Q.1. i) Briefly describe the Porter’s five forces model and the PESTLE framework.

ii) Illustrate the concepts with reference to the two-wheeler motorcycle segment in the
context of Royal Enfield for the Indian market.

Ans:

Part 1

i)Porter’s Five Forces Model :-

Potential of new entrants –

The capital venture is colossal in bike industry since vast plants and extensive apparatus with
talented work and great R&D group required for delivering bike. Since every organization in
industry change the model progressing premise to show separation among their rivals as a result
of this there are more learning and involvement in the field. Company should show interest on
promotions to create brand loyalty. Two-wheeler industry enjoys the profits by low cost
production.

Competition in the industry –

Cruisers still record for the lion’s offer of bike deals, however, gearless bikes might tilt the
organization in the coming a long time. The gearless bike market has been developing rapidly.
There is an expanding inclination for Japanese brands, promoting a checked change in the bike
market. The local organizations can’t confront the assault of their multinational partners. Instead,
each fourth bike sold in India is made either by Honda, Suzuki or Yamaha. By November 2012,
market share had grown from 15% to 25%.

Bargaining Power of Supplier –

At the selling units are high in the bike industry, since they change their models so that they
make a decent relationship between their suppliers. Some of the basic components for every bike
commercial enterprises are steel, aluminium, tires and tubes, these materials are accessible in
abundant, which are helpful for smooth production for their products.

Bargaining Power of Consumer –

As there are only few two-wheeler company’s so buyers has an upper hand upon the suppliers,
since they are fully aware of that product and seller cost. Now-a-days customers are attracted
towards a single brand as the company gives good services after the purchase. Sellers can’t price
their products at a high price at the most of the customers are of middle-class group.

Threat of Substitute Products –

But transportation, auto transportation and train etc are the substitute products for two-wheeler
industry, since there is a lot of segment in buses which is divided in normal and hi-tech AC
buses.

PESTEL Framework:-

Political factors include areas such as taxation policy, law labor of law, transportation problems
and stable political environment. Furthermore, governments have limited number of motorcycles
being sold in the country because Indian currency changes everyday with the comparison of UK
pounds. The changes of currency means the changes of price of products and demand of product
like Royal Enfield are also changes which means recession are enter into the market.

Environment elements incorporate biological and ecological elements, for example, climate,
atmosphere conditions and atmosphere changes. Moreover, with the expanding of mindfulness
among the potential atmosphere changes is influencing interest of item so organization
administrator takes snappy choice by making new markets and reducing or crushing existing
business sector.

Social elements incorporate the demographic and social parts of the external environment. These
elements influence client needs and the measure of potential markets. In the UK, Consumers
have a solid conviction in their local brand products rather than other nation brand, for example,
Indian brand Royal Enfield is moving worldwide which helps them to understand the customer
easily.

Technological elements incorporate some mechanical things, for example, Research and
advancement activity, automation, technology and the rate of mechanical changes. Now-a-days,
individuals depend on GPS to seek an area they need to go because of GPS had created by new
innovation. Royal Enfield has effectively included Satellite Navigation System in Bullet 350
classic.

Economical elements incorporate efficient stability, the rate of interest, currency rate. These are
variables which puts impacts on the operation of business and accrual choices. As the currency
and rate of interest changes, there is no economical stability in the country.

Legal elements incorporate livelihood law, consumer law and health and wellbeing law. These
variables put awful effects on the expense of products, the interest of item and the generation of
product. The government has proposed the entire organization working environment must
provide safety to the employees. The cover issues, for example, preparing, reporting and the
proper of security gear to ensure representative are safe.

Part 2

Two-wheeler motorcycle segment in the context of Royal Enfield for the Indian market –

One of the most versatile modes of transport is the two wheels. The ability to adapt two wheels
can be illustrated by using it. Its varied use of navigation may vary only from point A to point B.
It can be used to transport small packages of goods through markets or blocked streets. To catch
the school/university bus, or even a short ride to buy groceries. The absolute pleasure of riding a
motorcycle while driving a motorcycle is one of the most compelling reasons for having a wheel
with two wheels.
In India, the three top reasons for ownership of a two-wheeler are:
 Its low-cost ownership and maintenance
 Its compact size and
 Easy to learn and use
In India, the acceptance of two-wheeled vehicles is apprehended to passengers of all age groups.
According to the Motor Vehicle Act of 1981, the driver's license for motor vehicles with 50 cc
engine capacity is 16 years, and the permanent license is 18 years and above. Increasing city
population and increasing traffic congestion requires the use of two wheels and remains the most
convenient and accessible option for mobility.
Since its inception, the Indian two-wheeler industry has developed a lot in terms of technology
and the number of manufacturing and production. Compared with other countries where two-
wheelers are a major component of transportation, it has grown tremendously in half a century.
The establishment of the industry dates back to 1955 when the first "350cc Bullet'2 bicycles were
commissioned by the Indian Army. The harsh conditions of rough terrain and narrow passages
required powerful motorcycles in western and northernmost parts of the country. These bicycles
were made in the UK. Made by Royal Enfield and assembled in Chennai.
India's demand for motorcycles has steadily increased. It has become a young symbol of youth,
especially motorcycles that give them speed and individual style. The motorcycle overtook a
motorcycle in the 1998-99 season and did not look back. 2016-17 is in line with recent
sustainable performance, with sales exceeding 19 million units, an increase of more than 5%
over last year's sales.

Driven by the introduction of new products and high-power machines, consumer preferences are
constantly changing, and support this part of the market dramatically. The Splendor and Super
Splendor brands are available in the Indian market in 2016-2017, with sales exceeding 5 million
units. The Splendor brand was opened in 1994 and is now the world's largest brand. Suzuki sales
began in 2005-06 (1,600 units were sold), and its sales performance grew steadily from 2016 to
17, with sales exceeding 69,710 units. The company specialized in bag manufacturing in the
world started producing more than 800 motorcycles in India. Earlier, India and the US
government reached an agreement to pave the way for manufacturing high-end Harley-Davidson
motorcycles in India. The first plant started its operations in 2013 in Bawal, Haryana. The first
bike was launched in 2014.

Q.2. Briefly explain the concept of Product Life Cycle (PLC) and what should be the
marketing strategy in each of the stages. Elaborate at which stage you would classify Royal
Enfield’s Bullet with appropriate reasons.

Ans:

Part 1
The Product Life Cycle is an important concept in marketing. It describes the stages a product
goes through from when it was first thought of until it finally is removed from the market. Not
all products reach this final stage. Some continue to grow and others rise and fall.

The life cycle of a product is associated with marketing and management decisions within
businesses, and all products go through four primary stages: introduction, growth, maturity, and
decline. Each stage has its costs, opportunities, and risks, and individual products differ in how
long they remain at any of the life cycle stages.

1. Introduction

The introduction stage is about developing a market for the product and building product
awareness. Marketing costs are high at this stage, as it is necessary to reach out to potential
customers. This is also the stage where intellectual property rights protection is obtained. Product
pricing may be high to recover costs associated with the development stage of the product life
cycle, and funding for this stage is typically through investors or lenders.

