48891221 c6 b2b final project version 1 0

7/28/2019 48891221 C6 B2B Final Project Version 1 0

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2010

B2B Marketing : Project

Submission

WHEELY FOLDABLE ECO-FRIENDLY

CYCLE FOR EASY TRANSPORTATION

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Group No C6Aravind Babu PGP 25289

Arunkumar S PGP 25288

Prabakar P PGP 25246Radhakrishnan Raman PGP 25205

Ram Sundar PGP 25294

Ramsaravana R S PGP 25263

P R Srinivasan PGP 25313

Vivek Kumar A PGP 25280


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Table of Contents

1 Introduction................................ ................................ ................................ ................... 5

1.1 Product Profile: Wheely ................................ ................................ .......................... 5

1.2 Product need ................................ ................................ ................................ ........... 5

1.3 Company profile: TI Cycles of India................................ ................................ ....... 6

1.4 Strategic Fit ................................ ................................ ................................ ............ 6

1.4.1 Tangible: ................................ ................................ ................................ ......... 6

1.4.2 Intangible: ................................ ................................ ................................ ....... 7

2 Customer Analysis ................................ ................................ ................................ ........ 7

2.1 Objective ................................ ................................ ................................ ................ 7

2.2 Methodology ................................ ................................ ................................ .......... 7

2.3 Customer Expectations ................................ ................................ ........................... 8

2.3.1 Super Markets................................ ................................ ................................ .. 8

2.3.2 IT Parks ................................ ................................ ................................ ........... 82.3.3 Airports ................................ ................................ ................................ ........... 8

3 Competitor Analysis................................ ................................ ................................ ...... 9

3.1 Intensity of competition-High ................................ ................................ ................. 9

3.2 Bargaining power ofsuppliers-Low ................................ ................................ ........ 9

3.3 Bargaining power of buyers-High ................................ ................................ ........... 9

3.4 Threat of new entrants-Moderate ................................ ................................ .......... 10

3.5 Threat ofsubstitutes-High ................................ ................................ ..................... 10

4 MarketingObjective................................ ................................ ................................ .... 11

5 Generic Marketing Strategies ................................ ................................ ...................... 12

5.1 Market segments................................ ................................ ................................ ... 12

5.2 Target Market ................................ ................................ ................................ .......12

5.3 Product Differentiation ................................ ................................ ......................... 12

5.3.1 Product Form ................................ ................................ ................................ . 13

5.3.2 Product Features ................................ ................................ ............................ 13

5.3.3 Performance ................................ ................................ ................................ .. 13

5.3.4 Quality................................ ................................ ................................ ........... 13

5.3.5 Conformance Quality ................................ ................................ ..................... 135.3.6 Durability ................................ ................................ ................................ ...... 13

5.3.7 Reparability ................................ ................................ ................................ ... 13

5.3.8 Style & Design ................................ ................................ .............................. 13

6 Product Policy ................................ ................................ ................................ ............. 14


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6.1 Product Customization ................................ ................................ .......................... 14

6.1.1 Supermarkets ................................ ................................ ................................ . 14

6.1.2 Manufacturing plants & IT parks ................................ ................................ ... 15

6.1.3 Airports ................................ ................................ ................................ ......... 15

6.2 Product Technology & Design ................................ ................................ .............. 15

6.2.1 The Cycle ................................ ................................ ................................ ...... 15

6.2.2 The Display Screen ................................ ................................ ........................ 16

6.2.3 RFID Scanner ................................ ................................ ................................ 16

6.3 Manufacturing ................................ ................................ ................................ ...... 16

7 PricingPolicy ................................ ................................ ................................ .............. 17

7.1 PricingObjectives................................ ................................ ................................ . 17

7.2 Total Market Demand (TMD) / SalesPotential ................................ ..................... 17

7.3 Cost Structure Analysis................................ ................................ ......................... 18

