New Product Launch

Institute of Management Technology
Company Confidential
[Avatar/CNG Bike]
Product Launch Plan
Date: Authors:
30.08.2011 Abhay Gahlot Joseph Thomas Rajat Vashisht Rishabh Chaudhary
New Product Launch: CNG-Bike
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Table of Contents:
1. Objective...............................................................................................................03 2. SWOT Analysis.....................................................................................................03 a. Strength.....................................................................................................03 b. Weakness...................................................................................................03 c. Opportunity...............................................................................................03 d. Threat........................................................................................................04 3. Product..................................................................................................................04 4. Assumption...........................................................................................................04 5. Management Information System.........................................................................05 6. MIS Survey Results..............................................................................................06 7. Consumer Behaviour............................................................................................09 8. New Product Launch............................................................................................11 9. Pricing...................................................................................................................13 10. Promotion.............................................................................................................15 11. Placing & Distribution..........................................................................................17
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Objective To be the pioneer in Two-Wheeler industry by launching the worlds first CNGbike, Avatar. And change the rule of the game by shifting the focus to CNG bikes.
SWOT Analysis
Strength(s) New Technology: CNG technology in bikes is a new concept which is the strength for the company as it opens up new market opportunity and no competitors in this segment .This technology provides fuel efficiency and therefore due to high petrol prices creates a huge market for the product. Brand is well accepted in India: The Company is well accepted as a pioneer in innovation and latest technology in India. Therefore the consumers will have little difficulty in accepting avatars quality and latest technology. Already existing dealer network: The company has an already existing dealer network which will help in distribution activities as there are no hassles of finding a new network of dealers .The reputation of the dealers is very good and they have proved very capable in the past. CNG is less expensive: The price of CNG is less expensive than petroleum per litre in India.
Weakness(es) The Company may not be able to achieve the projected sales in the initial phase of product launch. The technology is not patented therefore there is a threat of competition entering in the near future.
Opportunity First mover advantage: The Company is the first to launch a CNG bike therefore it has a significant advantage as there is a lack of competition. Growing demand of transportation that runs on alternative fuel: There is a growing demand for vehicles that run on alternate fuel as fuel prices have increased drastically.
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Threat Competitors can copy the product and come up with a similar product. Invention of newer and less expensive technology/fuel: If competitors come up with a new product which uses newer technology and is less expensive then the market for avatar will be lost.
Product Avatar is the worlds first CNG bike with the millage of 110 km/litre.
Figure 1: Avatar Worlds first CNG-Bike
Assumptions 1. 2. 3. 4. 5. The company is known for its technology and R&D department. Never before has been any bike developed with CNG engines. Joint-venture with Isuzu will last long enough for the product to be successful. Government will not regulate the CNG prices for two wheelers. There will not be any new technology breakthrough in two wheeler industry in near future.
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MIS (Marketing Information System)

The company conducted the survey in 8 cities of India and surveyed over 20 thousand people to check the feasibility and acceptance of the CNG-bike. The survey was posted on major news portal and survey portals. The below link is the live MIS survey form created to gather information. Link http://www.jotform.com/form/12413827227 The Survey Format is shown below
Figure 2: Format of Sample
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MIS Survey Results

1. Expense on Fuel The survey categorized expanse on fuel into four categories: a. Rs 0 to Rs 500. b. Rs 500 to Rs 1000 c. Rs 1000 to Rs 1500 d. > Rs 1500
Figure 3: Survey result of Expense on Fuel
Majority of the people falls into the range [c] Rs 1000 to Rs 1500, followed by more than Rs 1500 and then 21% people spends between Rs. 500 to Rs. 1000. 2. Effect of CNG on Reducing the Expenses
Figure 4: Survey Results of Effect of CNG on Expenses
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94 percent of the people of surveyed understand that bikes that would run on CNG will cost them less on a daily usage. The major learning from the survey extends the corollary of four wheels that run on CNG to bikes as well. 3. Safety of CNG bikes 52 percent of the people believe that use of CNG tanks in motorbikes will be safe.
Figure 5: Survey of Safety of CNG
4. Environmental benefits of CNG over Petroleum 88 percent people believe that CNG will considerably reduce the carbon footprint and reduce air pollution.
Figure 6: Environmental benefits of CNG over Petroleum
5. Distance travelled per month on bike 45 percent people surveyed travel around 500 to 1000 kms. These were the people who own 100 cc to 135 cc bikes. Another 35 percent people drive around 500 kms per month.
New Product Launch: CNG-Bike Page 7
Figure 7: Distance travelled per month on bike
6. Buying preference in terms of cc Majority of the bike market is concentrated around 100 cc and 150 cc engine capacity.
Figure 8: Buying preference in terms of cc.
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Environmental factors that can affect the companys ability to work

