MBA 2020

VU 2nd Semester Examination

Paper Code: MBA- 202

Subject: Marketing Management

Total Marks: 100

Read the following case study and answer the questions given below in your
own words.

INTRODUCTION
Royal Enfield is the oldest surviving brand of motorcycles in the world. The brand which is
more than 100 years old has been in India since 1949. The manufacturer Enfield India was
bought over by Eicher Motors Limited in 1994.
Since then, the brand is owned by Eicher Motors. Thus, it is now an Indian brand. Once
considered as the king of the world, the kingdom of Royal Enfield was on the verge of getting
snatched away at one point of time in late 1990.
Beating the odds, Royal Enfield, the oldest motorcycle brand, is still in production. The
legendary bike brand was facing a loss of Rs. 20 crores and was on the edge of a shutdown in
2000. The manner in which the fortunes of the brand turned can be an excellent example of
brilliant product planning, process and brand management coupled with excellentmarketing
strategies.
For the year 2014, Royal Enfield, recorded sales of 302,592 units. The sales for the year were
higher than even the worldwide sales of Harley Davidson for the first time in the brand’s
history. The spectacular figures were the result of the turnaround strategy implemented by the
company’s management after its sales hit a low of 2,000 units per month in the year 2000.
During the early 2000s, Royal Enfield was suffering from a number of problems like poor
quality of its products, outdated design, change in tastes and preferences of customers, and
the entry of Japanese two wheeler manufacturers in Indian market. Despite having a cult
following among its fans, many prospective customers saw Royal Enfield Brand as a relic of
the past.
In order to turn around the fortunes of Royal Enfield, the management began taking a number
of marketing initiatives in the early 2000s. Despite facing strong opposition from the brand’s
fans, a number of design changes were made to the vehicles. A new lightweight aluminium
engine was developed to replace the old cast iron one. Further changes like using a single
platform for all its vehicles and the introduction of new models like the Royal Enfield
Thunderbird saved costs and boosted sales. In order to enhance brand experience for its
customers, Royal Enfield improved the quality of its dealer outlets and started company
owned flagship outlets called ‘Royal Enfield Concept Stores’.
BACKGROUND NOTE
The origins of Eicher Motors (Eicher) dated back to 1948 when Goodearth Company was set
up to import tractors from other foreign markets and sell them in India. Between the years
1952 and 1957, Goodearth Company imported and sold 1,500 tractors in India. In the year
1958, it entered into a joint venture with Eicher Tractor Company of Germany to
manufacture tractors in the Indian market.
The joint venture was named Eicher Tractor Corporation of India Private Limited (ETCI).
ETCI built its first factory at Faridabad and sold its first tractor in the Indian market in the
year 1959. The name was changed to Eicher Tractors India Limited when it was converted
into a public limited company when its Indian shareholders bought out the German stake in
the company in the year 1965. By the year 1975, 100 percent indigenization had been
achieved in the manufacturing of Eicher Tractors.
In the year 1980, Goodearth Company was renamed EicherGoodearth Limited to leverage on
the Eicher brand image in the country. In the year 1982, the company entered into an
agreement with the Mitsubishi Group of Japan to manufacture Light Commercial Vehicles in
India. A new company called Eicher Motors Limited was incorporated the same year for the
manufacture of commercial vehicles other than tractors. In the year 1990, the Eicher Group
entered the two wheeler business when it bought a 26 percent stake in Enfield India Limited.
By the year 1993, the Eicher Group had acquired 60 percent of shareholding in Enfield India
Limited and had become its controlling stakeholder.
In the year 1893, Enfield Manufacturing Company Ltd (Enfield Manufacturing) was set up in
England to manufacture bicycles. The company manufactured its products under the Royal
Enfield brand. Not content with limiting its product line to bicycles, Enfield Manufacturing
soon decided to focus on building other types of vehicles. In the year 1899, it started
manufacturing a quadricycle called the Royal Enfield Quadricycle. The Royal Enfield
Quadricycle was powered by a rear-mounted engine. Despite being an innovative concept at
that time, the Quadricycle had limited market potential. In the year 1901, Enfield
Manufacturing launched its first motorcycle. This was fitted with a 239 cc engine.
In 1949, Enfield started selling its motorcycles in the Indian market as a strategic move for its
global expansion serving the need of Indian Army. The Royal Enfield motorcycles were
considered an ideal choice for the Indian army for patrolling the country’s border and as a
result of that in 1955 the Indian government placed an order of 800 350-cc Royal Enfield
motorcycles. Soon after receiving a thumbs up from Indian customers, the company also
started manufacturing 500 cc Bullet for Indian markets.
In 1955, the company partnered with Madras Motors in India to form 'Enfield India' to
assemble, under license, the 350-cc Royal Enfield Bullet motorcycle in Madras (now called
Chennai). The tooling was sold to Enfield India so that they could manufacture components.
By 1962, all components were made in India. The Indian Enfield uses the 1960 engine (with
metric bearing sizes), Royal Enfield still makes an essentially similar bike in 350 cc and 500
cc forms today, along with several different models for different market segments. In 1990,
Royal Enfield collaborated with the Eicher Group, an automotive company in India, and
merged with it in 1994.
ROYAL ENFIELD INDIA
As part of its global expansion strategy, Enfield started selling its motorcycles in the Indian
market in the year 1949. In 1955, the Indian government placed an order for eight hundred
350 cc Royal Enfield motorcycles for use by its police and armed forces. The Royal Enfield
motorcycles were considered an ideal choice for the Indian army for patrolling the country’s
border.
A CULT BRAND IN TROUBLE
Despite operating in a niche segment, Royal Enfield remained one of the most admired two
wheeler brands in India. The bikes were preferred by both motorcycle enthusiasts and
customers in the rural areas.
The problems they faced were manifold but the brand still commanded a loyal following.
Most of the customers were of the opinion that the bikes were too heavy and difficult to
maintain. It was time to modernize the Bullet. The marketing mavens at Royal Enfield
understood the need for a complete makeover, but they faced a catch-22 situation; doing so
could bring in a newer profile of buyers, but they also risked alienating their loyal audience
that defined the brand. It was a challenge they had to meet, and they did so in style.
Siddhartha Lal, a third generationmember of the Delhi-based Lal family, was one of the key
promoters of the Eicher group of companies. Lal, then26 years old, was an unabashed Bullet
fan: he even rode a red-coloured Bullet while leading his baraat, instead of the traditional
horse. He was of the opinion that ‘You can feel the pulse of your customers, only if you get
close to them.’
This thought process has driven Royal Enfield to set up a wide network of 11 Brand Stores,
250 dealers in all major cities and towns, and over 200 Authorised Service Centres. The
Company also exports motorcycles to 42 countries including the Unites States, Japan, UAE,
Korea, Bahrain, United Kingdom, France, Germany, and Argentina through 40 importers and
over 300 dealers across the globe.
REVIVING THE BRAND
Immediately after taking over as CEO, Siddhartha analysed the strengths and weaknesses of
Royal Enfield to come up with a strategy to put the brand on its path to revival. He came to
the conclusion that the sales of Royal Enfield motorcycles needed to be improved quickly to
save the brand.
FOCUS ON OTHER BRAND ELEMENTS
With the quality issues addressed, the management focused on improving the customers’
experience of buying and owning the brand. To improve the sales experience, Royal Enfield
improved the look of the dealer outlets.
AIMING HIGHER GROWTH
Even though the prices of Royal Enfield were higher than that of the low powered Japanese
motorcycle brands sold in India, they were cheaper than the major global brands. And in
order to keep the motorcycles affordable in the price conscious Indian market, the company
did not revise its prices even after the prospects of the brand started to improve...
LOOKING AHEAD
The strong pricing power of the Royal Enfield brand and the improved operating margins
rapidly increased the valuation of the company. By the year 2015, Eicher Motors had become
one of the most expensive automobile stocks in India.

