Having sneaked past Hero to grab the second spot in thescooter market in the quarter ended September 2015, TVSMotor Company is raising its pitch. With a rash of launches and design and feature upgrades lined up for the coming months and a power-packed star cast of endorsers, the company wants to push its brands harder to rise up the ranks in the two-wheeler market. TVS currently is at number three with a share of around 13 per cent, behind Hero (around 38 per cent) and Honda (around 27 per cent).
The company plans to invest close to Rs 350 crore in brand building, manufacturing and product development and on its tie-up with BMW during the year 2015-16. And when it comes to promoting its upcoming brands, it is leaving nothing to chance as it has put together an all-star cast of endorsers – Amitabh Bachchan, MS Dhoni, Virat Kohli, Anushka Sharma and Mahesh Babu are all on its list. TVS says that it has set itself a target of 14-14.5 per cent share of the two-wheeler market in 2015-2016 and 18 per cent in the next three years. It is in pursuit of this goal, that the company has added to its portfolio of brands, increased its advertising and marketing spending and built an enviable line-up of celebrity ambassadors.
Getting into gear
In the scooter market, TVS (April-September 2015) holds the second spot with 15 per cent share of the market. It is marginally ahead of Hero (12.68 per cent) but way behind segment leader Honda (58.4 per cent). To rise up the charts, it knows it needs to push harder in the scooter segment and close the distance with Honda while increasing it with Hero.
The company has added to its portfolio of scooter brands. It has launched TVS Jupiter ZX range, TVS Star City+ gold edition, the new 2015 TVS Wego and the new TVS Scooty Zest with a smartphone charger. It has also lined up two motorcycle launches -New Apache and Victor – in the next six months. Analysts tracking the company say that the Star City+ and Scooty Zest will help the company in the South which is a key market for the company.
TVS however wants to grow nationally and is therefore putting its weight behind aggressive campaigns and launches. Analysts said that over 2014-15 the company spent about five per cent of its turnover on brand building as compared to around or little over two per cent by peers like Hero and Bajaj. S G Murali, chief financial officer at TVS Motors said that the company believes its advertising thrust and the choice of ambassadors is playing an important role.
Despite intense competition and constrained demand for the industry, TVS was an outperformer in FY15 as well as in the second quarter of FY16 (among the listed peers) say analysts. “This trend is expected to continue in FY16 as well. The launch of ‘Victor’ would also help improve volumes,” says Rohan Korde of Prabhudas Lilladher.
A parade of stars
Aniruddha Haldar, vice president, marketing of TVS Motor says multiple brand ambassadors help the company target each product at a distinct set of customers. He explains the choice of Amitabh Bachchan for TVS Jupiter. “Bachchan is held in high esteem in India. In him is seen, an embodiment of the fact that success comes from talent nourished with great diligence, character and the spirit of wanting to do zyada,” he says. The campaign’s tagline is ‘zyada ka fayda’ which is meant to emphasise the brand’s durability. Similarly Dhoni was roped in for Star City because the vehicle is all about power and Kohli, for TVS Sport, since it is more about style.
Stars help increase brand visibility which, Bharat Gianani, senior research analyst with Angel Broking believes, is a must if TVS is to hold its own amidst the growing competition. Besides, he adds, profit margins for TVS, at 6 to 6.5 per cent, are low compared to Hero’s 13-14 per cent and Bajaj’s 19-20 per cent. To increase profitability, the company has to increase sales. “They may feel the pressure (spending heavily on brand building) in the short-term, but in the long-term they would certainly get gain,” Gianani says.
With TVS Jupiter, the company says it can already see the strategy working as the brand has had the fastest ramp up in sales volumes reaching half a million units in just 18 months. “The outlays behind the brand are seen as long term investment. Given our relative visibility and gain in market share, our marketing investments are proving to be effective, impactful and prudent,” says Haldar.
However, experts warn that companies must tread with caution when it comes to celebrity endorsers. Anand Halve, who runs brand consultancy, Chlorophyll says that ambassadors have become a kind of default minimum requirement. “If you don’t have one, you lose out, and if you have it, you don’t really gain too much,” he says