This report provides you an overview of the brand Royal Enfield.

1. Brand Management
Project- Royal Enfield
Tanmay Vankalas
Akshit Somani
129278069
Bhuvan Gupta
1292780
Jyotirmay Mandal
1292780
Manish Ahlawat
129278062
Samveg Sethi
SJMSOM, IIT Bombay
129278005
129278

2. Royal Enfield is the oldest surviving brand of motorcycles in the world. With its heritage as a
weapons maker and ‘Made like a gun’ as tag line, Royal Enfield started in the 1890s making bicycles,
lawn mowers and motorcycles in England. Since the 1940s, the company hasn’t much altered the
technology in the single- cylinder engined two-wheelers except for modern features such as direct
fuel injection and switch ignition. The British military used the bikes, including the ‘Flying Flea’
designed for parachute drops with airborne troops during the Second World War.The manufacturer
Enfield India was bought over by Eicher Motors Limited in 1994. The brand is now owned by Eicher
Motors. Thus, it is now an Indian brand. The legacy of weapons manufacture is reflected in the logo,
a cannon, and their motto "Made like a gun, goes like a bullet". Use of the brand name Royal Enfield
was licensed by The Crown in 1890.
ROYAL ENFIELD LOGO :
Tag-line: ‘Made like a gun’
The first customers of the Bullet was the Indian Army. More often than not people from defence
forces, police and head or landlords from villages in India were seen using this mean machine which
helped in defining the brand as an aspirational brand. The bullet was often seen as the vehicle of
power and affluence. The love for the bullet is often passed on as lineage from generation to
generation. Often bullet owners have felt the magic for the thump as kids when their parents or
elders in the family got home a bullet.
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3. Brand communication
Designing brand communication for such an iconic brand is always a challenge since the right mix of
portraying heritage and legacy vs modern well equipped machine has to be chosen. The Bullet has
always been associated with independence, self expression, power and passion. Even the marketing
campaign ‘Leaving Home’, ‘Selfism’ focussed on the same aspect as it showed a boy cutting his
umbilical cord to ride his dream bike. The brand communication was based on the insight that many
young men stay at home for too long missing out on the fun of an independent life. Recently the
brand communication revolves around being independent, being free and power. Earlier in 1980s, it
was more about power and authority. But during 2000, Royal Enfield changed its communication
from targeting people above 30 years to the youth. The brand then started communicating the
values of self-respect, independence , power and adventure. The different branding activities of
Royal Enfield are all encircled around this brand communication.
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Brand Building activities of Royal Enfield
Advertisements
Royal Enfield rarely uses television and radio advertisements for its promotions compared to other
two wheeler manufacturers in India. The first Ad of Royal Enfield was released in the year 1960
showing Bullet as ‘ShaankiSawari’ communicating the exact brand personality and positioning as a
premium product and associating it with the pride of the owner. Later on after the revival of the
brand in early 2000 they launched the Ad campaign ‘Jab Bullet Chalet oh Duniya Rasta De’ again
highlighting the pride and respect for the brand amongst its owner and the masses. Thus RE has
never been a brand which advertises heavily through television or media.
Branding through Royal Enfield Rider Mania
One of the most important branding activity of Royal Enfield is the Royal Enfield Rider Mania. To
keep users engaged with the brand, Royal Enfield organizes adventure filled, fun and leisure
motorcycle trips all around the year with Himalayan Odyssey being the most prominent. Royal
Enfield also organizes Rider Mania in Goa each year in December where all the Bullet enthusiasts all
over India assemble for a 4 day long fun filled union of bullet lovers. All bullet clubs in the country
make it a point to be a part of this grand event organized by RE. There are long waitlists of
enthusiasts wanting to go on such trips. A lot of publicity is also achieved through these events as a
lot of news channels showing automobile programmes are present here to cover the entire grand
event.
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4. Branding through Royal Enfield Riders Club and Communities
Following the Harley Davidson model of riders club, Royal Enfield also heavily promotes the Club
culture amongst its riders. The first Royal Enfield club was started in Dec 1995 and since then a lot of
similar clubs have evolved all across the country. Today, there are a large number of riders club
formed all across India. These clubs not only promote the feeling of brotherhood amongst fellow
bullet riders but also organises a lot of rides to different places, training sessions, sessions for
improving riding skills of the riders etc. All these clubs arrange meets, trips, competitions with fellow
riders, clubs and also become a part of the Rider Mania organised by Royal Enfield every year. It is
one of the reasons for the cult brand that Royal Enfield is today. These clubs are also a major reason
why people want to own a Bullet so that they can be a part of one of these coveted clubs. Some of
the oldest and notable clubs are Roadshakers, Indie-thumpers, Shimoga Bulls etc.
