A Change Of Gear

Till the nineties, this positioning helped Escort Yamaha garner an 85 per cent of the power and styling segment of the 100-130 cc motorcycle market and 11 per cent of the total market (8,10,000 bikes in 1995-96).

Today, with competition growing in a segment it largely created, Escorts Yamaha is looking for faster growth elsewhere. By 2000, the company has set itself a target of trebling the Yamaha brand. One of its key strategies to achieve this is to enter the utility/economy segment with a new four-stroke 125 cc bike.

Now if it makes Yamaha's task look simple, nothing would, of course, be further from the truth. Yamaha's challenge is essentially to bridge the image gap between its core brand positioning as a performance motorcycle and the utility segment.

 

In a motorcycle market, where the rider sees the bike as an extension of himself, the Yamaha RX 100 has traditionally been strongly positioned as powerful, stylish and speedy; low on mileage and economy, but high on durability and reliability. The owner's self-concept was also radically different: dominating, tough, youthful, highly indulgent and also sociable.

Through the eighties, this single-minded positioning helped Yamaha corner almost 85 per cent share in the power and styling segment of the 100 to 135 cc bike market. But despite the dominant position, the market for such high-performance bikes never grew beyond 20 per cent of the total market.

In the nineties, Yamaha has two choices. One, continue growing its niche and maintain its stranglehold on power bikes. Two, start expanding its market and target the fuel efficiency segment. To be sure, it is by no means an easy toss-up.

For one, there are a clutch of increasingly aggresive competitors like TVS Suzuki (with its Suzuki Shogun) and Bajaj Auto's newly launched RT 125 Z breathing down its neck. Although the growth rate in the high performance segment is till close to 30 per cent, within a space of two years, both Bajaj and TVS have chipped off 10-15 per cent share.

From that standpoint, the step into the economy/utility segment makes sense. But entering the fuel efficiency segment has its own set of prickly issues. It involves running into top dog Hero Honda, which has cornered nearly 60 per cent of the segment. And if Yamaha hopes to break into the new market, it has to find a strong mix to dislodge the reference brand, Hero Honda. And it can do so only when it finds a way to shake off its strongly associations with power.

What should Yamaha now do?

The clear road

To gain an idea of the enormity of Yamaha's task, it is important to first understand the evolution of the motorcycle market in India and Yamaha's role in catalysing the market.

Before the mid eighties, the bike market was dominated by the bigger (higher engine capacities) and heavier vehicles - the Bullets and the Yezdis. Then there was the Rajdoot, perceived as a bit of an underperformer but relatively economical.

The Bullets and the Yezdis were perceived as too dangerous, while the Rajdoot tended to have a downmarket tag. Since the bike was associated with the not-so-civilised elements of the society, there was a problem of social acceptability. Apart from largely extrovert bachelors, few tended to go in for bikes.

The family man grew up on the stable diet of various incarnations of the Vespa scooter. Scooters were thought to be safer and more socially respectable.

In the mid-eighties, after the imports were liberalised, many

tie-ups/alliances emerged - all aiming to transform the motorcycle market. In came all the Japanese majors -- Honda, Yamaha, Suzuki and Kawasaki. The first to enter was the Madras -based TVS group in alliance with the Suzuki of Japan in 1995.

It got off the ground pretty well, but lost its way somewhat as it ran into quality problems - mainly a fallout of the industrial relations problems.

That is when Hero Honda, riding on the unmatched fuel economy stole the march. (It did 80km/l compared to the Bajaj scooters which did around 30km/l.) This helped it attract the married guy and even the long distance rider.

As the economy began to take-off, a new and more affluent class emerged, which was considerably younger and less preoccupied with fuel efficiency. When Escorts, which was then marketing Rajdoot entered into a tie-up with Yamaha Motors of Japan and entered this market, it decided to target this class of buyers. Consequently, the bike was positioned as the performance bike. Yamaha RX 100 with its 11 bhp engine took very little time to establish itself as the fastest bike (100 cc category) on the Indian roads.

Since Hero Honda was a four-stroke bike, it could not deliver the kind of power two-strokers like Yamaha and TVS Suzuki could. CD 100 quickly took the fuel efficiency route. Yamaha took the other clear-cut postioning plank available - power.

