BRAND ANALYSIS OF ROYAL ENFIELD

1 Brand Analysis – Royal Enfield

BRAND ANALYSIS OF ROYAL ENFIELD

An Overview Royal Enfield Brand in Indian Markets – So far how they have performed and how they

will grab more market share and be profitable. Every year, they have sold modest

numbers but despite low numbers, they continue to command a position of respect and

awe in the Indian motorcycle market. The different product lines, marketing strategy

and Brand Management of Royal Enfield Bullets in Indian market.

1. Bullet riders are mostly Value-Expressive, with an internal locus of control

and a strong sense of independence.

2. The company has been cashing in on the iconic status it has and has done

little to reinforce its image amongst an exploding two-wheeler market.

3. The pricing of the motorcycle might also be looked upon as conservative.

Royal Enfield has for a while now targeted the youth market with lure of freedom.

However, they have done little to reinforce their position. Maybe advertising campaigns

targeted at the Value-expressive customer would enable the brand to reap the benefits

of its iconic position in a much more productive way. Also, most users find it imperative

for the company to improve its After Sales Service and Spares availability.


Introduction

Indian automobile industry The automobile industry in India is the ninth largest in the world with an annual

production of over 2.3 million units in 2008. In 2009, India emerged as Asia's

fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.

India’s automobile sector consists of the passenger cars and utility vehicles,

commercial vehicle, two wheelers and tractors segment. The total market size of

the auto sector in India is approximately Rs 540 billion and has been growing at

around 8 percent per annum for the last few years. Since the last four to five years,

the two wheelers segment has driven the overall volume growth on account of the

spurt in the sales of motorcycles. However, lately the passenger cars and

commercial vehicles segment has also seen a good growth due to high discounts,

lower financing rates and a pickup in industrial activity respectively. Major automobile manufacturers in India include Maruti Udyog Ltd., General

Motors India, Ford India Ltd., Eicher Motors, Bajaj Auto, Daewoo Motors India,

Hero Honda Motors, Hindustan Motors, Hyundai Motor India Ltd., Royal Enfield

Motors, TVS Motors and Swaraj Mazda Ltd.

With the economy growing at 9% per annum and increasing purchasing power

there has been a continuous increase in demand for automobiles. This, along with

being the second largest populated country, makes the automobile industry in India

a very promising one.

Indian two wheeler market Ever since the old Lambretta scooter was replaced with the flurry of vibrant two

wheeler models, Indian two wheeler industry has seen a phenomenal change in the

way they perceive the Indian market. Two wheeler manufacturers are now

competing in an ever growing consumer market by bringing out new products and

features. The country has now grown into the second largest producer of two

wheelers in the world. Currently there are around 10 two-wheeler manufacturers in

the country, and they are Bajaj, Hero, Hero Honda, Honda, Mahindra/Kinetic,

Royal Enfield, Suzuki, TVS, and Yamaha.

There have been various reasons behind this growth. Because of poor public transport


system, the citizens found convenience in two wheelers. Added to this is the fact that

the average Indian still does not have the purchasing capacity for a more expensive, four

wheeler.

The Indian two wheeler industry can be divided into motorcycles, scooters and mopeds.

The consumer has changed his preference from mopeds to scooters and then to

motorcycles. The trends seen in the past few years include females increasingly using

two-wheelers for their personal commutation and various two wheeler manufacturers

designing vehicles specially to cater to needs of this segment. One of the earliest

revolutions in this industry was Kinetic’s introduction of the concept of electronic/self-

start and automatic gears which made two wheelers comfortable and useable by women,

when compared to old Bajaj Chetak advertisements which showed middle aged females

riding a Bajaj Chetak scooter. A recent trend in the industry has been electric vehicles,

which mostly leverage on their eco-friendliness and low operating costs, but is still not

accepted well due to the lack of reputation of the manufacturers and lack of trust on

technology, which is still being perceived in the nascent stages, especially battery and

inverters which prove to be very expensive components. TVS recently leveraged this

opportunity by launching a hybrid model of their non geared scooter – TVS Scooty. The

end of the last decade saw Bajaj taking a radical decision to do away with the Scooter

range and completely concentrate on motorcycles, especially stating change in

customers preference as the main reason. The customers are left without a choice in

most cases than to migrate from the traditional scooters of the Indian family to the all

youthful bikes that one’s son rides.


Profile of the Organization

In 1893, the Enfield Manufacturing Company Ltd was registered to manufacture

bicycles by 1893, as Enfield Manufacturing Co. Ltd. By 1899, Enfield were

producing quadricycles [ with De Dion engines and experimenting with a heavy

bicycle frame fitted with a Minerva engine clamped to the front down tube. In 1912,

the Royal Enfield Model 180 sidecar combination was introduced with a 770 cc V-

twin JAP engine which was raced successfully. Royal Enfield motorcycles made in England were being sold in India from 1949.

