A Marketing Strategy Report On

BikeZone, Hinjewadi

MBA-IB 2009-11
Div. B

Prepared by:
Divya Bhatia (09020241071)

Hari G (09020241085)

Ankita Chhajlani (09020241104)

Soumya Chakrabarti (09020241109)

Sankar B (09020241115)

Biswajit Nag (09020241117)

 Dheeraj Sharma (09020241129)

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 Table of Contents
Table of Contents...............................................................................................3

Executive Summary:..............................................................................................4

Situational Analysis:...............................................................................................5

CUSTOMERS........................................................................................................... 5

COMPANY............................................................................................................... 5

Competitive Scenario:............................................................................................5

SWOT ANALYSIS.....................................................................................................7

Marketing Mix:....................................................................................................... 8

PLACE.................................................................................................................... 8

PRODUCT AND PRICE.............................................................................................9

PROMOTION......................................................................................................... 11

BUSINESS OBJECTIVES – SALES AND PROFITS.....................................................11

SEGMENTATION, TARGETING AND POSITIONING.................................................11

SEGMENTATION .................................................................................................. 11

TARGETING.......................................................................................................... 12

POSITIONING........................................................................................................12

MARKETING STRATEGY DETAILS..........................................................................13

REFERENCES........................................................................................................18

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Executive Summary:

Castrol BikeZone, Hinjewadi is set up by Mr. Arun and Mr. Buchade in partnership on 7th
Aug, 2008. It is a franchisee of Castrol’s multi brand service centres of 2-wheelers. Its main
business is to provide after sales services (including spares and consumables) for 2-wheelers
of all the brands under single roof. Being a franchisee of Castrol helps in giving the Castrol
brand and invests in market development for bringing in traffic, provide support in getting the
requisite equipments, training of mechanics and keeping them updated technologically. The
franchisee started with an initial investment of nearly Rs.14 lac in a rented facility with
1200sq.ft. of area and 20 feet of frontage area as required by Castrol.

The Bike Zone franchisee has to pay Rs.4.5 lac as one time franchisee fee and 10% of
revenue as royalty on an ongoing basis. There are some other contracts as well regarding
selling the amount of Castrol Engine Oil.

As Hinjewadi has a large number of IT companies, which employees thousands of employees

(with a large disposable income) there is a huge market potential for after sales service of 2-
wheelers.

While being a Castrol franchisee, the business has lot of constraints as well. For example the
service charge has to be according to company standards which makes the profit margin
really thin (after paying 10% royalty to Castrol).

Because of all these, the management (Mr. Arun and Mr. Buchade) recently decided to move
out of the franchisee and make it an independent Service centre in the name of Bike Point.
This move will remove the bourdon of royalty to be paid to Castrol, but the sales contract of
selling Castrol Engine Oil will be still applicable.

To make this successful the facility is under renovation which is scheduled to be completed
within a month. The management is also thinking to re-look at its marketing strategy.

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Situational Analysis:
CUSTOMERS
The current set of customers includes bikes owned by people in the locality of Hinjewadi
village and the employees working in corporate in the MIDC industrial area. In the two years
of its operation in the current place, the Bike Zone has had more than 2000 customers and half
of them are repeat customers for the enterprise. Average number of customers on a regular
day is around 25.

COMPANY
The company was started as a partnership firm and as a franchisee of Castrol. The total
capacity of the place is to service around 25 to 30 bikes everyday. There are nine employed
mechanics and one chief mechanic who take care of the operational aspects of the business.
Apart from this, there is one receptionist who takes care of the administrative functions of the
enterprise. The target for this marketing strategy is to improve the numbers further and get in
an average customer increase of ten customers per day.
The BikeZone, which was started as a franchisee with Castrol is currently in a transformation
phase. It is set to become BikePoint, wherein the royalty payment that is currently made is not
needed, and they will be bound only by a contract for the amount of servicing oil target every
month.

Competitive Scenario:
As of now there are four major competitors to this business entity (BikeZone, Hinjewadi).