2. Growth

In the growth stage, the product has been accepted by customers, and companies are striving to
increase market share. For innovative products there is limited competition at this stage, so
pricing can remain at a higher level. Both product demand and profits are increasing, and
marketing is aimed at a broad audience. Funding for this stage is generally still through lenders,
or through increasing sales revenue.

3. Maturity

At the mature stage, sales will level off.  Competition increases, so product features may need to
be enhanced to maintain market share. While unit sales are at their highest at this stage, prices
tend to decline to stay competitive. Production costs also tend to decline at this stage because of
more efficiency in the manufacturing process. Companies usually do not need additional funding
at this stage.

4. Decline
The decline stage of the product life cycle is associated with decreasing revenue due to market
saturation, high competition, and changing customer needs. Companies at this stage have several
options: They can choose to discontinue the product, sell the manufacturing rights to another
business that can better compete or maintain the product by adding new features, finding new
uses for the product, or tap into new markets through exporting. This is the stage where
packaging will often announce “new and improved.”

Marketing Strategy – Stages of Product Life Cycle :

Marketing Strategies for Introduction Stage:

Introduction stage is marked with slow growth in sales and a very little or no profit. Note that
product has been newly introduced, and a sales volume is limited; product and distribution are
not given more emphasis. Basic constituents of marketing strategies for the stage include price
and promotion. Price, promotion or both may be kept high or low depending upon market
situation and management approach. 

Following are the possible strategies:

1. Rapid Skimming Strategy:
This strategy consists of introducing a new product at high price and high promotional expenses.
The purpose of high price is to recover profit per unit as much as possible. The high promotional
expenses are aimed at convincing the market the product merits even at a high price. High
promotion accelerates the rate of market penetration, in all; the strategy is preferred to skim the
cream (high profits) from market.

2. Slow Skimming Strategy:

This strategy involves launching a product at a high price and low promotion. The purpose of
high price is to recover as much as gross profit as possible. And, low promotion keeps marketing
expenses low. This combination enables to skim the maximum profit from the market.

3. Rapid Penetration:
The strategy consists of launching the product at a low price and high promotion. The purpose is
the faster market penetration to get larger market share. Marketer tries to expand market by
increasing the number of buyers.
4. Slow Penetration:

The strategy consists of introducing a product with low price and low-level promotion. Low
price will encourage product acceptance, and low promotion can help realization of more profits,
even at a low price.

Marketing Strategies for Growth Stage:

This is the stage of rapid market acceptance. The strategies are aimed at sustaining market
growth as long as possible. Here, the aim is not to increases awareness, but to get trial of the
product. Company tries to enter the new segments. Competitors have entered the market. The
company tries to strengthen competitive position in the market. It may forgo maximum current
profits to earn still greater profits in the future.

Several possible strategies for the stage are as under:

1. Product qualities and features improvement
2. Adding new models and improving styling

3. Entering new market segments

4. Designing, improving and widening distribution network

5. Shifting advertising and other promotional efforts from increasing product awareness to
product conviction

6. Reducing price at the right time to attract price-sensitive consumers

7. Preventing competitors to enter the market by low price and high promotional efforts

Marketing Strategies for Maturity Stage:

In this stage, competitors have entered the market. There is severe fight among them for more
market share. The company adopts offensive/aggressive marketing strategies to defeat the
competitors.

Following possible strategies are followed:

1. To Do Nothing:
To do nothing can be an effective marketing strategy in the maturity stage. New strategies are
not formulated. Company believes it is advisable to do nothing. Earlier or later, the decline in the
sales is certain. Marketer tries to conserve money, which can be later on invested in new
profitable products. It continues only routine efforts, and starts planning for new products.

2. Market Modification:
This strategy is aimed at increasing sales by raising the number of brand users and the usage rate
per user. Sales volume is the product (or outcome) of number of users and usage rate per users.
So, sales can be increased either by increasing the number of users or by increasing the usage
rate per user or by both. Number of users can be increased by variety of ways.

There are three ways to expand the number of users:

i. Convert non-users into users by convincing them regarding uses of products

ii. Entering new market segments

iii. Winning competitors’ consumers

Sales volume can also be increased by increasing the usage rate per user.

This is possible by following ways:

i. More frequent use of product

ii. More usage per occasion

iii. New and more varied uses of product

3. Product Modification:
Product modification involves improving product qualities and modifying product characteristics
to attract new users and/or more usage rate per user.

Product modification can take several forms:

i. Strategy for Quality Improvement:
Quality improvement includes improving safety, efficiency, reliability, durability, speed, taste,
and other qualities. Quality improvement can offer more satisfaction.

ii. Strategy for Feature Improvement:

This includes improving features, such as size, colour, weight, accessories, form, get-up,
materials, and so forth. Feature improvement leads to convenience, versatility, and attractiveness.
Many firms opt for product improvement to sustain maturity stage.

Product improvement is beneficial in several ways like:

(1) It builds company’s image as progressiveness, dynamic, and leadership,

(2) Product modification can be made at very little expense,

(3) It can win loyalty of certain segments of the market,

(4) It is also a source of free publicity, and

(5) It encourages sales force and distributors.

4. Marketing Mix Modification:

This is the last optional strategy for the maturity stage. Modification of marketing mix involves
changing the elements of marketing mix. This may stimulate sales. Company should reasonably
modify one or more elements of marketing mix (4P’s) to attract buyers and to fight with
competitors. Marketing mix modification should be made carefully as it is easily imitated.

Marketing Strategies for Decline Stage:

1. Continue with the Original Products:
This strategy is followed with the expectations that competitors will leave the market. Selling
and promotional costs are reduced. Many times, a company continues its products only in
effective segments and from remaining segments they are dropped. Such products are continued
as long as they are profitable.

2. Continue Products with Improvements:

Qualities and features are improved to accelerate sales. Products undergo minor changes to
attract buyers.

3. Drop the Product:

When it is not possible to continue the products either in original form or with improvement, the
company finally decides to drop the products.

Product may be dropped in following ways:

i. Sell the production and sales to other companies

ii. Stop production gradually to divert resources to other products

iii. Drop product immediately.

Part 2

Q.3. i) Why do we segment a market? Briefly explain the bases of market segmentation.
ii) Illustrate the market segmentation by Royal Enfield for the urban and rural Indian
market.
Ans:
Part 1
Big data and technology have changed how companies approach segmentation. Technology
revolves around universally cheap communication. The boundaries of availability for an infinite
variety of products and services have expanded, and many products have been converted to a
digital format.
Technology has also created a ‘two-way flow’ of information between customers and suppliers,
enabling an entirely new set of customer behaviors and expectations around how, when and
where they can buy and use products, and in what form. This isn’t necessarily bad news, rather
over time, customer behaviors will be easier to cater thanks to the use of advanced analytics.
So, as the pool of customers’ personalities, needs, behaviors, etc. change over time, it is crucial
that companies keep up the pace and consistently correct and revise their segments with new data
on real behaviors. You will want information about which benefits and features matter to
customers, and data on emerging social, economic and technological trends that may alter
purchasing and usage patterns.
Effective segmentation need to be dynamic in two ways and need to be redrawn as soon as they
lose their relevance. The first way is, they should concentrate on the needs and behaviors which
are rapidly evolving, rather than personality traits, which frequently persist through a person’s
life. The second way is that segments are being rapidly reshaped by technology, fluctuating
economics, and new consumer niches.
If a company, business or firm ignores market segmentation and ignores their target customer,
there is nothing to sell and nobody to sell to. A good market strategy and thus a proper
segmentation can increase your competitiveness, brand recall, customer retention,
communications and expand your market. In summary – Target the right segment, and you will
walk away with a better company and higher profitability.