In 1955, the Indian government looked for a suitable motorcycle for its police and

army, for patrolling the country's border. The Bullet was chosen as the most

suitable bike for the job. The Indian government ordered 800 350 cc model Bullets. In 1955, the Redditch company partnered with Madras Motors in India to form 'Enfield

India' to assemble, under licence, the 350 cc Royal Enfield Bullet motorcycle in

Madras (now called Chennai). The first machines were assembled entirely from

components shipped from England. Royal Enfield are the makers of the famous

Bullet brand in India. Established in 1955, Royal Enfield (India) is among the

oldest bike companies.. Bullet bikes are famous for their power, stability and

rugged looks. It started in India for the Indian Army 350cc bikes were imported in kits from the UK and assembled in Chennai. After a few

years, on the insistence of Pandit Jawaharlal Nehru, the company started producing

the bikes in India and added the 500cc Bullet to its line. Within no time, Bullet

became popular in India.Bullet became known for sheer power, matchless stability,

and rugged looks. It looked tailor-made for Indian roads

In 1990, Royal Enfield ventured into collaboration with the Eicher Group, a leading

automotive group in India, in 1990, and merged with it in 1994. Apart from bikes,

Eicher Group is involved in the production and sales of Tractors, Commercial Vehicles,

and Automotive Gears.

Royal Enfield made continuously incorporating new technology and systems in its

bikes. In 1996, when the Government of India imposed stringent norms for emission,

Royal Enfield was the first motorcycle manufacturer to comply.


It was among the few companies in India to obtain the WVTA (Whole Vehicle Type

Approval) for meeting the European Community norms. Today, Royal Enfield is

considered the oldest motorcycle model in the world,spanning 3 centuries and still in

production and Bullet is the longest production run model.

The company is marching on with its tagline- "Made like a gun, goes like a bullet"


Change in Strategy after Year 2000: Marketing Mix:

Product: Product which is the ruff & tuff all terrain motorcycle. It has been

upgraded with technology such as EFI (Electronic Fuel Injection) for better

response, heavy cast iron diesel engine of the earlier model has been replaced by a

lighter but equally power full single cylinder four strike petrol engine which is

made from aluminum. The gears have removed from the right side to left side to need general standards.

But it was ensured that the “VINTAGE” and “Macho” appeal of the bike is not

damaged.

Place: The market of Royal Enfield can be divided basically into two segments:

1. Metropolitans: Teir 1 &Teir 2 Cities.

2. Small Cities: Teir 3 &DH (District Headquarters) But in both the market it commands premium position.Hence the showrooms must

be opened in the prime locations of the cities irrespective of metropolitans or small

cities. Promotion: It is promoted in MENs magazines, Adventure magazines, local print media,

adventure trips ie. Himalayan Odyssey and Fan Clubs. Price: It is premium product hence demands a premium price.

Segmentation, Targeting & Positioning (STP) Segmentation: It is segmented as a leisure and adventure curser bike. Though in

Tier 3 & DH market it is associated with the social/status symbol.

Targeting: It is targeting Bikers in the age group of 25-45 years of age, they are

working executives as in the case of Tier 1 & 2 Cities and young, rich & powerful

in terms of Teir 3 & DH.

Positioning: In Tier 1 & 2 cities it is positioned as a leisurely, adventure, curser bike.

But in Tier 3 & DH it is a bike which shows your social status is a symbol of your power

in society.


WHY IT IS DIFFERENT AND A STANDARD BRAND?

• India’s first cult bike.

• Its an iconic brand to stay true to character and be proud of what is represents.

• Customers are value expressive, sense of independent

• Campaigns – use cinema, print media

• Leave Home campaign - Thunderbird

• Exhibitions – Photography

• The art of Motor cycling 2010.

• Sponsors trips/events

• Mark rides, Member rides throughout the year

• Organizes “Himalayan Odyssey”

• Publications – The beat, coffee table book etc.

• Forums, clubs, events

• No proper service channel structure

• Limited number of Royal Enfield zones

• Established the field quality RAF

• New company owned showroom

• After sales service is problem.

• Dealerships and expansion.


The brand Analysis of Iconic Royal Enfield

The year 2000 could have been decisive. That was when the board of directors at

Eicher Motors decided to either shut down or sell off Royal Enfield - the company's

division, which manufactured the iconic Bullet motorbikes. For all its reputation, the sales

of the bike was down to 2,000 units a month against the plant's installed capacity of 6,000;

losses had been mounting for years.

Though the bikes had diehard followers, there were also frequent complaints about

them - of engine seizures, snapping of the accelerator or clutch cables, electrical failures

and oil leakages. Many found them too heavy, difficult to maintain, with the gear lever

inconveniently positioned and a daunting kick-start.

Just one person stood up to the board, insisting Royal Enfield should get another

chance. He was Siddhartha Lal, a third generation member of the Delhi-based Lal family,

promoters of the Eicher group of companies. Lal, then 26, was an unabashed Bullet fan: he

even rode a redcoloured Bullet while leading the baraat (procession) to his wedding venue,

instead of the traditional horse.Lal felt Royal Enfield could still be saved.

