LML may shift bike account from FCB-Ulka

By , agencyfaqs! | In | June 15, 2001
Five agencies - including Enterprise Nexus, Rediffusion, Ambience D' Arcy, Capital Advertising and incumbent FCB-Ulka - are in the fray for the estimated Rs 12-crore motorbike account of LML


LML is looking to shift the Rs 10-Rs 12 crore advertising account for motorbikes from FCB-Ulka, Delhi. The pitch for the combined account of Adreno and Energy took place in Delhi over the last fortnight, ending with presentations from Rediffusion and FCB-Ulka on June 13. Talking briefly to agencyfaqs!, Hemant Malhotra, general manager, marketing, LML, said, "There were five agencies in the pitch. And we would take the final call on an agency in the next 10-15 days." He refused to be drawn into a detailed discussion on either the reason for calling a fresh pitch or the agencies involved in it.

However, information available with agencyfaqs! indicates that besides Rediffusion and FCB-Ulka, the other three agencies vying for the account were Enterprise Nexus, Ambience D' Arcy and Capital Advertising. While none of the agencies would officially put a figure to it, back-of-the-envelope calculations indicate that the account would be worth around Rs 12 crore. A senior official in one of the agencies in the fray put it this way: "Last year, the (motorbike) category spent was about Rs 71 crore. And among the bigger spenders were Hero Honda, Bajaj and Kinetic, which between them would have spent around Rs 45-48 crore. Yamaha would be spending around Rs 10-11 crore. Which means, the LML account would be worth no more than Rs 12 crore."

To put things into perspective, LML is the second largest scooter manufacturer in the country and a major player in scooterettes. Over the years, it has proved to be a strong competitor to the market leader Bajaj Auto. The company's products have been traditionally priced at a premium. Therefore, it does not have a major market share in the value-for-money segment, where volume growth is higher. Driven by falling sales of scooters, LML decided to foray into the highly-competitive motorcycle segment in collaboration with Daelim of Korea. Its long-standing dispute with its Italian partner Piaggio ended last year with an out-of-court settlement. As a result, Piaggio sold its stake in the company to the Indian promoters.

Interestingly, when LML set foot in the mobike market in January this year, 14 months behind schedule, it did not call for a pitch. The account went straight - "almost like a foregone conclusion," as an agency insider puts it - to FCB-Ulka, which handles its Rs 24-25 crore scooter account. But as it turns out, the agency is finding it difficult to keep the account. As the head of an agency handling a competitive brand puts it, "The reason why the company has called for a pitch is obvious. The LML communication, especially that of Adreno, where they show this bike morphing into a woman into a bike again, was weak and unfocussed. There was no brand promise, no consumer insight to speak of." An ex-LML hand seems to think that Capital Advertising is "a good candidate for the job in hand."

He seems to think that task for the new agency would be to convey LML's aggressive intents in motorbikes and correct the perception problems. "Besides the initial problems with its collaborators, the big issue before the company is to correct the product proposition. See, Daelim brands have a lot of pep associated with them; but Indian consumers are looking for fuel efficiency. Now, check the market figures. The sales of LML bikes by end February had touched a high of 10,000 units. Now it is hovering at 2,000 - 2,500 units. On the other hand, TVS Suzuki's Fiero and Hero Honda's Passion are pitching for both appearance and performance. So the challenge for LML and its new agency would be to strike the right balance between looks and performance."

Given the aggressiveness the other players in the market, the task is clearly cut out for the new agency for LML.

© 2001 agencyfaqs!