Blaze Motorcycles Wilfred B. Abello: The Company
Blaze Motorcycles Wilfred B. Abello: The Company
Blaze Motorcycles Wilfred B. Abello: The Company
Wilfred B. Abello
The year is 2005, a group of friends, young entrepreneurs, get together and in the process of discussion come
up with the observation that a swelling number of motorcycles on the road have indeed become noticeable.
With the observation as a starting point and realizing that the share more than a love for bikes they decide
to put a company to join the industry. The group, however, wanted to be different from the current players in
the market. Thus, armed with sheer determination and a basic common objective, the group proceeded to
their individual research, sharing ideas learned, authorities met, insights gathered through conversation with
pioneers in the industry while establishing requisite relationships with new found partners,
With the rest of 2005 and the earlier part of 2006 utilized company plans, strategies and for trips to China to
workout supplier arrangement and technology transfers we now move fast forward to the second half of
2006. The company completes incorporation proceedings and has acquired all the required legal documents
including the financial requirements and contingency sources. The have a large warehouse rented in the
Pasig area and have made initial negotiations to acquire a five hectare land in the Bulacan area which is to be
the site of their manufacturing and assembly plant.
To test market acceptability they import in limited number, Complete Knock Down (CKD) units and do
assembly and perform small scales sales. With the results of the test marketing resulting in encouraging
feedback and acceptance of a different product from a new player the stage is set for a full scale launch of
he companys product.
The Company
Blaze looks upon itself not only as a proponent of the first Philippine motorcycle; rather it views itself as a
purveyor of an improved lifestyle for the vast majority of the populace and with the goal of a truly world
class Philippine bike but a means to an end.
The companys key officers have extensive senior managerial experience in the motorcycle industry. These
officers have amassed over 50 man-years in the manufacturing, engineering and sales function with the
leading Japanese motorcycle company.
The company has sufficient financial resources to set up a small scales manufacturing operation and to
launch a middle scale marketing program.
It has strong dealership arrangements around the Philippines.
INDUSTRY BACKGROUND
With the prices of oil at one of its highest in over two decade and the worsening traffic situation the riding
public is forever looking for a means of transport that will provide mobility, convenience and peace of mind.
The countrys increasing population (please see table) and urbanization creates an increasing demand for
more efficient means of transportation. The rapid expansion of the vehicle fleet in the country has also
resulted in increased traffic congestion.
The motorcycle (Motorbike) market is growing. In the latest available figures from the Asian Development
Bank (ADB) on the internet in 2005, motorcycles dominated the vehicle fleet in the country with about
42.6%. Even with no access to the latest figures, it can be easily deduced that these number has even
increased.
With the Philippines motorcycles to population ratio (density) at only around 1 is to 30 (or 1 motorcycle for
every 30 citizens) compared with Malaysias 1:4 and Thailands 1:3 (please see table below) the potential
for the motorcycle market is very bright
Human Population
Motorcycle Population
Density
(person/motorcycle)
Indonesia
222 million
20 million
11
Thailand
64 million
20 million
Vietnam
84 million
12 million
Malaysia
26 million
6 million
Philippines
91 million
3 million
30
The motorcycle market for the scooters/motorcycles has in the last ten years been consistently on the rise
(with the one exception being 1999 decrease of 4.1%, maybe as a result of the Asian Financial crisis).
There is a good market prospect in the single bikes for the business people and professionals. While the
attached graphs shows a decrease for the private and government employees this was the 2006 trend, which
per by personal estimates may have already been reversed in 2007.
800,000
600,000
400,000
200,000
Business
Solo
Total
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
117,956
108,719
127,986
134,742
129,934
114,831
135,667
111,646
108,605
102,000
100,000
45,474
47,919
64,394
78,547
129,353
195,354
364,653
489,709
522,818
570,000
650,000
165,428
158,637
194,380
215,290
261,289
312,188
502,324
603,360
633,429
672,007
750,000
The Product
Blaze currently offers only four motorcycle models (two per engine displacement 100cc and 150cc). These
are the HUBS and BUZZ in the 110 cc displacement and the NSR and Brute models in the 150 cc
displacement. These models come in four different colors, namely: Red, Blue, Black and Silver. The
company can customize colors for institutional sales upon request.
The companys Japanese competitors like Honda and Yamaha carry the full line of products (higher engine
displacements like the 250cc and 450cc, etc.)
The Competition
The top four (4) leading brands in the market are all Japanese brands. These four corners a high ninety six
(96%) of the market.
HONDA
HONDA
340,804
62%
KAWASAKI
81,760
15%
SUZUKI
72,424
13%
YAMAHA
ChinaBrands
33,961
6%
17,597
4%
546,546
100%
KAWASAKI
SUZUKI
YAMAHA
China-Brands
TOTAL
These Japanese brands have been in the Philippine market for a very long time now. In addition to its long
dominance of the Philippine market, the Japanese brands have consistently proven their durability and
quality of their motorcycle products. Consumers buying decisions were most affected by the affordability
and the perceived quality.
HONDA
This brand has been the dominant brand in the choice for motorcycles. Their very strong breakthrough in the
car market and excellent design and performance has even helped further the HONDA brand a household
name. Its name has even become the generic name for motorcycles in the far flung barrios of the country. It
carries a complete line of products and its Honda Wave has become almost the clear (unanimous) choice for
buyers in the scooter and smaller bike category (100cc to 125cc).