Economic Condition of the Country- The economic condition of India is getting better and so is the PDI (Personal Disposable Income) available with the consumers as a result, the upper lower and lower middle class is emerging as the core consumer for various products. Rising prices of petrol- With petroleum prices increasing regularly, more and more people will prefer vehicles with high fuel economy or alternate fuel vehicles. Credit/financing options Easy instalment options will definitely pull a lot of consumers. Emission limit Are under the limits given by the Environment Ministry. People will prefer low emission vehicles. Competitors - The Company will get the first mover advantage. Suppliers - Suppliers can affect the companys functionality by not delivering the raw materials on time. Dealers - Dealers will surely affect the sales by motivating the customers. R&D- R&D team will play a crucial role by implementing newest technological updates.
Who will be the consumer and their behaviour? Our consumers will be the lower income strata people who will use our bike as a primary mode of transport. So, some of the factors taken into consideration are:1-Bike will run an average of 10000 kms a year. 2-After sales support should be satisfactory. 3-Spare parts should be less expensive. 4-Spare parts should be readily available.
Now consumer behaviour will be judged on the following factors:1-Technology 2-Scial class 3-Family of orientation 4-Social circles 5-Age
6-Life cycle stages 7-Income 8-Personality 9-Motivation 10-Attitude 11-Perception
Segmentation
1- On the basis of availability of CNG With the increase in awareness for cutting down the pollution and the concern among the people and the government of India, the Government of India is motivating the people to use other alternatives of petrol and diesel and in this process the installation of CNG pumps has been done in various cities Delhi, Ghaziabad, Pune, Bangalore, Lucknow, Indore and a large number of cities are under consideration of the project. So, the companys major segment will belong to these cities where the CNG pumps are readily available. 2- Cities The major segment of the economy bikes comes from the sub-urban. So, company will look after to launch the bike in the cities associated with sub-urban such as Delhi, Pune, Bangalore, Ghaziabad, Lucknow etc. 3- On the basis of income On the basis of income the market is segmented into Particulars Singletons With Family 10-20,000 Without Fam 15-20,000 Married With kids 25-30,000 Without kids 20-30,000
Income
4- On the basis of occupation On the basis of occupation the company can segment the market into three categories the service class, the self employed (lower class people the carpenters, the barbers etc) and small scale business men. 5- Benefits sought On the basis of benefits sought the company can divide the market into the segments like the segment who seeks good mileage, the segment who seeks well after sales support, the
segment who seeks less expensive spare parts, the segment who seeks some finance service etc.
Targeting
On the basis of segmentation the target markets are selected. Working class consumers and regular bike users will benefit due to the high mileage and low and easy maintenance therefore they will form a high priority target. Young urban and rural students also form a good target market.
Market \Product Market1(Urban) Market2(Sub-urban) Market3(Rural)
Economy Bikes Avatar Avatar Avatar
Power Bikes ----------
Super Bikes ----------
Positioning
The company positions the bike in the minds of the consumer as the most economic bike that will cater the basic transportation needs of the people. The bike is 110 cc and gives a mileage of 110kmpl (under test conditions), so this bike gives what is being promised by the company. In the minds of the consumer the bike is positioned as a highly fuel efficient bike which will bring profits to them in the long run as the price of petroleum is steadily on the increase.
New Product Launch

