The Year that Was: Rajiv Bajaj, The Comeback Kid

For almost a year now, Rajiv Bajaj, the 42-year-old managing director of Bajaj Auto and India’s No. Two motorcycle maker had tried to shut out the outside world. There was a constant stream of stories about how the company’s market share had plummeted or how its share price had dropped to its lowest level in over a decade. Almost everybody seemed to think that their bête noire, the Munjals of Hero Honda, had turned out to be decisive winners in their fight with the Bajaj family.

But today, the siege is finally lifting. News has just trickled out that Discover M, a new 100 cc bike Bajaj Auto launched in July, has taken the market by storm.

While the Munjals were running circles around his company, Bajaj thought hard about his strategy — why he had failed — and what would Bajaj Auto have to do survive five years later?

The bulwark of Hero Honda’s strategy was its biggest selling model, the Splendor. Splendor epitomised the needs of the Indian customer. They were willing to sacrifice performance for reliability and fuel efficiency. Initially, he looked to take on Splendor head on. After trying hard for four years, Bajaj decided to change his strategy. He decided to create a niche segment of sporty bikes. His research team put out the first Pulsar models.

Bajaj wanted to take his mind off chasing Hero Honda and instead create a halo around Bajaj Auto’s motorcycles. Pulsar did just that for him. It successfully created a niche in the more expensive
executive segment.

Everything seemed on the right track till early 2007. But at that point, perhaps Bajaj may not have fully grasped the significance of Pulsar’s success. He simply moved ahead in his search for a new and better bike. His team developed another model — XCD 125 packed with technology normally not available in entry segment bikes. Customers rejected the XCD outright. They reasoned that a more powerful bike could not be smaller than the 100cc Splendor.

Bajaj realised that getting his company back on the rails required a new kind of thinking. He began to search for a new lever that would help him compete. He quickly realised it couldn’t be distribution or low-cost manufacturing. That was easy to replicate. It had to be the brand.

For a company to be successful, it needs to define its core or a centre. For Bajaj, Chetak had been its core, be it in terms of technical skills, cost structures, consumer’s perception or capacity. But you couldn’t replace a Chetak with a better Chetak.

To beat Chetak, you needed a diametrically opposite concept. That’s exactly why Hero Honda’s Splendor became the reference brand in the two wheeler category. In many ways, Pulsar had done just that. Pulsar may have had quality issues, but the fact that it was the only sporty bike of its kind, meant that consumers were willing to forget its niggling problems. Everything about it was different from the Splendor. “So we said… Pulsar is the new centre. Everything we do coming from Pulsar will succeed as long as people want a Pulsar,” adds Bajaj.

The Discover 100cc was built on this principle — it looks very much like the Pulsar. If the sales numbers are anything to go by, the strategy seems to be working.

- This article was earlier published in Forbes India magazine dated December 18, 2009.

WHY DID WE DO THE STORY
There is something brash, youthful and even arrogant about Rajiv Bajaj. He likes fast bikes and doesn’t miss an opportunity to poke fun at competition. But, as the scion of the family that ruled the two wheeler business in India for decades, there was something that was nagging Bajaj when we started researching our story. We were chasing Rajiv Bajaj for a long time—since October-November 2008, when Bajaj Auto was going through a very rough patch. But, Rajiv wasn’t ready to speak. He was rapidly losing market share to Hero Honda, the No.1 motorcycle company in India and his company share price had seen its worst in many years. A model launched earlier had failed miserably, taking Bajaj’s market share to its lowest ever.

Finally, when we met Rajiv for the story, there was a cautious optimism but you could see that he was raring to have a go again. The initial reactions to Discover 100, Bajaj’s latest launch and purportedly a body blow to Hero Honda, were trickling in and Rajiv was talking management laced with philosophy. He performed for us a few yoga poses that synthesized his resolute comeback plan. He let his team tell us their strategy with an openness the company had never displayed before.

WHERE DOES THE STORY STAND
It’s over nine months since the new model Discover entered the market. It’s been a runaway success selling around 60,000 units per month. Nearly two years ago, unable to withstand the onslaught of Hero Honda in the hot selling, Bajaj wanted to vacate the 100 cc engine size segment. But since the launch of this model, Bajaj’s market share in that segment has gone up from 7.5 percent to 20 percent and nearly all the gains have come from rival Hero Honda.

Bajaj Auto has also developed an all-new brand strategy.

An outcome of this is a string of new models to outflank competition and become more profitable. If stock price is any barometer, then Bajaj looks stronger than ever. The company’s value gained 25 percent since the story was published.