TI cycles-TII

TI Cycles India
GROUP 3 SECTION C Niraj Kumar Murarka Nishant Kumar PMVR Chidvilas Rohan Kochar Sachin Gupta Sandeep Kumar Sanjeev Kumar Saurabh Sharma Shelly Jain 202/46 203/46 209/46 255/46 263/46 268/46 271/46 276/46 287/46
The CASE
TI SALES NUMBERS
2500
2000
1500 Overall 1000 500 0 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
The Market for Bicycles in India

12000 10000 8000 6000
Poly. (Overall ) 4000
2000 0
The CASE
PROFITS OF TI CYCLES (IN Rs. Crores)

Profits
4
2 0 -2 -4 1994-95 1995-96 1996-97
New Management has Improved profits over the last two years. Objective is to sustain sales and market share.
The current cycle market
Cycle Industry
Domestic Segment
Export Segment
Standards
Specials
tIs market Segments & Target Customers
Standards Segment Workhorse Targeted towards semi-urban & rural adult market -Social Eco. Classification.) C or D Cost differential of 10% leading to price disadvantage TI: Hercules Popular Competitors: Hero Royal, Atlas Goldline, Avon User purchased bike on his own, direct from dealers. Price sensitive, limited features set.
75
Market for Standards
70 65 1994-95 1995-96 1996-97 Standards
tIs market Segments & Target Customers
Specials Segments
Aesthetically designed trendy cycles used for recreational purposes. Major Markets: SEC A&B urban market. Targeted towards 6-16 yr age group and fitness conscious adults. Price inelastic, feature based and differentiation driven demand. The subcategories are SLRs, ATB, MTB, Lady-bird and No-frills. MTB contributing highest revenue in the segment. Parents buy for the younger users. TI BSA SLR, BSA Mach, Rockshock Competitors: Hero Impact, MTB Jr, Dynamix
25
Market for Specials in India
20 15
Specials
1994-95
1995-96
1996-97
Market Segments & Target Customers
International Market Export Segment Cycles meant for fun and exercise. Export Markets : EU countries, Middle East, Africa, US & Japan. Positive rub-off on domestic best manufacturing processes; welding, assembling, painting, order tracking. Major offerings: MTB/ATB/Sports Light Roadster. Geared bikes. Major competition: Low Cost Chinese products based on Taiwanese technology. Export rejects face problem in domestic acceptance due to specialized servicing requirements.
Total demand & imports in europe 1993-1997
Total Demand and Imports for Bicycles in Europe Million Units
Imports
8 6 4 13 12
Demand
Imports
Poly. (Imports)
11
Demand
Poly. (Demand)
2 0
10 9
Exports decreasing due to tariff changes, currency fluctuations & increased production cost.
The indian cycle market scenario Penetration in different income groups
Bicycle Ownership Penetration in % based on Income Group

70 60 50 40 30 20 57% 60% 54% 60%
40% 39%
Urban Rural
10
0 Lower(<2000 per Month) Middle(2-6000 per Month) Upper(>6000 Month)
Major Competitors In the domestic market
HERO
1. A low cost leader in standard range. High load carrying capacity. 2. Worked on quality improvement, brand consolidation and innovation in painting. Key Strengths: Faster time to market, strongest dealer organization, a low cost leader. Ex: 800/- bike for rigid terrain(hero ranger) overlooked by TI 1. A Government Recognised Research and Development wing. 2. Introduced a range of fitness products like exercise bicycles, walks and steppers. 3. Standard black cycle constituted 80% of production. 1. Standard cycles was main focus. 2. 3rd in kids section. 3. Mainly Sold through distribution network without any marketing and product design organisation.
ATLAS
AVON
ti & its competitors Market shares Bicycle Industry 1996-97 Standard and Special Market Share (in 000s)
4000 3500 3000 2500 2000 1500 1000 500 0 TI Hero Atlas Avon Standards Specials
TI & its Competitors A Geographic representation

Market Shares North
27% 4%
15% 18% 36%
7%
West
45%
East
24%
18%
31%
South
22%
53%
Hero Atlas TI Others
43%
39%
18%
TI & its Competitors A Demographic representation
Market Share by Population Strata 96-97 (in %)

60 50 40 30 20 10 15 27
35
30
Hero Atlas
TI
Others
0
Rural Towns(<1 Lakh) 1-10 Lakh 10 Lakh+
TI vs industry Trends in the two segments
120 100 80 60 40
INDUSTRY TRENDS- MIX OF STANDARDS AND SPECIALS
INDUSTRY Specials Standards TI Specials Standards Mid 80's Early 90's Mid 90's
20
0
tIs domestIc and export sales over tIme
Year on Year Growth of Domestic and Export Sales (In Rs. Million) for TI Cycles
2000 1800 1600 1400 1200 1000 800 600 400 Domestic Sales Export Sales Poly. (Domestic Sales) Poly. (Export Sales)
200
0 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
TI Course of action Overall
Sustain & Increase Market advantage Specials (Maximum).

Increase Market Share - Northern Region.
Increase Market Share Standards ( 23 % of Heros)

Innovation - New Products especially the Fitness Market.
Decrease Production Cost.
Ti course of action - standards
Expand distribution network in rural areas.

Re-innovate the product to a more cost effective one. Revive Dealers interest in the Standards Segment through
incentives etc.
Establish self-owned distribution & assembling presence Replicate Heros personal-relationship based model.
TI Course of action - specials
TIs Competitive Advantage with Dealers Preferring This Segment. New Products/Categories through Innovation. Extending specials to the rural market in an economical version. Target the fitness equipment market.
Increase customization (colour schemes, sports-gear holders)

Larger Sales promotion (discounts, endorsements) . Target the geared bikes in India while promoting cyclinics.
Ti course of action - exports
Target geographically closer & developing export markets

like Nepal, Bangladesh etc. Policy environment more predictable & demand will be sustainably high, unlike the EU countries. Feasibility study of middle and upper end bikes.
Technological tie ups with European manufacturer for

competing with Chinese bikes.
Q&A

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TI Cycles India

The Market for Bicycles in India

PROFITS OF TI CYCLES (IN Rs. Crores)

The current cycle market

tIs market Segments & Target Customers

Market for Standards

70 65 1994-95 1995-96 1996-97 Standards

tIs market Segments & Target Customers

Market for Specials in India

Market Segments & Target Customers

Total demand & imports in europe 1993-1997

Total Demand and Imports for Bicycles in Europe Million Units

The indian cycle market scenario Penetration in different income groups

Bicycle Ownership Penetration in % based on Income Group

Major Competitors In the domestic market

TI & its Competitors A Geographic representation

Hero Atlas TI Others

TI & its Competitors A Demographic representation

Market Share by Population Strata 96-97 (in %)

TI vs industry Trends in the two segments

INDUSTRY TRENDS- MIX OF STANDARDS AND SPECIALS

tIs domestIc and export sales over tIme

TI Course of action Overall

Sustain & Increase Market advantage Specials (Maximum).

Increase Market Share Standards ( 23 % of Heros)

Decrease Production Cost.

Ti course of action - standards

Expand distribution network in rural areas.

TI Course of action - specials

Increase customization (colour schemes, sports-gear holders)

Ti course of action - exports

Target geographically closer & developing export markets

Technological tie ups with European manufacturer for

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