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5. Online Media and Social Media marketing
Royal Enfield actively uses online media and social media marketing for branding. Through their
website they organise contests like best trip story writing contest and encourage people to go on
rides and express their stories to everyone through their trip story blog on the official website of RE.
They also have a members directory where a consumer can enrol himself in the members directory
once he has purchased the bullet and then he can stay informed and connected with all the activities
of Royal Enfield. Apart from the official website of Royal Enfield there are various online
communities and groups on Facebook of Royal Enfield riders where they discuss their experiences,
share photos, videos, discuss problems related to their bike etc. Thus Royal Enfield has effectively
used the online media to bond all the bullet riders together and spread the feeling of brotherhood.
Royal Enfield Merchandise
Following the Harley Davidson’s model of branding, Royal Enfield has also started selling their own
merchandise for riders including riding jackets, helmets, t-shirts, gloves etc promoting safety for
riders. All these merchandise are sold in the Royal Enfield showrooms all over the country. The RE
showrooms have started allocating a separate section in the showrooms for displaying all these
merchandises of Royal Enfield. So when a person walks into the showroom for the delivery of his
bike, seldom do we observe him walking out without picking up one of these RE merchandise.
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6. Branding through Film Industry
Bollywood and Hollywood movie makers have been using Royal Enfield since a long time. May it be
Brad Pitt’s ‘Curious case of benjamin button’ or Bollywood’s ‘Karan Arjun’, Royal Enfield has always
been shown as a hero’s vehicle. Royal Enfield was first shown in the movie ‘Sholay’ and the song
‘YehDosti Hum nahiTodenge’ was shot on the bike.But recently Celebrity endorsements of the
Bullets through films have reached the next level as due credits are given to the Royal Enfield and its
logo is highlighted in the film. Recently, Katrina Kaif drove it in the movie ‘Zindagi Na MilegiDobara’,
Ajay Devgan in ‘Singham’, KanganaRaut in ‘Tanu Weds Manu’. Also Shahrukh Khan’s ‘Jab takhaiJaan’
and FarhanAkhtar’s ‘BhaagMilkhaBhaag’ saw extensive use of this cult bike.
Customer Insights gathered from interviews :
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There is a sense of aura around the brand.
Very few people drive Bullet but many many more aspire for it.
The brand offers a riding experience which no other bike can.
The thumping sound, the road presence, the classic crome finish, the sheer 'ego' boost
which the brand gives its rider makes him feel 'arrived'.
It gives a feeling of power, authority, independence and pleasure while riding a Royal
Enfield.
People like to be associated with the legacy and community of the brand Royal Enfield.
People are ready to wait for a waiting period of 6-12 months for Royal Enfield.
Every Bullet loyalist has agreed to the fact the once you drive a Royal Enfield, it’s hard to
switch to another bike.
The bike lasts for a really longer time, from generations to generations and thus becomes an
integral part of the life cycle of the consumer.
The percentage of brand loyal people of Royal Enfield is large compared to other motorcycle
manufacturers in India.
Royal Enfield remains an aspirational brand for a lot of people using 150cc and 200cc bikes.
Brand awareness and Brand loyalty is very high.
Very high Top of mind recall.
Word of mouth publicity is the major factor for high brand equity of Royal Enfield.
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7. Perceptual Mapping
In the perceptual mapping matrix Royal Enfield is bound to take up the elite class top right corner
beating all the other brands, hands down. The brand value and image which Royal Enfield has built
over the years is out of the bounds for any other brand. They are currently the most respected
motorcycles in the market and lie in the premium sector. They have established a cult image for
themselves and carved out a niche for themselves in the market giving the owners more than simply
a means of transport. The brand is perceived to give a sense of pride and authority to the owner and
adds up a definition to the person’s character. In India Royal Enfield has the same image as Harley
Davidson has in west, it gives a sense of pride, freedom, passion and distinctiveness. They have also
set their image as a very manly bike, as being very heavy it becomes a little difficult to handle making
it possible only for well-built people to handle it. This further gives a hint of muscularity and pride to
the owner, to be a part of the few who can handle the beast. The people who don’t or rather can’t,
own a Royal Enfield aspire to own one and the owners are generally looked at with respect. Many
brands like Bajaj and Kawasaki tried to enter the segment with their cruiser bikes like Avenger and
Enticer respectively but could not come anywhere near to the leader ‘Bullet’. Although they fulfilled
the dream of owning a cruiser bike for those who couldn’t afford a Bullet, but were unable to tap the
image which Royal Enfield had its old on. The brand has worked hard in building this perception from
the very beginning, for instance the motorcycle was first to be seen owned by the powerful people
only, like police officials, zamindars etc. making it an aspiration for others. Royal Enfield advertises
their motorcycles in a completely different manner, unlike other brands they never show comfort
and economy, they simply concentrate on the sheer power of the machine and the respect it brings
along with it. Association of customers with the brand has grown very deep with the years and
customer loyalty simply breaks the charts. Transition from Royal Enfield to some other motorcycle is
a very rare phenomenon as the attitude which is perceived for the brand, the association with
power, strength and ruggedness with unique touch of luxury is not to be seen in any other brand.
