brand activation: bajaj auto
TRANSCRIPT
PRO J ECT PROPOSAL Prepared for: Prof. Rakesh Premi Prepared by: Ashish Jude Michael (2012PGX105) Date: 27th March 2013 Proposal #: Brand Activation “Bajaj”
2 Brand Activation “Bajaj”
Introduction to Brand Activation
Brand activation is looking deeper into the possibilities within the brand, its strategy and position to
find assets that have relevant consequences for the whole company. A brand can be activated in a
range of situations, best summarized in four cornerstones; Products and services, Employees, Identity
and Communication. An active brand offers products and services that deliver on the brand position.
It meets the customer in a personal manner closely related to the position. It also has the same
appearance independent of interface.
In other words, the customer will perceive the brand as “one coherent company” whether he or she
meets it in digital or analog media, through a product, face to face or on the telephone. But brand
activation is also communicating the position through advertising.
Brand activation is about presenting solution to create a differentiation in consumers perspective
either by changing its Identity, through employees or through the product or services they offer. But
all these changes are to be properly communicated to the Customer. I will be taking the example of
Bajaj.
History Of Bajaj
The Bajaj Group is amongst the top 10 business houses in India. It was incorporated on 26th Nov 1945
as a 2 wheeler and 3-‐wheeler automobile company. It was initially in technical collaboration with
Piaggiao, Italian Scooter maker. The agreement lasted till 1971. 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 group's flagship company, Bajaj Auto, is
ranked as the world's fourth largest two-‐ and three-‐ wheeler manufacturer and the Bajaj brand is
well-‐known across several countries in Latin America, Africa, Middle East, South and South East Asia.
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Founded in 1926, at the height of India's movement for independence from the British, the group has
an illustrious history. The integrity, dedication, resourcefulness and determination to succeed which
are characteristic of the group today, are often traced back to its birth during those days of relentless
devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close confidant and disciple
of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This close relationship and his deep
involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on
his newly launched business venture.
Initial Scenario till Mid 1980s (License Raj)
Till mid 1980’s Bajaj was enjoying its leader position in two-‐wheeler market. They were largest
scooter manufacturer and there used to be advance booking for scooters. They launched their first
motorcycle in 1981 but it was not successful. It was mid 80’when Hero and Honda signed a JV and
Hero Honda entered with their first bike in 1984. But until 1990’s it was the Bajaj scooters ruling
India’s roads as they were seen as family vehicle.
Problems after mid 1980’s (End of License Raj)
The end of license raj started problem for Bajaj. There was no more monopoly. Hero Honda was
already there. Petrol prices started to rise and people were looking for more fuel efficient two
wheelers. Bajaj tried to came back by 4 stroke scooters but they were not successful. Hero Honda,
Yamaha, TVS Suzuki had already started to eat Bajaj’s share and things were looking very gloomy for
Bajaj.
The Revival of Bajaj by Rajiv Bajaj
The results of 1998 were very complex for Bajaj, there was a question which way to go? They had cash
reserve but there was no idea how to sustain their market position? The emission norms were very
strict and two stroke scooters were on the verge of extinction. The four stroke scooters were not so
successful as then there was entry of Rajeev Bajaj his son came to steer the company in 1991. He had a
clear vision “We are not a scooter company. We make products that sell.” A true professional. He
understood the changing market and activated the Brand Bajaj.
Strategic Decisions Taken for Activation of Brand Bajaj
Rajeev change the product offering and identity of Bajaj. The new activated Bajaj was more young and
dynamic where else old identity of Bajaj was of traditional. The targeted the growing youth
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population, offered them bikes instead of scooters. All types of bikes cruser such as eliminator, sports
as Pulsar and economical such as Boxer. He Changed the Logo of Bajaj, which had a more dynamic
appeal. Following are the changes by Mr. Rajeev Bajaj.
Logo
Traditional Old Logo Dynamic New Logo
The change is clearly communicated and it’s an important part for Brand Activation.
Change in Product Offering:
Bajaj Dramatically changed its product line from Scooter oriented to Motorcycles. Even for the three
wheelers they brought 4 stroke variants and now CNG. They introduced automatic scooterettes for
ladies and unisex both. The motorbikes cater to all the rising needs such as Boxer for smaller towns &
villages, Patina was 100 cc fuel-‐efficient, Discover was performance oriented, Pulsar is a sports bike
and avenger a curser bike.
Bajaj old Product Line:
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Bajaj New Product Line
Change in Communication:
The first Television advertisement they launched after transformation was “Badal rahe hum yaha,
humara kal humara aaj”. They linked the past and tradition to the modern and dynamic outlook. They
have shown all the new models of motorcycles and a well-‐knitted Indian tradition in the Television
advertisement.