The punch line was, Born to lead. The product itself had the highest bhp (break horse power) and acceleration (0-60 km in less than seven second) in its class.

Yamaha succeeded in creating the performance segment and became an aspirational brand in that. At the same time Hero Honda along with other bikes like Kawasaki Bajaj and TVS-Suzuki was instrumental in creating social acceptability for motorcycles.

However, there was more to it than that. For Hero Honda, the durability of its four stroke engine too was an issue. At that time all other bikes (with the exception of Enfield) were all two stroke engines. And, there was added doubts about the availability and cost of spares as most of these were imported. These issues sorted themselves out over time. Consistent performance has solved the Honda's problem and subsequent indigenisation took care of the spares issue, says Vikram Sharma, vice-president, marketing, Hero Honda.

Not only that, the bikes came with relatively newer technologies while the scooter remained the same. Thus, not only the mileage was more, the handling was better. The technology separated power from the size. The 100 cc motorcycles had higher bhp than the scooter and comparable to those of the bigger bikes. The lighter machines with larger and wider wheelbase were actually safer than the old scooter - more so on shoddy roads.

All this combined to give bikes an one-third of the total two wheeler market which bought 26 lakh units in 1995-96. Yamaha also grew with the market. From less than 57,000 bikes, in 1993-94, it managed to sell close to 93,000 in 1995-96. Bajaj's moved up from 42,000 to over 89,000 and Hero Honda from 1.5 lakh to over two-and-a-half lakh bike during the same period.

All this in the total motorcylce market estimated at roughly 8.1 lakh bikes in 1995-96 and growing at the rate of 15-20 per cent. That gives Yamaha a 11.4 per cent share of the market. The 100-135 cc segment has come to acquire a 14.4 per cent share of the total motorcycle market.

All through Yamaha's advertising emphasised its power and style, points out Deepak Mahendroo, deputy general manager, marketing, Escorts Yamaha Motor Ltd. After the Born to lead came the Ahead of the 100s campaign. The campaign showed Mig fighter aircrafts essaying war manoeuvres and a bike going up the moun-tain terrain. This was followed by a macho male chasing a helicopter (on his bike) to rescue his abducted lady-love. The idea: reinforce the power and speed of the bike and associate it with a a confident and indulgent male personality.

Over the years the market has developed, but the basic drivers of demand have not. The prime driver is still price, followed by fuel efficiency and power. The secondary driver is maintenance - cost of spares and the frequency of break-downs.

Yamaha RX 100 meanwhile has largely been resting on its laurels. After capturing the speed and power platform, its communication became unfocussed which merely reiterated the obvious that RX 100 was a fast bike by comparing itself to fast cars and aircrafts, says Mahesh Chauhan, account director, Chaitra Leo Burnett, the agency that handles the Bajaj motorcycles account.

Skidding on the tarmac

As a result, when Suzuki Shogun zoomed into the market, Yamaha began to feel the heat of competition. TVS Suzuki - barring some south markets - was never a hot-seller in the two-stroke category. All this changed with Shogun. Shogun came equipped with a higher capacity engine (110cc) which delivered higher power - 14 bhp. To grab share it priced itself as close as possible to Yamaha. The communication (road signs trembling, chickens flying, house lights going off like a blaze), proved effective in imbuing the brand with the daring-do elements needed to survive in this category.

Now with Shogun moving into its territory Yamaha is trying a different tactic. Its latest counter offering, RXG tries to use eco-friendliness as benefit. Last year, after the stricter emission laws came into force, it introduce a 135 cc bike to confirm to the law. The Born to lead punchline was supplemented by Yamaha - friends of the earth.

The trouble is that the eco-friendly benefit is already being offered by four-strokes. In fact, Hero Honda is already closely associated with eco-friendliness because of its advertising.

Among the two two-strokes bikes, Shogun delivers more power even after fitting catalytic convertors. That pushes the two-stroke Yamaha into a corner because catalytic convertor fitted bikes require lead-free petrol, which is not widely distributed. And the convertor itself needs to be changed after every 10,000 km and costs Rs 2,000, thereby increasing running costs.

While the other manufacturers have constantly upgraded their models, Yamaha has preferred to stick to its tried and tested formula. Not having fortified itself with multiple models, it now increasingly finds itself being outflanked by Hero Honda Splendour, the new Bajaj KB 125 cc bike and the Suzuki Shogun.