Idea Generation Creating a new segment in the bike industry in India. With the fuel prices going up, there exists a market which is economy driven and wants to en-cash on the millage. The idea of launching CNG bikes was validated by a large survey conducted on line on major news channels websites and survey websites. The idea is worth considering. The survey results are shown in the below pie charts. Idea Screening The idea of launching CNG Bikes, is in aligned to the companys objective, strategy and resources. The company is in the business of making fuel efficient bikes for the segment of riders who are price conscious, for whom the bike is a mode of transportation than a style or a personality statement. The current market segment is cluttered and crowded with the range of bikes, in the same CC segment with similar features, pricing and millage. The company plans to expand its market share with the launch of altogether new segments in Indian two-wheeler industry.
The company wants to expand its market share and is banking on this new product, Avatar (CNG Bike). The company has recently gone into a joined venture with Isuzu Motors, for sharing and manufacturing the CNG engines for bikes.
Concept Developing and Testing The MIS survey conducted to test the feasibility and acceptance of the idea in the market. The survey results are overwhelming for the company to invest money and resources to develop this new product. The key indicators of the survey results are 1. 2. 3. 4. 5. 6. Rising price of fuel. Availability of CNG at CNG stations. Expenses on Fuel. Safety of CNG bikes. Performance of CNG bikes. Environmental benefits of CNG over petroleum.
Marketing Development Strategy The concept of the product is strong and practical. The company recently developed the prototype in association with Isuzu and IIT Mumbai, mechanical year students.
Business Analysis The product will not yield high profits in the initial phase of its life cycle as the market will take time to accustom to the concept of the CNG-bikes and to bring down the manufacturing cost by producing the economies of scale. The company project the profitability to increase exponentially as it expects that the sale of the bikes will shoot up with any further increase in the price of the fuel and acceptance of the safety and ease of using CNG bike.
Product Development Development of Avatar, CNG-Bike has already been tested by Isuzu and IIT Mumbai students. The bike has been tested on the following parameters 1. Millage Under the test conditions the CNG-bike, Avatar, gives the millage of 112 km/litre. 2. Price/Km The price of CNG is Rs. 33 per litre and with the millage of 112 km/litre the cost of running comes to Rs. 0.30/km. 3. Maintenance The bike, like its competitors is average on maintenance.
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Market Testing Avatar will be launched in the three test markets: Delhi, Pune and Bangalore. The target sale of the bike expected on average for each market over the period of two months is 200 units.
Pricing
Pricing objective: the company is setting a new segment in the market because of its new technology of CNG bikes therefore the company is setting the price on the basis of market penetration. The company will set the price of the bike slightly higher than its competitors bikes in the same segment. Due to high petrol prices there will be a large demand for the product in the market even if though the price is a bit higher because the fuel efficiency would be the differentiating factor. The operating cost of avatar is much less compared to other bikes in this category and within a period of 2 years an avatar owner can save more than other bikes. The high initial price will also deter competitors from launching similar products initially.
Determining demand: Normally higher the price lower the demand but Avatar gives the consumer a huge advantage the because the consumer can save a lot of money on fuel because of the additional mileage it gives .Therefore the demand expected for the product is high . Unique value effect: The customers will be less price sensitive because the product is unique Substitute: There are no substitutes for the product therefore price sensitivity in the market is less. Difficult comparison effect: Comparing the product will be difficult as there are no competitors in this segment. Price elasticity: The elasticity of demand with respect to price is not a huge factor because the features and benefits the product provides is what is attracting the customer and lack of any substitutes means the initial low price will attract the consumer creating high demand.
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Figure 9: Price elasticity in inelastic demand
Cost: The Company expects the initial costs to be high but will be able to achieve economies of scale as the demand increases.
Figure 10: Economies of Scale Chart
This graph depicts how the cost of production decreases with increase in production and the company aims to achieve the same within a few months of the launch of avatar.
Pricing method followed: The Company follows market plus/delta plus pricing method. The average price of 135 cc bikes in the market falls in the range of 50000-60000 rupees but avatar would cost slightly higher at 62000 rupees. The higher price is justified by its unique features like fuel efficiency and lack of competition.
Geographical price change: the company will divide the market into different zones and the price of avatar will change according to the various zones.
Promotion
Consumer attitudes and buying patterns Fuel prices sky rocketing to Rs. 80 a litre, there was a scope of economical high mileage everyday bike. Even the traffic jams was adding up to the consumer attitudes towards buying of fuel efficient bikes. As the research suggested there exists a steady market of fuel efficient bikes and soaring fuel prices were adding up to a scope of more economical motorcycles . The promotional strategy should be oriented towards capturing this huge market which is definitely looking for more economical options.
Brand strategy Availability - The bikes should be easily available as per the demand throughout the nation. Initially, it should be delivered on pre bookings so as to createhype among the consumers. But it should be taken into considerations that the time of delivery and booking time shouldnt be more than 10-15 days so the consumers will not lose interest or look for other options. Affordability - As the on-road price of the product is not more than Rs. 50,000 throughout, therefore its very affordable for our target market. Awareness - Our campaigns should clearly classify the bike as most economical, low on maintenance, eco friendly bike. Acceptability -The bike should be acceptable by our target market .The factors like claims and utilities should be practical enough and well tested in market target.
Competitive strategy Reliability More reliable than petrol bikes as the new improved technology is created. Most economical to ride & constant mileage CNG price very low than Petrol and thus mileage in terms of (Rs per km) will be very low. Comfort ride- The structure evolved after a lot of Research and design.
Reasonable Price- The selling price of 50,000 for 135cc bike is very competitive enough for the market. Low & easy maintenance The technology evolved with low and easy maintenance as one of the objective. Sales promotions - The primary objective of a sales promotion is to improve a company's sales by predicting and modifying your target customers purchasing behaviour and patterns. Sales promotion shall boost sales and draw new customers while at the same time retaining older ones .
Advertising strategy 1) TV Advertising - The various campaigns should clearly differentiate the bike from its competitors and shall also display the utilities. The campaigns should also touch base with the target market. 2) Print media (newspaper & magazines) - Initially daily and weekly basis than gradually move to monthly promotions. 3) Online advertising - Heavy promotions on all/most of the everyday portals (videos + pictorials) 4) Promotional products - Helmets, jackets , caps , stickers , various consumer products should be distributed as complimentary 5) Social media marketing The brand should be heavily promoted in various exhibitions and social gatherings .Road shows should also be organized. 6) Sponsorship Various Television shows, primetime matinee movies, reality shows, college fests, sports and leisure media coverage should be heavily bombarded with the advertisements of the bike. 7) Celebrity Endorsement A celebrity can sometimes act as a catalyst for a brand.
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Placing & Distribution

