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 The

in 1949 by the Murugappa Group and Sir Ivan Stedeford of Tube Investments Group in UK 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 in1990s

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.

Forming panels

Steps

Get responses Get detailed perceptions

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

Make a choice, Reason

Riding

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