7.4 CompetitorsPricing Strategy ................................ ................................ ............... 19

7.5 Pricing Methodology ................................ ................................ ............................ 20

8 Marketing Communication ................................ ................................ .......................... 21

8.2 Promotional Mix:................................ ................................ ................................ .. 22

8.2.1 Advertising: ................................ ................................ ................................ ... 22

8.2.2 Personal Selling: ................................ ................................ ............................ 22

8.2.3 SalesPromotions: ................................ ................................ .......................... 22

8.2.4 Public Relations: ................................ ................................ ............................ 22

9 Sales force design................................ ................................ ................................ ........ 24

9.1 Sales force objectives................................ ................................ ............................ 24

9.2 Sales forcestrategies................................ ................................ ............................. 24

9.3 Sales forcestructure................................ ................................ .............................. 24

9.4 Sales forcesize ................................ ................................ ................................ ..... 25

9.5 Sales force compensation ................................ ................................ ...................... 25

9.6 Sales force management................................ ................................ ........................ 25

9.7 Sales forceevaluation ................................ ................................ ........................... 26

9.8 Enhancingsales forceeffectiveness ................................ ................................ ...... 26

10 Annexure ................................ ................................ ................................ .................... 2710.1 Annexure1: Excerpt of interview with former Employee of TI cycles............... 27

11 Abstract................................ ................................ ................................ ....................... 28

12 Bibliography ................................ ................................ ................................ ............... 29


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1 Introduction1.1 Product Profile: WheelyWheely is bicycle cum shopping cart which caters to the

transportation and storage needs of shoppers in a shopping

mall or retail store. Wheely has the built similar to a bicycle

but has a cart in the front and back portion to facilitate

carriage of shopping articles. The product is foldable and

occupies1/4th of thespace ofa normal bicycle. This product

can be modified to suit other needs to, for e.g. the shopping

cart can be substituted with laptop holder etc. The

manufacturing of this product can be taken up by any large

cycle manufacturer in the country and can be sold to

hypermarketsand also for movement between two divisions in large manufacturing facilities

and in software complexes.

1.2 ProductneedAt present, shoppers in retail storesand

malls need to carry their purchased

articles on their own or use a trolley

and walk from one end of the store to

another. This results in fatigue and

tirednessand asa result customer loses

their interest and joy of shopping.

Similarly, in large manufacturing facilitiesand also in intern-division movement in Software

Parks, one needs to walka lot between divisionsas they arespread acrossa largerareaand

this result in employee fatigue and decrease in employee productivity which affects the

efficiency of the organization.

Wheely isan ideal product which can be used to address the needs mentioned above. It is

compact, flexibleand environment friendly.


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1.3 Companyprofile:TICyclesofIndiaTI Cycles are one of the largest manufacturers

of bicycles in India, and are a part of the

Rs.15646-crore Murugappa Group. It has 90

stores (BSA Go, Track & Trail, etc.) in five

different formats and over 240 Hercules BSA

zones (shop in shop) inside major dealer outlets.

TI is market leader in Specials segment -

Children cycles, ladies cycles, and sports cycles

amongst many. TI hasalso ventured into E-scooterssegment. It isexpected that thespecials

segment isset to grow in India in a big way. For the FY2009-10, the company had revenues

of Rs.2453.65 croresand a net profit of Rs.81.21 crores. The company is thesecond largest

bicycle manufacturer in India with a 30% market share in 2009, next only to Hero Cycles.

1.4 Strategic FitWheely is essentially an extension of the modern bicycle and hence it fits into the product

portfolio of TI cycles. TI cycles can use itsexisting production capabilitiesand expertise for

manufacturing Wheely and its economies ofscale will ensure theavailability of Wheely at

lower prices. TI is the pioneer in thissegment (Specials) and would be interested to invest in

thisarea if it seesa potential. TI is one of the leaders in providingengineeringsolution to the

automobile industry, so it has competency in thissegment. And also, with a network of 2500plus dealers and backed by a strategic outsourcing policy, the company has a nationwide

presence. It has 3 fully functioning plants across India at Chennai, Nasikand Noidaand 7

regional officessituated across the country, ensuring wide presenceacross industrial formats.