It was a well-‐thought and excellent Brand Activation shown by Bajaj.
Change In Strategy:
The Bajaj brothers (Rahul and Shishir) say the problem was of one of attitude: Bajaj was a scooter
company and therefore the motorbike department was given second-‐class treatment (it was only 10
per cent of their business in 1996), the quality of the products was poor, and they did not offer fuel
efficiency the way the Japanese bikes did.
In 1997, Rajiv walked into the Aurangabad plant and ordered it shut down. Says Sanjiv: "It was
unimaginable and against everything Bajaj had stood for. In 40 years we had never shut production
anywhere. But we realized that a shock needed to go through the system." Their father, he says, had
not opposed the move.
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That was just the beginning. When the brothers discovered that they had over 1,000 vendors
supplying them components, many of which were plain bad, Rajiv decided to prune them down to a
realistic 200. And the labor force was trimmed down from 23,000 to virtually half that through a VRS
scheme. "We had studied in the local school within the premises, had played with many of them, some
were our friends," says Sanjiv, "suddenly, we had to let them go."
The challenge was to get the right products at the right price, to bring in Japanese productivity tools to
reduce costs just as the competitors were doing. Sanjiv, who had joined the company armed with an
MBA from Harvard, says his reading of big companies like Honda, Toyota and Apple had taught him
one thing: a successful company needs a good product. But most workers in the Pune plant did not
believe you could bring in Japanese management practices into India there was stiff resistance to the
move.
That's when the two brothers made an unusual decision. They decided to set up a new mobike plant
but not at their existing facility in Pune. Instead, they chose Chakan, an hour's drive from Pune. Says
Sanjiv: "We realised that sometimes people have to be taught by example. That's what we did in
Chakan."
Chakan was like a laboratory. There was no concept of workers -‐-‐ everyone was "staff" -‐-‐ and the
factory had the luxury of a three-‐hour gap between shifts for maintenance. Productivity levels
virtually doubled per worker as compared to the company's Pune plant, and it remains the benchmark
to push productivity levels in all other units.
The next challenge was to get the products right. Rajiv took up the cudgels by personally supervising
even nitty-‐gritty details, from the styling and paint to the design of the console, the right grip and even
the spark plug to use.
A project for a bike is conceived depending on inputs from the marketing team. The design
department then comes up with eight-‐10 different designs that Rajiv and his team narrow down to
three or four. Feedback on the styling is sought through market surveys and, finally, two prototypes
of the bike are made. Rajiv & Co work on at least two to three variations of engines, of which one is
selected. This takes 24-‐30 months.
That is how many of their hit bikes were built. Rajiv and Sanjiv found there was a market of customers
looking for something more than just a bike for commuting -‐-‐ they wanted rugged styling and more
power. Pulsar (150 cc and 180cc) was born from this market reaction. But Sanjiv notes: "When we
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conceived the bike, we thought the target audience would be 25-‐35-‐year-‐olds. But when we saw the
sales chart, it was being being picked up by 35-‐45-‐year-‐old customers."
The Bajajs say they realised the reason when they saw the stance that riders took while driving the
bike -‐-‐ the product was fulfiling the desire of the riders to take on a youthful persona. Perhaps in the
same way the formally dressed executive in the US may drive a Range Rover SUV to create the image
of a man who seeks adventure.
Rajiv realised that to crack the 125 cc segment where Hero Honda had been ruling the market was
going to require a very strong reason. A market survey showed that Honda's bikes provided
reliability. But Sanjiv and Rajiv did not miss out on some key revelations: customers thought that the
Honda bikes did not have enough power, and would prefer bikes with superior styling.
Rajiv's mandate to the design department was simple: they would have to build a bike with these two
basic qualities without compromising on either price or fuel efficiency. Bajaj Discover was born from
this understanding, and the company sells over 25,000 of these bikes every month.
But analysts say the brothers' drive for volumes is already effecting margins. A senior analyst in
Motilal Oswal says margins of the company have fallen to 16 per cent (from 18 per cent earlier). He
points out: "That they are selling 125 cc bikes at 100 cc prices is cause for worry. They are dependent
on the entry level for large volumes. And three-‐wheeler sales are down."
Conclusion:
Brand Activation is a perfect mix of bringing about a change in Product/services offering, employee
outlook and belief and Identity of brand itself. Its like a re-‐birth of a brand and the most difficult task
to use the earlier brand equity during Brand Activation. Bajaj was successful in doing so.
Rajeev Bajaj was the turnaround leader for Bajaj to turn the tables for them. And he used brand
activation as a tool for reviving the company.