Bases of Market Segmentations:

There are four main bases of market segmentation – Geographical, Demographic, Psychographic
and Behavioural Segmentation.

Geographical Segmentation –

In this type of segmentation the market is divided on the basis of regions or areas like Nations,
States, Cities, Towns, North, South, East, & West. Take for example, the world is a market, a
mobile manufacturer may focus on the Asian Countries, further he may concentrate on the Indian
market and further divide the Indian market into North, South, East and West regions.
The manufacturer may want to first start in the Southern region and concentrate on Karnataka,
Bengaluru North Region.
Demographic Segmentation –
Segmentation can further be done on the basis of demography (demographics is the study of
Population). The market may be segmented into regions but the people residing in those regions
will be of different age groups or gender, will have different occupations and education.
Therefore, it then becomes necessary to further group them on the demographic elements
as follows:
a. Segmenting on the basis of age
b. Education
c. Occupation
d. Income
e. Religion
f. Gender
g. Family size, and
h. Social Class etc.
Example:
A mobile phone manufacturer divides the region into North, South, East & West, he targets the
Northern region and further divides the market on the basis on gender, income, occupation etc.
Offers handsets to the respective groups based on their likes and preferences.
Psychographic Segmentation –
In this the market is segmented on the basis of the psychology of the people, that is, the way
people think and live their life, in other words it is the lifestyle of the people. Market may be
divided on the basis of demography, but it has been found out that, though people belong to the
same demographic group, their thinking and way of living is different.
Example:
People belonging to the high income group may live a simple lifestyle and prefer simple
products. Therefore a mobile manufacturer needs to offer luxury high priced mobile phones to
this group along with reasonably priced low end handsets.
Another example can be for clothes, women form a major group, but all women do not have the
same lifestyle, some are fashionable, some prefer simple branded clothes and some prefer good
quality unbranded and reasonably priced clothing.

Behavioral Segmentation –
In this type of segmentation the market is divided into groups as per their behavior towards the
products. The behavior relates to the frequency of usage, volume of consumption, loyalty
towards the brand, behavior during occasions like festivals, marriages etc. This type of
segmentation is needed so that the marketer can gain advantage and satisfy the group in a better
manner.
Example:
During festivals, certain group of people based on their religion purchase more products. Some
groups use more of certain products and are frequent buyers, for example, dual income families
may buy bread more frequently and maybe loyal to a certain brand.
Part 2
Two-wheeler segments is one of the largest volumes amongst all the automobile industry and
it can be divided into three such as Scooters, Motor cycles, and mopeds. In the last four to five
years, the two-wheeler market has witnessed a marked shift towards motorcycles at the
expense of scooters. In the rural areas, consumers have come to prefer sturdier bikes to
withstand the bad road conditions. In the process the share of motorcycle segment has
grown from 48% to 58%, the share of scooters declined drastically from 33% to
25%, while that of mopeds declined by 2% from 19% to 17% during the year 2000-01. The
Euro emission norms effective from April 2000 led to the existing players in the two- stroke
segment to install catalytic converters. All the new models are now being replaced by 4-stroke
motorcycles. Excise duty on motorcycles has been reduced from 32% to 24%, resulting in
price reduction, which has aided in propelling the demand for motorcycles. Within the two-
wheeler industry, motorcycle segment grew at a phenomenally high rate of 35% as against a
deceleration of 3% for scooters and 27% for mopeds. In fact, motorcycle has been taking away
the share of scooters and mopeds in a 4.3 million two-wheeler market and surging ahead with
its market share of 68%. The increasing demand from semi-urban and rural segments
may have caused this positive shift towards motorcycles. The Indian two wheeler
industry made a modest beginning in the early 1950 when Automobile Product of India (API)
started manufacturing scooter in India. Until 1958, API and Enfield (motor cycle -350cc bike
and Escorts 175cc) were the only two products. Currently India is the second largest two
wheeler market in the world, it stands next to Japan and China in terms of number of two
wheelers produced and sold.
There are a number of two wheeler companies in India that produce vehicles of extremely
high standard. Some of the leading two wheeler manufacturers in India are Bajaj Auto, TVS
Motor, Kinetic Motor, Suzuki Motor Corporation, Royal Enfield Motors India, Hero Honda
Motors, Yamaha Motor India, LML India and Monto Motors.
There is a large untapped market in semi-urban and rural areas of the country. Any strategic
planning for the two¬-wheeler industry needs to identify these markets with the help of
available statistical techniques. Potential markets can be identified as well as prioritised using
these techniques with the help of secondary data on socio-economic parameters. For the two-
wheeler industry, it is also important to identify the target groups for various categories of
motorcycles and scooters. With the formal introduction of second hand car market by the
reputed car manufacturers and easy loan availability for new as well as used cars, the two-
wheeler industry needs to upgrade its market information system to capture the new market
and to maintain its already existing markets. Availability of easy credit for two-wheelers in
rural and smaller urban areas also requires more focussed attention. It is also imperative to
initiate measures to make the presence of Indian two-wheeler industry felt in the global
market. Adequate incentives for promoting exports and setting up of institutional mechanism
such as Automobile Export Promotion Council would be of great help for further surge in
demand for the Indian two-wheeler industry. In conclusion we can say that there are great
opportunities and possibilities in the automobile sector. But hike in the fuel price is influencing
the market of this industry.
There is a need of a very liberal policy for the fuel prices and requires a great good deal with
fuel supplying countries. Though the performance of the industry is better instead of high and
unfavourable fuel policy.
Q.4. i) Describe the concepts of targeting and positioning.
ii) Elaborate how Royal Enfield has targeted the market and positioned the brand for
Indian consumers.

Ans:

Part 1

Targeting –

Targeting in marketing is a strategy that breaks a large market into smaller segments to
concentrate on a specific group of customers within that audience. It defines a segment of
customers based on their unique characteristics and focuses solely on serving them.

Instead of trying to reach an entire market, a brand uses target marketing to put their energy
into connecting with a specific, defined group within that market.

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It

impacts advertising, as well as customer experience, branding, and business operations.
When your company focuses on target market segmentation, you can do the following:

Speak directly to a defined audience. Marketing messages resonate more deeply with

audiences when readers can relate directly to the information. Brands that have a large,
varied market of customers often struggle with creating marketing campaigns that speak
directly to their audience. Because their viewers are very different, few slogans or stories
can resonate with each person on a personal level. Through target marketing, you can
alleviate this problem and focus on crafting messages for one specific audience.