TI Cycles have the brand name and competence to manufacture and market bulk products.

Wheely would prove to bean innovative product as well as market extension to their current

portfolio of market offerings.

1.4.1 Tangible:- 'Financials' for the new product shouldnt bea problem as TI cycles isa well-establishedcompany in cycles industry and hasgood reputation in the market


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- Physical (Location, Plant, Machinery) - TI Cycles could leverage its existing production

capabilitiesand expertise for manufacturing Wheely

1.4.2 Intangible:- Technology: While TI Cycles haveexpertise in cycles, it will have to develop expertise in

RFID, wireless technologiesand designing cycles that could easily be put to use in different

environmentsand has provisions to add new featuresat a later point of time.

- Human Resources: Product development team that is specialized in the RFID/wireless

technology and is familiar with the needsand different potential uses of Wheely

- Reputation & Culture: While TI cycles hasagood reputation in the cycles industry, it has to

imbibe innovation into its culture to bring in different potential uses to remain a market

leader in this lucrativesegment.

2 Customer Analysis2.1 Objective

1) To determine the customer-specific product modifications required for Wheely2) To arriveat an appropriate Target Marketing, Differentiation and Positioningstrategy

for Wheely

2.2 MethodologyConducted In-depth interviews with

a. Employeesand Managers of Big Bazaar, Spencers Hyperb. Employees of IT Firms Infosys, TCS and Wiproc. Facility management service providers

Observational studies

d. We observed how employees use the bicycles provided for internaltransportation in the Infosys Bangalore campus

e. Wespent 4 hours inside Big Bazaar outlets in Lucknow to observe how peopleused shopping carts/trolleys

f. Wealso observed the consumer behavior while using luggage trolleysatairports in Lucknow and New Delhi


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2.3 Customer Expectations2.3.1 SuperMarketsThesestoresare large in size. The purchase process issimplified with the Wheely. It can also

be viewed asa fun experience. Forsuccessful use, Wheelyssize has to besmall with a high

degree of maneuverability. Initially we had considered the Wheely as a substitute to the

shopping carts present in thestores. But when we observed the consumersand spoke with the

employees of retail stores, we realized that Wheely could be used asasource ofadditional

income for retail outlets.

Display screens can be installed on Wheelys. These can display the promotional offers of

various products, store map and location of various items in thestore. Apart from this with

the help of RFID scanner information about items in thestore can begot (Calorie content,

expiry date, size etc) in different languages. This will help shoppers plan their purchase

better. Going forward, waiting times for billing can also be reduced.

2.3.2 IT ParksIT parksand facilities of large IT/ITeS firmsarespread over multipleacres of land. Most

firms have 7-8 multiple buildings within thesame campus. The use in IT parks is limited to

transportation from the parking lot to office space. We can add a cart to the front of the

Wheely which can be used by the IT employees to carry the laptop bag.

2.3.3 AirportsAirportsare perhaps the biggest users of trolleys today. The modern privateairports havea

lot ofshops. People tend to spend a lot of time in airports. Wheely has to be easy to use,

spaciousand informative.

The display should havea map of theairport, listing of different stores in theairport shopping

area, any promotional deals/price discounts offered in thestoresand advertisements. While

shopping in the airport people may lose track of time, so the display should constantly

provide boarding callsand other flight-travel specific information.


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3 Competitor Analysis3.1 Intensityofcompetition-HighBicycle industry is characterized by intense competition. Bicyclesare in thestage of decline.

So bicycle firmsare lookingat launching newerand better lifestyle products.

