A PROJECT REPORT ON

AUTOMOBILE INDUSTRY

IN INDIA

(SPECIAL FOCUS ON

BAJAJ PULSAR BIKES)

SUBMITTED TO :

Prof. Ms.Simran sethi

(Faculty of Managerial economics )

BY GROUP 1

NIHAREIKA SINHA

PADMADEVI

SAURABH PANDEY

GAURANG SAHLOT

ISHA VASHIST

SIRAJ SIDDIQUI1

INDEX

1. ACKNOWLEDGMENT……………………………………….………………3

2. INTRODUCTION………………………………………………….……………4

3. COMPANY PROFILE(BAJAJ AUTO LTD)…………………………..14

4. OBJECTIVE OF STUDY……………………………………………..……….18

5. IMPORTANCE OF STUDY………………………………………………….18

6. METHODOLOGY……………………………………………………………….19

7. MARKET SHARE AND GROWTH RATES………………………….20

8. MARKET STRUCTURE……………………………………………………….22

9. PRIMARY DATA ANALYSIS……………………………………………….23

10. SALES FORECASTING……………………………………………………47

11. CORRELATION………………………………………………………………55

2

12. HERFINDAHL INDEX…………………………………………………….56

13. PRICEANALYSIS…………………………………………………………… .58

14. CONCLUSION…………………………………………………………………59

15. APPENDIX……………………………………………………………………….72

16. REFERENCES…………………………………………………………………..73

Acknowledgement

We are extremely grateful to Ms. Simran Sethi for providing us

the honor of carrying out the project, which helped us to put our

3

learning’s into experience. Without her guidance we would not

have been able to proceed with our project in the right direction.

We would like to express our sincere regards to the staff of

LBSIM, New Delhi, whose help and guidance enables us to

know what exactly consumer’s preference towards television is

all about.

We would also like to thank our family friends and relatives

who have helped us and supported us in all possible ways.

A Project report needs co-operation, guidance and experience of

many more other than the persons whose name appears on the

cover, we would like to thank each and everyone who have

helped us in our endeavor.

INTRODUCTION

The Indian automotive industry consists of five segments: commercial

vehicles; multi-utility vehicles & passenger cars; two-wheelers; three-

wheelers; and tractors. With 5,822,963 units sold in the domestic market

4

and 453,591 units exported during the first nine months of FY2005

(9MFY2005), the industry (excluding tractors) marked a growth of 17%

over the corresponding previous. The two-wheeler sales have witnessed

a spectacular growth trend since the mid nineties.

Two-wheelers: Market Size & Growth

In terms of volume, 4,613,436 units of two-wheelers were sold in the

country in 9MFY2005 with 256,765 units exported. The total two-

wheeler sales of the Indian industry accounted for around 77.5% of the

total vehicles sold in the period mentioned

Figure 1:Segmental Growth of the Indian Two Wheeler Indust

ry

(FY1995-2004)

 

After facing its worst recession during the early 1990s, the industry

bounced back with a 25% increase in volume sales in FY1995.

However, the momentum could not be sustained and sales growth

dipped to 20% in FY1996 and further down to 12% in FY1997. The

5

economic slowdown in FY1998 took a heavy toll of two-wheeler sales,

with the year-on-year sales (volume) growth rate declining to 3% that

year. However, sales picked up thereafter mainly on the strength of an

increase in the disposable income of middle-income salaried people

(following the implementation of the Fifth Pay Commission's

recommendations), higher access to relatively inexpensive financing,

and increasing availability of fuel efficient two-wheeler models.

Nevertheless, this phenomenon proved short-lived and the two-wheeler

sales declined marginally in FY2001. This was followed by a revival in

sales growth for the industry in FY2002. Although, the overall two-

wheeler sales increased in FY2002, the scooter and moped segments

faced de-growth. FY2003 also witnessed a healthy growth in overall

two-wheeler sales led by higher growth in motorcycles even as the sales

of scooters and mopeds continued to decline. Healthy growth in two-

wheeler sales during FY2004 was led by growth in motorcycles even as

the scooters segment posted healthy growth while the mopeds continued

to decline. Figure 1 presents the variations across various product sub-

segments of the two-wheeler industry between FY1995 and FY2004.

Demand Drivers

The demand for two-wheelers has been influenced by a number of factors

over the past five years. The key demand drivers for the growth of the two-wheeler

industry are as follows:

 ▪ Inadequate public transportation system, especially in the semi-urban

6

and rural areas;

▪ Increased availability of cheap consumer financing in the past 3-4

years;

▪ Increasing availability of fuel-efficient and low-maintenance models;

▪ Increasing urbanisation, which creates a need for personal

transportation;

▪ Changes in the demographic profile;

▪ Difference between two-wheeler and passenger car prices, which

makes two-wheelers the entrylevel vehicle;

▪ Steady increase in per capita income over the past five years; and

▪ Increasing number of models with different features to satisfy diverse

consumer needs.

