Searching For A Roadmap

First, a brief synopsis of the case:

For the average motorcyle buyer in the eighties, the name Yamaha RX 100 meant power, style, speed, a bike that was low on mileage and economy but high on durability and reliability.

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. Yamaha now 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 aggressive competitors like TVS Suzuki with its Suzuki Shogun and Bajaj Auto's newly launched RT 125 Z breathing down its neck.

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 strong associations with power.

What should Yamaha now do?

Over to our panel of experts:

Stick to the knitting

Yamahas desire to enter the 4-stroke segment ofthe motorcycles market seems understandable on the face of it. The segment is, after all, around 80 per cent of the market and given Yamahas scale of ambitions the company would not like to remain in relative fringes, represented by the power segment.

However, as desirable as the contemplated move may appear to be, it is worth examining how feasible it would be in reallity.

The 4-stroke economy segment is dominated by Hero Honda, the brand that helped create the segment in the first place. From its inception, the brand has talked and demonstrated economy and is associated in a singularly strong way with the benefit. Powerful players like Bajaj - inspired by moti ves similar to those that may be driving Yamaha today, and armedwith tangible product claims and offensive marketing budgets --have been unable to make a significant dent in Hero Hondas franchise. Indeed, Bajajs sales in the 2-stroke and 4-stroke combined are just about on par with what Yamaha has achieved in the power category alone.

Let us pause instead to look at the merits of Yamaha continuing to concentrate on its current home ground, the power segment. The brands equity (though admittedly not built very imaginatively or consistently over the years) is nevertheless entirely on the realms of power, speed and machismo. On the one hand, it is difficult for the brand to suddenly take on the utilitarian values typically expected of a 4-stroke economy bike and compete credibly with brands that are seen as specialist in this area (particularly when Yamaha as a company worldwide has no proven edge in 4-stroketechnology). On the other hand, with the right product portfolio and with focused communication the brand can not only ride the power motivation but can also grow the salience of the motivation itself.

The case states that the power segment is already growing faster than the economy. There is a reason to believe that the trend will further accelerate over time. Given the basic role of transportation that two-wheelers have traditionally played in India, it is understandable that the practical benefits like economy, maintenance, price have dominated as motivators for the purchase.

Instead, given the socio-economic structure of the country, such benefits will probably continue to dominate in absolute terms in the forseable future. However, just like so many other categories of products cars, TVs, refrigerators, needs other than purely functional are bound to grow in relative importance over time. The instintive and powerful semantic association of the motorcycles with power and machismo are bound to find an increasingly higher place in the order of things.

With newer product offerings that help to satisfy the need for power and machismo as well as impactful communication that help secure this appeal around the brand Yamaha, there is good reason to expect the brand to progress steadily and strongly along this path.

This strategy may not result in trebling of the share overnight but there is no reason to believe that the strategy being contemplated would, either. n

Sell a dream for a price

Yamaha finds itself between the devil and the deep sea. To cut a long story short, Yamaha is a powerful bike in the light bike segment, that now has more powerful bikes. Further, the whole segment is an overall fuel efficiency segment and not counting Hero Honda, there is no appreciable difference between the best and the worst. In any case, fuel efficiency restricts itself in advertising terms to test driving conditions and can therefore hardy cut much ice as a proposition or a functional discriminator.

Furthermore, the Suzuki Shogun offers 14 bhp as against Yamaha's 11 bhp. And eco-friendly is more a four-stroke reality, hijacked by Hero Honda.

The flip side is that Yamaha still has a dominant position in the light bike power segment. A position attributable to a first mover advantage, now under threat from Suzuki Shogun and to some extent the KB125 RTZ.

The light bike power segment has grown at the rate of 30 per cent, in all probability due to the new entrants. Now, this segment has a 20 per cent share of the total motorcycle market. Also, the growth of motorcycles has been higher than that of scooters.

However, what holds today may be gone forever tomorrow. Yamaha can at best, only recap the past, without treating it as the basis for marketing decisions.

David Barker called automobiles The cocaine of the century. Now let's look at how this intoxicating category will behave in the coming years.

Current products and brands

The light bike segment (100 cc - 135 cc) has three subsegments.

Fuel efficient four-strokes dominated by three variants of Hero Honda, namely, CD 100, CD 100ss and Splendour. Giving them company is the new Bajaj 4S Champion (87 kmpl) and Suzuki Samurai.

Powerful two-strokes dominated by Yamaha RXG a 135cc. 11.8 bhp bike, with new companions in the Suzuki Shogun, a serious 110 cc challenger delivering 14 bhp priced at Rs 48,000 as against the Yamaha at Rs 43,000. Joining them is the KB125RTZ with 12.5 bhp at Rs 36,000.