OEM DEALERSHIPS:

A new bike comes with at least one year of company warranty. This warranty also comes
with pre-decided number of free services (service vouchers). In order to be eligible for
availing the company warranty, the bike has to be serviced at specified intervals by a
company dealership only. This clause keeps the customers away from the multi brand
showrooms like BikeZone.
For Example: Consider a bike with 6 years of lifetime which comes with OEM warranty of
1year. In this case the customer is bound to get his bike serviced at the company dealership

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only. And hence 16.66% of market share (lifetime is 100% market) goes straight to the OEM
dealerships. And it becomes difficult to attract the customers from OEM dealerships to
BikeZone.

ROAD SIDE MECHANICS:

Repairing bike does not require very hi-tech and costly instruments. A person having few
months of experience in repairing bike can start his own business with few basic tools on a
road-side.
As these road side mechanics need not to invest in facility and does not pay taxes (VAT, sales
tax, service tax etc.), they offer service at 5-10% discount compared to BikeZone. And as
customers from Hinjewadi village are highly price sensitive, they prefer going to road side
mechanics to save money. There are nearly 3-4 road side mechanics in Hinjewadi.

INDEPENDENT GARAGES:

These garages are mostly owned by ex employees of OEM dealerships. These people get
experience while working with OEMs, build contacts with suppliers of spare parts and poach
the mechanics of OEM dealerships.
These garages keep some inventory of spare parts, consumable like oil and grease and use the
open space in front of shop to repair/service the bikes. The USP of these garages is high up
time. They provide instant service. There are two independent garages in Hinjewadi.

SPURIOUS PART SELLERS:

Spurious parts are defined as locally manufactured or recycled and sold under brand names
(OEM, OSM and Alternate vendor), using third party intellectual property.
Again these spurious part sellers do not pay any VAT, sales tax. Because of this they are able
to offer the spare parts at huge discount (25-35%) to original parts. The price sensitive
customers prefer these spurious parts although they are of inferior quality.
Spurious parts pose much greater threat (competition) to the multi brand service centres like
BikeZone. Kindly refer to the graph below. (Reference IMaCS Study)

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 Figures indicate
market size in Rs crores

SWOT ANALYSIS
Strengths Weakness

1. Servicing for all kinds of two wheelers
2. Brand name of Castrol
3. Large target segment to get customers
from
1. Employees in corporate being highest
among the customers, the repeat
customer from employees is hindered by
transfer / re-shifting of employees
2. The location of the enterprise as such is
an advantage, but since the service center
is located further away from the roadside,
visibility of the shop becomes almost Nil
and it necessitates use of bill boards to
make it visible for other passers-by.

Opportunities Threats

1. Potential customers from corporate 1. With the additional customers, the

working capital needed also increases.
2. Potential to increase number of bikes
The current level is close to four lacs per
serviced without any major
month and there are no Bank credits that
infrastructural and labour investments
are used.
3. Potential to tap into the market of fleet
2. Competitors (as explained in Competitive
owners
scenario)

3. Perception of service provided as a

branded service (from Castrol) and hence
being costly

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Marketing Mix:
PLACE
Location: The business enterprise is run in a central location in Hinjewadi chowk and
is an ideal spot for the business. It is at the intersection of the Phase I and Phase II of the
Hinjewadi MIDC. The traffic in this part of the city is increasingly high due to the large
number of corporate companies coming up in the region and having the service center at this

location is a prime advantage. It also provides opportunities for expanding the business
through sales promotional activities. More on these will be covered in the detailed marketing
strategy.

Coverage: The coverage of the business again depends on the customers coming in.
As of now, most of the people come from the Hinjewadi village, the corporate employees
who have offices in the Phase I and Phase II. So, the ideal coverage is restricted to this.

Channels: The channel of selling, in our case a service provided, starts only after the
vehicle comes into the service station. The authorized spare parts are the ones used and the
oil used for all servicing done is from Castrol. After the in house servicing, the bike gets
delivered. There is no other channel for the business activity as such.

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PRODUCT AND PRICE
The service of two wheelers involves many different categorizations. The servicing is
done for all kinds of bikes and these are packaged too. The customers usually are explained
about these when they come for a servicing and then the particular package is provided.

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Apart from service offerings as a package, there is also individual servicing done like:

 Bike Beautification – Cleaning, glazing and wax application @ Rs. 150/-

 Battery Maintenance @ Rs.40/-
 Carburettor Maintenance @ Rs.80/-
 Clutch Overhauling @ Rs.275/-
 CVT Overhauling @ Rs.275/-
 Disk Brake Overhaul @ Rs.275/-
 Front Suspension @ Rs.300/-
 Clutch wire replacement @ Rs.30/-
 Accelerator Cable replacement @ Rs.40/-
 Brake shoes Replacement @ Rs.50/-
 Speedometer maintenance @ Rs.35/- etc.

