Subject / Date Slide 1 Customer Segmentation: Insights into Prevailing Trends and Strategy for Future Project Team: Aditya Ghamande Kongpon Kijnum Spenser Slaton Project Mentor: Vaidyanathan S. Iyer

Subject / Date Slide 2 Project Goals Our Approach Industry analysis and brand positioning in industry Future Opportunities & Recommendations Hypothesis: Where TVS is and way forward Question & Answers Today’s Agenda

Subject / Date Slide 3 Identify factors that influence customer’s buying decision Identify industry offerings and products’ positioning Perform gap analysis to understand potential gaps for future by projecting customer’s needs vs. industry offerings. Recommend new models for the future based on gap analysis Understand socio-economic trends and customer behavior to develop future industry view Industry product comparisons and where TVS stands Project Goals

Subject / Date Slide 4 Our Approach Find out factors that influence customer’s buying decision: Mileage Style Power Brand Handling Price Plot the combination of parameters for two wheelers from each manufacturer Perform gap analysis to understand potential gaps in industry offering Recommend future motorcycle model based on gap analysis Source: Company Reports (TVS Customer Interview Data)

Subject / Date Slide 5 Defining Style of Motorcycle and Scooters Seat: Flat Exhaust: Straight Tank: Simple No Disc Brakes Head Light Assembly: Simple Seat: Deep curve Exhaust: Angle/Chrome Tank: Large & Chiseled Disc brake & Engine: Large Head Light Assembly: Chiseled and curved Seat: Deep curve Exhaust: Angle/Chrome Tank: Chiseled Wheels: Disc brake Head Light Assembly: Chiseled and curved Seat: Soft curve Exhaust: Slight angle Tank: Simple No Disc Brakes Head Light Assembly: Slightly curved Seat: Deep curve Exhaust: 2 Angled pipes Tank: Large & Chiseled Disc brakes & Engine: Huge Head Light Assembly: Stylish, Chiseled and curved Down-to-earth Sincere / Cheerful Competent / Successful Sophisticated Freedom / Excitement Generic Daring Exciting Conventional Luxury Flashy

Subject / Date Slide 6 Defining Style of Motorcycle and Scooters

Subject / Date Slide 7 Defining Handling/Comfort of Motorcycle & Scooter WeightGearlessGeared Less than 110 KG – 130 KG – 160 KG62 More than 160 KG51 A vehicle with low weight is easy to handle on roads A vehicle without gear is easy to ride on roads

Subject / Date Slide 8 Current Industry state based on Multiple Dimension Plots

Subject / Date Slide 9 1. High Power Scooter Current Situation Current market has low power and standard mileage (average of 40 kmpl) scooters Lack of high power, high weight, lower ‘handling’ rating vehicle Increased power means higher speed, better riding experience, and similar mileage of 35 kmpl Plot and opportunity Explanation Above plot portrays that market does not have high power scooters with ‘Handling’ rating between 4 and 8 We recommend TVS to come up with new high power scooter

Subject / Date Slide 10 Product Characteristics Weight: 130 – 160 KG (Higher than Suzuki Access) Power: more than 10 KW Higher weight means lower handling rating of 6 Price: 60, ,000 (Based on comparison with Suzuki Access) Mileage: Around 40 kmpl (To satisfy average mileage requirement) Style: Higher than 3.5; Large body size, large and inclined exhaust pipe, and visible engine; These parameters signify higher style ratings Target Customers Based on our analysis of current sales data, TVS can target customers* who are: In the age group of Earn more than INR 25,000 monthly income Are self-employed *Note: These customers bought scooters with power rating of more than 6 KW

Subject / Date Slide 11 Product Visualization

Subject / Date Slide 12 Current Situation High Power bikes that are very stylish targeted toward high end customers. No High power generic/conventional looking motorcycle for mainstream average customers Introduce ordinary motorcycle with high power Plot and opportunity Explanation Above plot portrays that there is no high power motorcycle with a low style quotient. We recommend TVS to come up with new motorcycle that is extremely powerful but with lower style rating 2. High Power Conventional Motorcycle

Subject / Date Slide 13 Product Characteristics Style rating between 1 and 2: Seating: Some soft curves in the seating for new bike Slightly inclined but bigger exhaust pipe to signal high power motorcycle Simple tank and front mirror assembly Weight: High (Between 125 to 130 KG) Power: Around 10 KW Displacement: CC Price: Between INR 60,000 – 65,000 Mileage: Around 55 kmpl Target Customers Based on our analysis of current sales data, TVS can target customers* who are: In the age group of Earn more than INR 25,000 monthly income Are self-employed *Note: These customers bought scooters with power rating of more than 10 KW

Subject / Date Slide 14 Product Visualization

Subject / Date Slide 15 Current Situation High Power, high style motorcycles that provide low mileage Engineering tradeoff: Higher power bikes cannot give high mileage. High investment required for low power bikes that provide extremely high mileage Need exists: Customers think mileage and acquisition cost while buying motorcycles. Plot and opportunity Explanation Above plot portrays that there is no motorcycle or scooter with extremely high mileage. We recommend TVS to come up with new motorcycle that is powerful but gives higher mileage compared to that given by current motorcycles. Introduce motorcycle with high mileage 3. Hybrid Motorcycle or Scooter

Subject / Date Slide 16 Product Characteristics Mileage: More than 90 kmpl (Compared to 87.7 kmpl mileage of TVS Sport) Style: Could vary from 2 – 4 Weight: 130 – 160 KG Price: At least 80,000 INR Target Customers Based on our analysis of current sales data, TVS can target customers* who are: In the age group of Having monthly income between INR 16,000-25,000 Are self-employed Customers would be ready to pay high upfront costs to gain mileage advantages in future *Note: These customers bought motorcycles with mileage of at least 75 kmpl