Attract and convert high-quality leads. When you speak directly to the people you want
to target, you are more likely to attract the right people. Your marketing will more
effectively reach the people most likely to want to do business with you. When you connect
with the right people, you are then more likely to get high-quality, qualified leads that will
turn into paying customers.

Differentiate your brand from competitors. When you stop trying to speak to every
customer in your market and start focusing on a smaller segment of that audience, you also
start to stand out from competitors in your industry. When customers can clearly identify
with your brand and your unique selling propositions, they will choose you over a
competitor that isn’t specifically speaking to or targeting them. You can use your
positioning in marketing to make your brand more well-known and unique.

Build deeper customer loyalty. The ability to stand out from competitors by reaching your
customers on a more personal, human level also creates longer-lasting relationships. When
customers identify with your brand and feel like you are an advocate for their specific
perspectives and needs, they will likely be more loyal to your brand and continue to do
business with you over a longer period of time.

Improve products and services. Knowing your customers more intimately also helps you
look at your products and services in a new way. When you have a deep understanding of
your target audience, you can put yourself in their shoes and see how you can improve your
offerings. You can see what features you can add to better serve your customers.

Stay focused. Finally, the benefit of using targeting in marketing is that it also serves to
help your brand and team. Target marketing allows you to get more specific about
your Marketing strategies, initiatives, and direction of your brand. It helps you clarify your
vision and get everyone in the organization on the same page. You have more direction
when it comes to shaping upcoming plans for both marketing and the business as a whole. A
focused approach helps you fully optimize your resources, time, and budget.

Positioning –

Positioning is defined as the act of designing the company’s offering and image to occupy
distinctive place in the target market’s mind. A simple example of positioning would be If I say
An expensive TV, what comes first to your mind probably will be A Sony or A Samsung TV
whereas if I say a cheaper or VFM TV (Value For Money TV) you might think of an Onida or
a Videocon. Thats positioning. Why is it that you have called out these respective names only?
That is because how the brands are positioned in your mind in terms of awareness.

The most attractive positioning that can be targeted in general is:

(a) Prospectively profitable: the segment’s characteristics (e.g. price levels, growth rate) and
competitive environment (e.g. number of competitors, basis of competition) are conducive to a
growing pool of profits.

(b) Homogeneous within the segment, i.e. members are relatively similar with respect
to attitudes, buying criteria, media habits, etc.

(c) Heterogeneous across segments, i.e. members in different segments have fundamental

differences and act accordingly.

(d) Accessible: members can be reached effectively with communications, and shop in outlets

through which products can be efficiently distributed.

(e) Winnable: the company’s distinctive strengths match the segment’s requirements and

provide an advantage versus competition, so the company can reasonably expect an acceptable
share of the industry profits.

Part 2

Royal Enfield Targeted the market

Driving in top gear in India, motorcycle company Royal Enfield is looking to grow its presence
in select overseas markets where the brand can be positioned in the middle weight motorcycle
segment. After Colombia, it is entering Thailand and Indonesia even as it ramps up capacity by
50% every quarter to meet demand in the domestic market.

“The aim is to be a motorcycle brand that is relevant culturally in every overseas market we enter
into. We want to be the leader in the middle weight motorcycle market and grow that segment
the way we are growing in India.“

Thailand and Indonesia, he added, are strong commuter bike markets after China and India.
Royal Enfield has just started its first exclusive store in Jakarta and announced its entry into
Thailand. Royal Enfield will, simultaneously, target developed markets like North America and
Europe where the numbers may be smaller but the branding will be stronger. The company is
positioning itself as a middle-weight heritage brand and will go with the
same Bullet, Classic, GT and Himalayan Brands that it sells in India. “We are the oldest
motorcycle brand in continuous production“.

"We will focus on growing the Royal Enfield brand in a non-extreme way -our products will not
be extreme fast or cater to extreme sports but symbolize leisure and adventure”.

The company will pursue slightly different strategies while targeting developed and developing
markets.

"In developed markets where there is a history of the brand we are following mostly a
distributor-led strategy except in North America where we have our own marketing company”.

"We will market mostly through multi-brand stores and have few Royal Enfield stores as well. In
developing markets like Columbia, the company will have its own stores. We are developing the
brand now and sales will follow”.

Positioned the brand -

Royal Enfield has targeted the market and positioned the brand for Indian consumers in these
ways :

• Targeting : Royal Enfield is focusing on the bikers in the age gathering of 23- 35 years
old, these individuals are working official or understudy or armed force and police on account of
metropolitan urban areas. In district headquarters they are focusing on rich and intense
individuals.
• Positioning : A handmade powerful classic bike for Indian roads. In metropolitan cities
Royal Enfield is positioned as an adventure and leisure bikes. In small cities and district
headquarters RE is a bike which shows the symbol of status of your power in society.

Q.5. i) Define brand image, brand identity and brand personality.

ii) Illustrate the brand image, brand identity and brand personality for Royal Enfield.

Ans:

Part 1

Brand Image

Brand image is the perception of the brand in the mind of the customer. It is an aggregate of
beliefs, ideas, and impressions that a customer holds regarding the brand.

A simple definition of brand image could be – the customers’ perception of the brand based on
their interactions and experience with the brand or their beliefs of what the brand could be. 

A brand can be perceived differently by different customers. Hence, the formation of a consistent
brand image is a huge task for any business.

Every Company strives to build a strong image as it helps in fulfilling their business motives. A
strong brand image has the following advantages –

 More profits as new customers are attracted to the brand.

 Easy to introduce new products under the same brand.
 Boosts the confidence of existing customers. Helps in retaining them.
 Better Business-Customer relationship.
Brand Identity

Brand identity is the collection of all elements that a company creates to portray the right image
to its consumer. Brand identity is different from “brand image” and “branding,” even though
these terms are sometimes treated as interchangeable.
The term branding refers to the marketing practice of actively shaping a distinctive
brand. Brand is the perception of the company in the eyes of the world.

Besides the rationale that brand identity is what makes the brand unique and identifiable in the
market, here are some other importance of brand identity –

Helps Develop A Suitable Brand Image

While brand identity is the outward expression of the brand, brand image is how the customers
perceive it. Having an identity is really important for the business as it gives rise to brand image.
However, it’s a task for the marketer to make customers form an image of the brand which is
similar to its identity.

Differentiates The Product From The Competition

Brand identity helps the brand develop its own unique stance and differentiate itself from others
in the market. This differentiation also helps in developing a positioning strategy and getting a
loyal customer-base in the market.

Creates Consistency
Consistency is the most important aspect of branding and brand identity is what gives rise to
consistency. Developing a consistent outward expression is important to be perceived in a way
brand wants.

Helps Develop A Personality

A brand identity is the visual representation tool to express the brand’s personality.

Brand Personality

Brand personality refers to the association of human characteristics and traits with the brand to
which the customers can relate.