Royal Enfield can very well be termed as an epitome of brand loyalty and this can be sensed by the
fact that unlike for any other brand, people are ready to wait for 6-8 months to get their Royal
Enfield.
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8. Other brands in the market like Bajaj, Hero Honda, TVS, Suzuki, Yamaha etc. have their customer
base diversified and they cater to different market segments with different line of products ranging
from 100 cc to 200-250 cc. This widened their customer base but also loses the sense of individuality
among the owners and the motorcycles are bound to remain just a mean of transport. On the
contrary Royal Enfield cater to only one segment and maintain their core competency, i.e. lifestyle
biking. They give the riders a sense of belonging that the motorcycle has been specially built for
someone like him/her. They don’t have any low range products maintaining the premium image of
the brand and even in the future they plan to go further up the ladder of power and thrill.
Marketing Program Investment:
Product:Motor cycle which represent power, matchless stability and rugged looks with state of the
art technology
Communication:well positioned cult brand to capitalize on trend towards lifestyle biking
Trade: The bike is traded through agencies and dedicated showrooms
Employee: Employees of the company are also highly involved in communicating the brand as well in
keeping the brand activity high
Customer Mindset:
Awareness: Very high, due to high brand equity and strong brand loyalty
Associations: Royal Enfield is associated with power, strength, luxury, ruggedness. It is the bike
holding record of carrying 48 persons on a single bike for over 1000 mts.
Attitudes: It is perceived as a proud asset, it initially was a favourite of police and army personnel
which gave it a strong association with power and authority
Attachment: Customers are very loyal to this brand, the transition from enfield to other competitor
is generally low
Activity: There are regular engagement events that keep happening ex. tours organized by Royal
Enfield or groups of Royal Enfield bike owners
Market Performance:
Price Premium: Royal Enfield does charge a slight price premium on its products. This is owing to the
fact that the bike offers higher engine capacity (350cc to 500cc) and also being Handmade; it has
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9. positioned a cult and superior brand image in customers mind and hence is able to charge a price
premium on its products
Price Elasticity: The Royal Enfield products have moderate Price Inelasticity, which means that since
they have superior brand image in the customers mind, even if the price of the products are
increased, to a certain level the demand for the products will remain mostly inelastic and will only go
down considerably if the price of its products are increased too high. Hence Royal Enfield can
leverage the Price Inelasticity of its products to increase its revenues.
Market Share: In the premium segment of motorbikes (350cc to 500cc), Royal Enfield currently has
about 95% market share in India which shows that it has virtually a monopoly in this market segment
and is also trying to attack the market share of higher segments (500cc to 1600cc) against Harley
Davidson by introducing newer models.
Expansion Success: While the current annual installed capacity is 60k units for Royal Enfield, over
the last couple of years, the company has been consistently increasing its monthly output. Despite
production increasing by 50% YoY in recent months, the average waiting period for Royal Enfield
motorcycles is 6-12 months.
To meet the increasing demand and further improve product profitability, Royal Enfield is setting up
a new plant with capacity of 150k units/year in Chennai at a capex of INR 1.5 billion.
Capacity expansion will enable it to improve availability and expand its reach – both domestic and
global. In India, it currently has 250 dealers, catering largely to Tier 1 & 2 cities. It is yet to tap the
potential of semi-urban/rural markets, where affordability for its product is improving.
Profitability: The Profit After tax (excluding Dividend) of Royal Enfield is about INR 1.064 billion at
the end of FY2013, which has almost doubled from FY2012 end PAT of INR 0.529 billion, shows that
the profitability of the Royal Enfield has been increasing and it is forecasted that the profitability
(PAT) will touch about INR 2.28 billion mark by FY2015 end which is an extremely good sign from the
investors point of view.
Shareholder value:
Predictable Revenue: Having 95% of the Market Share in the premium segment of 350cc to 500cc
motorbikes and also a waiting period of 6-12 months shows that the demand for Royal Enfield is
growing constantly and it has a very predictable Revenue stream with Revenues predicted to grow
by 100% by end of FY2013.