As far as the service mix is concerned, it is in the category - Major Service with
accompanying minor goods. The minor goods include selling of merchandise from Castrol,
spare parts, etc. Quality is of most important for any service enterprise and the same applies
for a bike service center also. On these lines, it is ensured that the oil being used by Bike
Zone is only that of Castrol, which is known for its reliability. Design, Features, Brand Name,
Packaging, Sizes, services, warranties, returns

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PROMOTION
Promotion currently happens mainly through the brand name of Castrol, the major advantage
being that servicing of all types of two wheelers irrespective of the type and make. The
mechanics are trained for the same. Other promotional activities that are currently done are
through pamphlet distributions in colleges and corporate offices. As the enterprise is fairly a
new enterprise and the dearth of quality service centers around this area have resulted in a
fairly lesser promotional activities carried on till now and hence leaves us with a lot of
potential for promotional activities.

BUSINESS OBJECTIVES – SALES AND PROFITS

The business objective is to increase the number of bikes that are being serviced, currently at
an average of 25 a day, to increase by 10 per day. This will generate a revenue increase of
close to Rs.100000/- per month @ the rate of Rs.350/- per bike, in a period of two years.

The current monthly turnover in turns of cash flow is approximately around 3 lacs.

Current:
Avg pay out per Total revenue
No. of customers / month customer generated
25 350 262500

Target no. of Avg pay out per Total revenue

customers/month customer generated
35 350 367500

% change 40.00%

We are targeting only the servicing aspect of the business and not the side that deals with
selling of spare parts.

SEGMENTATION, TARGETING AND POSITIONING

SEGMENTATION
The market segments present in Hinjewadi for undergoing bike servicing are:

1) Employees of IT Park

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They form the biggest chunk of availers of this service. They are not permanent customers as
many of them either get transferred to other cities frequently or drop out of the firm to join
some other firm which is not in this location.

2) Students of Colleges aroung – SIC, I2IT, Indira College, etc.

They form the next biggest segment. There are some students who even after leaving their
college visit BikeZone for servicing their two-wheelers because of service loyalty which has
been built over time.

3) Villagers
The villagers living in this area are carrying out various small businesses in and around the
Hinjewadi Chowk. They also have servicing needs for their vehicles.

4) Fleet owners
Certain food joints in Hinjewadi own a fleet of two-wheelers who also have continuous
servicing requirements.

TARGETING
All the bike owners in the segment mentioned above is our target segment and our market
strategies are applicable to all.

POSITIONING
BikeZone has positioned itself as a quality service provider which charges its services at a
premium due to the quality offering. It will still continue with this positioning.

Keeping in mind the target customers, who will want to have a quality offering and who wish
to pay a premium for quality offered, this positioning is only to be continued further.

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MARKETING STRATEGY DETAILS
The proposed core marketing strategies have been derived from the service differentiators.

Service differentiators

 Ordering Ease :

WHAT THEY DO:

As such placing the order to avail the service, is being done by the customer mostly
manually, and in certain cases on phone.

WHAT WE PROPOSE THEM TO DO:

It would be of utmost relevance for them to go online with respect to placing orders, as the
largest chunk of their customers belong to employees of firms in the IT Park. For this,
maintaining a website is advisable.
This will bear an expense of close to Rs.10000/- for creation and maintenance of the page.
It will have a yearly expense of Rs.4000/- for owning the webpage URL and a further
expense of close to 2000/- per month for information updates.
Major Advantages: Booking online
Providing updated information online
Along with the web pages, having a Facebook account for publicity is suggested. This is
specifically keeping in mind the potential customers who are tech savvy and spending most
of their time on computers / internet.
It would be of relevance for the owner to maintain a Facebook account and let customers
place order there. The promotion has to be accordingly changed where not the website, but
the Facebook account has to be highlighted.

2) Delivery :

WHAT THEY DO:

The firm has established a delivery radius of its own, within which free pickup / drop is done.
But, this does not cover all the potential firms from where customers can pour in.

