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A Case on the marketing success story of Bajaj Fans Report


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A Case on the marketing success story of Bajaj Fans

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THE MARKET SCENARIO PRE-2000

Electric Fans is a high market penetration product category and is very high in terms of purchase priority amongst durables. It is a matured product category with a stagnant growth rate during the period 1990-2002. The domestic market size of fans in India is around 20 Million units. The share of the organized sector stands at 45 per cent and of the unorganized sector at 55 per cent. The figures were exactly the opposite in the early Nineties. Low technologies manufacturing process, quality norms, lower overheads and tax evasion methods have enabled the un-organized sector to gain larger share of the market by ensuring a significant price difference. The local/unorganized brands are quite appealing to a large section of the price-conscious Indian consumers, for their lower price points.
The organized sector is dominated by national brands that have built their brand image over a period of time, through sustained advertising and a good dealer network. The market size in value terms of the fans category is quite large at around Rs.1500 Crores and it is the largest selling item in the brown goods category. Bajaj had a basic presence in the Fans Business since the Fifties and was a respected household name in the country. It had the potential to achieve a stronger presence in the Fans market and become a leading player in the category. What was required was to get the marketing, sales and the organization act right.
There are 6 major brands in the organized sector namely: Crompton, Orient, Polar, Khaitan, Usha and Bajaj. All large players in the industry have their own manufacturing facilities, which are helping them in reaping the benefits of economies of scale. Intense competition in the market has transformed the fan industry into a high-volume, low-margin business. To remain profitable and competitive, it becomes imperative to have high-volumes and a reasonable market-share, to enjoy the related economies of scale.
With liberalization of imports, low cost world-class manufacturers of Table, Pedestal and Wall fans from China offer an active threat to Indian manufacturers.
Market Segmentation
The fans market is segmented based on price, quality and aesthetics.
The Fan industry has the following Product based segmentation and shares:
Ceiling Fans - 70 per cent
Table/ Wall / Pedestal (TPW) Fans - 20 per cent
Fresh air Fans - 10 per cent

BAJAJ FANS - BEFORE APRIL 2000

Bajaj Electricals Limited entered the Fans business by distributing fans manufactured by a small fan company called Matchwel Electricals Pvt. Ltd. located in Pune in the 50s. Bajaj Electricals Ltd acquired a controlling stake in this company in the early 60s and this subsidiary was merged with Bajaj Electricals Ltd in the year 1984. Bajaj fans had the lowest share in the organised sector with a market share of only 7.6 per cent and a market share of only 3.6 per cent of the total market.
Bajaj was also present mainly in the premium ceiling fans segment; that meant that it was targeting only 14 per cent of the total Organised Sector market for fans of which Bajaj had a 20 per cent market share and was considered as a strong player.The brand s advertising Share of Spend was only 12 per cent of the total category spends on advertising.The brand was not in the consideration set of many consumers as word of mouth franchise was weak.
The channel used by Bajaj to market the fans was an Indirect Distribution Model thanks largely to the legacy of the Appliances business of Bajaj Electricals, which is still based on an Indirect Distribution model:

Company Distributor Retailer Consumer

The consumer perception of Bajaj brand in the Electrical trade has been good overall. However, the brand s presence in the fans category in the minds of the consumer was missing. As a result the brand was not included in the consideration set of the consumers for fans purchase.
Bajaj also has a very strong all India logistics with a round 20 Branches and a strong after sales service infrastructure with around 200 Service Franchisees and a good synergy of its Appliances product lines in the channel, many of who also sell fans.
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