Brand activation: Bajaj Auto

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.

Brand Activation “Bajaj” 3

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


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:


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.


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


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.


Reference:

1. Brand Activation by By: Paul Morel, Peter Preisler and Anders Nyström

2. Transformation of Bajaj Auto Ltd by Geetha Parimal, Sumatra Goshal and Sudeep Budhiraja.

3. “How the sons transformed Bajaj” article from Business Standard by Surajeet Das Gupta.