WHAT WE PROPOSE THEM TO DO:

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Rather than sticking to just customers who are working in Phase-1, the services can be
extended to customers of Phase-2 as well. This has the advantage of attracting corporate
employees, encouraging them to leave the bike for service in the morning and get the same in
the evening when they leave. This will especially work once the booking online system is
implemented.

3) Customer Consulting :

WHAT THEY DO:

Those who come under the target customers of the firm are employees of firms in the IT
Park. Most of them are in their early working days, aged in the age group of 21-35, who own
only two-wheelers. For them, their 2-wheeler is nothing less than their baby. So, it would also
be of relevance to apprise the customers of the condition of their vehicle and provide them
with detailed answers to whatever they ask.

For instance, customers need to be told that replacing their spark plug with a new one, would
cost them only Rs.70, but in the long run, it would lead to saving a lot of fuel consumption.
This kind of consultancy would only help in increasing the customer’s loyalty towards the
service provider.

WHAT WE PROPOSE THEM TO DO:

The customers who would possibly order the service online must be provided this
consultancy on phone, immediately after the vehicle is received by the service provider. If a
detailed consultancy has to be provided, the they must float a mail to the customer, for which
BikeZone must note the e-mail id of the customer while taking the order. Earlier, when the
orders used to be on phone, Bikezone would only do the servicing and not provide a detailed
analysis of what is good for them and what needs to be done.

Apart from the above core strategies, we propose several other strategies as under.

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 1) Second hand bikes
There is a tremendous market opportunity in the area of Hinjewadi for second hand bikes. We
propose a lateral marketing strategy through this.

If original MRP of a bike = Rs.50000

Resale value = Rs.30000

Margin charged by BikeZone @ 2.5%= Rs.750

So, BikeZone would have to sell the bike at Rs.(30000+750)=Rs.30750

BikeZone can offer to renovate the bike, the cost of which would be charged over and
above this Rs.30750, the margin of which would also depend on the kind of renovation done.

BikeZone would also offer to perform the task of transfer of ownership. That would cost
them around Rs.250, so the selling price for the bike would now be around = Rs.
(30750+250)=Rs.31000.

Now while selling this, BikeZone would have to offer a 3-month free service offering. This is
in consonance with a 1-year free service provided on sale of new bikes. This would cost Bike
Zone around Rs.150 (sale price of this service is Rs.255). So, on a margin of Rs.750, if this
cost is incurred, then also a margin of Rs.(750-150)=Rs.600 would be achieved.

This is a lateral strategy because it is imperative that the customers who will buy this second
hand bike would take up the free servicing provided within a 3-month period and that would
be the chance for BikeZone to attract them with their expertise in quality servicing.

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 2) Corporate Club

Castrol currently provides membership to specific customers to avail specialized servicing

facilities. As per this plan, a customer can get his bike serviced by experienced mechanics
using hi-tech equipment. He can watch his bike being serviced while he can relax in a
comfortable air-conditioned lounge area. Following are the highlights of this programme:

But, BikeZone at Hinjewadi doesn’t follow this programme because he doesn’t have a proper
place to build an air-conditioned lounge.

We recommend him to remove the condition of providing a AC relaxation area. He can

provide the service under this programme with the same discounts. We also recommend him
to target this programme only to customers of major IT firms in this area, possibly only
Infosys, Wipro and CTS(because they have the bulk potential customers) for the first six
months and based on the success of this programme , repeat it for other large firms in the next
period.

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 3) Food joints providing delivery services

In Hinjewadi, Domino’s Pizza and McDonald’s are prime food delivery service providers.
McDonald’s has in all 3 bikes and Domino’s Pizza has in all 10 bikes in operation. BikeZone
needs to target them right away, provide them with the same set of facilities as provided in
the Club membership programme, but no membership fees needs to be paid.

4) Tie up with Corporates

Most of the corporate have tie up with consumable goods shops and eateries that help them in
increasing their customer base by offering a discount. The same can be used by BikeZone as
well. A discount of 10% will incur an expense equivalent to the royalty that is currently being
paid to Castrol. Once the conversion to BikePoint happens, this royalty payment does not
exist and can be used for offering the corporate discount.

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REFERENCES
1) Castrol BikeZone owners – Mr. Arun and Mr. Buchade

Phone: 020-22934400

9011084822

9011084823

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