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Strategy is nothing but specialisation: Rajiv Bajaj, MD & CEO, Bajaj Auto
Lijee Philip & Brian Carvalho, ET Bureau Mar 22, 2012, 10.21AM IST

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In an exclusive interview with ET , Rajiv Bajaj , MD & CEO, Bajaj Auto, throws light on how the motorcycle maker's three 'power' brands will drive growth and his game plan to become a global leader in bikes. Edited excerpts: On the evolution of the Indian motorcycle industry over the past decade or so:

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What is the one word each manufacturer owns that is in the mind of the motorcycle consumer? In my view, the word that Honda owns is quality, Hero owns is mileage and the one word Bajaj owns is power, thanks to the Pulsar. If it's Yamaha, that word is style. The one word that TVS owns is cheap (not in a bad sense) but as in the least expensive. If this is true, then it points to a very high state of evolution in the market place where consumers are able to clearly associate brands with positions. Each of the above-mentioned brands has a clear position. This has its pros and cons. The pro is that, for instance, if a consumer wants power, other things being equal, he will come to you. So, the brand becomes safer in that sense. It is relatively insulated. The con of that is people who don't seek power won't be really too interested in you-but I think the advantage is greater than the disadvantage. On Bajaj's position: We got back into the game with the Pulsar. People buy the Discover because it reminds them of the Pulsar. It's like a younger brother of the Pulsar; or a 'domesticated' Pulsar. There is this clear divide in this market place. Hero has a 71% share in the 100cc segment; I find that, after having a satisfying experience with Hero, consumers move up and they come to us. So, people who want bigger and stronger bikes come to us, but they will not buy a 100cc from us.

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http://articles.economictimes.indiatimes.com/2012-03-22/news/31225047_1_pulsar-150cc-1... 8/4/2012

Strategy is nothing but specialisation: Rajiv Bajaj, MD & CEO, Bajaj Auto - Economic Ti... Page 2 of 4

On whether Hero MotoCorp will continue to be number one because most consumers want fuel efficiency: Yes, it will, if mileage continues to remain so important- unless someone is able to make a technology breakthrough and take it away from them. For example, Hero bikes give 65kmpl efficiency. Being engineers, we are always thinking of how to make something better. We don't know the difference between better and different. The consumer does not think better, he thinks different. What I mean is that if Hero is delivering 65kmpl, we would be happy if we made something delivering 70kmpl. However, consumers can't tell the difference as 65 is only an average. The first time the consumer can actually perceive a difference is if there is a minimum 20% difference. A 33% difference is even more noticeable, while a 50% difference cannot be missed. That's why we made the Pulsar 150cc. It's not a coincidence that 150cc is 50% more than 100cc. The question now is can anybody produce a technology that is 50% better? My view is that to move from 65kmpl to 78kmpl (a 20% difference) is difficult; from 65kmpl to 70kmpl has happened, but that is evolution, not a revolution.
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On how Bajaj can create that difference: We are now less in the engineering and more in the marketing industry. We have to be perceived to be different, with credibility; and there are also not too many tech levers to do this. For this, you might have to create a perception that you are at loggerheads with your father and will refuse to ever make scooters-thereby creating a perception that I am wedded to the Pulsar. I believe that one day everybody will buy powerful bikes; it may take five years or 15 years, but you have to direct the whole organisation in that direction. Strategy is nothing but specialisation. So, we have to stay where we are and try to expand the appeal for what we stand for, which is power. On the future for the Pulsar, which is now a decade-old: We follow a platform strategy. One platform is 125-200cc, from which we make the Pulsars and the KTM bikes. The next platform is 250-350cc, and there will be both brands out of this also. If the Pulsar has to go any further, we need another larger platform, but that would not be right as the Pulsar is not a niche bike like a Harley or a Ducati. So, 350cc may be a good place to stop as of now. Ten years down the line, the Pulsar can go much further. On the need for more brands besides the Pulsar, Discover and KTM: Many industries have a three-tier structure. People at the bottom buy on price, those at the top for exclusivity, and those in the middle for value for money. The most successful car brands of the last 50 years are Toyota and Volkswagen. They have understood how to position their brands and play the market. For VW, it is Skoda at the bottom, Audi at the top and VW in the middle. Toyota does it even better with Daihatsu at the bottom, Lexus at the top and Toyota in the middle.
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Readers' opinions (18)

