Bajaj Electricals devises new marketing strategy

Amit Mitra Mumbai , Feb. 16 BAJAJ Electricals Ltd is working out a marketing strategy, which includes launching new brands at different price points and a campaign through print and electronic media for its fans and cooler segments. The company's TV commercial is expected to roll out in March, with an advertisement budget of Rs 4 crore. The campaign will see 20-second films with different creatives to highlight the company's marketing pitch `Bajaj fans sabse tez' and Bajaj coolers, `ek dum solid thanda'. "Our products can be seen only in the last few seconds in these ads. For example, one campaign will open with a scene of papers flying around in a room, and only towards the end, we show our fan is the reason for that," says Mr R. Ramakrishnan, President and Chief Operating Officer. Also, the company will use a series of five-second shots that will seek to highlight its claim that Bajaj fans have the largest RPM (rotation per minute). "The average RPM of our fans is about 400, while those of our competitors range from 330-340," Mr Ramakrishnan told Business Line. As part of its marketing strategy, Bajaj Electricals plans to come out with new products at different price points. "We will be sharpening our focus on the two new products in the fans segment, Bahar and Maxima, which are priced at Rs 800 and Rs 900, respectively. This is just a little over the prices offered by the unorganised sector. The idea is to get a slice of the unorganised market based on our brand equity. At the other end, we will be introducing new brands such as Bajaj Regal Gold and Bajaj Crown, which are priced at about Rs 1,250," he said, adding that the company's objective was to offer products in a wider price band. India's fan market is growing at a steady clip. It is estimated at three lakh-four lakh pieces a year in the organised sector. In the previous financial year, the company had sold about 52,000 pieces and this year its fan sales are likely to cross 65,000. "We are at present No. 3 in the industry and we would like to move up to the second position, after Kenstar, shortly," according to Mr Ramakrishnan. In the cooler segment, the company plans to come out with a new product, Bajaj Coolest, which will be at the top end, in March. Apart from launching new products, the company is also strengthening its distribution network, with more focus on having new dealers. "We had some 6,000 retailers about three years ago, today we have more than 10,000. New dealers accounted for about 20 per cent of our growth in sales last year," Mr Ramakrishnan said.

Bajaj Electricals reported a net profit of Rs 5.51 crore in the first nine months of the current fiscal, against a loss of Rs 6.31 crore during the corresponding period of the previous fiscal. A five-pronged turnaround strategy, envisaging a 15 per cent increase in topline growth, focus on products that yield higher margins such as luminaries and appliances, reduction of working capital, cutting fixed costs and increasing consumer pull through brand building exercises.

OTHER

5.0 KEY ELEMENTS OF THE MARKETING STRATEGY 5.1 Product Strategy Ceiling Fans

l Launch high quality decorative fans with better designs in the premium segment. l Launch high quality decorative and non-decorative but contemporary fans in the Economy Segment corresponding to the consumer needs of this segment. l Launch basic products without any frills to meet the needs of sub-economy segment aimed at providing an up-gradation platform to the customer from the unorganised sector.
TPW Fans

Launch a new range of TPW fans in the premium and economy segments.
Freshair Fans

Launch a new range of Freshair fans in the economy and sub-economy segments.
Actions

To bring the products in line with the positioning strategy the Revolutions Per Minute (RPM) of all products was increased from 330RPM to around 400RPM to ensure higher Air Flow Velocity. Launched the Bajaj Midea range of TPW fans in the premium segment. Launched the Crown range of TPW fans in the Premium segment. Launched decorative & non-decorative fans in the economy segment of ceiling fans Grace, Grace Gold & Ultima. Launched basic models with no special features in the sub economy segment - Bahar & Maxima
5.2 Pricing Strategy

