Meanwhile Bajaj brothers were busy in changing company’s logo and identity. They came up with new logo which was like flying bird and BAJAJ words in capital. The tagline changed from Hamara Bajaj to Inspiring Confidence. The new logo was a symbol of change happening in Bajaj Auto for technology, product and even processes.
The Birth of Discover
The Pulsar success boosted much needed confidence of Bajaj Auto R & D team. There was a gap between boxer and pulsar bike. Though wind 125 cc were there but that was manufactured in collaboration with Kawasaki. Bajaj Auto wanted its own 125 cc bike to compete in executive segment.
In those days market for 125 cc segment was growing at rapid pace. They planned a 125 cc engine which was they earlier planning for pulsar. It was known as Project K60 inside the company (Perhaps K60 stands for 60 kilometer per liter). The idea was to create a bike with features better than any other in the segment, but at a comparable price. The discover project took 24 months to complete. Finally Bajaj auto launched this bike in the year of 2004.
The Discover was designed keeping in mind average Indian height. The seating position was lowered so that a 5 foot 6 inch tall rider can easily ride the bike (Discover is not that much comfortable for tall rider). Discover was Bajaj Auto’s first bike which was equipped with Exhaust-tech (A torque expansion chamber which increases torque in lower and middle range). Bajaj Auto did not believe in spending money behind brand ambassador or celebrity but for Discover advertisement they chose Jackie Chan.
Soon Discover became no.1 brand in 125 cc segment. Though Discover was not as successful as Pulsar but it was established as a bigger and sportier brand in the market. Bajaj Auto launched many variants of Discover like 112cc, 135cc etc.
The Failure of XCD
Everything was running fine till 2007. Bajaj was slowly gaining market share from Hero Honda. By 2006 the gap came down to 32,000 bikes per month. The Discover sales were gaining momentum but there was one problem that 100cc segment was not profitable enough. Bajaj was leader in entry level segment but whenever they upgraded their 100cc version it was immediately intimated by competition within short span and hence it became a cut throat competitive 100 cc segment. Bajaj Auto decided to do something different which can’t be copied immediately to avoid competition. The R & D team came up with solution of changing engine. An electric start 125 cc engine would take 2 years time to copy and that’s how XCD 125 born.
The XCD platform was based on DTS-Si (Digital Twin Spark ignition with swirl induction) engine which was able to deliver better power and fuel efficiency. The bike was equipped with the features normally not available in executive segment. Simultaneously Bajaj auto also changed its strategy to exit 100cc segment. Discover 112 cc was replaced by XCD. Initially XCD did good numbers but then it failed to retain sales.
The main reason behind the failure of XCD was its positioning in 100cc executive commuter segment. It was general belief of this segment that a 125cc bike can’t be more fuel efficient than 100cc one. Even though XCD was able to produce the fuel efficiency same as 100 cc segment the general belief worked against it.
According to S Sridher, CEO two wheeler business, Bajaj Auto “As the economic conditions weakened, customers tended to feel safer buying tried and tested products. Splendor sales shot up shortly after the launch of XCD. ”
Bajaj Auto saw its worst ever period in December 2008 when it sold just 60,000 units a month in domestic market. Everyday there was news about company’s falling sales. It’s lost market share. The stock price hit all time low. Vendors and dealers started complaining that there business became unviable.
According to senior marketing executive of Bajaj “It was hard to miss the media headlines every other morning. The pressure on us was because of our own ambition. We wanted to do a lot. It was frustrating that we had come close to regaining that leadership and then lost it.” Everybody was worried about company’s future.
Rediscovery of Discover
The most important thing was that Bajaj Auto lost the ground in front of Hero Honda. It was frustrating situation for Bajaj family who always remain leader in front of Munjal Family. While chairing a session at the annual conference of the Society of Indian Automobile Manufacturers (SIAM) in the capital, in August 2009 Rajiv Bajaj emotionally said that Hero Honda become so big that a small frog like Bajaj would have to jump out of well. In replied Pawan Munjal said “Why jump out of the well, when there is enough for everybody.” The young Bajaj took the challenge. While everybody was letting him down he started thinking two main things
- Why XCD failed?
- What would Bajaj Auto have to do survive five years later?
He realized that to take his company back on track he needs new kind of thinking. The junior Bajaj got answer in three things 1.Yoga 2. Homeopathy 3. History of Automobile
While everything was going wrong the junior Bajaj was spending much of his personal time behind two things Yoga and Homeopathy. He had begun to practice yoga and got closely involved with the renowned B.K.S. Iyengar yoga school in Pune.
During Yoga practices the junior bajaj found that much emphasis was given on foundation or base for example before doing any advance standing poses you need to learn standing correctly. Once you learnt standing correctly you can easily do the advanced standing poses correctly. The same thing he related with Pulsar. It was the first thing in motorcycle space that Bajaj Auto did correctly. Everything that came from Pulsar DNA was succeeded. He got realized that for Bajaj Auto the new centre is Pulsar.
In Homeopathy before prescribing any drug a homoeopathist will check patient’s medical history first. The idea is to get root of the pain. The same thing applied to Splendour and Pulsar when they were launched. Before launch of Splendour Indian two wheelers market was crowded with Scooters. Bajaj Chetak was leading brand and used to be core center for Bajaj. When Splendour launched it was totally opposite to Chetak.
For two stroke it was four stroke, for cheap it was expensive, for small wheels it was large wheels, for Indian it was Japanese. Soon Splendour became reference brand in two wheeler segment and core centre for Hero Honda. The same way to beat Splendour, you need totally opposite concept and that’s where Pulsar came into picture. For small it was big, for slow it was fast, for fuel efficient it was powerful, for sober it was sexy, for cheap it was expensive, for Japanese it was Indian. The junior Bajaj realized to beat Splendour they need those things in product which Splendour does not have.