In simple terms, it refers to brand personification. It is the set of human trait and characteristics
assigned to the brand.
A brand personality comes into existence when human-like adjectives – like unique, caring,
funny, trustworthy, creative, straightforward, dishonest, rebel, etc. – are assigned to a brand.

The concept of brand personality is best understood when we imagine the brand to be a person.
How would that person speak? How would s/he behave in certain situations? How does s/he
dress up?

To simplify the concept even more, imagine how would it be if Apple were a human.

Wouldn’t it have an impeccable knowledge of the language with perfect grasp of grammar.

Wouldn’t it be someone with great imagination? Wouldn’t it maintain discipline even in
demanding situations? And wouldn’t it choose premium quality clothes over the cheap ones?

That’s the brand personality of Apple.

Besides the fact that brand personality is imperative to differentiate the product in the market,
here are other important factors why brand personality matters:

 Develops Brand Image: Brand identity and brand personality are two interconnected
tools which helps in developing a desired brand image in the market. While brand
personality strategizes how a brand would behave in the market, brand identity visualizes
this strategy, which in turn, results in developing a brand image.
 Positions the Offering: Customers use same products provided by different brands
differently. That is to say, brand personality teaches customers how they should be using the
brand’s products.
 Develops Emotional Connection: Brand personality helps develop emotional
connection with the like-minded people who look for more than just tangible offerings from
the brand. This emotional connection further helps the brand to develop more meaningful
brand interactions and start with customer powered marketing strategies like word of mouth
marketing, loyalty marketing, etc.
 Eases Communication: Having a personality makes it easy for the brand to
communicate effectively with the customers mostly because the customers can relate to the
traits that they possess with the personality traits that the brand has.
Part 2
Brand Image for Royal Enfield
To create a positive brand image unique marketing programs that link strong, favorable and
unique brand associations to the brand in the memory of the consumer are required. The
definition of customer based brand equity does not differentiate between the source of brand
association and the manner in which they are formed: Instead it requires favorability, strength
and uniqueness. It indicates that customers can form brand associations in a wide variety of ways
other than various marketing promotions: i.e. through direct experience: through information
from other commercial or nonpartisan sources such as consumer reports from published sources
or other media vehicles; through word of mouth; and by assumptions or inferences customers can
make about the brand itself, from name, logo, or identification with a company about the product
or service.
Brand managers should recognize the impact of these other sources of information by both
managing them as well as possible and by sufficiently accounting for them in designing strong
communication planning.
Strength of Brand Association
If a person thinks more deeply about their product information and relates it to existing brand
knowledge of his product, then there exists stronger brand association. There are two factors that
strengthen association to any piece of information .They are personal relevance of the consumer
and the consistency with which it is presented over a period of time. The particular association
we recall about the brand and their salience will mainly depend not only on the strength of
association, but also factors like retrieval cues about the brand and the context in which we
consider the brand.

Brand Identity
Brand Identity is considered as brand meaning. Brand imagery entirely relies on the extrinsic
features of the product or service, including the ways in which it tries to satisfy customer‘s
psychological or social needs. Brand imagery is the way by which people think about a brand
exactly, rather than what the brand actually looks in real. Thus, imagery defines as to be more
intangible features of the brand, and consumers recognise imagery associations in their minds
directly from their personal experience or indirectly through advertising or by some othermeans
of communicating channels., such as word of mouth. The four main divisons of intangibles of
brand imagery are as follows,
a.User profile of product
b.Purchase and usage situation of the product
c.Personality and values
d.History, heritage and experiences of the brand
For example, take a brand or product with high brand imagery, such as Nivea cream in India.
Some of its intangible brand association memory include family,shared experiences from
others ,maternal,multipurpose classic,timeless and childhood memories shared from family
members etc..
The brand imagery association exists by the type of person or organization who uses the brand or
prouduct. The brand imagery association may result in consumer‘s mental maps of actual users
who use the brand or from more aspirational users. Customers may form associations of memory
from a typical or idealized product user on descriptive demographic categories or more abstract
psychographic factors.
Demographic factors may include the categories like education level ,age ,marital status and
income of the person etc.
Psychographic categories may include attitude toward life, career of the person, possession,
social issue in the surrounding environment , or political institution.
In a business to business environment , brand user imagery might relate to the size or nature of
the organization. Brand imagery is characterised by focussing the nature of individual and may
differ if the individual perception as a group as whole.. For example, consumers may believe that
a brand is experienced by many people and therefore view the brand as popular or a market
leader.
Brand Personality

Brand personality dimensions of ‘sincerity’ and ‘imaginative’ is found out to be contributing to

the satisfaction level of customers of motor bikes. Sincerity is a major contributor to the
satisfaction stating that motor bikes which are sincere are expected to satisfy the customers more.
More the motor bike is sincere and imaginative, high would be the satisfaction level of
customers.

Brand Personality is defined as “the set of human characteristics associated with a brand”.
Although, literature has been talking of brand associations and brands acquiring personalities
since long but it was only after Aaker work that the concept got worldwide attention. The debate
on brand personality started from product personality. Product personality takes its roots in
product symbolism which is relatively an old concept.

The main aim of this study is to check the applicability of Aaker’s scale of brand personality in
India in case of motor bike consumers and to identify relationship between human personality
and brand personality for motor bikes. The following sub objectives have been framed to achieve
this task:

 To check the validity of Aaker’s brand personality dimensions/scale for major brands of motor
bikes in India;

 to find out the dimensions of brand personality of motor bike’s brands;

 to find out the brand personalities of major motor bike brands;

 to examine the relationship between brand personality and human personality for various
brands of motor bikes; and

 to check the contribution of brand personality and human personality on purchase behaviour
and satisfaction of consumer.

Brand personality was operationalized using Brand Personality Scale (BPS) developed by Aaker.
Scale has 42 items in it. All items were measured using five point Likert scale. Scale was used in
full compliance with the instructions suggested by Aaker. Brand Personality Scale is considered
as the largest and most widely accepted effort to measure brand personality. The final structured
questionnaire was divided into four parts. First part contains the items measuring brand
personality using Brand Personality Scale. Second part of questionnaire contains 44 items
measuring human personality using Big Five Inventory. Third Part of questionnaire contains
items relating to satisfaction of respondents for their motor bike. Fourth part contains items
measuring demographics of respondents.

Q.7. Define the term ‘Product’. Discuss the different levels of product with suitable
examples from the two-wheeler automobile segment.

Ans:

Part 1

A product is the item offered for sale. A product can be a service or an item. It can be physical or
in virtual or cyber form. Every product is made at a cost and each is sold at a price. The price
that can be charged depends on the market, the quality, the marketing and the segment that is
targeted. Each product has a useful life after which it needs replacement, and a life cycle after
which it has to be re-invented. In FMCG parlance, a brand can be revamped, re-launched or
extended to make it more relevant to the segment and times, often keeping the product almost the
same.

A product needs to be relevant: the users must have an immediate use for it. A product needs to
be functionally able to do what it is supposed to, and do it with a good quality.
A product needs to be communicated: Users and potential users must know why they need to
use it, what benefits they can derive from it, and what it does difference it does to their lives.
 Advertising and 'brand building' best do this.

