How Rajiv scripted the Bajaj turnaround

Bajaj Auto could be on a roll today but not many people know that barely over two years ago, Mr Rajiv Bajaj was actually worried about its future.

“I was in a car between Bangalore and Belur in December 2008 when I received a call updating me on motorcycle sales. We were likely to end with 70,000 units for the month and this was when I asked myself where we were heading as a company,” the Managing Director of Bajaj Auto told Business Line .

On his return, Mr Bajaj sat with senior colleagues for a brainstorming session at the Akurdi office near Pune. ‘Look, guys,” he said, “we are being too rational about this whole thing. The reality is that Honda is a bigger name and their costs are as competitive with top quality and technology to boot. How can we hope to compete and will we succumb eventually?”

Good show by Pulsar

It was a grim reality that was staring Mr Bajaj and his team in the face. After all, smaller two-wheeler companies in India were in all sorts of trouble with one of them having shut shop too. However, in the midst of this gloom, the silver lining was the good showing of the Pulsar.

“We just could not understand what made this bike so successful. After all, Honda had a bigger portfolio in the form of the Unicorn, CBZ, Hunk, Karizma and Achiever. The Pulsar was one versus five and, yet, stood out,” he recalled.

It was this reality that spawned serious introspection. Mr Bajaj and his team wondered if less was actually more and, in turn, if this meant greater specialisation. In the process, this would involve sacrifice which seemed the best strategy going forward.

“The thought that struck us in the December 2008 meeting was that maybe if we shrink, we will still expand. In January, I told the team that there was no issue with our products or manufacturing processes. The problem was in the way we were creating or destroying perceptions in the eye of the customer,” Mr Bajaj said.

The choice was for the company to opt for either a brand or commodity approach. By the end of the day, brands have pricing power and, therefore, ensure profits. “A brand is actually a product that creates a new category while a product is a product which serves an existing category,” he said.

Creating a new category

It was obvious that the Pulsar succeeded and became a brand because it created a new category whereas other motorcycles in the kitty like the Platina, Boxer or CT 100 were mere followers. The top priority was to create the perception of putting in place a new bike category.

“All this was happening in January 2009 and I told the team that we had a great position in the Discover which was then doing 10,000 units a month. It was, after all, the domesticated sibling of the Pulsar and meant for those who could not afford (the Pulsar) or lacked the courage to ride one,” Mr Bajaj said.

In every other way, The Discover was as much a sporty, powerful commuter. The next step was a 100cc version but this was to be heavier and bigger so that it stood out. The challenge, though, was to ensure good mileage and competitive costs in a bigger bike.

The think-tank in Bajaj also figured out that as long as people knew it was a Discover, the battle was already won in terms of mileage perception. The Discover 100 bike was ready in six months and, today, the brand accounts for sales of around 1.4 lakh units a month.

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