The bike had its reputation, a cult following, an instantly recognisable build, and

aspirational value. Changes had to be made to keep up with the times and make the bike more

acceptable, and therein lay the problem. Royal Enfield fans liked the bikes exactly the way

they had always been

Retaining the bikes' rugged looks was a given, including the build, the design of the

head lamp and the petrol tank. But should the gears be shifted close to the rider's left foot - as

in most bikes - or retained on the right side? The question gave Lal and his team many

sleepless nights, since long time users were dead opposed to the change. The engine was

another thorny question. The old cast iron engine was a relic of the past. Its separate gear box

and oil sump design made it prone to oil leaks and it seized up very often. Its ability to meet

increasingly strict emission norms was also suspect.


A modern aluminium engine would eliminate these problems, but it would lack the

old engine's pronounced vibrations and beat - which Royal Enfield customers loved. Laws of

physics made it impossible to replicate these with the new engine.

But the new engine, unlike the old, had hydraulic tappets, a new engine arrangement,

new metal and fewer moving parts. Obviously, it did not produce the vibrations and the beat

of the old, but international experts were consulted and sound and

mapping carried outfor over 1,000 hours to ensure it produced the maximum rhythmic

vibrations possible and a beat, which was 70 per cent of the amplitude of the original.

The new engine had 30 per cent fewer parts and produced 30 per cent more power

than the old, with better fuel efficiency. By 2010, all Royal Enfield models had begun to

use the new engine. Two other problems needed to be addressed: the quality of some of

the components Royal Enfield bikes were using, and the sales experience. To tackle the

first, shop floor processes were fine-tuned, while suppliers were exhorted to improve

quality levels. Royal Enfield also embarked on a large scale internal exercise to tone up

performance.

Today, Royal Enfield's problems are of a different kind. How should it scale up

without diluting brand equity? It also faces challenges from iconic global brands such as

Harley-Davidson which has entered the Indian market. With other options available, will

its customers continue to sit out the six-month period it takes to provide deliveries?

The questions before Royal Enfield now: what is the pen profile of its prospective

buyer? How is this pen profile different for different offerings of Royal Enfield? For

instance, Bajaj says while its 'Pulsar' is an India bike (urban), its Boxer is a 'Bharat' bike

(rural). In this sense the buyers for each of the company's offerings must be clear. Also

will the niche that appealed yesterday, appeal today? What should Royal Enfield do to get

today's aspirers on board? What are the volumes it hopes for in this niche? How to stay

profitable there? These will be the questions for tomorrow.


In order to augment the production for growing market demand, your company

has acquired 50 acres of land for construction of its new manufacturing facility at

Oragadam, Chennai, Tamil Nadu. This will enhance Royal Enfield’s annual production

capacity to 150,000 units. The new facility is expected to commence production in first

half of 20131.

The Company is strenuously working to ensure that the opportunities are

converted into profitable growth. A critical element in this strategy is to continually

expand the customer offering. At the 2012 Auto Expo, Royal Enfield previewed – its new

motorcycle—Thunderbird 500. It is fitted with UCE (Unit Construction Engine) and a host of

design enhancements. - its all-new Café Racer model which will launched in 2013 - a range

of purpose built motorcycle gear. The collection included biker apparel, bike and riding

accessories.

Every year, the Company conducts a study to develop a comprehensive 360° view on

the opportunities, risks and threats to the business. These include areas such as markettrends,

new competition, changing customer preferences, disruptions in supplies, product

development, talent management etc.

The Company has robust ERP systems based on SAP platform. This ensures high

degree of systems based checks and control.

The Royal Enfield unit was able to produce and sell 42% more motorcycles in 2011

as compared to 2010. Total sales volume of Royal Enfield in 2011 was 74626 motorcycles as

compared to 52576 in 2010. Total income for the year was 6,709.5 MINR, 51.6% growth over

previous year1.

Even during 2008 recession, when auto sector was severely damaged, Royal Enfield Bullets

had very good performance in terms of sales. It can be seen from the below bar graph


Conclusion

The buying behavior is governed predominantly by the need for Power and respect for

the iconic Brand.

The internal locus of control is by and large dependent on the Sense of Control the

motorcycle offers and also on the Sense of Freedom that users associate with it.

Users are mostly Professional Males, 25-45 years of age, including some students.

Users’ display mostly Value-Expressive behavior and Ego-defensive behavior is

not seen amongst responses.

People who choose not to buy Bullets do so because of high price, maintenance

and spares hassles and also because some feel they are not built for it.

Advertisements are rarely recalled and are highly ineffective amongst non-Bullet

riders.

Bullets are perceived as low on cost-effectiveness, but high on ride comfort and

reliability.

Royal Enfield should concentrate on building around the iconic status it already

Enjoys if it plans to attract customers migrating to other manufacturers.


REFERENCES:

http://royalenfield.com

www.youtube.com

https://en.wikipedia.org/wiki/Royal_Enfield

http://royalenfield.com/

http://royalenfield.com/

http://www.youtube.com/

https://en.wikipedia.org/wiki/Royal_Enfield

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BRAND ANALYSIS OF ROYAL ENFIELD