A product needs a name: a name that people remember and relate to. A product with a name
becomes a brand. It helps it stand out from the clutter of products and names.

A product should be adaptable: with trends, time and change in segments, the product should
lend itself to adaptation to make it more relevant and maintain its revenue stream.

Part 2

Market offering Product features and Services mix and Quality Quality Product Levels In
planning its market offering, the company needs to think thru five levels of the product. Each
level adds more costumer value, and the five constitute a customer value hierarchy. First level, is
the core benefit. The fundamental service or benefit that the customer is really buys. Here in
Bajaj the core product is the vehicle. (Means for transportation) Second level, the company has
to turn the core benefit into a basic product. The basic product would include the gears, the
leather seat, the rear view mirrors, the trunk and the petrol tank. The essential accessories that
would make the product useful. Third level, the company prepares an expected product, a set of
attributes and conditions buyers normally expect when they buy the product. Here in case of two
wheelers it is the warranty, the after sales service that the customers expect. At Bajaj they have
special customer care service tips which are accessible even on its website. They have a 24-hour
service whereby the customers can post their queries to the company and they try to answer the
queries within a span of 7 days.

Q.9. Specify and explain the macro-environment forces affecting the marketing program
of: i) Honda Motor-cycle ii) PepsiCo

Ans:

Honda Motor-cycle:

1. Political- Legal Factor: Political- legal environment factor particularly in a mixed economy like
± ours, and affects the working of business organization significantly. The Indian Auto industry
is harmonizing both safety and emission regulation with international standards for sustained
growth. Government policy impact on petrol prices: petrol prices determine the running cost of
 two wheelers expressed in rupees per kilometer. Petrol prices are the highest in India as GOI
subsidizes kerosene and diesel.
Improvement in disposable income: With the increase in salary levels due to entry of
multinationals following liberalization process the disposable income has improved exponentially
over the years. This will have a multiplier effect on demand for consumer durables including two
wheelers. This is already witnessed in improved demand two wheelers.

Implementation of mass transport system: many states have planned to implement mass transport
systems in state capitals in the future. This will have a negative impact on demand for two
wheelers in the long run. But taking into account the delays involved in the implementation of
such large infrastructure projects; we expect the demand to be affected only five to seven years
down the line.

2. Economic Factor: Marketers need to consider the trading company in short term and long term.
Economic factors have major impacts on how business operate and how to they make decisions.
Domestic and global factors ensured that economic growth slowed down significantly during
2011-12 after two strong years in Hero Motocorp said by the chairman. Global macroeconomic
and financial uncertainty, weak external demand, elevated level of prices, widening twin deficits
and falling investment combined to adversely affect the growth. Structural weaknesses, in the
form of policy uncertainty, inflation and rising interest rates weakened the growth environment
further.
Though India outperformed most of its peers in terms of growth, its potential and actual growth
slowed. After tightening monetary policy till October 2011, the Reserve Bank paused hiking
policy rates, and affected a cut in March 2012. However, the growth rates remained weak at the
time of writing.

3. Social Factor: Social factors that include the demographic and cultural aspects of the external
macro environment. These factors affect the customer needs and size of possible market. Hero
Motocorp has been setup on 40 acres of land along the Delhi jaipur highway. The center
complete with wide approach roads, clean water, and education facilities for both adults and
children. Hero Motocorp taken up by the foundations include: Raman Munjal Memorial
 Hospital, Raman Munjal Sports Complex, Vocational Training Center, Adult Literacy Mission,
and Rural Health Care.

4. Technological Factor: During the year, the Company profoundly emphasized on enhancing the
existing technology landscape and also ushering in new technologies to improve upon its
operations. Hero Connect, the Company’s Dealer Management System, was expanded further.
By the end of the year, the system was successfully deployed at 645 dealerships across the
country. In the next step, the system will be in the process of being deployed further to the next-
tier of customer touch-points. Besides this, various other IT applications were enhanced during
the year in order to provide them with better collaboration capabilities. The Company also
undertook efforts to improve its operational efficiency and supply chain. Enhancement was also
done in the analytics area to ensure the organization had a strong decision support system.
Besides, an advanced system for business reporting and dash-boarding has been deployed to
ensure reporting processes are made more effective.

5. Environmental Factor: Integrate Environmental attributes and cleaner production in all

business processes and practices with specific consideration to substitution of hazardous
chemicals, where viable and strengthen the greening of supply chain. They continue the product
innovation to improve environmental compatibility. Example: Among two wheelers, the
selected models, Splendor and CD 100 are most eco friendly two wheelers. HERO ELECTRIC
TO FORAY INTO OVERSEAS MKT CHANDIGARH: Bike maker Hero Electric has decided
to foray into overseas market starting with exports of e-bikes to SAARC countries this year and
also plans to set up a new Greenfield assembly unit. "We have plans to export 4,000-5,000 units
of bikes this year to SAARC countries to tap overseas markets," Hero Electric Managing
Director Naveen Munjal said here. Stating that the company would have exclusive dealers in the
neighboring countries for its exports project, he said, "Initially export will account for 1516 per
cent of total sales." The two-wheeler industry has been hit hard by the prevailing high interest
rates as well as the credit squeeze in the market. Hero is looking at the non-banking finance
company (NBFC) route to get into the retail finance market, on the lines of its rival two-wheeler
companies — Bajaj Auto’s Bajaj Auto Finance and TVS Sundaram Finance of TVS Motors.
 When contacted, the Hero spokesperson said: “There is nothing concrete at this stage. We are
looking at various possibilities to increase financing options for our products in the market.”

PepsiCo:

Political Factors Affecting PepsiCo’s Business

Governments are external factors that impose requirements on PepsiCo. This element of the
PESTEL/PESTLE analysis considers the effects of governmental action on companies’ remote
or macro-environment. PepsiCo must address the following political factors:

1. Political stability in major economies (opportunity)

2. Improved intergovernmental cooperation (opportunity)
3. Government initiatives against carbonated drinks (threat)

Major economies like the United States and Canada are politically stable, thereby presenting
growth opportunities for PepsiCo. In addition, the trend of intergovernmental cooperation
improves opportunities for global expansion. However, government initiatives against sweetened
carbonated drinks are a threat that could reduce PepsiCo’s revenues from affected segments. In
this element of the PESTEL/PESTLE analysis, PepsiCo must consider changing its products to
overcome the identified threat about carbonated drinks.

Economic Factors Important to PepsiCo

PepsiCo’s performance is directly linked to the economy. The influence of economic conditions
on the remote or macro-environment of businesses is covered in this element of the
PESTEL/PESTLE analysis. The political external factors that relate to PepsiCo are as follows:

1. Economic stability of most major markets (opportunity)

2. Rapid growth of developing economies (opportunity)
3. Slowdown of the Chinese economy (threat)

PepsiCo has opportunities for growth and expansion based on the economic stability of
developed countries like the United States, as well as the high growth rates of developing
economies, such as those in Asia. However, the current slowdown of the Chinese economy
threatens PepsiCo’s potential international growth, considering that China is among the biggest
economies in the world. This element of the PESTEL/PESTLE analysis shows that PepsiCo must
ensure market diversification to achieve stable international growth.