Stock Price: In a year’s time from Dec 2012, since the work of plant expansion has started and with
higher demand, the stock of Eicher Motors (parent company of Royal Enfield), has increased from
INR 2841 to INR 4126.9 per share. This shows the tremendous faith the investors have in the Eicher
Motors and Royal Enfield and has led to very good returns for the investors.
P/E Ratios: The P/E Ratio of the parent company Eicher Motors is 76.97 and EPS of INR 53.61, which
is pretty good from the investor’s point of view.
Market Cap: The Market Capitalization of Eicher Motors is INR 111.4263 billion.
Program Quality:
Clarity: Advertising program and marketing communication of royal enfield is very clear. It is clearly
perceived as a powerful bike for enthusiasts. It's owners take proud in being amongst the few to
dare to handle this bike.
Consistency: Program has been consistent in its communication, royal enfield still represents what it
represented 20 years back. Just that the customer base has increased over the period of time, but
the brand equity has only increased.
Distinctiveness: Product clearly differentiates itself from other motorcycles.While other motorcycles
focus on speed and comfort alone, royal enfield has always leveraged on the advantage of being the
powerful and respectable bike. It distinguishes itself clearly against other popular motor cycles like
Pulsar or FZ 16 or Hero Honda.
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10. Relevance: The product has been communicated well and also the marketing program has been very
relevant to the product's positioning. The product is considered a niche to some extent and
therefore the communication is more towards a targeted set of customers rather than the entire
population. Marketing program for Royal Enfield is more about customer engagement and loyalty.
Market Conditions:
Competitive Response: Although Royal Enfield is the only player in 350cc to 500cc, many players
have entered in the 200cc to 250cc motorbikes and then there are players in the 500cc -1600cc
range. Royal Enfield has been able to maintain its market share in the premium range but may lose
out to other players if it loses its premium cult image in customers mind.
Channel Support: Royal Enfield has about 250 Dealers serving the customers in mainly Tier 1 and 2
cities. It is yet to tap the potential of semi-urban/rural markets, where affordability for its product is
improving. Also the After Sales Service of Royal Enfield is not great and numerous Customer
dissatisfaction reports have been recorded and Royal Enfield needs to work on this.
Segment Size and Profile: Royal Enfield has a niche segment in motorbikes with a demand of about
250,000 motorbikes a year. But due to the Price Premium that Royal Enfield charges, it is able to
achieve higher profit margins. Royal Enfield mainly comes in the Premium and Cult Category with a
Niche market aimed at Lifestyle Biking among customers with rising income and aspiration levels.
Investor Sentiment:
Market Dynamics: According to the Society of Indian Automobile Manufacturers’ data, the premium
segment, which comprises motorcycles with the engine capacity above 350cc till 1,600cc, grew by
49% to 54,425 units for the April-July period this year, at a time when the overall two-wheelers,
comprising scooters and motorcycles, decline by 2%.
Growth Potential: Royal Enfield has a very good growth potential with an expected growth in Sales
Volume and PAT of about 100% by end of FY2015.
Risk Profile: There is only a Risk of a very large capex being involved of INR 1.5 billion for
manufacturing expansion but this risk will also help to meet the demand and increase revenues and
profitability for the company for the next 3-4 years. Hence this risk needs to be taken
Brand Contribution: Due to the Cult and Superior Brand Image in India, Royal Enfield has carved out
a niche market for itself owning largely to the Brand value built over the years. The Brand
contributes around 40% EBITDA to Eicher Motors and is a significant part of their portfolio which will
help them maintain higher profitability and revenues in future.
Recommendations:
1) Improve the After Sales Service by opening more service centres, as lot of customers have
complained about lack of service and lot of problems with the Royal Enfield bikes. Availability of
spares
is
also
a
issues
especially
for
old
bullets.
2) In India, Royal Enfield currently has 250 dealers, catering largely to Tier 1 & 2 cities. It is yet to tap
the potential of semi-urban/rural markets, where affordability for its product is improving. Try and
tap that market.
3) Due to numerous complaints on delivery of bike - scratches, ignition problems, break down and
other complaints, try and make the manufacturing more automated - from current levels of 30%
automation to 50-60% automation, so that many of the problems can be eliminated.
4) Try and build bikes to compete against Harley Davidson (500cc - 1600cc) - INR 6 lakh above bikes,
as they can have the potential to capture that very niche market segment as well before Harley
Davidson does.
5) Royal Enfield brand ambassadors should come and join in some rides happening to different parts
of India.
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11. 6) The RE merchandise should be available outside RE showroom too like at malls, etc so that people
get greater access to these merchandises.
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