 

MARKET CHARACTERISTICS

Demand

Segmental Classification and Characteristics

7

The three main product segments in the two-wheeler category are

scooters, motorcycles and mopeds. However, in response to evolving

demographics and various other factors, other subsegments emerged,

viz. scooterettes, gearless scooters, and 4-stroke scooters. While the first

two emerged as a response to demographic changes, the introduction of

4-stroke scooters has followed the imposition of stringent pollution

control norms in the early 2000. Besides, these prominent sub-segments,

product groups within these sub-segments have gained importance in the

recent years. Examples include 125cc motorcycles, 100-125 cc gearless

scooters, etc. The characteristics of each of the three broad segments are

discussed in Table 1.

Table 1

Two-Wheelers: Comparative Characteristics

8

  Scooter Motorcycle Moped

Price*(Rs.

as in

January

2005)

> 22,000 > 30,000 > 12,000

Stroke2-stroke, 4-

strokeMainly 4-stroke 2-stroke

Engine

Capacity

(cc)

90-150 100, 125, > 125 50, 60

Ignition Kick/Electronic Kick/Electronic Kick/Electronic

Engine

Power

(bhp)

6.5-9 7-8 and above 2-3

Weight

(kg) 90-100 > 100 60-70

Fuel 50-75 50-80+ 70-80

9

Efficiency

(kms per

litre)

Load

Carrying High Highest Low

*Ex-showroom Mumbai

Compiled by INGRES

 

Segmental Market Share

The Indian two-wheeler industry has undergone a significant change over the past

10 years with the preference changing from scooters and mopeds to motorcycles.

The scooters segment was the largest till FY1998, accounting for around 42% of

the two-wheeler sales (motorcycles and mopeds accounted for 37% and 21 % of

the market respectively, that year). However, the motorcycles segment that had

witnessed high growth (since FY1994) became larger than the scooter segment in

terms of market share for the first time in FY1999. Between FY1996 and

9MFY2005, the motorcycles segment more than doubled its share of the two-

wheeler industry to 79% even as the market shares of scooters and mopeds stood

lower at 16% and 5%, respectively.

Figure 2

Trends in Segmental Share in Industry Sales

(FY1996-9MFY2005)

10

 

While scooter sales declined sharply by 28% in FY2001, motorcycle

sales reported a healthy growth of 20%, indicating a clear shift in

consumer preference. This shift, which continues, has been prompted by

two major factors: change in the country's demographic profile, and

technological advancements.

Over the past 10-15 years the demographic profile of the typical two-

wheeler customer has changed. The customer is likely to be salaried and

in the first job. With a younger audience, the attributes that are sought of

a two-wheeler have also changed. Following the opening up of the

economy and the increasing exposure levels of this new target audience,

power and styling are now as important as comfort and utility.

The marketing pitch of scooters has typically emphasised reliability,

price, comfort and utility across various applications. Motorcycles, on

11

the other hand, have been traditionally positioned as vehicles of power

and style, which are rugged and more durable. These features have now

been complemented by the availability of new designs and technological

innovations. Moreover, higher mileage offered by the executive and

entry-level models has also attracted interest of two-wheeler customer.

Given this market positioning of scooters and motorcycles, it is not

surprising that the new set of customers has preferred motorcycles to

scooters. With better ground clearance, larger wheels and better

suspension offered by motorcycles, they are well positioned to capture

the rising demand in rural areas where these characteristics matter most.

Scooters are perceived to be family vehicles, which offer more

functional value such as broader seat, bigger storage space and easier

ride. However, with the second-hand car market developing, a

preference for used cars to new two-wheelers among vehicle buyers

cannot be ruled out. Nevertheless, the past few years have witnessed a

shift in preference towards gearless scooters (that are popular among

women) within the scooters segment. Motorcycles, offer higher fuel

efficiency, greater acceleration and more environment-friendliness.

Given the declining difference in prices of scooters and motorcycles in

the past few years, the preference has shifted towards motorcycles.

Besides a change in demographic profile, technology and reduction in

the price difference between motorcycles and scooters, another factor

12

that has weighed in favour of motorcycles is the high re-sale value they

offer. Thus, the customer is willing to pay an up-front premium while

purchasing a motorcycle in exchange for lower maintenance and a

relatively higher resale value.

