Customer Segmentation: Insights into Prevailing Trends
and
Strategy for Future
Project Team:
Project Mentor:
Aditya Ghamande
Vaidyanathan S. Iyer
Kongpon Kijnum
Spenser Slaton
Subject / Date
Slide 1
Today’s Agenda
•
Project Goals
•
Our Approach
•
Industry analysis and brand positioning in industry
•
Future Opportunities & Recommendations
•
Hypothesis: Where TVS is and way forward
•
Question & Answers
Subject / Date
Slide 2
Project Goals
•
Identify factors that influence customer’s buying decision
•
Identify industry offerings and products’ positioning
•
Perform gap analysis to understand potential gaps for future by projecting customer’s
needs vs. industry offerings.
•
Recommend new models for the future based on gap analysis
•
Understand socio-economic trends and customer behavior to develop future industry view
•
Industry product comparisons and where TVS stands
Subject / Date
Slide 3
Our Approach
•
Find out factors that influence customer’s buying decision:
•
Mileage
•
Style
•
Power
•
Brand
•
Handling
•
Price
Source: Company Reports (TVS Customer Interview Data)
•
Plot the combination of parameters for two wheelers from each manufacturer
•
Perform gap analysis to understand potential gaps in industry offering
•
Recommend future motorcycle model based on gap analysis
Subject / Date
Slide 4
Defining Style of Motorcycle and Scooters
Down-to-earth
Generic
1
•
•
•
•
•
Seat: Flat
Exhaust: Straight
Tank: Simple
No Disc Brakes
Head Light
Assembly: Simple
Subject / Date
Competent /
Successful
Sincere /
Cheerful
Conventional
Flashy
2
• Seat: Soft curve
• Exhaust: Slight
angle
• Tank: Simple
• No Disc Brakes
• Head Light
Assembly: Slightly
curved
2.8
Exciting
3
3.3
• Seat: Deep curve
• Exhaust:
Angle/Chrome
• Tank: Chiseled
• Wheels: Disc brake
• Head Light
Assembly: Chiseled
and curved
Freedom /
Excitement
Daring
4
• Seat: Deep curve
• Exhaust:
Angle/Chrome
• Tank: Large &
Chiseled
• Disc brake &
Engine: Large
• Head Light
Assembly:
Chiseled and
curved
Sophisticated
Luxury
5
• Seat: Deep curve
• Exhaust: 2
Angled pipes
• Tank: Large &
Chiseled
• Disc brakes &
Engine: Huge
• Head Light
Assembly:
Stylish, Chiseled
and curved
Slide 5
Defining Style of Motorcycle and Scooters
Subject / Date
Slide 6
Defining Handling/Comfort of Motorcycle & Scooter
•
•
A vehicle with low weight is easy to handle on roads
A vehicle without gear is easy to ride on roads
Subject / Date
Weight
Gearless
Geared
Less than 110 KG
8
4
110 – 130 KG
7
3
130 – 160 KG
6
2
More than 160 KG
5
1
Slide 7
Current Industry state based on Multiple
Dimension Plots
Power Vs Style
40
40
35
35
30
30
25
25
20
20
Power (Kw)
Power (kw)
Power Vs Handling
15
10
15
10
5
5
0
0
0
2
4
6
8
0
10
1
2
Handling
1000000.00
900000.00
800000.00
700000.00
600000.00
500000.00
400000.00
300000.00
200000.00
100000.00
0.00
5
9
8
7
Handling
Price
4
Style vs. Handling
Style vs. Price
6
5
4
3
2
1
0
1
2
3
Style
Subject / Date
3
Style
4
5
0
0
1
2
3
4
5
Style
Slide 8
1. High Power Scooter
Current Situation
•Current market has low power and standard
mileage (average of 40 kmpl) scooters
•Lack of high power, high weight, lower
‘handling’ rating vehicle
•Increased power means higher speed, better
riding experience, and similar mileage of 35
kmpl
Plot and opportunity Explanation
• Above plot portrays that market does not have high power
scooters with ‘Handling’ rating between 4 and 8
• We recommend TVS to come up with new high power scooter
Subject / Date
Slide 9
Product Characteristics
•
Weight: 130 – 160 KG (Higher than Suzuki Access)
•
Power: more than 10 KW
•
Higher weight means lower handling rating of 6
•
Price: 60,000 - 65,000 (Based on comparison with Suzuki Access)
•
Mileage: Around 40 kmpl (To satisfy average mileage requirement)
•
Style: Higher than 3.5; Large body size, large and inclined exhaust pipe, and
visible engine; These parameters signify higher style ratings
Target Customers
• Based on our analysis of current sales data, TVS can target customers* who are:
• In the age group of 15-30
• Earn more than INR 25,000 monthly income
• Are self-employed
*Note: These customers bought scooters with power rating of more than 6 KW
Subject / Date
Slide 10
Product Visualization
Subject / Date
Slide 11
2. High Power Conventional Motorcycle
Current Situation
• High Power bikes that are very stylish targeted
toward high end customers.