Assumption: The Companys manufacturing plant is located in Hosur (Tamil Nadu) and Bombay highway (Maharashtra).
Distribution objective: To make the product highly available throughout the market.
Distribution Channel: The Company will use the pre-existing dealership network to distribute the bike, so here, the distribution format will be seller driven. Also the approach used by the company will be the selective distribution. The company will reward the top 5 dealers that will give the maximum sales. And also if any dealer will found selling duplicate spare parts then the dealership will be cancelled by the company. Dealers Functions: The main functions of the dealers will be to motivate the customers to buy the all new CNG bike, and for this test drive will be provided on the expense of the company itself. The company will appoint expert personnel to train the employees of the dealers how and what features to be shown to the customer. Though there will no competition to the bike in the initial stages when the bike will be launched but it will be the duty of dealer to tell the customers how the new CNG bike is better than the available petrol bikes. The dealers must provide the customers with genuine spare parts and the best after sales service experience and for this the company provide the required training to the dealers employees. The financing service will be available at every dealer but this is the duty of the dealer to tell the customer all options that are available.
Logistics: The transportation cost of delivering the bikes will be to the dealers in various
zones will be borne by the dealers who will pass it on to the customers. The bikes will be sent to the dealers based on their proximity to the manufacturing plants in Hosur and Bombay highway.
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Institute of Management Technology

30.08.2011 Abhay Gahlot Joseph Thomas Rajat Vashisht Rishabh Chaudhary