Supply

Manufacturers

As the following graph indicates, the Indian two-wheeler industry is

highly concentrated, with three players-Hero Honda Motors Ltd

(HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd

(TVS) - accounting for over 80% of the industry sales as in 9MFY2005.

The other key players in the two-wheeler industry are Kinetic Motor

Company Ltd (KMCL), Kinetic Engineering Ltd (KEL), LML Ltd

(LML), Yamaha Motors India Ltd (Yamaha), Majestic Auto Ltd

(Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle &

Scooter India (P) Ltd (HMSI).

Figure 3

Shares of Two-Wheeler Manufacturers in Industry

Sales (FY2000-9MFY2005)

13

 

Although the three players have dominated the market for a relative long

period of time, their individual market shares have undergone a major

change. Bajaj Auto was the undisputed market leader till FY2000,

accounting for 32% of the two-wheeler industry volumes in the country

that year. Bajaj Auto dominance arose from its complete hold over the

scooter market. However, as the demand started shifting towards

motorcycles, the company witnessed a gradual erosion of its market

share. HHML, which had concentrated on the motorcycle segment, was

the main beneficiary, and almost doubled its market share from 20% in

FY2000 to 40% in 9MFY2005 to emerge as the market leader. TVS, on

the other hand, witnessed an overall decline in market share from 22% in

FY2000 to 18% in 9MFY2005. The share of TVS in industry sales

fluctuated on a year on year basis till FY2003 as it changed its product

mix but has declined since then.

14

Technology

Hitherto, technology transfer to the Indian two-wheeler industry took

place mainly through: licensing and technical collaboration (as in the

case of Bajaj Auto and LML); and joint ventures (HHML).

Table 2

Technological tie-ups of Select Players

  Nature of Alliance Company Product

Bajaj Auto Technological tie-up Kawasaki Heavy Industries Ltd, Japan Motorcycles

Technological tie-up Tokya R&D Co Ltd, Japan Two-wheelers

Technological tie-up Kubota Corp, Japan Diesel Engines

HHML Joint Venture Honda Motor Co, Japan Motorcycles

KEL Technological tie-up Hyosung Motors & Machinery Inc Motorcycles

KEL Tie up for manufacturing

and distribution

Italjet, Italy Scooters

LML Technological tie-up Daelim Motor Co Ltd Motorcycles

Hero Motors Technological tie-up Aprilia of Italy Scooters

.BAJAJ Auto limited

15

Bajaj Auto is a major Indian automobile manufacturer. It is India's

largest and the world's 4th largest two- and three-wheeler maker. It is

based in Pune, Maharashtra, with plants in Akurdi and Chakan

(Pune),Waluj (near Aurangabad) and Pantnagar in Uttaranchal. Bajaj

Auto makes and exports motorscooters, motorcycles and the auto

rickshaw.

The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at

1946.

Over the last decade, the company has successfully changed its image

from a scooter manufacturer to a two wheeler manufacturer. Its product

range encompasses scooterettes, scooters and motorcycles. Its real

growth in numbers has come in the last four years after successful

introduction of a few models in the motorcycle segment.

The company is headed by Rahul Bajaj who is worth more than US$1.5

billion.

Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj

Trading Corporation Private Limited. It started off by selling imported

two- and three-wheelers in India. In 1959, it obtained license from the

Government of India to manufacture two- and three-wheelers and it

went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977,

it managed to produce and sell 100,000 vehicles in a single financial

year. In 1985, it started producing at Waluj in Aurangabad. In 1986, it

16

managed to produce and sell 500,000 vehicles in a single financial year.

In 1995, it rolled out its ten millionth vehicle and produced and sold 1

million vehicles in a year.

BAJAJ PULSAR

Bajaj Pulsar is a motorcycle brand owned by Bajaj Auto in India. The two wheeler was developed by the product engineering division of Bajaj Auto in association with motorcycle designer Glynn Kerr Tokyo R&D. Currently there are four variants available -with engine capacities of 150cc, 180 and two variants with capacities of 220 cc. More than a million units of Pulsar were sold by November 2005. A Pulsar 200 variant was discontinued in July 2009. With monthly sales of more than 48,000 units in June 2009, Pulsar is the leader in the 150 cc segment in India with a market share of 43%.

Before the introduction of the Pulsar, the Indian motorcycle market trend was towards fuel efficient, small capacity motorcycles (that formed the 80-125 cc class). Bigger motorcycles with higher capacity virtually did not exist (except for Enfield Bullet). The launch and success of Hero Honda CBZ in 1999 showed that there was demand for performance bikes. Bajaj took the cue from there on and launched the Pulsar twins in India on November 24, 2001. Since the introduction and success of Bajaj Pulsar, the Indian youth began expecting high power and other features from affordable motorcycles.

