Tube Investment (TI) CYCLES-New Product Strategy

BY-GROUP 3

COMPANY BACKGROUND✴TI Cycles of India (a Unit of Tube Investments of India Ltd.) is one of the leading bicycle manufacturers in India ✴Started in 1949 by the Murugappa Group and Sir Ivan Stedeford of Tube Investments Group in UK ✴The maker of the country's most famous cycle brands like Hercules, BSA and Philips cycles

✴BSA: style and looks, hercules: strength and toughness

✴BSA: 40% volume and 50% profit hercules: remaining

✴Currently the first largest manufacturer in India and number one manufacturer in special segments like Mountain bikes, Sports Lite Roadsters, Racing bikes etc

✴ It has manufacturing capacity of around three million bicycles per year

Two Categories of Bicycles

Standard Category Bike

Special Category Bike

Market Scenario in1990’s

➡ Distinctive Range: Standards and Specials

➡ Marketing television and sports events

➡ Early 1997, 993 dealers, aimed at towns with population more than 1lakh

➡ Dealers receive cycles in ckd (complete knock down)

➡ Standard cycles lost markets slowly

OPPORTUNITIES

✦Internet/Mobile introduces new avenues to customer. This can save costs of dealerships

✦New markets in India (geared bikes)

✦Entry into the lower cost bicycle market may add to market share

✦Customization of the product

✦Market penetration in tier ii, tier iii cities and rural market

SWOT Analysis

STRENGTHS

✦Strong Financial Support from group

✦Capability to adsorb foreign technologies- no

restrictions

✦Brand name awareness

✦Known as a high-performance leader in the

bicycle industry

WEAKNESS ✦Unable to reduce cost price

✦No balanced focus on domestic and export markets

✦Product innovations are few

✦Unable to penetrate into rural market

✦No new market tapping(North)

✦No good rapport with customers/dealers

✦Research and Development capabilities

THREATS

✦The popularity of less expensive substitute products (Scooty)

✦More competitors entering the market(China, Taiwan)

✦Shift of demand for higher priced to lower priced bicycles

✦Unsure trends in the bicycle industry

PROBLEMS FACED

Lack of access to complementary assets Matured marked Inferior manufacturing capabilities Gap in distribution network & Dealers are not well

equipped Dealers intending more towards Special category The idea of specialised distribution ‘CYCLINICS’ constrained to large towns & that to in less number No substitute for better training for dealers Inaccuracy in data-collection and future analysis

New Product Dilemma• 15 models in last 3 years‣ 1 Standard‣ 14 special

• Product ideas & concepts were generated through industry, company & competitors obtained from various sources.

• Team of managers from PM, PD, manufacturing & purchase under guidance of GM(marketing), VP.

• TI cycles uses 3 approaches‣ Product design‣ Prototypes‣ Product test

The Decision

• The launch of geared bicycles in India

• Popular brands that were fitted with gears imported from Shimano Japan, were:

»Hercules Univers»BSA Easybird»BSA Dirtgrinder

THE SIMULATED RESEARCH• Sample size– 300

•Different classes were made on the basis of classes in which studying, intending to buy what, monthly family income up to 5000/- and 5001/-, central campus was selected.

Steps

Forming panels

Get detailed perceptions

Get responses

RESEARCH METHODOLOGY

✓List of students, their age, class studying in, intention to buy a bike in next 3/6 months, top choice of brand, and current brand own etc

✓Next, home interviews were conducted with parents for verification and invitations to the central campus

✓Questionnaire was prepared

GET RESPONSES

Display area

Identification

RidingMake a choice, Reason

Feedback Procedure• Price sensitivity of the respondents

• Perceptions of 1st, 2nd choices of each test brands

through detailed probing questions

• Respondents were asked to provide a few infos as

income class, sporty or studious, modernity and

liking/empathy

Strategic Implication

Short term:

• Brand positioning in existing market and product group

Long term:

• Expansion of market and get into more demanding products

Recommendations• Involving the manufacturing dept. in product design

stage, hence improve time to market

• Analyze customer complaints through cross functional teams and timely review of the complaints

• This will provide useful inputs for product design and

even process change

• Simultaneous focus on price and quality

• Focus on manufacturing process through-– Outsourcing– Synergies in the production of standard

…continued• Working more closely with dealers and vendors-

relation building for better inflow of infos from customers and consumers

• Significant up gradation of product development and manufacturing process- innovation

• Design changes, prices and speed to market are critical for maintaining competitiveness

• In the long run, synergies between domestic and

export market

• The ultimate decision for the company, that we derived is that the company should launch all the three bicycles together