• No High power generic/conventional looking
Introduce ordinary
motorcycle with
high power
motorcycle for mainstream average customers
Plot and opportunity Explanation
• Above plot portrays that there is no high power motorcycle with a low style
quotient.
• We recommend TVS to come up with new motorcycle that is extremely
powerful but with lower style rating
Subject / Date
Slide 12
Product Characteristics
•
Style rating between 1 and 2:
•
Seating: Some soft curves in the seating for new bike
•
Slightly inclined but bigger exhaust pipe to signal high power motorcycle
•
Simple tank and front mirror assembly
•
Weight: High (Between 125 to 130 KG)
•
Power: Around 10 KW
•
Displacement: 150-180 CC
•
Price: Between INR 60,000 – 65,000
•
Mileage: Around 55 kmpl
Target Customers
• Based on our analysis of current sales data, TVS can target customers* who are:
• In the age group of 30-45
• Earn more than INR 25,000 monthly income
• Are self-employed
*Note: These customers bought scooters with power rating of more than 10 KW
Subject / Date
Slide 13
Product Visualization
Subject / Date
Slide 14
3. Hybrid Motorcycle or Scooter
Current Situation
• High Power, high style motorcycles that
provide low mileage
• Engineering tradeoff: Higher power bikes
cannot give high mileage.
• High investment required for low power
Introduce
motorcycle with
high mileage
bikes that provide extremely high mileage
• Need exists: Customers think mileage and
acquisition cost while buying motorcycles.
Plot and opportunity Explanation
• Above plot portrays that there is no motorcycle or scooter with extremely high mileage.
• We recommend TVS to come up with new motorcycle that is powerful but gives higher
mileage compared to that given by current motorcycles.
Subject / Date
Slide 15
Product Characteristics
•
Mileage: More than 90 kmpl (Compared to 87.7 kmpl mileage of TVS Sport)
•
Style: Could vary from 2 – 4
•
Weight: 130 – 160 KG
•
Price: At least 80,000 INR
Target Customers
• Based on our analysis of current sales data, TVS can target customers* who are:
• In the age group of 15-30
• Having monthly income between INR 16,000-25,000
• Are self-employed
• Customers would be ready to pay high upfront costs to gain mileage advantages in future
*Note: These customers bought motorcycles with mileage of at least 75 kmpl
Subject / Date
Slide 16
Product Visualization
Subject / Date
Slide 17
4. Sporty & Powerful Looking Scooter
Current Situation
• Lack of sporty and powerful scooter in the
market
• TVS can come up with such scooter that
looks sporty and powerful but is of
approximately 125 cc.
Plot and opportunity Explanation
• Above plot portrays that there is no high
power motorcycle with extremely high
Introduce scooter
with high style
mileage.
• We recommend TVS to come up with new
motorcycle that is powerful but gives higher
mileage compared to that given by current
motorcycles.
Subject / Date
Slide 18
Product Characteristics
•
Price: Around INR 50,000 as the bike is not actually powerful
•
Power: In the range of 5-7 kw
•
Displacement: 125 cc
•
Style: A rating of at least 4
•
Mileage: Around 40 kmpl
Target Customers
• Based on our analysis of current sales data, TVS can target customers* who are:
• In the age group of 15-30
• Having monthly income between INR 25,000
• Students
• Are self-employed
*Note: These customers bought scooters with power of at least less than or equal to 6
Subject / Date
Slide 19
Product Visualization
Subject / Date
Slide 20
Improvement in affluence levels across income groups is
increasingly driving structural shifts across industries
>40000 INR MHI
Increasing share of
‘Seekers’ among the
population
16000-40000 INR
MHI
Exponential Increase
in share of ‘Strivers’
among the population
Subject / Date
8000-16000 INR
MHI
Slide 21
With hardly 7% penetration, Indian Two Wheeler Industry is
sitting on the launch pad of an exponential growth phase
SOURCE: Credit Suisse Aug 2012
Subject / Date
Global Two Wheeler Penetration and GDP Per Capita
Slide 22
Competitor & Product Positioning
Goal: Analyze positioning of major competitors to understand
TVS’s capability to seize future opportunities