DTSi

17

DTSi stands for Digital Twin Spark Ignition, a Bajaj Auto trademark. Bajaj Auto holds an Indian patent for the DTSi technology. The Alfa Romeo Twin-Spark engines, the BMW F650 Funduro which was sold in India from 1995 to 1997 also had a twin-spark plug technology, and the Rotax motorcycle engines,more recently Honda's iDSI Vehicle engines use a similar arrangement of two spark-plugs. However very few small capacity engines did eventually implement such a scheme in their production prototypes.

Key players in the Bike segment :

BAJAJ AUTO HERO HONDA

TVS

YAMAHA

ROYAL ENFIELD

Objective of Study

The objective of this research is to determine the customer as well as retailers preferences regarding different brands of motorcycles which result in their market share. It involves the study of consumers’ buying

18

behaviour and attitudes towards a variety of attributes and factors, which help them in decision-making.

The brand we chose to focus on was BAJAJ AUTO Ltd.’s PULSAR brand of bikes. We studied the company profile, its market structure, the brand awareness, growth rates and popularity among consumers so as to forecast the future sales and understand the growth trends.

We designed a questionnaire to survey various dealers and consumers to understand the demand and supply situation of the bike market. Secondary data from the internet has also been used for effective analysis.

Importance of Study

The importance of this study is to practically understand the relevance of the concepts of managerial economics in the business organisations and here in the realm of the motorcycles industry. The present market scenario was analyzed and future demands forecasted using the simple regression techniques. Also, a comprehensive study of the major factors involved in this market was conducted so as to see how different and similar a market structure is from the theories.

Methodology

Primary data collection:

19

For primary data collection we designed a questionnaire to survey various dealers and consumers. The objective of survey was to understand the consumer preferences among various brands of motorcycles available in the market and the factors affecting consumer buying process.

The sample size for the survey was around 40-50.

Secondary data collection:

Internet was the major source for secondary data. Apart from understanding the bike industry in general and Bajaj in specific, our major task was to analyse the consumer demand for Bajaj’s PULSAR’s brand and project the future sales for the company. We have used the trend projection and exponential forecasting technique to predict the sales.

Market share and Growth rates

20

Two- wheeler sales in the country have sky rocketed in the recent years, and the annual sales of motorcycles in India expected to cross the 10 million mark by 2010. The low penetration of two-wheelers in the country 31 two-wheelers per 1000 citizens (2004) leaves immense scope for the growth of the market. Overall the industry sales of two-wheelers have grown by 15% from 6.57 million in 2004/2005 to 7.57 million in 2005/2006. The buoyant Indian economy with a growth rate of around 8% per annum is further expected to fuel the growth of two wheelers in the country.

The share of motorcycles have increased over the years, while that of other two-wheelers like geared scooters, scooterettes and mopeds have shown a negative growth or remained stagnant. The two-wheelers have penetrated 7% of rural house hold and 24% of urban markets, thus it leaves an immense scope for the market to grow.Bajaj Auto one of the leading producers of automobiles in the country has been able to sell close to 2.3 million vehicles in 2005/2006, the sales of the company grew by almost 31%. The company registered a 32% growth in the sales of motorcycles much above the industry average of 19%. Bajaj Auto has emerged as a market leader in the entry level or price segment motorcycle with the Bajaj CT 100 accounting for nearly 40% of the market share. It also commands a 62% market share in the premium segment of motorcycles with products like the Bajaj Pulsar DTSI. TVS Motors which has lots of firsts to its credit in the two-wheeler sector in the country was able to sell 1.34 million units during the same period thus registering an overall growth of 15% from the previous year. In the motorcycle segment the company's growth in sales was in sync with the industry average.

f this figures have daunted you the best is yet to come, the country leader in two-wheelers hero honda have crossed the three million mark during the year 2005/2006 which is a good few lakhs more than its nearest competitor Bajaj Auto. The company accounted for nearly 40% of then two-wheeler market. In the motorcycle segment the company has been able to attain a market share of about 50%. The segment in which hero

21

honda has emerged as a clear winner is the Deluxe segment, which is the largest segment in the motorcycles category, with its flagship family of motorcycles splendor selling over 1.2 million units which is just a shade less than all the two wheelers sold by TVS during the same year.

The motorcycle category is expected to see a further growth and according to industry experts it will drive all other category of two-wheelers to the periphery.

The table below shows the over all trend of Industry Sales over a 5 year period. The figures are provided by the Society of automobile Manufactures Association (SIAM).