Social/Sociocultural Factors Influencing PepsiCo’s Business Environment

Many of PepsiCo’s consumers follow sociocultural trends. This element of the

PESTEL/PESTLE analysis identifies the impact of social conditions and changes on companies’
remote or macro-environment. The following are notable sociocultural external factors relevant
to PepsiCo’s business:

1. Higher health consciousness (threat & opportunity)

2. Increasing busy lifestyles (opportunity)
3. More discriminating attitudes about product quality (opportunity)

Higher health consciousness is a threat to PepsiCo because of concerns about the sugar, salt, and
fat content of its products. However, this external factor also presents the opportunity for the
company to improve its products to address such concerns. PepsiCo can also take advantage of
the busy lifestyles of consumers, especially in urbanized and industrializing markets around the
world. People with these lifestyles are more likely to purchase ready-to-eat food products like
those of PepsiCo. The company has the opportunity to continue enhancing product quality to
maximize revenues, with regard to consumers’ increasingly discriminating attitudes about
product quality. Based on this element of the PESTEL/PESTLE analysis, PepsiCo must align its
products and marketing strategies to changes in consumer behaviors.

Technological Factors in PepsiCo’s Business

 PepsiCo’s business is partly dependent on technologies. The link between technological change
and companies’ remote/macro-environment is examined in this element of the PESTEL/PESTLE
analysis. The technological external factors significant to PepsiCo are as follows:

1. Moderate R&D investments in the food and beverage industry (opportunity)

2. Improving knowledge management systems (opportunity)
3. Increasing automation in business (opportunity)

Based on moderate research and development (R&D) investments in the industry, PepsiCo can
boost its own R&D investments to improve its competency in this business aspect. Also, PepsiCo
can exploit the benefits of knowledge management systems to support its various business
processes, such as product innovation and strategic decision-making. In addition, an increase in
the number of automated processes in the company can enhance business performance. This
element of the PESTEL/PESTLE analysis indicates that PepsiCo must include new technologies
as tools to improve business competitiveness.

Ecological/Environmental Factors

PepsiCo’s supply chain and brand image are linked to environmental concerns. This element of
the PESTEL/PESTLE analysis considers the ecological trends and issues that affect consumers,
employees, and companies’ remote or macro-environment. The following ecological external
factors are significant to PepsiCo:

1. High focus on business sustainability (opportunity)

2. More complex expectations and standards on waste disposal (opportunity)
3. Climate change (threat & opportunity)

Consumers are now pushing companies like PepsiCo to improve their sustainability standing. In
relation, PepsiCo can improve its waste disposal strategies, such as recycling, to gain more
support from customers. On the other hand, climate change poses a threat to PepsiCo’s supply
chain. However, the company can further diversify its global supply chain to minimize risk
exposure to climate change. Based on this element of the PESTEL/PESTLE analysis, PepsiCo
 must improve its environmental impact to attract and retain customers, and to stabilize its supply
chain.

Legal Factors in PepsiCo’s Industry

PepsiCo and its competitors are subject to legal requirements. Such requirements and regulations
are evaluated in this element of the PESTEL/PESTLE analysis in terms of their effect on the
industry’s remote or macro-environment. The legal external factors relevant to PepsiCo’s
business are as follows:

1. Regulation on GMO ingredients (opportunity)

2. Health and product safety regulations (opportunity)
3. Moderate rate of regulatory change (opportunity)

Genetically modified organisms (GMOs) are now increasingly regulated worldwide, particularly
in Europe. PepsiCo has the opportunity to reduce its use of GMO ingredients to satisfy these
regulations. Similarly, the company can improve products to address regulations about product
safety and health effects. The moderate rate of regulatory change gives opportunity for PepsiCo
to grow with the expectation that its current strategic decisions will satisfy regulatory
requirements in the long term. In this element of the PESTEL/PESTLE analysis, it is shown that
PepsiCo can focus on product innovation to comply with regulations.

Q.11. Discuss the major objectives of advertising. Give examples in support of you answer
from the two-wheeler automobile segment in the Indian market.

Ans:

Part 1

1) Introduce a product

The most common reason Advertising is used is to introduce a new product in the market. This
can be done by existing brands as well as new brands. Have a look at the latest iPhone in the
market or a Samsung smartphone and you will find a lot of advertisement for these
new products. The objective of advertising here is to tell customers – “Here is the new
product we have launched”

2) Introduce a brand

There are many startups in the market today and many of them are services. Services are
generally marketed as a brand rather than marketing their individual service product.
Thus, Uber will market its own brand and introduce that Uber has started servicing customers in
a new market. Same goes for Oracle or Accenture – Companies which market their brand and
their presence in the market rather than marketing an individual product.

3) Awareness creation

According to the AIDA model, the most important job of advertising is to get attention which is
nothing but Awareness creation. Advertising needs to capture the attention of people and make
them aware of the products or their features in the market.

Example – Most of the Bank ads that you see are awareness campaigns. The ads that advertise
the benefits of savings / mutual funds or benefits on credit and debit cards are all awareness
creation ads.

4) Acquiring customers or Brand switching

One of the major objectives of advertising and the first objective of many advertising
campaigns is to acquire more customers. This is also known as making the customers switch
brands. This can happen by passing on a strong message so that the potential customer leaves the
brand which he is tied up with and comes to your brand.

Example – Most telecom companies launch plans and strategies just to acquire customers and
then advertise these strategies in the market so that the customer switches brands. There is hardly
any differentiation in the telecom market – thus advertising is a major way to acquire customers.
The Vodafone Zoozoo campaign was just that – Influence the customers and create passion in
such a way that they do brand switching.
5) Differentiation and value creation

A most important aspect of Advertising is to differentiate the product or the service from those of
the competitor. A customer can only differentiate between services based on the value the firms
provides over that of competitors.

If a competitor is just advertising the features, whereas your firm advertises the promises and
commitments that it will keep, naturally more customers will “trust” your brand over others. This
is the reason that advertising is used commonly to create value and to differentiate one brand
from another.

Coca-Cola, Toyota, Amazon are some of the most trusted brands in the market. It is no doubt

that these brands are also amongst the top advertisers in their respective segments. These
brands target value creation as well as differentiation via their advertising campaigns.

6) Brand building

When a brand regularly advertises and delivers quality products and fulfills the promises it
makes, automatically the value of the brand is built. However, there are many other aspects
of brand building. One of the first ones is to advertise via ATL and BTL campaigns etc.

Brands have different objectives of Advertising. Brands like P&G and HUL regularly invest
funds in building a good brand value for the parent brand. By doing so, even if one brand is
affected, the parent brand is untouchable.

Recently we observed the problems of Maggi in India where Maggi was banned completely due
to high lead content. However, this did not affect the parent brand Nestle much and neither
affected its other brands like Nescafe which had done their own brand building and were
independent of the parent brand. This brand was built by good products and constant advertising
towards building brand equity and making a connect with the audience.