The company follows a competitive pricing strategy in all major markets for all product segments The strategy to enter the lower price segments was executed through launch of

differentiated models aimed at the lower price segments. Earlier all Economy and Premium ceiling fans were sold at around Rs.1000 and Rs.1200 respectively to the customer. Sub-Economy ceiling fans were introduced at a customer price of less than Rs.900. The company introduced their Maxima ceiling fans at a customer price of Rs.900 and Bahar ceiling fans at a customer price of Rs.800. However, one of the organised sector competitors (say Competitor A) introduced a ceiling fan model at a customer price of Rs.700. Today the sub economy segment is being actively looked at by most major competitors. The pricing innovation aimed at the Bottom of the Pyramid mass market has been a key element of the Bajaj Fans success story.
5.3 Packaging Strategy

All the carton graphics were revamped in line with a new theme of Elements of Nature. The Fans business being an Air business, took up the image of moving clouds as a graphical motif for its packaging and a new set of Carton graphics were implemented for the entire product range. This theme was also incorporated in the Posters, POPs, the shop boards and all other communication elements to give Bajaj fans a unique and instantly recognisable in-shop identity.
5.4 Promotion Strategy

Television as the main media It was important to create high aided and unaided brand recall related to the fans category in the minds of the consumer. Fan as a product category has no major regional disparities in sale. Much of the sale of organised sector is in the metro, Class I and Class II markets. The cable and satellite penetration in these markets is very high. It was therefore strategised to shift from the traditional way of promoting fans in print media to TV advertising through major C&S channels like Star, Sony and Zee. TVCs of 10, 20 & 30 secs were developed based on a positioning Bajaj Fans Sabse Tez in Hindi and various regional languages such as Tamil, Kannada, Telegu, Malayalam & Bengali. A CD Rom containing some recent TVCs is submitted alongwith the Paper. The Paper Weight TVC won a Silver Abby for 2002 and has been widely acclaimed. The Door Closer press ad won a Silver Abby for 2002 and the Fish Bowl press ad won a Bronze at the International ADFEST at for Asia Pacific 2002.
Increased brand visibility at the market place

Initiated various Ground level activities by hiring promoters in key wholesale and large retail markets for fans. These promoters were dressed in branded T-shirts and caps and were asked to distribute leaflets of Bajaj fans to the potential customers and to detail the products at the Point of Sale. When visiting the market, they would carry placards with the core communication

message of Bajaj fans Subse Tez. This created a lot of excitement in the market and customers started asking for Bajaj fans. Attractive POPs, Display schemes and Mystery Customer Contests were also run for the dealers for better display of products and packaging on the retail shelves by the retailers and for a Channel Push.
Publicity

An effective public relations campaign was also started to get favorable word of mouth publicity and press coverage. The results have been quite encouraging.
5.5 Distribution Strategy

Reach of potential through Mission Excel Initiative The aim under this initiative was to understand the reach of Potential of the retailers of the company in the total market and ensure presence and high shop share at key retail outlets, which had a high share of the defined market. This enabled the Company to explore a larger part of the defined market potential by being present in larger retailers counters in a stronger manner. This activity leads to an improvement in both the width and depth of Distribution. Retail Performance Standard (RPS) The Francis Kanoi database was used to know the width of distribution of leading players in the market. The leading player was benchmarked and a Retail Performance Standard was developed for all markets, which were based on the ratio of our presence in the number of retail counters vs. that of the benchmarked competitor. An action plan was developed and executed to ensure that Bajaj brand gains an entry in the selected retail outlets where the benchmarked competitor was present, so as to achieve the targeted RPS.
Change in Distribution Strategy

Bajaj decided to reduce the additional layers of distributors wherever feasible, which was increasing the distribution costs for the company over that of the competitors. Instead a switch over was made to the industry norm of supplying fans directly to major fans retailers and whole sellers and allowing for adequate width of distribution as per the market forces. Company Retailer Consumer
Separate Network for Sub-Economy fans