Two-wheeler domestic sales trend

Motorcycles

2001-02 2002-03 2003-04 2004-05 2005-06

2887194 3647493 4170445 4964753 5815417

MARKET STRUCTURE22

Market Structure

This industry is a high volume, medium growth sector characterized by excess/ idle capacities owing to in efficient operations. Imports have not been influencing prospects, as high government regulations limit this .

Characteristics

BIKES : primarily a commodity market - price sensitive Effective distribution chain - through a simple network of dealers

and franchises. Regulation - Emission norms as well as import regulations are in

existence. Market - Urban areas are the largest market for Pulsar, followed by small

towns and then rural centres.

The market of motorcycles shows a monopolistic structure due to the following factors:

Different and many players in the market Differentiated products. Prices charged are different. The competition is a non price competition i.e on the basis of

advertising and delivering differentiated products.

PRIMARY DATA ANALYSIS

1. Age group classification of customers preferring Bajaj Pulsar

23

18-24 24%

24-30 38%

30-36 19%

ABOVE 36 19%

As is clear the maximum buyers are of the age group 24-30 , hence it can be interpreted as being popular in college going youth.

2. Bikes owned (categorisation)-

pulsarbajaj Splendor

Apache Unicorn

cd-dawn enfield

bullet(old)hunk enticer

ct100 CBZ

Pulsar DTS i hero honda

3.ANUAL HOUSEHOLD INCOME

<I LAKH 0%

1-3 15%

24

LAKH3-5 LAKH

35%

5-10 LAKH

35%

>10 LAKH

15%

income group share of survey

0%5%

10%15%20%25%30%35%40%

<I LAKH 1-3 LAKH 3-5 LAKH 5-10LAKH

>10 LAKH

income group

% s

hare

Series1

income group share of survey

<I LAKH

1-3 LAKH

3-5 LAKH

5-10 LAKH

>10 LAKH

Which shows that a majority group belonging to the pulsar kind of bikes is more from the income group category 3-5 & 5-10 lakh group.

Moreover none of the customer was from < 1 lakh category which is also an important finding from the marketing point of view.

Summary report (graphical representation of collected data)

25

4.purpose of the bike

(office/traveling/household/adventure/other)

