Brand activation: Bajaj Auto


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Brand activation is looking deeper into the possibilities within the brand, its strategy and position to find assets that have relevant consequences for the whole company. A brand can be activated in a range of situations, best summarized in four cornerstones; Products and services, Employees, Identity and Communication. An active brand offers products and services that deliver on the brand position. It meets the customer in a personal manner closely related to the position. It also has the same appearance independent of interface.
In other words, the customer will perceive the brand as “one coherent company” whether he or she meets it in digital or analog media, through a product, face to face or on the telephone. But brand activation is also communicating the position through advertising.

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Brand activation: Bajaj Auto

  1. 1. P R O J E C T   P R O P O S A L   Prepared  for:   Prof.  Rakesh  Premi   Prepared  by:     Ashish  Jude  Michael    (2012PGX105)   Date:                              27th  March  2013   Proposal  #:                              Brand  Activation  “Bajaj”            
  2. 2. 2   Brand  Activation  “Bajaj”       Introduction  to  Brand  Activation     Brand  activation  is  looking  deeper  into  the  possibilities  within  the  brand,  its  strategy  and  position  to   find  assets  that  have  relevant  consequences  for  the  whole  company.  A  brand  can  be  activated  in  a   range  of  situations,  best  summarized  in  four  cornerstones;  Products  and  services,  Employees,  Identity   and  Communication.  An  active  brand  offers  products  and  services  that  deliver  on  the  brand  position.   It   meets   the   customer   in   a   personal   manner   closely   related   to   the   position.   It   also   has   the   same   appearance  independent  of  interface.   In  other  words,  the  customer  will  perceive  the  brand  as  “one  coherent  company”  whether  he  or  she   meets  it  in  digital  or  analog  media,  through  a  product,  face  to  face  or  on  the  telephone.  But  brand   activation  is  also  communicating  the  position  through  advertising.         Brand   activation   is   about   presenting   solution   to   create   a   differentiation   in   consumers   perspective   either  by  changing  its  Identity,  through  employees  or  through  the  product  or  services  they  offer.  But   all  these  changes  are  to  be  properly  communicated  to  the  Customer.  I  will  be  taking  the  example  of   Bajaj.     History  Of  Bajaj   The  Bajaj  Group  is  amongst  the  top  10  business  houses  in  India.  It  was  incorporated  on  26th  Nov  1945   as   a   2   wheeler   and   3-­‐wheeler   automobile   company.   It   was   initially   in   technical   collaboration   with   Piaggiao,  Italian  Scooter  maker.  The  agreement  lasted  till  1971.    Its  footprint  stretches  over  a  wide   range   of   industries,   spanning   automobiles   (two-­‐wheelers   and   three-­‐wheelers),   home   appliances,   lighting,   iron   and   steel,   insurance,   travel   and   finance.   The   group's   flagship   company,   Bajaj   Auto,   is   ranked  as  the  world's  fourth  largest  two-­‐  and  three-­‐  wheeler  manufacturer  and  the  Bajaj  brand  is   well-­‐known  across  several  countries  in  Latin  America,  Africa,  Middle  East,  South  and  South  East  Asia.  
  3. 3.   Brand  Activation  “Bajaj”   3     Founded  in  1926,  at  the  height  of  India's  movement  for  independence  from  the  British,  the  group  has   an  illustrious  history.  The  integrity,  dedication,  resourcefulness  and  determination  to  succeed  which   are  characteristic  of  the  group  today,  are  often  traced  back  to  its  birth  during  those  days  of  relentless   devotion  to  a  common  cause.  Jamnalal  Bajaj,  founder  of  the  group,  was  a  close  confidant  and  disciple   of  Mahatma  Gandhi.  In  fact,  Gandhiji  had  adopted  him  as  his  son.  This  close  relationship  and  his  deep   involvement  in  the  independence  movement  did  not  leave  Jamnalal  Bajaj  with  much  time  to  spend  on   his  newly  launched  business  venture.   Initial  Scenario  till  Mid  1980s  (License  Raj)   Till   mid   1980’s   Bajaj   was   enjoying   its   leader   position   in   two-­‐wheeler   market.   They   were   largest   scooter  manufacturer  and  there  used  to  be  advance  booking  for  scooters.  