Slowly but surely, Bajaj comeback strategy falls into place

Nazim Khan

moneycontrol.comIt was a corporate blunder that would make a perfect case study on how things can go wrong in business. Over the past three years, homegrown motorcycle maker Bajaj Auto seemed to be able to do nothing right in its domestic market. Over that period, the company saw its market share almost halve (from 24 to 14 percent), it was overtaken by TVS as the country's number-three player, and its management was accused of being rigid, ostrich-like.The problem, analysts say, was three-fold. The company's entry-level products strategy suffered from an acute lack of focus, the market for its premium products shrank and it refused to enter the two-wheeler industry's fastest-growing segment: scooters.Here's how the company addressed its first two problems.At the entry level, the company's products suffered from an outsized bet on the Discover that went wrong. A popular product till a few years back, the Discover suffered a sales meltdown after Bajaj launched as many as 11 variants that cut across a number of segments: 100cc, 125cc, 135cc and 150cc. (Between FY 13 and FY15, the Discover's sales fell from about 1.3 million units to roughly 450,000.)Bajaj CFO Kevin D'Sa admitted it was Discover's all-over-the-place positioning that led to the problem, conceding in an analyst call that "if you ask the customer what does Discover mean, he does not know what it is".The clutter was finally broken when Bajaj brought back an old but still fondly remembered brand, the CT100, and pitted it directly against some of Hero's popular entry level brands such as HF Dawn.Starting at Rs 35,000, the CT100 was an instant hit, and is selling an average 60,000 units a month.Bajaj also rallied behind the other product in its entry-level segment, the Platina, bringing it on par with competitors this year by introducing a slew of must-have features such as electric start. It also decided against following the Discover strategy and kept the Platina firmly targeted at the 100cc segment.The second factor, however, was not in its control. Bajaj's foray into motorcycles was with its Pulsar and while it continues to dominate the segment, the market itself shrunk by half (from 2.5 million to 1.25 million) between FY13 and FY14, as rising fuel prices and the economic downturn hit home.Bajaj, though, has kept its focus unwavering and has given the Pulsar several fresh leases of life. Even as the Pulsar sells bikes from 135 cc to 220cc, and with a 400cc version on the anvil, it does not suffer an identity crisis, unlike the Discover.A slew of variant launch, included a naked, adventure and racing bike, has refreshed the Pulsar lineup and is expected to keep it in good stead for a few years. As the economy recovers and premium bike sales rebound, it is the Pulsar that should help Bajaj regain market share. Bajaj is also finally giving its neglected cruiser, the Avenger, a complete makeover, with a 200cc engine said to be sourced from the Pulsar NS. This may take away at least some sales away from the popular Royal Enfield range.The final piece missing of the puzzle still isn't there: scooters. But officially, Bajaj has repeatedly reiterated it won't enter the segment that was once synonymous with the company itself. Its explanation: the country's fastest-growing two-wheeler segment does not fit with its global plans and take away from its export focus.Recent reports, however, suggested the company had re-registered the iconic Chetak brand. If this comes to be, it would be a full circle for the two-wheeler maker that slowly but gradually solved all three of its major problems.