1 -

LOWEST 30%

2 10%

3 15%

4 5%

5 -

HIGHEST

40%

LOWEST HIGHEST

26

LOWEST HIGHEST

1 - LOWEST 5%

2 20%

3 35%

4 40%

5 - HIGHEST 0%

LOWEST HIGHEST

1 - LOWEST 1 5%

2 9 45%

3 1 5%

4 6 30%

5 - HIGHEST 3 15%

OTHER

27

LOWEST HIGHEST

1 - LOWEST 33%

2 0%

3 33%

4 0%

5 - HIGHEST 33%

PLEASE SPECIFY THE OTHER FACTOR

College, small town movement, status ,shopping

28

5.Buying decision

Mileage/looks/brand/service/price

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 30%

4 25%

5 -

HIGHEST

45%

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 25%

4 35%

5 -

HIGHEST

40%

29

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 20%

4 45%

5 -

HIGHEST

35%

LOWEST HIGHEST

1 -

LOWEST 0%

2 15%

3 55%

4 25%

5 -

HIGHEST

5%

30

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 40%

4 30%

5 -

HIGHEST

30%

6.Purchasing decision

31

Friends/family/dealer/adventure/other

LOWEST HIGHEST

1 -

LOWEST 0%

2 5%

3 55%

4 0%

5 -

HIGHEST

40%

LOWEST HIGHEST

1 -

LOWEST 15%

2 15%

3 25%

4 20%

5 -

HIGHEST

25%

32

LOWEST HIGHEST

1 -

LOWEST 25%

2 40%

3 30%

4 5%

5 -

HIGHEST

0%

LOWEST HIGHEST

1 -

LOWEST 0%

2 10%

3 50%

4 15%

5 -

HIGHEST

25%

OTHER FACTORS

33

LOWEST HIGHEST

1 -

LOWEST 75%

2 0%

3 0%

4 25%

5 -

HIGHEST

0%

PLEASE SPECIFY THE OTHER FACTOR

College, work requirements

34

7.Chosen media

Television/hoarding/print media/internet/other

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 0%

4 15%

5 -

HIGHEST

85%

LOWEST HIGHEST

1 -

LOWEST 5%

2 15%

3 20%

4 45%

5 -

HIGHEST

15%

35

LOWEST HIGHEST

1 -

LOWEST 0%

2 5%

3 10%

4 60%

5 -

HIGHEST

25%

LOWEST HIGHEST

1 -

LOWEST 30%

2 20%

3 20%

4 20%

5 -

HIGHEST

10%

OTHERS

36

LOWEST HIGHEST

1 -

LOWEST 50%

2 25%

3 25%

4 0%

5 -

HIGHEST

0%

IF OTHERS PLEASE SPECIFY

Radio,pamphlets

8.Brand power – Easy recall

37

Bajaj/herohonda/Yamaha/Honda/tvs

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 10%

4 25%

5 -

HIGHEST

65%

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 0%

4 60%

5 -

HIGHEST

40%

38

LOWEST HIGHEST

1 -

LOWEST 0%

2 35%

3 30%

4 35%

5 -

HIGHEST

0%

Honda

LOWEST HIGHEST

1 -

LOWEST 5%

2 5%

3 45%

4 35%

5 -

HIGHEST

10%

TVS

39

LOWEST HIGHEST

1 -

LOWEST

15%

2 50%

3 25%

4 10%

5 -

HIGHEST

0%

40

8.Bike on preference

Pulsar/apache/f-z 150/hunk/other

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 10%

4 45%

5 -

HIGHEST

45%

LOWEST HIGHEST

1 -

LOWEST 0%

2 5%

3 30%

4 65%

5 -

HIGHEST

0%

41

LOWEST HIGHEST

1 -

LOWEST 5%

2 0%

3 5%

4 30%

5 -

HIGHEST

60%

LOWEST HIGHEST

1 -

LOWEST 0%

2 10%

3 40%

4 50%

5 -

HIGHEST

0%

ANY OTHER

42

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 0%

4 50%

5 -

HIGHEST

50%

IF OTHER,PLEASE SPECIFY

Splendor,karizma

9.Perception parameters about pulsar

Style/power/performance/value/brand

43

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 25%

4 20%

5 -

HIGHEST

55%

LOWEST HIGHEST

1 -

LOWEST 0%

2 5%

3 20%

4 45%

5 -

HIGHEST

30%

44

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 45%

4 35%

5 -

HIGHEST

20%

LOWEST HIGHEST

1 -

LOWEST 0%

2 5%

3 35%

4 55%

5 -

HIGHEST

5%

45

LOWEST HIGHEST

1 -

LOWEST 0%

2 0%

3 10%

4 80%

5 -

HIGHEST

10%

Some direct inferences

.Factors influencing the buying behavior

46

Brand recall

Sales Forecasting

47

1. Trend projection method:

This classical method of business forecasting is essentially concerned with the study of movements of variables through time. It is used under the assumption that the factors responsible for past trends in the variable to be projected will continue to play their part in the future in the same manner and to the same extent in magnitude and direction.

There are three techniques of trend projection:

Graphical method

Least square method

Box-Jenkins method

Sales forecast of Pulsar for the year 2008 using Least Square method (which is same as simple linear regression method):

48

YEAR SALES(S)in Crores

T T2 ST

2000 865 1 1 8652001 1011.55 2 4 2023.12002 1374.94 3 9 4124.822003 1512.43 4 16 6049.722004 1647.86 5 25 8239.32005 1799.6 6 36 10797.6TOTAL 8211.38 21 91 32099.54

49

1.Trend Projection Method:

The straight line trend equation used for projecting future sales is:

S = a + bT

Where, S = annual sales

T = time in years

a, b are constants

The constants a and b are estimated by solving the following two equations:

50

∑S = na + b∑T

∑ST = a∑T + b∑T2

Here, n = 6

∑S = 8211.38 crores

∑ST = 32099.54 crores

∑T = 21

∑T2

= 91

On solving the above two equations we get,

a = 696.63 and b = 191.98

51

RMSE Calculation:

On the basis of the calculated values of a and b, the predicted sales value for the years 2006,

2007 and 2008 will be:

Sp2006 = 696.63 + (191.98*7) = 2040.49 crore

Sp2007 = 696.63 + (191.98*8) = 2232.47 crore

Sp2008 = 696.63 + (191.98*9) = 2424.45 crore

And, the actual sales values for the above three years are:

Sa2006 = 2072.00 crore

Sa2007 = 2487.00 crore

Sa2008 = 3497.00 crore

RMSE = {(3497.00 − 2424.45)2 + (2487.00 − 2232.47) 2+ (2072.00 − 2040.49)2}1/2

(3) 1/2

= 636.69

Sales for 2009 and 2010 can also be forecasted:

S2009 = 696.63 + (191.98*10) = 2616.43 crore

S2010 = 696.63 + (191.98*11) = 2808.41 crore

52

3. Exponential smoothing:

It is a popular technique for short-run forecasting. It uses a weighted average of past data as the basis for a forecast. It gives higher weight to most recent data and least weight to observations of distant past. The weights for past data are chosen in accordance with their degree of influence on the future. The formula for exponential smoothing is-