Subject / Date Slide 17 Product Visualization

Subject / Date Slide 18 Current Situation Lack of sporty and powerful scooter in the market TVS can come up with such scooter that looks sporty and powerful but is of approximately 125 cc. Plot and opportunity Explanation Above plot portrays that there is no high power motorcycle with extremely high mileage. We recommend TVS to come up with new motorcycle that is powerful but gives higher mileage compared to that given by current motorcycles. Introduce scooter with high style 4. Sporty & Powerful Looking Scooter

Subject / Date Slide 19 Product Characteristics Price: Around INR 50,000 as the bike is not actually powerful Power: In the range of 5-7 kw Displacement: 125 cc Style: A rating of at least 4 Mileage: Around 40 kmpl Target Customers Based on our analysis of current sales data, TVS can target customers* who are: In the age group of Having monthly income between INR 25,000 Students Are self-employed *Note: These customers bought scooters with power of at least less than or equal to 6

Subject / Date Slide 20 Product Visualization

Subject / Date Slide 21 Improvement in affluence levels across income groups is increasingly driving structural shifts across industries Increasing share of ‘Seekers’ among the population INR MHI INR MHI >40000 INR MHI Exponential Increase in share of ‘Strivers’ among the population

Subject / Date Slide 22 Global Two Wheeler Penetration and GDP Per Capita SOURCE: Credit Suisse Aug 2012 With hardly 7% penetration, Indian Two Wheeler Industry is sitting on the launch pad of an exponential growth phase

Subject / Date Slide 23 Competitor & Product Positioning Goal: Analyze positioning of major competitors to understand TVS’s capability to seize future opportunities

Subject / Date Slide 24 Motorcycle Segment: Hitting the Target 80% of all motorcycles sold: Price: 40K – 60K Power: 100cc – 150cc Weight:100kg – 140kg 20% Represent Premium & High Power bikes

Subject / Date Slide 25 Motorcycle Segment: Competitor Positioning TVSHeroHondaBajaj # of Bikes3446 Monthly Company Sales50K400K100K200K Close up Comparison BrandMotorcycle NameSalesStyleMileage Displacement Bajaj Platina 100 CC35K Hero Hero CD Deluxe/Dawn86K TVS Sport17K TVS Star city15K

Subject / Date Slide 26 Motorcycle Segment: Competitor Positioning TVSHeroHondaBajaj # of Bikes3446 Monthly Company Sales50K400K100K200K Close up Comparison BrandMotorcycle NameSalesStyleMileage Displacement Bajaj Platina 100 CC35K Hero Hero CD Deluxe/Dawn86K TVS Sport17K TVS Star city15K

Subject / Date Slide 27 Motorcycle Segment: Competitor Positioning TVSHeroHondaBajaj # of Bikes3446 Monthly Company Sales50K400K100K200K Close up Comparison BrandMotorcycle NameSalesStyleMileage Displacement Bajaj Platina 100 CC35K Hero Hero CD Deluxe/Dawn86K TVS Sport17K TVS Star city15K

Subject / Date Slide 28 Motorcycle Segment: Competitor Positioning TVSHeroHondaBajaj # of Bikes3446 Monthly Company Sales50K400K100K200K Close up Comparison BrandMotorcycle NameSalesStyleMileage Displacement Bajaj Platina 100 CC35K Hero Hero CD Deluxe/Dawn86K TVS Sport17K TVS Star city15K Key Take-away: TVS bikes are competitive or better in target segment. TVS’s competitive offerings do not translate to high sales. Hypothesis: Competitor positioning is similar within motorcycle segment. Factor outside product characteristics is driving market sales

Subject / Date Slide 29 Scooter Segment: Analysis TVSHeroHonda # of Scooters344 Monthly Company Sales35K56K118K Brand Motorcycle NameSalesStyle PriceMileageDisplacement Honda Honda Aviator9, , Suzuki Access N/A1.550, Honda Honda Activa100, , Hero Hero Maestro28, , TVS Wego15, , Honda Honda Dio8, , Hero Hero Pleasure28, , TVS Scooty Streak5,000342, TVS Scooty Pep+15,000340,

Subject / Date Slide 30 Scooter Segment: TVS scooter sales are lower than expected. TVS Streak & Pep+ are more stylish and lower priced than competitors. Style is the 2 nd largest determining factor when deciding a two-wheeler. TVS Wego lags behind Maestro sales despite being similar in all characteristics. Hypothesis: Competitor positioning is similar within scooter segment. A factor outside product characteristics is driving market sales

Subject / Date Slide 31 Brand: The BIG Difference Most Preferred Motorcycle Company Source: Francis Kanoi Marketing Research: A Report on Performance and Image of Motorcycle Brands (2011)

Subject / Date Slide 32 Brand: The BIG Difference

Subject / Date Slide 33 Brand: The BIG Difference Brand you will never buy Source: Vinayak Tiwari, PGDM-MM: Brand Image of Motorcycles and the Colour Survey for the Bike Colours

Subject / Date Slide 34 Brand: The BIG Difference Brand you will never buy Source: Vinayak Tiwari, PGDM-MM: Brand Image of Motorcycles and the Colour Survey for the Bike Colours Hypothesis Competitor positioning is similar within industry among major competitors. TVS will need to strengthen it’s brand to effectively seize future opportunities, as brand is likely one of the largest competitive advantages, not product offerings.

Subject / Date Slide 35 Question n Answers