Royal Enfield Case Study

Autor: rohit agrawal • January 12, 2016 • Case Study • 3,647 Words (15 Pages) • 1,219 Views

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U543Marketing Management-1

Project-Interim Report Submission

Table I: Situation Analysis

Analysis of:	Identify key factors -that may affect the demand and supply of the selected brand in 2015-16 compared to the previous year	Comment- on how these factors may impact the demand/ supply as well as the extent of impact.
Company	Production capacity-Opening of the new plant Waiting period to be reduced Improved technology to optimize cost of production Increasing global presence	The production to be increased from 4.5 L to 6 L with the opening of new plant Waiting period will be reduced from 6 months to 2-3 months owing to the increased output Incorporation of improved automation processes to optimize production cost and conserve energy Planning to expand global presence by increasing exports
Customers	Customer experience Brand image and customer satisfaction The growth rate of the middle class segment crucial Changing preferences	Increasing customer experience through trips to lesser explored parts of India like North East Improving brand image through sale of RE accessories and better customer service The increase in disposable income of middle class will have a significant impact Keeping in sync with the changing customer preferences through efficient feedback systems
Competition	Entry of new players into premium segment Launch of new products from competitors	Harley-Davidson and Triumph, world leaders in cruiser bikes, have been doing well in India KTM 390 Adventure to be launched by 2016, Kawasaki ZX to be launched in India
Collaborators	Need for more premium showrooms at strategic locations Suppliers need to meet the dynamic rising demands of the increased production	Opening new showroom at locations of growing youth population to improve brand loyalty Increased production by 2015 for Royal Enfield means the suppliers need to ramp up their supply in order to meet the rising demand on time
Context/Macro Environment	Growth of the middle class youth segment Increase in the number and quality of highways	The target customers being between the age of 25 and 40 years, growth in the middle class youth segment favours the product sales Increase in the number and quality of the highways can act as incentives to go for more bike trips and hence favours our product

Key Situational factors:

Company:

The long waiting period of 6 months for the product is a cause of major concern for the customers. This has been the major cause behind the histories of cancellations from the customers. Royal Enfield is opening a third plant at Chennai in order to increase the production from 4.5 to 6 lakhs to reduce the waiting period to at least 3 months.
To ensure consistency and less wastage, RE has incorporated robotic painting system and powder coating system in the Oragadam plant. Conventional diode rectifiers in plating shop replaced by high efficient IGBT rectifiers resulted in 25660KWh savings. RE plans to improve the technology to conserve more energy and optimize cost of production.
RE plans to increase its global presence this year. RE exports over 6000 bikes to over 40 countries including US, UK, Middle East, etc. Increasing global presence will add value to brand image as well as increase in sales.

Customers:

Improving customer experience through improved customer services and organizing road trips to unexplored areas of North East India. RE organizes yearly trips to Himalayas, Bhutan, etc for its customers. Extending the trips to more exotic, less explored areas could improve brand loyalty
Improving brand image is crucial for RE in the premium segment. The sale of high quality accessories in the showrooms at premium prices in order to elevate the brand image
Customer preferences follow highly dynamic trends in today’s scenario and there is a need for following market driven strategies in order to keep up with the competition. Efficient feedback system to know the needs and demands of the customers, surveys and market analysis to keep in sync with the changing preferences

Competition:

The presence of Harley Davidson and Triumph in the market has created room for competition. In spite of the market share being low compared to Royal Enfield, presence of Harley Davidson brings down value sales for Royal Enfield as high class bike enthusiasts would prefer Harley to Royal Enfield.
The launch of new products like KTM 390 at comparable prices (Rs. 2.2 lakhs) can pose as a threat as the market is opened up for customers with more choices, thereby increasing competition and threatening sales.

Collaborators:

Royal Enfield is planning to expand the distribution channel in order to have stronger presence in the consumer market. More premium showrooms and presence in more retail stores is a strategy to be implemented this year for better customer experience and brand loyalty. The number of showrooms is to be increased to 500 from 400 in urban locations.
With the new plant installation at Chennai, the production is to be ramped to 6 lakhs and the suppliers are to be well ramped in order to meet the rising dynamic demand. The waiting period is planned to be reduced to half from 6 months to 3 months. This needs to be addressed with the support from suppliers with efficient transport systems and improved supplies.

Context:

Growth of the middle class segment with growing disposable income favours our product. It is projected that Indian middle class population is to touch 267 million in 5 years, promising high growth rates for the segment. Surveys say that a typical middle class household spends about 50% of their income on expenses on durables, etc, which shows the increasing purchasing power of the segment. This is favourable for RE, with increasing youth population and bike enthusiasts willing to pay for bikes.
Improvement in infrastructure with more highways and good roadways looks favourable for bike enthusiasts and hence favourable for our product.

Brand History

Royal Enfield are the makers of Classic 350 in India. Established in 1955, Royal Enfield (India) is among the oldest bike companies. It stems from the British manufacturer, Royal Enfield at Redditch. Royal Enfield has its headquarters at Chennai in India. Royal Enfield bikes are famous for their power, stability and rugged looks.

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