For the two-wheeler industry, 2016-17 was a bitter-sweet year. The good news came with the Pay Commission announcement followed by a great monsoon. But in November, arrived demonetisation which was soon followed by the BS-III to BS-IV transition (all vehicles had to comply with BS-IV).
Overall, 166.5 million two-wheelers were sold in the year, with scooters accounting for 33 percent of this.
Honda Motorcycles & Scooters India (HMSI) managed to secure a 12 percent growth, nearly twice that of the industry’s growth. HMSI sold over five million two-wheelers - the first time that a 100 percent two-wheeler subsidiary of Japanese giant Honda Motors achieved that feat anywhere in the world.
HMSI makes motorcycles, scooters, superbikes and a moped - Navi - in India. Its bestselling scooter is the Activa (and its various models), which along with Dio and Aviator makes up the scooters range. Motorbikes include Shine, Unicorn, Hornet and Livo while the superbikes are the CB series and Goldwing. Last year, of its sales through 5,300 outlets, scooters weighed in with 71 percent while motorcycles comprised 27 percent and Navi the rest.
Yadvinder Singh Guleria, senior vice-president - Sales & Marketing, HMSI, who has been with the company since 2005, moved out for a year in 2011 to join Polaris as director. In 2012, he returned to Honda. In this interview with Anirban Roy Choudhury, he throws light on the ‘scooterisation’ of India.
If the brand is a trusted one, the decision making is very quick. When you have high brand trust, the enquiry-to-purchase conversion is very high - we saw this for Activa.
Another example is, during the BS-III to BS-IV transition everyone was discounting but people went for Honda as their first choice. That's a victory for marketing. It was because of the trust in brand Honda.
Once you are in a crisis, it is how society stands by you and how the consumer perceives the brand during that difficult period that is the real test of a brand.
Activa was the first model that we launched. Then came the Dio and Aviator. The USP of Activa is that it's a complete family scooter. The other two are sub segments that we had created. There are a set of consumers who say that they want something different. We do not want to lose those consumers and hence we got these two sub brands.
Dio was customised for the youth - from the footrest, which is inclined and not flat to our marketing initiatives, we were clear that this is a trendy offering for the youth. Our recent launch, Activa I, is for consumers who like a lighter machine. Then we have the Aviator which is for tall people. All this helps us expand our market and not lose customers.
From Bihar to the North-Eastern part of the country, we sell more 'Shines' than scooters. Digging deeper to find out why this is happening, we saw that many people used two wheelers to distribute milk. In Punjab, the sales of Aviator are high because Punjabi women are taller.
In Goa and Kerala, we sell more Dios than Activas. In fact, in Goa the colours which sell the most inthe rest of the country, sell the least - funky colours sell more in Goa.
When it comes to the East, the numbers are not that high compared to the South and the West. That is because the service sector is still growing and is yet to take full shape.
The common trend is that motorcycles sales are shrinking while that of automatic scooters are growing rapidly. People who use two-wheelers as a means of communication do not want to switch gears. They prefer a comfortable automatic model.
A bike has limitations. It does not provide any carrying space while the scooter does. Another thing that has changed is the consumer base. Earlier, you used to have only the young male riding a two-wheeler, now it's a totally different consumer base using two-wheelers. All these factors have resulted in the shrinking of motorcycle sales and the rise of 'scooterisation'.
A generation earlier, people, after retiring, used to save their pension for the next generation and not spend it. They would sit at home, read newspapers, watch TV and spend time. Today, senior citizens are living an active life and to do that, they need a mode of comfortable communication and the scooter becomes their choice.
Earlier, if a woman was riding a two-wheeler the reaction would be 'yeh kar kya rahi hai aur kaise gharwale hai iske jo usey allow kar rahe hai'. That has changed. The scooter becomes an automatic choice for women because they can ride it wearing all types of clothes.
The typical middle class life has changed. Kids go to school, housewives go for Zumba. In the afternoon the mother goes to pick up the kids from school. The scenario has changed in rural India too. Gone are the days when in villages, women spent time chatting under a tree. Now they are employed in the health sector, education sector and they value their time.