Sort by: Newest | Oldest Suresh BV Bharadwaj (Bangalore) 24 Mar, 2012 10:36 PM Sanatani Indian Aryan Dravidian Mongolian - Australoid Indian Hindu, Sikh, Shinto, Tao, Confucian, Buddhist and Jain Karnataka students, schools, families, farmers, banks, grocery stores, Core of Detectives, Police Stations, Karnataka State Reserve Police, Vidhana Soudha, Mysore Palaces, Melkote Sanatani Nambi Namoodiri Tengalai Sri Vaishnava Ramanuja Acharyas Vishista Advait Cheluva Narayana Swamy Temple, Sringeri Sanatani Nambi Namboodiri Guadapada Govinda Vishnu Shanka Avatar Adi Shankara Acharya s Sharade Temple, Shravana Belagolas Sanatani Jain Kaivalya Advait Mahatyagi Bahubali Swami Temple, Hotels, Traders & Industries desperately need more power & not less power in Karnataka. It is a very progressive step that the BJP Government in Karnataka has acted pro-actively and decided to increase power production in the state by inviting bids for four gas-fired power plants of 700 MW each in Belgaum, Gadag, Davangere and Tumkur under tariff-based competitive bidding routes. Such a people friendly, productivity friendly and economy friendly decision by the Karnataka CM Sadananda Gowda, power minister Shobha Karandajle, principal secretary DN Narasimha Raju & Power Company of Karnataka's managing director M Naveen Kumar is a step in the right direction & needs the support of Nitin Gadkaris BJP, Indias PM Dr.Manmohan Singhs Congress & former PM H.D. Devegowda s JDS & former CMs B.S. Yeddyurappa, HD Kumara Swamy, Dharam Singh & Veerappa Moily. Jai Bhuvaneshwari Devi! OM! India well-wisher (California) 24 Mar, 2012 11:25 AM Clearly, Mr. Bajaj cannot expound on the entire company strategy in an interview. I am no expert on the 2-wheel auto segment but do have a few questions/observations: Mr. Bajaj mentions a few vectors that drive demand (power, quality, price, etc.) that he links to the brand positioning of industry participants in India and some international markets. The markets need sub-segmentation IMHO, e.g., the Indian rural vs. urban markets; the different vectors for those markets (e.g., durability/warranties; spares; distribution; financing; etc.); the size and elasticity to vectors; etc. Interestingly, this gets even more complicated in international markets where the vectors may be very different for the market segments leading to very different strategies for different markets. An almost calculus approach of differentiation (to understand vectors, etc.) and integration (to reassemble and then sizing of homogenous vector baskets) will be required for a framework to THEN develop market entry and branding strategies, alliances, etc. A combination of niche vs. differentiation vs. low-cost producer strategies for the various markets (defined not by countries but vectors) and then quantifying the financials therefor (for each strategy alliance vs. build out vs. export, etc.) would be needed for an ambitious global strategy. The big behemoths of Brazil and China will need factoring as well particularly if the vector basket is large enough for a low cost based strategy. Sundar Parthasarathy (Mumbai) 23 Mar, 2012 12:57 PM While there could be little debate that there is head -room for exports growth, whether it translates to a target of 20/80 ratio is debatable. India is on its way to become the world's most-populated country for and maintaining "dominant" position in this market will be key for global success (Some academic thinkers have also argued that for emerging market firms to succeed globally, they must have dominant home-market positions). A ramp up of exports / international revenues, so as to be even closer to that 80/20 target will entail aggressive participation (and a reasonable position) in the domestic-market in China (the world's second largest economy - and will be the 1st in a decade or two. Also, China will yet be #2 in population, even it it slips from beng #1). So, how will Bajaj succeed in China, could become a moot point. In fact, India & China play will decide global dominance - and interestingly, some academic-thinkers who studied the emergence of "first -wave" multinationals originatng from developed-region countries have found that MNCs have a strong regional position, when it comes to global sales -distribution. Rocky (India) 22 Mar, 2012 05:01 PM Toyota does it with its Camry, Corolla, Land Cruiser. Honda does it with City, Jazz, CRV & s on. Even home grown Maruti emphasizes mother brand in its flagship 800cc engine Maruti 800 now rebranded as Maruti Alto. No one in the world would have known who Maruti is, had MUL not added the word Maruti to its 800cc line of Car. Rocky (India) 22 Mar, 2012 04:34 PM I am tempted to agree to all what Rajeev Bajaj has to say about brand, strategy, growth vs greed, specialization vs generalization, segmentation, etc. However, his comment about family brand Bajaj being out of sync in market does not make sense. His idea will fail to stand any empirical or theoretical test if measured against any world/Indian brand strategy/marketing benchmark. People know tablet means apple ipad, people understand Smartphone as an apple iphone, photocopy means Xerox, search engine means Google, portable music player means Sony walkman, stick it notes means 3M post it, spreadsheet means Microsoft Excel, Web browser means MS Internet Explorer/Mozilla Firefox. In 80 s scooters in India meant a Bajaj or a Priya. No one knew scooters as Chetak, Priya, Super or Sunny(all Bajaj scooter brands now defunct). All these brand names preceded with the word Bajaj. Why is he afraid to call his 150cc bike Pulsar just as Pulsar and not as Bajaj Pulsar. In consumer goods especially FMCG when you have different line of products or brands in different consumer segments (be it based on price, performance, relative utility, performance, geographical restrictions) it makes sense to build brand under an umbrella company brand and then introduce the sub product brand. READ ALL COMMENTS

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