunes
It’s easy to figure out why ‘Rama’ and ‘Krishna’ are so close to the 42-year-old Managing Director’s heart. Bajaj Auto, which was in the dumps in 2008-09 after its sales dropped 23 per cent (market leader Hero Honda had recorded a growth of 12 per cent that year) has made a spectacular turnaround – solely on the back of the two brands.
The strategy of depending on the “power of two” was adopted after Bajaj’s multi-pronged strategy of having several brands failed to click, with almost all of them getting rejected, the lone exception being Pulsar.
Says Bajaj: “We told ourselves that less is more. We got rid of the scooters, mopeds, we discontinued some bikes, and we shut down the Akurdi plant. We then decided on two positions and two brands because the brand is nothing but the name of that position.”
Many said Bajaj was taking a big risk by going off the beaten track, but the immediate benefit was visible: The company immediately saved a fortune by not having to promote multiple and newer brands.
The positioning was clear: While the Discover was to be promoted as a high mileage brand with sober styling, the Pulsar would retain its traditional aspirational image built on sporty models with peppy engines.
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The company made a re-entry into the 100cc segment with the launch of the Discover DTS-Si in July last year. It also introduced a new Pulsar with a smaller, yet sporty engine catering to the young-at-heart (“Krishna” according to Bajaj) with a easy-on-pocket price tag.
In 14 months, the Discover DTS-Si (100cc) priced at around Rs40,000, sold one million units – almost near India’s largest selling two-wheeler brand for 14 years, the Hero Honda Splendor.
The entry bike segment’s (classified as 75cc-124cc) share in the Indian two-wheeler industry has shrunk to 55.6 per cent as of October this year. But Bajaj’s share in it has grown to 19 per cent from 13.7 per cent earlier.
Similarly, the Pulsar 135 priced at Rs53,000, brought additional volumes of 100,000 units in five months boosting the company’s target of selling one million units from the Pulsar family by March next year. The next Pulsar in line is the Pulsar 150 priced at Rs65,067 (ex-showroom Mumbai).
Bajaj believed that there could be demand emerging from within the two brands from people who prefer higher or lower power, better mileage, aggressive or sober styling and design. It therefore launched the Discover 150. An all-new Pulsar, which is believed to be the most powerful bike from the company, will make its debut next year.
“So within those two broad categories of customers, we have someone who wants a bit more power and some who want less. So there is a Discover 135, 150, and there can be a Discover 200 tomorrow. There is a Pulsar 150, which went up to 220 and then came down to 135. But it still sells as a Pulsar”, adds Bajaj.
The Pulsar 135 was actually showcased by Bajaj Auto as the ‘Sprint’ in the 2008 winter at the Delhi Auto Expo. “If we had stuck to the name ‘Sprint’, I fear it would have been a disaster. A new brand would have called for higher marketing expenditure pushing costs higher. Here I advertise one Pulsar and sell all of it”, Bajaj says.
The results show why Rahul Bajaj’s elder son is so confident. The company’s market share in the entire two-wheeler segment had shrunk to 17.3 per cent in 2008-2009 from the peak of 26.7 per cent in 2006-07. But till October this year, the company has clocked a market share of 21.3 per cent. Its latest share in the motorcycle segment is 27.72 per cent — significantly better than 22.33 per cent recorded in the corresponding seven month period of last year.
Competition is obviously in no mood of waiting in the sidelines. Honda, the largest two-wheeler maker in the world, is planning a new low-cost bike for emerging markets like India that could be effectively priced at around Rs27,000.
Similarly, Hero Honda, Suzuki Motorcycle, Mahindra 2-Wheelers, Yamaha and TVS Motors are believed to working on strengthening their presence through multiple launches planned in the coming years.
Bajaj has for now completely ignored the automatic scooter segment, which is growing 20-30 per cent per annum attracting interest from other players. This segment recorded sales of 1.46 million last year and is pegged to end this year at close to 2 million units.
V G Ramakrishnan, senior director, automotive and transportation practice, Frost & Sullivan, says, “Bajaj has done very well by concentrating on just two brands which will allow it to offer products at different price points. It should however not try to focus too much premium bikes and less on the entry level segment of Rs40,000-45,000. That is because when the industry is hit with a downturn, the market for premium bikes tends to slide the most.”
That may be true. But for the moment, Rajiv Bajaj is basking in the glory of his twin brands. In fact, he is confident that Discover will do to Splendor what Splendor did to Chetak, the then largest selling two-wheeler brand in the country. The iconic Bajaj Chetak sold 75,000 units per month during its peak before hitting a low of 4,000 units, which was enough for the company to withdraw it from the market.
“Since the launch of the Discover, Splendor has lost significant base. The Splendor was launched in 1993 and in 10 years, the bike has been able to achieve what Chetak had achieved in many more years. But by 2013-14, brands like Discover will go past Splendor”, Bajaj adds.
Is Hero Honda listening?