ST+1 = AyT + (1-a) St

Where, St+1 = exponentially smoothed forecast

Yt = actual sales of previous year

St = forecasted sales of last year

Now, we apply this method on the available sales data of AWL considering a six period average as the initial forecast for the year 2006:

53

S2006 = (865.00+1011.55+1374.94+1512.43+1647.86+1799.60)/6

= 1368.56

We take the smoothing constant, a = 0.4

Therefore, S2007 = (0.4*2072) + (0.6*1368.56)

= 1649.93

S2008 = (0.4*2487) + (0.6*1509.25)

= 1984.75

RMSE Calculation:

RMSE = {(2072.00 − 1368.56)2+ (2487.00 − 1649.93)2 + (3497− 1984.75)2 }1/2

(3 )1/2

= 1077.406

Sales for the year 2009 can also be predicted as:

S2009 = (0.4*3497.00) + (0.6*1984.75) = 2589.65 cr

54

Calculation of Correlation:

Correlation Coefficient = 3359.71/(6-1)*(364.848*1.871)

=0.984

This shows that there is a high degree of correlation between the time period and sales i.e more the time period, more are the sales. This means that sales are highly dependent on the time period positively.

Calculation of Herfindahl Index

55

Market shares of various brands in premium segment i.e. 150-220 c.c.

Pulsar : 41%

Hero Honda: 27%

TVS: 25%

Royal Enfield: 5%

Yamaha: 2%

Herfindahl Index: (41^2)+(27^2)+(25^2)+(5^2)+(2^2)

=3064

Since the value of H (Herfindahl index) is high, we can say that the concentration ratio is also high in the segment of premium bikes.

PRICE REGRESSION PRICE ANALYSIS

56

bike vs price in india

0102030405060708090

100

Spirit

BykBox

erPuls

arDisc

over

Passio

n Plus

Ambit

ionActi

vaZX Z

oom

GF-170

Pulse

Energ

y Fre

edom

Beam

er

Bullet

Max

100

Fiero

Crux

Liber

o

bike type

bik

e p

ric

e

Series1

bike price distribution in india

0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100

price range

Ty

pe

s o

f b

ikes

Series1

The maximum number of bikes lie in the range between 40-50 thousands which is also a usp of pulsar as it is almost near to the given range and provides a better value for money.

57

0

10

20

30

40

50

60

70

80

90

Price

1

Bikes

veiw of bikes in india with price Spirit

M80

Saffire

Chetak

Chetak

Byk

Byk

Caliber

Caliber

Boxer

Boxer

Boxer

Pulsar 150

Pulsar

Pulsar

Pulsar

Eliminator

Wind 125

Wind 125

Discover

Discover

Splendor

CONCLUSION58

The bike was launched in the year 2000, and for it to capture the largest share of market and beat existing and flourishing brands like Hero Honda is a great achievement.

Also the root mean square error value in the least square method is less than that in the exponential forecasting method. Thus, the sales predicted by least square method will be a better estimate of the future sales than that predicted by exponential forecasting method.

The maximum buyers are of the age group 24-30 , hence it can be interpreted as being popular in college going youth .A majority group belonging to the pulsar kind of bikes is more from the income group category 3-5 & 5-10 lakh group The maximum number of bikes lie in the range between 40-50 thousands which is also a usp of pulsar as it is almost near to the given range and provides a better value for money.

The youth were more inclined towards the adventure part of bikes ,looks, consult friends, use television and internet and prefer style and value the most whereas for the elders go for household and office, mileage, family, print, value and brand before making a bike purchase. Annual incomes have a direct correlation with increasing demands of consumer also. Pulsar overall enjoys a favorable demand among all the categories and consist of maximum alluring qualities amongst the tested ones.

APPENDIX

59

Questionnaire for Bike Customers

(The findings of this survey will be used only for academic purposes by the students of Lal Bahadur Shastri Institute of Management,New delhi)

Q1.Name of the customer

Q2.Age :

18-24

24-30

30-36

ABOVE 36

Q3.WHICH BIKE DO YOU OWN PRESENTLY ?

Q4.ANUAL HOUSEHOLD INCOME

<I LAKH

1-3 LAKH

3-5 LAKH

5-10 LAKH

>10 LAKH

60

Q5.WHAT IS THE PURPOSE OF YOUR BIKE?

(RATE ON 5 POINT SCALE-5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)OFFICE

1 2 3 4 5

LOWEST HIGHEST

b)TRAVELLING

1 2 3 4 5

LOWEST HIGHEST

c)HOUSEHOLD

1 2 3 4 5

LOWEST HIGHEST

d)ADVENTURE

61

1 2 3 4 5

LOWEST HIGHEST

e)OTHER

1 2 3 4 5

LOWEST HIGHEST

PLEASE SPECIFY THE OTHER FACTOR

Q6.RATE THE KEY FACTORS WHICH AFFECTED YOUR BUYING DECISION?