Answer any EIGHT of the following questions. (Each carry 10 Marks –

Q.1. i) Briefly describe the Porter’s five forcesmodel 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.
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.
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.
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
Q.5. i) Define brand image, brand identity and brand personality. ii) Illustrate the brand
image, brand identity and brand personality for Royal Enfield
Q.6. ‘You can feel the pulse of your customers, only if you get close to them.’ Do you agree
with this statement of Siddharth Lal of Eicher Motors? Elaborate your answer with the 4Ps
marketing mix strategies adopted by Eicher Motors for its motorcycle division, Royal
Enfield.
Q.7. Define the term ‘Product¬¬’. Discuss the different levels of product with suitable
examples from the two-wheeler automobile segment.
Q.8. “The moment you make a mistake in pricing, you're eating into your reputation or your
profits.” Comment on this statement describing the objective and importance of Pricing in
marketing and the pricing strategies in the Indian market followed by:i)TVS Motor. ii)Harley
Davidsoniii)Ariel Detergent (P&G)
Q.9. Specify and explain the macro-environment forces affecting the marketing program
of:i)Honda Motorcycle ii) PepsiCo
Q.10. i) Discuss the main objectives of sales promotion. ii) Explain some of the sales
promotion methods directed at consumers, which can be used by (a) Hero MotoCorp Ltd, (b)
Bajaj Auto Ltd and (c) Royal Enfield (Eicher Motors)
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.
Q.12. Briefly explain the consumer buying decision process with reference to the Indian two-
wheeler automobile segment

[Internal Assessment: 20 Marks]