Exploring the new terrain

As Yamaha proceeds with its plan to enter the utility/economy segment, it is likely to find its task cut out. In the autility/economy Hero Honda already has three models -- a model called CD 100, offering a basic lower-priced-high mileage, the CD 100 SS, with double suspension for rough terrain and the Splendour, an overall better, more powerful bike with slightly lower mileage. In that sense, it has managed to further segment the utility/economy segment.

Besides, there are additional pressures acting on this segment. To begin with, there is a distinct difference between a potential two-stroke consumer and a four-stroke buyer.

The typical four-stroke consumer is of two kinds. The first set consists of men with families, possibly married with a couple of kids. The second set are the money-conscious consumer, typically a college student, in the age-group of 25 to 34.

In the two-wheeler market, the motorcycle is clearly seen as a more macho product compared to the scooter or the scooterette. It is only when financial constraints crimp such motivations, that the man tends to lower his aspirations and settle for a scooter.

In keeping with the segment's price sensitivity, Yamaha will be under pressure to keep its pricing strictly within a competitive band. That is because the four-stroke buyer is price-conscious and the entire segment is price-sensitive. This is reflected in the pricing of different brands. While Hero Honda CD 100 SS is about Rs 45,000, Splendor is about Rs 48,000 and Bajaj Auto's 4-S Champion is about Rs 46,000. Hence, a four-stroke brand has to go in for more or less parity pricing and cannot charge a bigger premium over its competitors. (Internationally though, the four-stroke bikes are more expensive.)

On the other hand, since two-strokes are more lifestyle-

oriented, the pricing also reflects this. TVS Suzuki's MAX 100 is priced at Rs 35,000, the KB 125 RTZ is priced at Rs 36,000, while the Samurai retails for about

Rs 37,000 and Shogun goes for Rs 48,000. The Yamaha RXG comes for around Rs 43,000. Now, Bajaj has come in with 125 cc bike which is Rs 3,000-4,000 cheaper.

Further, this market faces relatively little downward pull - from the sccoters. Significantly, the scooters have become increasingly powerful and economical - almost as much as the bikes.

The improvement in designs and styling coupled with premium positioning has helped LML carve out a niche for itself -- especially among the better-off youth. So in that sense, that has resulted in a distinct overlap between the scooters and the economy oriented bike segment.

Increasingly, market sources aver that a player like LML will seek out niches for its new brand of scooters, which will settle in a price band between the maximum price of a Bajaj scooter and the minimum price of a 100cc bike.

On the other hand, within the 100-135 cc market, the performance segment is relatively insulated from the larger pressures of the two wheeler market. Fron the present share of less than 25 per cent, this segment likely to grow to 30-35 per cent by the turn of the century.

The way segmentation and postioning platforms has evolved in the bike market, a two-stroke brand (or a variant) has a far more combinations from which to choose.

Again, discovering a suitable positioning platform in the fiercely competitive four-stroke economy segment is never easy. A four-stroke bike, for example, can only harp on the mileage aspect, if that is possible at all. This is because once CD 100 established 80 kmpl as sort of a benchmark for fuel efficiency promises, bettering that claim by three or four kilometre extras does not cut much ice with the consumers, Says a market source.

This can be seen in the sales of 4-S champion which, despite claiming the highest average (87 kmpl) has not been able to make much of a dint in Hero Honda's position as the segment leader.

So what are the options before Yamaha? Should it continue to concentrate on the segment where it has lead in -- albeit belatedly attend to its task of market development by launching newer models and splitting the segment further? Or should it enter the new segment which is already very competitive? If so, how can it drive a wedge between the segment leader, Hero Honda and the price warrior, Bajaj 4S? Not to mention the fact that worldwide, Yamaha is well-known for its two-stroke models, while Honda is reputed to have the best four stroke technology. Is Yamaha's power platform likely to get diluted if it moves to the four stroke category?

(Next week, The Strategist has invited an eminent panel of marketing and advertising professionals to dissect Yamaha's options and recommend strategy. The panel consists of Rahul Kansal, chief operating officer, Mudra Communications, Isaac Jacob, vice-president, SSC&B Lintas and Ashish Kaul, a senior marketing professional with a fund of experience in the two-wheeler industry. So stay tuned.)

With additional reporting by Shishir Prasad.