(5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)MILEAGE

1 2 3 4 5

LOWEST HIGHEST

b)LOOKS

62

1 2 3 4 5

LOWEST HIGHEST

c)BRAND

1 2 3 4 5

LOWEST HIGHEST

d)SERVICE

1 2 3 4 5

LOWEST HIGHEST

e)PRICE

1 2 3 4 5

LOWEST HIGHEST

63

Q7.WHICH OF THE FOLLOWING INFLUENCES YOUR PURCHASE DECISION?

(RATE ON 5 POINT SCALE-5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)FRIENDS

1 2 3 4 5

LOWEST HIGHEST

b)FAMILY

1 2 3 4 5

LOWEST HIGHEST

c)DEALER

1 2 3 4 5

LOWEST HIGHEST

64

d)ADVERTISEMENT

1 2 3 4 5

LOWEST HIGHEST

e)OTHER FACTORS

1 2 3 4 5

LOWEST HIGHEST

PLEASE SPECIFY THE OTHER FACTOR

Q8.WHICH OF THE FOLLOWING MEDIA ARE YOU MOST LIKELY TO NOTICE AN ADVERTISEMENT ?

(RATE ON 5 POINT SCALE-5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)TELEVISION

1 2 3 4 5

65

LOWEST HIGHEST

b)HOARDINGS

1 2 3 4 5

LOWEST HIGHEST

c)PRINT MEDIA

1 2 3 4 5

LOWEST HIGHEST

d)INTERNET

1 2 3 4 5

LOWEST HIGHEST

e)OTHERS

66

1 2 3 4 5

LOWEST HIGHEST

IF OTHERS PLEASE SPECIFY

Q9.WHICH BRAND NAME DO YOU FIND EASY TO RECALL?

(RATE ON 5 POINT SCALE-5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)BAJAJ

1 2 3 4 5

LOWEST HIGHEST

b)HERO HONDA

1 2 3 4 5

67

LOWEST HIGHEST

c)YAMAHA

1 2 3 4 5

LOWEST HIGHEST

d)HONDA

1 2 3 4 5

LOWEST HIGHEST

e)TVS

1 2 3 4 5

LOWEST HIGHEST

68

Q10.RATE THE BIKES ON THE BASIS OF YOUR PREFERENCE?

(RATE ON 5 POINT SCALE-5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)PULSAR

1 2 3 4 5

LOWEST HIGHEST

b)APACHE

1 2 3 4 5

LOWEST HIGHEST

c)F-Z 150

1 2 3 4 5

LOWEST HIGHEST

d)HUNK

69

1 2 3 4 5

LOWEST HIGHEST

e)ANY OTHER

1 2 3 4 5

LOWEST HIGHEST

IF OTHER,PLEASE SPECIFY

Q11.RATE YOUR PERCEPTION ABOUT PULSAR ON THE FOLLOWING FACTORS-

(RATE ON 5 POINT SCALE-5 BEING THE HIGHEST AND 1 BEING THE LOWEST )

a)STYLE

70

1 2 3 4 5

LOWEST HIGHEST

b)POWER

1 2 3 4 5

LOWEST HIGHEST

c)PERFORMANCE

1 2 3 4 5

LOWEST HIGHEST

d)VALUE

1 2 3 4 5

LOWEST HIGHEST

71

e)BRAND

1 2 3 4 5

LOWEST HIGHEST

72

73

REFERENCES

1. EBSCO HOST(database)2. PROWESS(database)3. INDIA STATS(database)4. Peterson, Lewis and Jain: Managerial Economics5. www.bajajauto.com 6. http://auto.indiamart.com/motorcycles/bajaj-pulsar 7. http://www.fadaweb.com/two_wheeler_industry.htm 8. auto.indiamart.com/motorcycles

9. www.ilove india .com/ bikes /index.html

10. www.infibeam.com/ bikes /make/herohonda.html

11. bikes.whereincity.com

12. www. bikes ales india .com

13. www.infibeam.com/ bikes /make/bajaj.html

14. www.autoblogs.in/.../ bajaj -pulsar-300-cc-india- bajaj - bikes .html

15. www.autoindiaforum.com/ bajaj -to-launch-6-new- bikes -in- 2009.html

16. FOR VEIWING THE COLLECTEDPRIMARY DATA VISIT –

http://spreadsheets.google.com/ccc?key=0Au4_eI1zvZ0YdF8yT2VCRHFKWmJZQm4zQkdlQ0d3enc&hl=en

74