Sunday, February 26, 2017

Blue Ocean Strategy India – Honda Activa Scooters dethroned motorcycles in India 2 Wheeler market

The iconic motorcycle brands Hero Honda’s Splendor and Bajaj’s Pulsar had successfully moved Indian consumers from iconic scooter brands Bajaj Chetak & LML Vespa in the year 2000. Motorcycles took over scooters since then and the market for the motor cycles grew exponentially in India until Honda India’s iconic automatic scooter Activa dominated the India two-wheeler market sales for seven consecutive months from January 2016 till July 2016. Honda Activa, the automatic scooter was design built and launched in the year 2001 with a unisex appeal targeting both men and women. Women empowerment was facilitated to some extent by Activa as women bought this scooter for their professional and domestic needs. Kinetic Honda was a successful automatic scooter that Honda initially launched which was also woman oriented. Honda Activa had emerged as a most preferred daily commute 2 wheeler vehicle both in urban and rural India. Yadvinder Singh Guleria said: “Activa today represents the metamorphosis of the society. The superior convenience, unisex appeal coupled with product features -- increased mileage, style and technology -- has converted millions from pillions to riders.”

Yadvinder Singh Guleria, senior vice-president, sales and marketing, Honda Motorcycle and Scooter India in an interview to Business Standard highlighted, “Activa included four-stroke technology and tuff up tube — a double-layered tube with a sealant. All of this, made the scooter business a “blue ocean" (creation of an uncontested market space) for Honda, even as Activa evolved over the years with innovations such as the company’s eco technology in 2012 that further enhanced mileage and nearly bridged the gap with 100cc motorcycles. The country’s economic growth also opened up a market of women users. With education and empowerment of more women, they stopped being dependent on men. This added to the “scooterisation" of the country. In rural areas, poor roads have for long tended to favour the sturdier motorcycles. But, with increased motorisation and more metalled roads, there are signs of greater acceptance of scooters. “Another positive change is the acceptance of working women, many of whom are employed in the health and education sectors and have their own commuting needs."

In terms of Eliminate, Raise, Reduce & Create grid, Activa eliminated kick start and provided automatic start, designed in such a way that both men and women can use Activa. Activa also raised the mileage per litre closer to 100 cc motorcycle mileage, reduced the maintenance cost and created a unisex automatic scooter urban market. Initially Activa was targeted as intracity vehicle but as the rural roads improved the rural adoption also increased. Even today the company dominates the uncontested market it created 17 years age and despite many competitors launching automatic scooters, the company has close to 18,000 back orders in 2016, which speaks of the consumer trust and confidence it has built. Activa has over 12 million customers in India despite the fact that there had been always waiting period for the consumers in buying Activa scooters and consumers had options from Honda competitors without any waiting periods. The Activa customers happily adopted the 100cc Activa in 2001 and the company successfully upgraded the consumers to 110cc and 125 cc without any consumer demanding or complaining and the company may do it again by moving consumers to 150cc. For, as Yadvinder Singh Guleria says, “it is all about creating new demand and guarding one’s turf.” 

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