Royal Enfield rides into the mass terrain

It is hardly surprising that in an era where two-wheeler companies are trying hard to woo the fairer sex, the Royal Enfield has maintained a cult following among Indian males. While initially it was mainly a machine for the police and the military, it went on to become quite the male icon.

However, the high prices of these bikes have kept them confined to a niche category. Sales figures in the motorcycle/step-through category in India illustrate the same. Royal Enfield sold 45,915 units for the April-August 2012, an impressive growth by 51.53 per cent year on year (yoy). However, this pales in comparison to the likes of market leader Hero MotoCorp (23,12,551 units), Bajaj (10,14,117 units), Honda Motorcycle & Scooter India (4,59,882 units), TVS Motor Company (2,18,287 units) and India Yamaha Motor (1,32,704 units). It is indeed not an apple to apple comparison, considering the price of a typical Royal Enfield product, but it is quite clear that the bike has performed below par compared to its potential. When they are operating in a two-wheeler dominated market like India, they certainly have struggled to account for a greater share and need to push the envelope; a view that even a company insider would willingly endorse, in all probability.

And this kind of a push cannot come at a better time. Off late, the leisure riding culture is quickly gathering pace in India. Consequently, the premium two-wheeler segment is rapidly gathering steam. A report by Hem Securities makes an interesting comparison in growth rates in various sub-segments of the motorcycle market in 2011 over 2010. While the economy segment (less than 125cc) registered a growth of 15 per cent yoy, the executive segment (125cc to 249cc) registered a growth by 20 per cent yoy. In contrast, the premium segment (more than 250cc) registered a phenomenal growth of 71 per cent yoy. With the visibly growing interest in this area, the marketing top brass at Royal Enfield senses an opportunity.

Campaigns like “The Himalayan Odyssey”, “Leave Home”, “Tour to Bhutan” et al have been launched to enhance the brand's recall and appeal in the minds of its target audience. It is trying to reach the youth, which was illustrated in the “Leave Home” campaign. It encouraged youngsters to leave the comforting confines of their homes and embrace the spirit of adventure and also included a hero theme-based comic strip. The campaign reinforced the attributes of masculinity, thrill and adventure. In fact, these are the most common themes for the bike

Other themes have also been explored in the brand communication. For instance, a series of ads emphasise on the legacy of the product, with the theme being, “Handcrafted in Chennai.” One ad highlights how even the typical “dhuk, dhuk, dhuk”  (engine sound) that Royal Enfield bikes make is a work of spectacular engineering and years of practice. “Without compromising on the unique characteristics of the brand, offering better performance, efficiency, reliability and easier maintenance for customers is always our focus,” elucidates Shaji Koshi, Senior Vice President, Sales and Marketing, Royal Enfield. Besides the media campaigns, the brand has been quite active on the racing circuit. The recently concluded Royal Enfield Rider Mania 2012 involved a wide range of events, including Slow Racing, Figure of 8, Assembly War, The Raghu Dixit project and Lemon and Spoon race.

Company officials claim that thanks to the ramp up in new model launches and changing customer preferences, they are now facing a pent up demand that is getting harder to meet. The waiting period for a new Enfield bike currently is anywhere between 5 to 15 months. Consequently, production has shot up by nearly 50 per cent in recent years. Moving forward, Royal Enfield's next milestone – producing 1.5 lakh units per annum – is on the cards. By March 2013, with its new manufacturing facility getting operational in Oragadam near Chennai, the brand plans to roll out 1.5 lakh units annually from its current capacity of 70,000 units per annum and the company plans to invest around Rs 3.5 billion in this facility over the years. The Oragadam facility has the capacity to bring out at least twice that number over time. Year 2013 will see Royal Enfield roll out new models, and Cafe Rider, which made its appearance in Auto Expo 2012, will be the first to be seen on the roads. Already, the company launched its highway cruiser – the Thunderbird 500 this year, which is aimed at establishing an unassailable lead in the highway biking space.

While the demand spurt is definitely encouraging, there has to be a consistent effort from the Royal Enfield marketing team to engage the youth more deeply and make them passionate for the brand. Royal Enfield's Facebook page currently has around 0.24 million likes compared to 4.3 million likes for a Harley Davidson. In fact, this is after branding experts label the Harley Davidson's digital efforts as relatively mediocre! Moreover, the Royal Enfield page does not have a clear positioning statement. The Harley Davidson page, on the other hand, clearly communicates below the profile photo, “We fulfill dreams inspired by the many roads of the world by providing extraordinary motorcycles and customer experiences.”

The last major hurdle that the company will have to cross in order to have a sustained momentum in India will be towards a good bit of mass marketing. Company officials had mentioned during a previous interaction with  TSI that they would not embrace mass marketing channels readily and continue to promote their products through niche channels. Like Harley Davidson and the Volkswagen Beetle, Royal Enfield has also embraced content-based marketing, but the effort has to be more consistent and far reaching than it is today. This certainly requires the use of mass media channels and promotion strategies. For instance, Hero and Honda (before they split) got a massive leg up in their brand equity among the youth through their association with MTV Roadies. Today, leisure biking enthusiasts are extremely excited about owning a Royal Enfield. But if the brand does not employ such mass positioning strategies to consolidate its position, competitors (especially those doing an upmarket line stretch) may wrest it from its perch, sooner or later.

bachan. thakur@planmanmedia.com