Background of the Case

Consumer prices are up. The stock market is down. The dollar has
plummeted. And credit is tightening. So what does that mean for motorcycles --
not only future sales, but also new model development, pricing and financing?
The motorcycle industry has seen several notable trends emerge in recent
years. Since 2003 the number of households that own motorcycles, the number
of women who ride motorcycles and the number of younger motorcycle riders on
the road have all increased.
Financial growth in the motorcycle industry started out relatively strong in
the early years of the new millennium, but like most other industries, motorcycles
took a hit from the economic recession of the latter part of the decade.
Motorcycle sales began to decline nationwide in 2007.
Some manufacturers' representatives have estimated an 8% to 10%
decline. The U.S. Department of Commerce puts the decrease at 2.2% for the
year. Particularly hard hit have been sales of small-displacement dirt bikes, which
have seen larger-than-average losses (Carpenter, 2008).
The escalating costs for the metals, plastics and other commodities used
to manufacture motorcycles and the fuel needed to transport foreign models to
the U.S. market drove the price pressures upward for the European and
Japanese manufacturers in particular. That has makers looking to cut
manufacturing costs rather than raise retail prices for consumers who, in the
U.S., are continuing to tighten their belts.
Rising fuel costs are a double-edged sword for the industry because
petroleum is need to make the gasoline that runs a motorcycle and is also used
to manufacture the plastics in the bikes, to run the factories that make the bikes
and to transport those bikes to the consumer, all of which cut into a
manufacturer's bottom line.
On the other hand, the rising gas prices is a great advantage for the
Filipino motorcycle market. The rising cost of fuel has convinced Filipinos that
these would save them time and money. Higher gas prices mean some will ride

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their bikes more often, necessitating new parts and, more frequently, new bike
purchases.
Blaze Motortech Corp. (Cabreza, 2011) says this is an industry that will
likely sell four million motorcycles by the end of the year because of an 11-
percent surge in demand—that meant the sale of a million more units than what
were earlier projected.
In the early 2000s, tricycles dominated industry sales with a 72-percent
share in the market. In 2008, over 50 percent of the 5 million vehicles registered
were motorcycles, and the figures grew, making motorcycle sales “the fastest
growing industry in the automotive sector”.
Motorcycle sales have been high in other Asian countries. Indonesia leads
with an 11:1 ratio, or 22 million motorcycles sold to a population of 244 million
potential customers. Other countries have saturated their markets. Thailand’s 62
million population utilizes 20 million motorcycles (a 3:1 ratio).
Despite the positive indicators, motorcycles still remain to be one of the
large consumer durable items that would be hardest to finance in a business
environment that is still struggling from the effects of global financial crisis.
Motorcycles are among the most discretionary of consumer durables.

Analysis

Filipinos are very dependent on transportation, whether the destination is

more than a mile away or less than two blocks from the point of origin. This
aversion to walking could be attributed to either the local humid but sometimes
squelchy climate or simply to the fact that there are modes of transportation
which could bring them around the city, pick them up and drop them off anywhere
they want to.
One of the most common modes of transportation in the locality is the
motorcycle or motorbike. The preference for motorcycles was noted to increase
from 2007 to 2010, with levels currently sustained at 18 percent, outnumbering
ownership of sedan/family car which is pegged at 12 percent (Sarthou, 2011).

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 This is especially discernible in Mindanao where habal-habal is popularly
known. In the southernmost part of the country, motorcycles are utilized as a
public transportation even without a side car.
The demographics of motorcycle riders have also changed since about
2003. According to the Motorcycle Industry Council (MIC), the number of female
motorcycle owners increased nearly 3% in the five years from 2003 to 2008. In
2008, women accounted for nearly 6 million of the country's 25 million
motorcyclists. The ages of motorcycle riders are changing, too. In 2003, those 40
and over composed the majority of motorcycle riders. But from 2003 to 2008, the
number of younger riders--those under age 40--increased about 62% (Hartman,
2012).
More riders are using their motorcycles for transportation. Motorcyclists
cited transportation as the No. 2 reason for owning a bike and riding, ahead of
short-distance leisure riding, or "touring."
Strategizing to expand the market share of any motorcycle business and
increase sales is carried through by an effective sales team. Headed by a
manager, the team plans, directs, or coordinates the actual distribution or
movement of the motorcycles to the customer (Sandilands, 2011).
It is a big plus if the sales manager is an excellent sales person. For this
reason, the manager may retain a sales territory in which she can still make
sales or receive orders from established customers. The remuneration for this
type of sales is commonly based on a sliding commission scale, which operates
by identifying the basic monthly or annual sales target and the base commission
payable for achieving it. Thereafter, as higher sales target levels are reached, the
commission increases to provide improved rewards for improved sales.
In some companies, sales leaders work on a goal-based plan that has
payout thresholds. For example, the sales manager earns no variable pay unless
the team achieves the minimum sales target, but receives a bonus based on a
sliding scale for exceptional performance.
When a problem is encountered, this team has to figure out how to tap the
right information on the problem, how to come up with solution options, and how