YAMAHA
Slightly more expensive and known for the power it can deliver. Some of its smaller displacement engines
can out perform the higher displacement engines of other brands. Yamaha DT 125 is still the favorite dual
purpose motorcycle. This is a two stroke motorcycle that can be ridden both on dirt and paved road.
KAWASAKI
Established as a business brand, with a slogan of MALAKAS HUMATAK and is the preferred brand in the
years ago for the tricycle operations.
SUZUKI
Perceived as the lower end of the Japanese brands but still known a brand not to be taken lightly in the
motorcycle market. Lately, the Suzuki Raider 150CC is slowly gaining a following among the young
generation because of its sporty looks and performance.
CHINA-Brands
The China-made brands of motorcycle in the market, while lower priced are perceived to have very poor
quality.
700,000
2005:
601K
Sales Volume
600,000
2006:
631K
500,000
Pre-Crisis Peak
Volume
2002:
259K
1997:
222K
400,000
300,000
200,000
HONDA
SUZUKI
KYMCO
CHINA
Dec-06
Sep-06
Jun-06
Mar-06
Dec-05
Jun-05
Sep-05
Mar-05
Dec-04
Jun-04
Sep-04
Mar-04
Dec-03
Sep-03
Jun-03
Mar-03
Dec-02
Jun-02
KAWASAKI
Sep-02
Mar-02
Dec-01
Jun-01
YAMAHA
Sep-01
Mar-01
Dec-00
Sep-00
Jun-00
Mar-00
Dec-99
Jun-99
Sep-99
Mar-99
Dec-98
Sep-98
Jun-98
Mar-98
100,000
User Occupation
160,000
Businessman
Government Employee
OFW
Professional
TC/Solo Taxi Driver
Part Time/No Reg Job
140,000
120,000
Farmer/Fisherman
Housewife
Private Employee
Student
Teacher
Retired
21%
PRIVATE EMPLOYEES
100,000
80,000
15%
GOVT EMPLOYEES
60,000
40,000
20,000
Dec- Mar Jun Sep Dec- Mar Jun Sep Dec- Mar Jun Sep Dec- Mar Jun Sep Dec- Mar Jun Sep Dec- Mar Jun Sep Dec00
01
02
03
04
05
06
PRICING
COMPARISON
BLAZE
HONDA
KAWASAKI
SUSUKI
YAMAHA
Other China
100 -110 CC
P 37K
P 46.9K
P 42.9K
P 50.5K
P 48K
P 35 - 40K
125 CC
N/A
P 60.5K
P 59.9K
P54.37K
P 62.8K
150 CC
P 47K
P 71K**
P 69.5K **
P 62.8K
P 68.7K
P45K - 50K
Displacement
NOTES :
1. All prices are Standard Selling Prices (SRP)
2.
3.
4.
5.
6.
N/A means this model or engine displacement is not currently being offered or carried.
When there are two or more model in one engine displacement (ex. 150CC) the average price was computed.
When prices between dealers differed, the lower price canvassed was used.
Differences in features like disk or drum bakes for front or rear, electric kick start, etc. were assumed to even out
** Extrapolated prices computed
The company expects to maximize the utilization of their dealers and service outlets to gather and provide
the information about the voice of the customer. In addition to these, their website and chat forum could be
best avenue to communicate and address customer questions and concerns.
MARKET DEMOGRAPHICS
Geographics
Blaze has the whole country as its geographic target market. With its website and nationwide
dealership reaching from north to south, the company can serve, in terms of sales and service,
the whole archipelago.
Demographics
The companys demographic target market is both male and female with the necessary driving
requirements and skills.
Behavior Factors
A matured-vehicle driving attitude and sees mobility and convenience as an affordable
privilege.
Affordability
The company realizes that along with the initial acquisition costs, affordable maintenance cost and expenses
are among the qualities that customers look for and which will create loyalty to the product.
Assurance
The motorbike designs was a product of well-studied alternatives to ensure the best possible materials and
manufacturing processes were employed to provide the customer with peace of mind.
Availability
The company believes that service goes hand-in-hand with the guaranteed availability of needed spare parts
and accessories to keep the motorbikes in excellent running condition. From a simple decal needed for the
customers signature identity to important spare component needed to keep the bikes excellent running
condition the company will coordinate with customers and dealers to ensure these are always available and
just a short distance from where it is needed.
Distribution
The company initially utilized their corporate partners dealership network. Ten outlet/dealers were
initially chosen to introduce/launch the product in the market. These ten were selected to cover the key
areas in the country.
The number of dealers has been increased. Both internal and external dealerships are now being
developed. Development of dealers includes seminars that cover product orientation, mechanic
training, outlet impact (one- shop concept) and spare parts inventory management.
Customer Service
In line with the companys strategy it guarantees availability not only of motorcycle units but also the
needed accessories and spare parts. Their one-stop shop (Salon-concept) is geared towards total
customer convenience and satisfaction. They ensure that each dealer has adequate inventory and
utilizes an on-line inventory tracking system. This is complimented with a Mechanic Training course
for the dealers repair person.
Design Innovations
Innovative designs like larger luggage carrier, smaller tire and the under-bone structure will not only
differentiate the product from those existing and dominating the market today but also address some of
the features currently being sought by the customers. The company attempts to fuse or merge the best
that China-made and Japan-made products can offer.
MARKETING BUDGET
The company has a marketing budget equal to three percent (3%) of annual Sales figures. This includes a
one-time new dealer marketing budget of P 300,000 to support the start-up operation.