Value for money bikes:The KB 100 and the Suzuki MAX 1.00 at Rs 38,000 and Rs 35,000 respectively.

It is worth nothing that all these are attempted brand positions.

The heavier bikes are so well differentiated as products that achieving a desired brand position in line with the product reality would be relatively easier for them.

In the light bikes, Hero Honda is well entrenched and clearly synonymous with fuel efficiency and Yamaha with its higher bhp and nostalgic memories of its earlier avataar, the Yamaha 350, has brand salience as a powerful light-bike.

But this position is under severe attack with the 14 bhp Suzuki Shogun and its excellent rendition of the power proposition in all advertising. KB125RTZ is also attempting to make inroads in this position, but with the Bajaj image of no frills - low price value for money, it would be difficult to take this competitor seriously.

Bajaj is clearly scoring on volumes, given the lower price. How sustainable would this be as a strategy remains to be seen after LML launches its offensive of high-tech scooters, besides the Gillera 125cc bikes. The LML. Scooters would end up taking up market share from both scooters and motorbikes of Bajaj Auto.

The powerful light bike

Yamaha's brand competitors are Suzuki Shogun and to some extent KB125 RTZ. On price, Bajaj is clearly going for Yamaha's jugular. Yamaha will have to resist the temptation of a price war that Bajaj is dangling before it.

Instead Yamaha's advertising will have to increase the perceived value of the Yamaha brand without naming KB. Thereby reposition the KB as a cheap proposition.

To address the Suzuki Shogun, Yamaha will also have to mention and highlight 135 cc for whatever this is worth till such time it launches new products -- a crucial need. This is the best Yamaha can do with the current product, beside matching the Shogun in advertising spend and advertising quality.

In addition, both Bajaj and TVS are far sharper than Yamaha in terms of marketing response times. Yamaha will have to necessarily improve on this in order to survive and flourish.

Competitors and their strategies

Company behaviour invariably determines marketing initiatives and, therefore, needs to be considered.

lTVS: A formidable product-mix with simple propositions:

i) If you want an inexpensive bike, buy the Suzuki MAX 100 for Rs. 35,000

ii) If you want a powerful light bike, buy the 14 bhp Suzuki Shogun

iii) If you want a reliable (no problem) fuel efficient bike, buy the Suzuki Samurai.

TVS has neatly straddled all three segments. The company seems to be leaving no stone unturned with its success of TVS Scooty, a step through and with its expected foray into scooters, besides a continuing presence in mopeds.

lHero Honda: With a first mover advantage, the company stuck to the fuel efficiency segment

with three design variants at different price points. Honda can draw on its rich four-stroke armoury to continue in this fortified segment.

As I write this, I've just got some news. Hero Honda is launching the Street a 100 cc bike for congested traffic conditions with a clutch free automatic operation and a step through design at Rs 30,000. There goes another price point.

lBajaj: Their scooters have a huge share of the market. However LML continues to increase its market share, with superior products and intelligent marketing. A competitor to global scooter manufacturers, there is little hope of foreign technology for Bajaj scooters. This is precisely the significance of their foray into motorcycles. Their first bike KB 100 received a lukewarm response (remember own the Cheetah, was actually the Yamaha and fuel efficiency was a brand property of Hero Honda.

Now they have the KB125RTZ, a 125cc, 12.5 bhp bike at a far cheaper price to compete with Yamaha and Shogun at Rs 43,000 and Rs 48,000 respectively. A strong volume player, such pricing is only to be expected.

Their second product, the 45 Champion claims a fuel efficiency of 87 kmpl. And for that the consumer will have to shell out Rs 46,000. A premium price point for the lower running cost! With a competitor like Hero Honda, a difference of 7 kmpl and the premium price, may make it an uphill journey all the way. Along with the Bajaj Sunny, they now cover every price point.

New products

With the expectation that LML, would introduce the Gillera bikes in the 100 cc -125 cc, Yamaha supremacy would be further challenged. Moreover, the market would expect TVS to enter with scooters also.

Yamaha will need to launch new products rapidly to not only take on the threat in its own segment, to increase its share with well differentiated products at various price points.

The changing face of the consumer

Before the 100cc invasion, cubic capacity was synonymous with power and fuel efficiency. A consumer looking for fuel efficiency, bought a scooter. A bike was purchased by bachelors and young couples for the glamour and riding pleasure.

For the first time, foreign automobiles entered India as Indo-Jap mobiles. The light fuel efficient Japanese bikes drew an inevitable response. Cubic capacity was no longer an issue.

The bikes succeeded in catering to the family men as well, thereby taking a slice of the scooter market. The smaller cubic capacity, lesser power, hence easy handling and greater safety changed consumer preferences radically. However, the same need not hold true today. The LML Supremo gives 8 bhp as against Hero Honda's 7.5 bhp., higher fuel efficiency at a competitive price.