Competitor A (mentioned earlier) was the first to introduce a range of sub-economy ceiling fans. However they offered this model to all their dealers and further advertised the price of this model very strongly. This affected them adversely in 2 ways. On the one hand the sub-economy model ate into their sale of economy and premium models whose sales declined rapidly while their overall sales remained

constant. On the other hand, as the customers knew the price through the companys advertising, dealer margins were compressed which created a serious dissonance in the minds of their dealers. Having learnt from this, Bajaj clearly made it a policy to establish a parallel distribution network for the sub-economy fans, which comprised of dealers who were primarily un-organised sector fan dealers. The company also decided, as far as possible, not to offer the sub-economy fans to its existing dealers of economy and premium fans. Wherever it had to offer sub-economy fans to some of its very important existing dealers, it insisted on a minimum growth of 20 per cent from such dealers in the economy and premium range of fans. It also did not advertise the subeconomy fans at all. The companys objective in introducing the sub-economy fans was clearly to take share from the growing un-organised sector market while sustaining growths in the economy and premium segments. A sub objective was also to take away some share from the Economy segment fans of the other organised sector players. This distribution strategy enabled the company to: l Sustain growth in the economy and premium range of fans. l Successfully establish a new network, which was hitherto unavailable to it, comprising of dealers who were primarily dealing with unorganised sector fans. l Ensure healthy Trade margins. Increasing Shop Share In the consumer durable market the consumer depends on the dealers recommendation for a brand. Hence it was important to ensure that key dealers were encouraged to recommend Bajaj Fans to the customer. For this the Company ensured that: l Attractive margins were given to dealers l An attractive and comprehensive range of products was offered l Efforts at gaining Dealer loyalty were undertaken Dealer Loyalty Simply increasing the margins of dealers by offering higher discounts was not the best form to gain dealer loyalty. This was because any other organised sector brand could match the offer immediately and nullify the companys price advantage. Instead, since 2001 the Company has introduced a number of programs to increase dealer loyalty towards Bajaj Fans, thereby encouraging them to recommend our fan over other brands, to the customer. These were:

Summer Hungama Scheme Special gifts to dealers, which included household appliances and travel within the country and abroad. Key dealers were encouraged to qualify for travel

incentives and were taken for the trip along with their spouse. This helped in increasing the bonding with key dealers. Trips were arranged to Bangkok, Mauritius and Singapore. Bajaj Fan Dealers Privilege Club l First by any Fan company o For long term CRM o Membership by invitation only o Only Crme de la Crme fan dealers invited o Special rewards, gifts, trophies and certificates o Annual conference at a foreign location o Criteria for qualification - Sales Volume, Growth, Payment Efficiency. o To honor our key dealers and make them feel important and valued. o The company invited only 100 top dealers of the country of which 81 dealers qualified. They were taken on a trip to Dubai with the top Management of the Company.

Direct Mailers Khulja Sim Sim: The company identified some key retail counters across India & sent them mailers directly from H.O. Branches were asked to open these counters directly or increase shop shares through existing distributors. This was a first of its kind activity by any company in the Industry and resulted in nearly 1000 responses. Dealer Meets Dealer and Sub Dealer meets were organised to gain their confidence share with them the companys strategies and future plans and obtains their feedback on how to collectively grow in volumes and profits. Most importantly such meets created a strong bond between the company and its dealers and sub-dealers and made them feel an important part of Team Bajaj. 5.6 People Strategy Another major step taken by the company was on the people front. The Organisation Structure was revamped and the company moved from a complex matrix structure to a SBU based organisation with shared services. The Fans SBU had a change in leadership with a younger, dynamic and more risk taking people oriented leader. Appropriate structures were formed for Sales, Marketing and Supply Chain functions alongwith a revamping of the Manufacturing and Design & development teams. The Head of Sales had a team of Regional Managers, Area Managers and Territory Sales In-charges to support him. The organisation was also revamped into seven responsibility levels from the previous 19 salary grades to make the career progression faster and to reward good performers. A new set of Job Descriptions and Key performance Indicators (KPIs) were implemented alongwith a substantial improvement in various processes such as Planning, Supply Chain, information management, review processes etc. A number of poor performers were weeded out

and replaced with good talent from the Fans industry. A new Performance Incentive Scheme and a new Performance Appraisal process were also implemented to ensure good talent management. Deserving people were promoted from within and better career rewards and punishments were implemented. All these coupled with appropriate decision making empowerment and delegation resulted in a transformed and result hungry team. The people in the Fans BU were the single biggest contributors to the Fans BU success story.

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