They  launched  their  first   motorcycle  in  1981  but  it  was  not  successful.  It  was  mid  80’when  Hero  and  Honda  signed  a  JV  and   Hero  Honda  entered  with  their  first  bike  in  1984.  But  until  1990’s  it  was  the  Bajaj  scooters  ruling   India’s  roads  as  they  were  seen  as  family  vehicle.     Problems  after  mid  1980’s  (End  of  License  Raj)    The   end   of   license   raj   started   problem   for   Bajaj.   There   was   no   more   monopoly.   Hero   Honda   was   already   there.   Petrol   prices   started   to   rise   and   people   were   looking   for   more   fuel   efficient   two   wheelers.  Bajaj  tried  to  came  back  by  4  stroke  scooters  but  they  were  not  successful.  Hero  Honda,   Yamaha,  TVS  Suzuki  had  already  started  to  eat  Bajaj’s  share  and  things  were  looking  very  gloomy  for   Bajaj.   The  Revival  of  Bajaj  by  Rajiv  Bajaj   The  results  of  1998  were  very  complex  for  Bajaj,  there  was  a  question  which  way  to  go?  They  had  cash   reserve  but  there  was  no  idea  how  to  sustain  their  market  position?  The  emission  norms  were  very   strict  and  two  stroke  scooters  were  on  the  verge  of  extinction.  The  four  stroke  scooters  were  not  so   successful  as  then  there  was  entry  of  Rajeev  Bajaj  his  son  came  to  steer  the  company  in  1991.  He  had  a   clear  vision  “We  are  not  a  scooter  company.  We  make  products  that  sell.”    A  true  professional.  He   understood  the  changing  market  and  activated  the  Brand  Bajaj.      Strategic  Decisions  Taken  for  Activation  of  Brand  Bajaj   Rajeev  change  the  product  offering  and  identity  of  Bajaj.  The  new  activated  Bajaj  was  more  young  and   dynamic   where   else   old   identity   of   Bajaj   was   of   traditional.   The   targeted   the   growing   youth  
  4. 4. 4   Brand  Activation  “Bajaj”     population,  offered  them  bikes  instead  of  scooters.  All  types  of  bikes  cruser  such  as  eliminator,  sports   as  Pulsar  and  economical  such  as  Boxer.  He  Changed  the  Logo  of  Bajaj,  which  had  a  more  dynamic   appeal.  Following  are  the  changes  by  Mr.  Rajeev  Bajaj.   Logo                                                                                                                                                               Traditional  Old  Logo                                                                                                                                                                                Dynamic  New  Logo   The  change  is  clearly  communicated  and  it’s  an  important  part  for  Brand  Activation.   Change  in  Product  Offering:   Bajaj  Dramatically  changed  its  product  line  from  Scooter  oriented  to  Motorcycles.  Even  for  the  three   wheelers  they  brought  4  stroke  variants  and  now  CNG.  They  introduced  automatic  scooterettes  for   ladies  and  unisex  both.    The  motorbikes  cater  to  all  the  rising  needs  such  as  Boxer  for  smaller  towns  &   villages,  Patina  was  100  cc  fuel-­‐efficient,  Discover  was  performance  oriented,  Pulsar  is  a  sports  bike   and  avenger  a  curser  bike.   Bajaj  old  Product  Line:      
  5. 5.   Brand  Activation  “Bajaj”   5     Bajaj  New  Product  Line       Change  in  Communication:   The   first   Television   advertisement   they   launched   after   transformation   was   “Badal   rahe   hum   yaha,   humara  kal  humara  aaj”.  They  linked  the  past  and  tradition  to  the  modern  and  dynamic  outlook.  They   have  shown  all  the  new  models  of  motorcycles  and  a  well-­‐knitted  Indian  tradition  in  the  Television   advertisement.   It  was  a  well-­‐thought  and  excellent  Brand  Activation  shown  by  Bajaj.     Change  In  Strategy:   The  Bajaj  brothers  (Rahul  and  Shishir)  say  the  problem  was  of  one  of  attitude:  Bajaj  was  a  scooter   company  and  therefore  the  motorbike  department  was  given  second-­‐class  treatment  (it  was  only  10   per  cent  of  their  business  in  1996),  the  quality  of  the  products  was  poor,  and  they  did  not  offer  fuel   efficiency  the  way  the  Japanese  bikes  did.   In   1997,   Rajiv   walked   into   the   Aurangabad   plant   and   ordered   it   shut   down.   Says   Sanjiv:   "It   was   unimaginable  and  against  everything  Bajaj  had  stood  for.  In  40  years  we  had  never  shut  production   anywhere.  But  we  realized  that  a  shock  needed  to  go  through  the  system."  Their  father,  he  says,  had   not  opposed  the  move.  