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to implement the selected solution. They can be structured as action team – a
structured way to attack business management problems. This action team
concept is adopted to give the sales manager a base to solve problems and
improve systems for many years to come.
For example, the sales team uses the SWOT analysis to determine the
problems to solve, policies to enforce and improve, and the major decisions to
make.
SWOT Analysis is one of the most popular tools when analyzing the status
of a company in the market. It is an acronym which stands for internal strengths
and weaknesses and external opportunities and threats. Motorcycle companies
analyze their situation their internal strengths and weaknesses in relation to the
external environment and it allows them to assess their present situation. During
SWOT Analysis the company should see where they are on the market in relation
to where they thought they were. The difference between the two is called the
strategic gap. Identifying the gap helps them plan their actions so that the
company can move to the desired position in the market (Zikmund, 2001).
Part of the decision-making to achieve high sales for the motorcycle
business is the concept of sustainable growth. It incorporates principles of
sustainability into each of the business decisions. In other words, it is a business
that “meets the needs of the present world without compromising the ability of the
future generations to meet their own needs (Anderson, 2006).

Alternatives

A motorcycle business may want to increase sales, either to overcome a

problem in the short term or as part of the planned growth of the business in the
longer term.
Increasing sales involves diagnosing the cause of problems in the short
term, increasing sales in the medium to long term, and a range of other possible
solutions.

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 In the midst of it all, decisions should be made. Decision making can be
regarded as the mental processes (cognitive process) resulting in the selection of
a course of action among several alternative scenarios. Every decision making
process produces a final choice. The output can be an action or an opinion of
choice.
First, there is a need to analyze problems, which includes pinpointing
deviations from performance standards and causes of each particular problem.
These are being discussed in meetings during working hours. Issues and related
data are researched by assigned team members. This may include figuring out
cost items and looking at different possible solutions.
New or modified procedures are identified and finalized, even if it means
tracking how the changes are affecting the business, so that some kind of
measure to monitor can be established.
Then, the sales team establishes objectives, develops alternative actions,
evaluates tentative decisions for more possible consequences, and takes
decisive actions. There are steps that are generally followed that result in a
decision model that can be used to determine an optimal production plan.
The sales team or department of the motorcycle business can be
conscious of decision-making theory as it sells products and services to clients. It
as a roadmap for providing the right kinds of information at the right time for each
client, moving them more swiftly and easily (or just more often) to purchase.
For example, in brand development, the first priority is to get people’s
attention. Basically, the client should be convinced why they needed to buy/own
a motorcycle. Client-based selling is fitting the right product for the right client
based on need.
This action must be part of a decision-driven modeling technique. This
simple process involves problem recognition, information search, alternative
evaluation, purchase decision, and postpurchase behavior.
At the postpurchase phase, it is ensured that the client is happy with the
company’s work and, ideally, becomes an advocate for its products and services.
A little research and report can be prepared to the customer-focused clients on

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their hopefully increased satisfaction levels. If needed, a cost-benefit comparison
for the profit-focused client can be made to demonstrate the value of rebrand
actually delivered.
These are just a few examples of the ways on how to use knowledge of
the purchase decision-making process to hone communications and sales effort
to move clients to make the purchase.

Recommendations

Aside from pure guts and instincts, making a sale also needs scientific
method of decision-making and planning. Decision-making is a crucial part of
good business.
A good decision is made when there is good information, and experience
in interpreting information. Consultation – such as seeking the views and
expertise of other people – also helps, as does the ability to admit one was
wrong and change one’s mind.
A decision-driven modeling technique in attaining business goals helps
tackle difficult problems. It is especially useful when situations include complexity,
high stakes, unclear objectives or uncertainty.
A selling business like the motorcycle business relies heavily on sales,
which are gained through buyers or clients. Today’s buyer is much more
sophisticated and informed than the buyers of the past. The successful
salesperson today is more of a problem-solver than the traditional salesperson
and needs a wider range of sales tools.
The need to increase sales is either a reaction to a short-term problem or
part of the planned growth of the business. Hence, it is recommended that if
sales are under pressure, start by looking at the sources and underlying causes
of that pressure, for example where things are going wrong. Once the causes are
identified, take action to increase sales. This will usually involve more or a
redirection of existing sales and promotional efforts.

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 There is a range of solutions to help increase sales, with varying degrees
of impact and time taken to deliver a result. It is important to use a solution that is
appropriate to the situation the business faces.
Some managers and businesses make better decisions than others. Good
decision-making comes from training of managers in decision-making skills, good
information in the first place, management skills in analyzing information and
handling its shortcomings, experience and natural ability in decision-making, risk
and attitudes to risk, and human factors.

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 JMJ Marist Brothers
Graduate School
NOTRE DAME OFMARBEL UNIVERSITY
City of Koronadal

INCREASING SALES OF A MOTORCYCLE BUSINESS

A Case Study on Quantitative Analysis to Decision Making

Presented to
Rodolfo C. Faldas, MEco, MBA

In Partial Fulfillment
of the Requirements for the Degree
Master of Business Administration

Presented by
Gelbert A. Franco