Subject / Date
Slide 23
Motorcycle Segment: Hitting the Target
80% of all motorcycles sold:
Price: 40K – 60K
Power: 100cc – 150cc
Weight:100kg – 140kg
Subject / Date
20% Represent Premium &
High Power bikes
Slide 24
Motorcycle Segment: Competitor Positioning
TVS
Hero
Honda
Bajaj
# of Bikes
3
4
4
6
Monthly Company Sales
50K
400K
100K
200K
Close up Comparison
Mileage Displacement
Brand
Motorcycle Name
Sales
Style
Bajaj
Hero
TVS
TVS
Platina 100 CC
35K
1.8
72.5
99.27
Hero CD Deluxe/Dawn
86K
1.2
60
97.2
Sport
17K
2.2
87.7
99.7
Star city
15K
2.2
83.9
109.7
Subject / Date
Slide 25
Motorcycle Segment: Competitor Positioning
TVS
Hero
Honda
Bajaj
# of Bikes
3
4
4
6
Monthly Company Sales
50K
400K
100K
200K
Close up Comparison
Mileage Displacement
Brand
Motorcycle Name
Sales
Style
Bajaj
Hero
TVS
TVS
Platina 100 CC
35K
1.8
72.5
99.27
Hero CD Deluxe/Dawn
86K
1.2
60
97.2
Sport
17K
2.2
87.7
99.7
Star city
15K
2.2
83.9
109.7
Subject / Date
Slide 26
Motorcycle Segment: Competitor Positioning
TVS
Hero
Honda
Bajaj
# of Bikes
3
4
4
6
Monthly Company Sales
50K
400K
100K
200K
Close up Comparison
Mileage Displacement
Brand
Motorcycle Name
Sales
Style
Bajaj
Hero
TVS
TVS
Platina 100 CC
35K
1.8
72.5
99.27
Hero CD Deluxe/Dawn
86K
1.2
60
97.2
Sport
17K
2.2
87.7
99.7
Star city
15K
2.2
83.9
109.7
Subject / Date
Slide 27
Motorcycle Segment: Competitor Positioning
TVS
Hero
Honda
Bajaj
# of Bikes
3
4
4
6
Monthly Company Sales
50K
400K
100K
200K
Close up Comparison
Mileage Displacement
Brand
Motorcycle Name
Sales
Style
Bajaj
Hero
TVS
TVS
Platina 100 CC
35K
1.8
72.5
99.27
Hero CD Deluxe/Dawn
86K
1.2
60
97.2
Sport
17K
2.2
87.7
99.7
Star city
15K
2.2
83.9
109.7
Key Take-away:
• TVS bikes are competitive or better in target segment.
• TVS’s competitive offerings do not translate to high sales.
• Hypothesis: Competitor positioning is similar within motorcycle segment. Factor
outside product characteristics is driving market sales
Subject / Date
Slide 28
Scooter Segment: Analysis
TVS
Hero
Honda
# of Scooters
3
4
4
Monthly Company Sales
35K
56K
118K
Brand
Motorcycle Name
Sales
Style
Price
Mileage
Displacement
Honda
Honda Aviator
9,800
2.2
51,200
45
109
Suzuki
Access
N/A
1.5
50,300
42.6
124
Honda
Honda Activa
100,000
1.5
49,900
45
109
Hero
Hero Maestro
28,000
2.2
46,900
42
109
TVS
Wego
15,000
2.2
46,892
40
109.7
Honda
Honda Dio
8,100
2.8
44,718
45
109
Hero
Hero Pleasure
28,000
1.5
42,950
40
102
TVS
Scooty Streak
5,000
3
42,735
40
87.8
TVS
Scooty Pep+
15,000
3
40,825
52.5
87.8
Subject / Date
Slide 29
Scooter Segment:
TVS scooter sales are lower than expected.
•
TVS Streak & Pep+ are more stylish and lower priced than competitors.
•
Style is the 2nd largest determining factor when deciding a two-wheeler.
•
TVS Wego lags behind Maestro sales despite being similar in all characteristics.
•
Hypothesis: Competitor positioning is similar within scooter segment.
A factor outside product characteristics is driving market sales
Subject / Date
Slide 30
Brand: The BIG Difference
Most Preferred Motorcycle Company
Source: Francis Kanoi Marketing Research: A Report on Performance and Image of Motorcycle Brands (2011)
Subject / Date
Slide 31
Brand: The BIG Difference
Two Wheelers
40%
35%
30%
25%
Bajaj
TVS
20%
Honda
Hero
15%
10%
5%
0%
Mileage
Subject / Date
Handling
Style
Power
Price
Slide 32
Brand: The BIG Difference
Brand you will never buy
Suzuki
27.25%
TVS
30.14%
Hero Honda
3.77%
Yamaha
11.01%
Bajaj
5.51%
0%
5%
10%
15%
20%
25%
30%
35%
Source: Vinayak Tiwari, PGDM-MM: Brand Image of Motorcycles and the Colour Survey for the Bike Colours
Subject / Date
Slide 33
Brand: The BIG Difference
Brand you will never buy
Suzuki
27.25%
TVS
30.14%
Hero Honda
3.77%
Yamaha
11.01%
Bajaj
5.51%
0%
5%
10%
15%
20%
25%
30%
35%
Source: Vinayak Tiwari, PGDM-MM: Brand Image of Motorcycles and the Colour Survey for the Bike Colours
Hypothesis
Competitor positioning is similar within industry among major competitors. TVS will need
to strengthen it’s brand to effectively seize future opportunities, as brand is likely one of
the largest competitive advantages, not product offerings.
Subject / Date
Slide 34
Question n Answers
Subject / Date
Slide 35