  6. 6. 6   Brand  Activation  “Bajaj”     That   was   just   the   beginning.   When   the   brothers   discovered   that   they   had   over   1,000   vendors   supplying  them  components,  many  of  which  were  plain  bad,  Rajiv  decided  to  prune  them  down  to  a   realistic  200.  And  the  labor  force  was  trimmed  down  from  23,000  to  virtually  half  that  through  a  VRS   scheme.  "We  had  studied  in  the  local  school  within  the  premises,  had  played  with  many  of  them,  some   were  our  friends,"  says  Sanjiv,  "suddenly,  we  had  to  let  them  go."   The  challenge  was  to  get  the  right  products  at  the  right  price,  to  bring  in  Japanese  productivity  tools  to   reduce  costs  just  as  the  competitors  were  doing.  Sanjiv,  who  had  joined  the  company  armed  with  an   MBA  from  Harvard,  says  his  reading  of  big  companies  like  Honda,  Toyota  and  Apple  had  taught  him   one  thing:  a  successful  company  needs  a  good  product.  But  most  workers  in  the  Pune  plant  did  not   believe  you  could  bring  in  Japanese  management  practices  into  India  there  was  stiff  resistance  to  the   move.   That's  when  the  two  brothers  made  an  unusual  decision.  They  decided  to  set  up  a  new  mobike  plant   but  not  at  their  existing  facility  in  Pune.  Instead,  they  chose  Chakan,  an  hour's  drive  from  Pune.  Says   Sanjiv:   "We   realised   that   sometimes   people   have   to   be   taught   by   example.   That's   what   we   did   in   Chakan."   Chakan  was  like  a  laboratory.    There  was  no  concept  of  workers  -­‐-­‐  everyone  was  "staff"  -­‐-­‐  and  the   factory   had   the   luxury   of   a   three-­‐hour   gap   between   shifts   for   maintenance.   Productivity   levels   virtually  doubled  per  worker  as  compared  to  the  company's  Pune  plant,  and  it  remains  the  benchmark   to  push  productivity  levels  in  all  other  units.   The  next  challenge  was  to  get  the  products  right.  Rajiv  took  up  the  cudgels  by  personally  supervising   even  nitty-­‐gritty  details,  from  the  styling  and  paint  to  the  design  of  the  console,  the  right  grip  and  even   the  spark  plug  to  use.   A   project   for   a   bike   is   conceived   depending   on   inputs   from   the   marketing   team.   The   design   department  then  comes  up  with  eight-­‐10  different  designs  that  Rajiv  and  his  team  narrow  down  to   three  or  four.  Feedback  on  the  styling  is  sought  through  market  surveys    and,  finally,  two  prototypes   of  the  bike  are  made.  Rajiv  &  Co  work  on  at  least  two  to  three  variations  of  engines,  of  which  one  is   selected.  This  takes  24-­‐30  months.   That  is  how  many  of  their  hit  bikes  were  built.  Rajiv  and  Sanjiv  found  there  was  a  market  of  customers   looking  for  something  more  than  just  a  bike  for  commuting  -­‐-­‐  they  wanted  rugged  styling  and  more   power.  Pulsar  (150  cc  and  180cc)  was  born  from  this  market  reaction.  But  Sanjiv  notes:  "When  we  
  7. 7.   Brand  Activation  “Bajaj”   7     conceived  the  bike,  we  thought  the  target  audience  would  be  25-­‐35-­‐year-­‐olds.  But  when  we  saw  the   sales  chart,  it  was  being  being  picked  up  by  35-­‐45-­‐year-­‐old  customers."   The  Bajajs  say  they  realised  the  reason  when  they  saw  the  stance  that  riders  took  while  driving  the   bike  -­‐-­‐  the  product  was  fulfiling  the  desire  of  the  riders  to  take  on  a  youthful  persona.  Perhaps  in  the   same  way  the  formally  dressed  executive  in  the  US  may  drive  a  Range  Rover  SUV  to  create  the  image   of  a  man  who  seeks  adventure.   Rajiv  realised  that  to  crack  the  125  cc  segment  where  Hero  Honda  had  been  ruling  the  market  was   going   to   require   a   very   strong   reason.   A   market   survey   showed   that   Honda's   bikes   provided   reliability.  But  Sanjiv  and  Rajiv  did  not  miss  out  on  some  key  revelations:  customers  thought  that  the   Honda  bikes  did  not  have  enough  power,  and  would  prefer  bikes  with  superior  styling.   Rajiv's  mandate  to  the  design  department  was  simple:  they  would  have  to  build  a  bike  with  these  two   basic  qualities  without  compromising  on  either  price  or  fuel  efficiency.  Bajaj  Discover  was  born  from   this  understanding,  and  the  company  sells  over  25,000  of  these  bikes  every  month.   But   analysts   say   the   brothers'   drive   for   volumes   is   already   effecting   margins.   A   senior   analyst   in   Motilal  Oswal  says  margins  of  the  company  have  fallen  to  16  per  cent  (from  18  per  cent  earlier).  He   points  out:  "That  they  are  selling  125  cc  bikes  at  100  cc  prices  is  cause  for  worry.  They  are  dependent   on  the  entry  level  for  large  volumes.  And  three-­‐wheeler  sales  are  down."   Conclusion:     Brand  Activation  is  a  perfect  mix  of  bringing  about  a  change  in  Product/services  offering,  employee   outlook  and  belief  and  Identity  of    brand  itself.  Its  like  a  re-­‐birth  of  a  brand  and  the  most  difficult  task   to  use  the  earlier  brand  equity  during  Brand  Activation.  Bajaj  was  successful  in  doing  so.   Rajeev   Bajaj   was   the   turnaround   leader   for   Bajaj   to   turn   the   tables   for   them.   And   he   used   brand   activation  as  a  tool  for  reviving  the  company.                
  8. 8. 8   Brand  Activation  “Bajaj”           Reference:       1. Brand  Activation  by  By:  Paul  Morel,  Peter  Preisler  and  Anders  Nyström   2. Transformation  of  Bajaj  Auto  Ltd  by  Geetha  Parimal,  Sumatra  Goshal  and  Sudeep  Budhiraja.   3. “How  the  sons  transformed  Bajaj”  article  from  Business  Standard  by  Surajeet  Das  Gupta.