This trend promises to be continued with LML introducing better scooters from the Piaggio stable. The light bike segment may end up having more company than they bargained for. With increasing levels of pollution, congested roads and longer commuting time, consumer preferences could shift to high-tech scooters. Yamaha has yet to experience this phenomenon.

At the other end, the heavy bike segment should open up for bike lovers. Chances are that fuel efficiency will be catered to by scooters and Hero Honda.

The BMW 650 with its brand salience, 48 bhp and price of Rs 5.30 lakhs would defy an categorisation. Its Esteem/Cielo pricing apart, larger bikes are here to stay.

International positions - Indian realities

The Hero Honda position is cluttered and pretty unassailable. Yamaha will have to rule it on completely. Yamaha will need to stick with its acclaimed international image of performance thrillers.

The price bands are fairly well determined. Let Bajaj cater to slimmer

wallets.

Yamaha will have to sell a dream for a price. The Maruti Van with eight seats is about Rs. 1.70 lakhs. That's about the highest price ceiling. The floor for the price, apart from costs, is Bajaj!

I remember a copywriter who walked into the agency one morning after picking up his brand new Yezdi from the dealer. I can't forget his dramatic description of the bike Cold hard steel outside pure makhan inside. And that too for a steal. Kotler's theory of the age of super value brands seems to be true.

Copywriters will be copywriters. Kotler will be Kotler. Bikes will be bikes. Yamaha too should remain Yamaha.n

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Blend core values of Yamaha and Rajdoot

Firstly, Yamaha as the leader in the power performance segment must consolidate the position it has created.

As more models are introduced in this segment and the segment evolves further, positioning must be more sharper, more defined, and focussed. A single model will not be able to withstand competition.

The Yamaha RXG a more powerful mobike, is an excellent way to forge the brand's power position ahead. This will not only blunt the Suzuki Shogun threat but is a good upgradation vehicle.

Next, the brand must ensure future growth from the segment it owns by maintaining its grip on the power position and should seek incremental sales volume by expanding this segment.

The brand should introduce a 150 cc mobike with excellent styling and aesthetics, wider tyres for better road gripping and superb shock absorbers priced at around Rs 55,000 and positioned as the Long distance speeder which could be the image leader for the Yamaha brand. The task is to offer a much more racy, comfortable and good looking bike from the Yamaha range to the compulsive outdoor guy.

The rationale for expansion of the speed segment comes from the fact that a large chunk of the youth population falls in the mobike-owning age having more disposable income. There is more emphasis on travel, outdoor and recreational activities amongst the urban youth now than ever before. This is the opportunity that Yamaha should exploit as also the position it has carved for itself. Speed and power are addictions the urban indulgent youth cannot do without.

However, the brand must push up activities to develop this segment

and consolidate its leadership position. Sponsorship of Mobike speed Racing programmes on Satellite TV must be taken up and followed through for the next couple of years. Event sponsorship and participation such as Sholavaram mobike races, etc. must become a

part of the brand

consolidation process. Promotion and road shows in colleges in the top 23 metros must be encouraged to upfront Yamaha to potential owners. Local mobike speed contests can be held to consolidate the brand at the local level.

Most importantly, brand advertising must carry forward the theme Ahead of the 100s

by making the brand much

more aspirational, yet not

abdicating the power-performance position.

The brand personality must be enhanced infusing a much

more outgoing, adventurous, indulgent and dynamic image. The brand's personality must dovetail with that of the urban affluent youth at whom it is

targetted.

In India the need for a fuel

efficient vehicle is paramount especially amongst the

middle-class. These we term as trend values. Obviously volumes come from this segment and Escorts Yamaha as a company cannot afford to overlook this large segment.

Dipstick research conducted amongst Yamaha users indicates that there is a danger of dilution of Yamaha's power image of Yamaha if the brand is blatantly extended into the fuel efficiency segment.

The best option seems to be use the equity of the Rajdoot brand with the international image of Yamaha.

A blending of the core

values of Rajdoot and Yamaha viz., dependability, reliability and speed/performance respectively, and trend values such as fuel efficiency, eco-friendliness

and low maintenance cost

could carve a strong position,

especially if targeted at the young-at-heart middle class family man.

A 150 cc 4 stroke bike with a good fuel efficiency and branded Rajdoot Yamaha can appeal to our target

audience. An aggressive pricing strategy coupled with low maintenance benefits can tilt the scale its favour.

Rajdoot Yamaha should be positioned as the

dependable 4 stroke power bike for the middle-class family man. It can also act as an upgrading net for the former scooter owner now aspiring for a mobike.

Communication for both

the brands must be separate as both are differently positioned, each having its own raison-

de-etre. A positive equity rub-off is expected from the Yamaha communication onto Rajdoot Yamaha.