Another change that has happened since then is that there are multiple riders in the same house - the husband, wife and daughter can all ride - the common choice is the scooter. Earlier, it used to be the choice of the husband alone, or maybe the son, but now it's otherwise.
One funny perception is that parents consider the motorcycle to be unsafe and prefer a scooter for their kids. Actually, it is the person riding the vehicle who is responsible for the safety measures. These are the shifts in consumer base and change in perception that have resulted in the rise of 'scooterisation'.
Thirty-five percent of the market is 100 CC motorcycles and 32 percent of the market is 100 CC scooters. So, close to 70 percent of the entire market is 100 CC.
Whenever there is economic growth and purchasing power goes up, there is a trend which follows. The simplest way to tell your neighbour that you have arrived is to park an SUV outside your house. Now an actual SUV is one which has a 4X4 facility. In India, the definition of an SUV is a vehicle with more ground clearance, a bigger body and most importantly, looking down at other cars.
Similarly, rich people buy superbikes only to do some loud vroom-vroom in the evenings. This is what the superbike culture is all about. A five-day work culture has resulted in the growth of leisure riding but this is not a trend - in fac,t it would be 3 percent of the total industry size.
One big change is that there is a real scope for any brand to move from value for money to money for value. There are many buyers who pay the money for what you create to deliver to them. That change has brought in a balance between the rational and emotional aspect of marketing.
As you rightly say, communication used to be specification centric - 'alloy wheel hai disc brake hai, le lo'. Now, storytelling plays an equal part in the thought process. A story about a queen and king who tied the knot and lived happily ever after won't sell. On the other hand, if the same king and queen fell in love and ran away to get married because the parents were against it and then lived happily ever after, the story will sell. Storytelling around the brand has changed with the change of generation.
Communication. For example, how do you communicate that a product like Activa caters to 20-80-year-olds. That is a big challenge. You have to make an impression on the consumer. You cannot show a well-built man riding a scooter - it won't cater to everybody.
Today's grandmas and grandpas are also new generation. They are on WhatsApp, on mobile gaming scoring more points than their grandson or grand-daughter. Choosing the correct medium and communication at the right time is a challenge that you need to crack.
I only get involved in the ideation stage, when the brief is given to the creative agency and then when we discuss planning with the media agency. The team takes care of the rest. But the initial stages are time consuming and you need to toil hard. I also get involved if there is a crisis.
On the sales front, most of the time is devoted to coming up with ideas to keep the team on the ground motivated. Performance is always under the scanner, your targets are always challenging. The on-ground team can give up easily, so the task here is to add a fun element which encourages the team to achieve challenging targets happily.
A Note From the Editor
For a segment driven by passion and word of mouth, one in which brand loyalty is impossible to influence, what role does marketing play, really? And what exactly does the marketing head do? In the era gone by, two-wheeler advertising was about product specifications – today, people look for this information online. What role then, does mass media advertising play for this segment?
YS Guleria, the seasoned sales and marketing in-charge at Honda India, who has spent over two decades at the company, doesn't mince his words. He is frank and verbose and has been in the system long enough to answer questions like these in a straightforward-to-the-point-of-being-funny manner. While discussing SUVs and superbikes during the course of this interview, for instance, he told us that SUVs are cars people buy to, essentially, show off. "SUV is a way to say ‘I am rich, I have arrived...' and superbike culture is all about doing some broom broom in the evening..." he says, with a smile.
On the agency side of things, Guleria gets involved only during the ideation stage – when the creative brief is given to the team – and, "if there's a crisis."
Sales is a big part of his mandate at Honda, one that arguably, given the nature of this category and product, takes up more of his mindspace than marketing does. "Sales is massively stressful, your performance is always under scanner, your targets are always challenging..." he says about this part of his job. Keeping his on-ground staff pumped is the key, we learn. "The on-ground team can give up very easily. I have to make their job fun," he says.
He also spoke to us about the shrinking demand for motorcycles and the parallel "scooterisation" of the market. Compared to most of our recent marketing-based interviews, this one is rooted more in opinion and anecdote than in digits and data. "Too much analysis, leads to paralysis," he says.