7) Positioning the product – Product and brand recall

One of the key factors in the actual purchase of a product is the products recall and the brand
recall at the time of purchase. Amongst the objectives of advertising, one objective is to correctly
position the brand in the minds of the customer.

Examples include premium brands like Ralph Lauren, Gucci, Hermes or others which are clearly
positioned premium. This position is achieved by first having a very premium product line which
is high priced but it is also achieved by buying premium advertising and placing the ads in media
vehicles which are very premium.

Besides premium marketing, we can also look at niche marketing. Kent is a company which has
focused all its advertising on its purification capability. They claim they are the masters of water
purifiers. Their repeated advertising creates a high product and brand recall in the minds of the
customers thereby positioning them as the top purchased brand in the water purifier segment.

8) Increase sales

Naturally, with so many steps being taken to advertise the product, it is no doubt that one of the
objectives of advertising is to increase sales. Many a times this objective is achieved via
advertising. However, if the campaign is improper or the audience is not targeted properly, then
advertising can fail in its objective.

Nonetheless, there are many seasonal products wherein an immediate increase in sale is observed
due to advertising. The best example is Ice cream brands which advertise heavily during the
summer months because they know that advertising will immediately influence the sales figures.
They do not waste money in advertising during the winter season at all.

Similarly, you will see many ads of raincoats during rainy season and ads of winter wear during
winter seasons. All these ads are placed to increase the sale of the product immediately.

9) Increase profits
With the value being communicated and the brand being differentiated as well as sales being
increased, there is no doubt that advertising can contribute a lot to increasing profits. Advertising
should never be looked at as an expense or a liability. In fact, it is an investment for a firm just
like a brand is an investment.

Look at the likes of Siemens or Bosch – Brands which have invested heavily in positioning
themselves on the basis of their German engineering. As a result, today they demand high profits
in whatever segments they operate in or whatever products they sell.

10) Create Desire

Again, referring to the AIDA model, one of the key factors in advertising is to create a desire for
the product so that the customer wants the product. Brands which are known to do this
are BMW, Audi, Harley Davidson, Adidas and others. These brands are master of advertising
where they create so much desire for the product that the customer absolutely wants a product
even if he doesn’t need it.

There are many stories of Harley Davidson as a brand wherein customers have saved money for
years to buy a particular bike of Harley Davidson. Same stories can be heard about an Audi or a
BMW. A unique example in this case are the bottles of Absolut Vodka. Absolut Vodka is so
famous for its bottles that there are collectors who desire to collect all different bottle types of
Absolut Vodka. Such desire creation is an effect of advertising + brand building + the fan
following over time.

11) Call to action

One of the most common objectives of digital advertising and digital marketing is to get a call to
action. Brands invest in banner ads, link ads as well as social ads to get their potential customers
to take an action. This action can be filling up an Email form, clicking on a link, watching a
video, giving a survey or what not.
There are brands which have done ATL advertising and shown half the ads and then attracted
customers to their Youtube Channel so that they could track their viewers and get them to take
some action. Call to actions are also one of the objectives of advertising in which case the actions
differ from time to time based on what the marketer wants to achieve.

Part 2

Hero Honda achieved highest monthly sales of 4,35,933 units in May 2010. May 2010 was the
17th consecutive month where the company had sold more than 3 lakh units and the 4th month
where the company recorded sales of over 4 lakh units. Hero Honda total sales grew merely by
2.28 percent in August 2010 in comparison to August 2009. Total sales stood at 4,24,617 units in
August 2010 in comparison to 4,15,137 units in August 2009. Hero Honda’s Pleasure
contributed more than 27,000 units.

However, company’s share in the 100cc market has reduced from 69 percent in August 2009 to
64 percent currently majorly gulped by Bajaj’s Discover 100 and HMSI’s Twister.

This is the fourth consecutive month where company has recorded more than four lakhs dispatch.
According to company officials the growth will maintain this trajectory in the coming months.
The company also said that sales may grow at lower pace in second half of the year due to higher
interest rates. Notably, the company has installed capacity of 5.6 million units per annum with 3
manufacturing plants and it has goal of selling 5 million units in current fiscal up 8.7 percent
from last year. The company is also looking for setting up 4th manufacturing plant.

BAJAJ AUTO

Bajaj Auto, a Pune-based company, has been performing well, with steady and consistent growth
in sales chart month after month. Bajaj Auto total sales grew by 54.58 percent in August 2010 in
comparison to August 2009. Total sales for August 2010 stood at 3,29,364 units (highest ever
monthly sale), in comparison to 2,13,072 units in August 2009. Motorcycles sales stood at
2,89,176 units in August 2010 up 56.50 percent in comparison to 1,82,441 units in August 2009.
Domestic sales stood at 2,30,786 units up 67.35 percent in comparison to 1,37,908 units in
August 2009. Exports stood at 98,578 units up 31.15 percent in comparison to 75,164 units in
August 2009.

The Company has attributed this growth to its Pulsar and Discover brands. Sales of Pulsar brand
stood close to 83,000 units and that of Discover stood at 1.27 lakh units. The company also
claimed that production constraints limited the sale of its two wheelers. The company aims to
cross sale of 3 lakh units of motorcycle in September 2010. The company has a goal of selling 4
million units in current fiscal. It is also working out possibilities for Tri-alliance with KTM and
Kawasaki to share technology and production platform. A final decision on this alliance is
expected to be taken by end of current year, with Bajaj aiming to cross sales of 3 lakh units.

Financial Highlights

TVS MOTOR

TVS Motors total sales grew by 33.51 percent in August 2010, in comparison to that of August
2009. Total sales for August 2010 stood at 1,70,735 units (highest ever monthly sale) compared
to 1,27,875 units in August 2009. Motorcycles sales stood at 66,574 units in August 2010 up
30.21 percent in comparison to 51,127 units in August 2009. Scooters sales stood at 40,913 units
up 43.14 percent in August 2010 in comparison to 28,582 units in August 2009. Domestic sales
stood at 1,48,081 units up 28.66 percent in August 2010 in comparison to 1,15,095 units in
August 2009. Exports stood at 19,028 units up 61.98 percent in August 2010 in comparison to
11,747 units in August 2009. TVS recent launches Jive and Wego have received good response
from the market. The company aims to sell over 2 million units in this fiscal. The company is
also looking to expand its installed capacity to 2.8 million units.

HONDA INDIA

HMSI total sales grew by 37.63 percent in August 2010 in comparison to August 2009. Total
sales for August 2010 stood at 1,32,330 units compared to 96,149 units in August 2009.
Motorcycles sales stood at 56,659 units in August 2010 up 52.69 percent compared to 37,108
units in August 2009. Scooters sales stood at 75,671 units in August 2010 up 28.17 percent
compared to 28,582 units in August 2009. The company is engaged in setting up its second
manufacturing plant at Alwar in Rajashtan which will have installed capacity of 6 lakhs units per
annum. The company is also planning to launch a low cost bike which will be priced lower than
the price of CB Twister.