Which were the most successful brands in last four decades for Indian two wheelers segment? The answer is Chetak, Splendour and Pulsar. Why they succeeded? The answer is because of their clear positioning. The Junior Bajaj learnt the thing that you don’t need to create so many brands for a particular thing. If you do so your brand will lose pricing power. There are no. of examples in automobile history.
For example, Toyota had created a separate brand for small car small car range under Daihatsu, leaving the mid-sized cars to itself and the top end cars for Lexus. The truck business is carved out for Hino which makes consumer clear about brand positioning. Over a time period Bajaj has created so many brands like Boxer, Platina, Caliber, Kawasaki, Discover, Pulsar but the market does not need too many brands.
So the junior Bajaj got clear that he need just one brand per segment. Indian motorcycle market is divided in three segments 1. Entry level (Commuter Standard) 2. Executive Segment (Commuter Delux) 3. Performance (Sports) segment. The junior Bajaj decided to focus only on two brands Discover and Pulsar and that’s how Discover 100cc, 150 cc and Pulsar 135 cc came into picture.
The 100cc Discover which is known as Discover M inside the company was built on above outcomes. Since the original discover design came from Pulsar DNA it was remain untouched. The other thing is that Discover brand was there in market for almost 5 year and there was not much difference in the designs of other model of Discover. For a layman it was Discover only be it 112cc, 125cc or 135 cc.
Discover 100cc was designed with the features normally not available in 100cc segment like Nitrox suspension, Alloy wheels, Electric start as standard feature, five speed gear box etc. Other smart thing Bajaj did is priced it above Splendour which helped Bajaj in two ways 1. Previously whenever Bajaj tried to rule 100 cc segment Hero Honda responded with price cut which made difficult for Bajaj to maintain its profit margin. This time Bajaj was relaxed from this side. 2. Discover perceived to be an upgrade option for 100cc buyer due to its higher price.
Discover M was equipped with 100cc DTS-Si engine. It was the same engine platform which was used for XCD series but this time it was 100cc instead of 125 or 135cc. It was necessary to do due to general belief of less cc more mileage philosophy. Discover 100 cc engine is able to give 80 KMPL in actual riding condition. (One thing must be noted that XCD engine platform was extremely fuel efficient but it did not work well with XCD brand.) The Discover 100cc was not scheduled to launch in the year 2009 but the product development was fast tracked by almost a year due to critical condition.
The last thing Bajaj positioned it as long distance bike with a view to attract rural segment. The same was shown in ad campaign of Discover (Discover India with 1 liter magic).
Result Discover 100 cc sold more than million units since its date of launch.
Bajaj Auto showed the XCD sprint concept in Auto Expo 2008 which was powered by 4 valve 135 cc engine. Rajiv Bajaj realized that for performance segment he just need Pulsar brand. Hence XCD Sprint became Pulsar 135LS.No doubt that the engine is unique but it’s the name Pulsar which did wonder on sales chart. Today, Pulsar 135LS is the second largest selling model in performance segment after Pulsar 150. Many doubted that launch of Pulsar 135LS would affect the sale of Pulsar 150 but Rajiv was confident about his strategy. In fact Sales of Pulsar 150 cc has increased after the launch of Pulsar 135LS.
Bajaj Auto showed the concept of Discover 150cc in Auto Expo 2008. The junior Bajaj always wanted Indian consumer to move from 100 cc segment. When he decided to launch Discover 150cc many were confused that What Rajiv Bajaj wants to do as the company has already Pulsar 150cc in the market. Many doubted the co-existence of Discover 150 with Pulsar 150. But Rajiv was very clear about positioning of Discover brand. The Discover brand was positioned in executive segment hence it should not affect the sale of performance segment. The Discover 150 cc was launched at unbeatable price of 46,000 rs ex-showroom Delhi with Disc brake. Today Discover 150cc is topping the 150cc segment with average monthly sales of more than 35,000 units per month. Bajaj hopes this figure to go up to 50,000 units a month in upcoming months.
- Rajiv Bajaj has decided not to put Bajaj tag post 2012 to avoid brand confusion. Because when you talk about Bajaj you don’t know what you are talking about is it insurance, hair oil, autorikshaw? He has decided to focus only on four brands for motorcycle Boxer, Discover, Pulsar and KTM. The three wheeler business has been taken under RE brand. He also decided to exit scooter segment in order to become true motorcycle manufacturing company.
- 2011 is the year when Pulsar will complete its 10 year. Rajiv Bajaj has planned to launch all new Pulsar which will have higher engine capacity than existing Pulsar. Simultaneously, Entire Pulsar range will be upgraded in this year.
- From 2012 onwards whatever vehicle Bajaj auto will built would be three generation ahead of us from what they have today. That means not only better interiors but also new set of engines and transmissions as well.
- Bajaj Auto also working on Project Dream with US based MotoCzysz LLC, under which both the companies are jointly developing next generation automobile. MotoCzysz LLC is known for its E1pc electric superbike. It is safer to assume that they are working electric bike or car.
- Bajaj auto will foray into four wheeler business in 2012 with its Ultra low cost car which will give 30 Kilometer per liter.
- Bajaj Auto wants its 70% revenue to come from Export market. The ultimate dream is to challenge Honda on International level. Of course it will take years to do so but Bajaj Auto is preparing for the same.
Till now Rajiv Bajaj’s branding strategy is doing wonder for Bajaj Auto. Though it is early to say anything but one thing is sure You just can’t beat a Bajaj.