3.2 Bargainingpowerofsuppliers-LowThe bicycle industry has few players. So the vendorsare dependent on these manufacturers

for their businesses. Wheely usesstandard partsand these parts can be sourced from many

suppliers

3.3 Bargainingpowerofbuyers-HighThe buyersare very concentrated. Thereare very few Airport operators AAI, GVK, and

GMR. Thereare only 6-7 major hyper mart chains in the country. Also the target consumers

Strengths

Strong R&D

Market leader-Strong brand equity

Established distribution strength

Weakness

New to Institutionalselling

Low focus on new product

linesHigh-Investment in existing

carts and trolleys

Opportunities

Airports,retail high-growthsectors

Additional Income throughcomplementary features

Threats

Aggressivecompetition

Time to imitate will be low

Cheap imports fromChina

TI Cycles


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already using trolleys, so if the product is not availableat the right price the target consumers

will not adopt wheely.

3.4 Threatofnewentrants-ModerateIt will take a while for other firms to replicate this. But the entry barriers in terms of

technology and investment are low. Firms can form technology partnerships to cover for the

lack of technical resources.

3.5 Threatofsubstitutes-HighWheely is a substitute to the trolleys and shopping carts used today. As such, target

consumers have invested a lot of money in the trolleysand may not be willing to buy new

products. Other firms may come up with simple products that arent as feature rich as wheely

but provide value for money.


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4 Marketi O ecti eMarketi g objecti e is to position t e product in t e first uadrant (as s own in t e figure

below) by making itan important differentiator in itstarget markets Below aresome oft etangible objecti es oft e project:

yTo reachasales volume of 36 unitsin one yearwithinitial focus on airportsand then onhypermarkets

yTo cover at least 5 of the identified premium customers in hypermarkets and airportsmarketin theinitial yearof operations

As mentioned abovetheinitialB B project focusshall be on uadrant in theabove figure,withthelongterm objective ofthe projectto getitto uadrant 3. By havingthis objective,it

shall be clear on what front the product needs to be defined in target markets. Also, bymovingto uadrant 3 in thelongterm,the market potential forthe productcan be broadened

to attract more clients. Considering that this product will be used by customers ofhypermarketsand airports,B C positioningrelated to uadrant 2 in theabove figureshould

be looked at for B2B marketing of the product. Thus, the finer details of the marketing

objectiveshould focus on uadrant in the initial years of operations on B2B front before

moving on to uadrant 3 asalongterm viable option along with uadrant2 B2C positioning

ofthe product.


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5 GenericMarketingStrategies5.1 MarketsegmentsPotential market segments for the product includeareas or businesses that deal directly with a

huge number of end customers/prime stakeholders at their facility. Based on this broadermarket and the potential need fulfilment of our product, furthersegmentation of the broader

market narrows down the market to those businesses that provides standardizedproducts/servicesand requires their customers to perceiveservices to bean experience rather

than just asa need that can besatisfied through other meansand also requires to movearoundtheir big facility.

Apart from the nature of businesses, factors likegeographiesalso needs to be considered as

even if there is a potential for the product, end customer might feel the product to besuperfluous based on theexperience perception of the businesses services. As our product

caters to the need of uniqueexperienceand other related benefits, it can only be targeted at

businesses that have spacious facilities and where customers are involved in for the

experience rather than just for their broader need. Based on these inputs, target marketsare

identified.

5.2 TargetMarketAs marketsaresegmented based on the nature of businessesand theexperience perception of

the end customers along with their geographical wants, target markets are arrived at after

analysing thesegments based on the following factors:

yGeographies in which customers perceivea want for our product based on theirspendinghabits in terms ofexperienceand usefulness

yBusinesses that could use our product in an effective mannerand have got the spaceanduse for our product

yBusinesses that have potential of improving customer experiences with our product andthus improve footfalls based on customization features

Based on the above factors and the elements of market segments, following four target

marketsare identified:

yLarge Retail formatsand Hypermarkets like City Center, Bharti Wal-Mart, Reliance, etcyLarge manufacturingand R&D facilities in companies like Ford, Fiat, GE, NASA, etcyLarge public utility facilities like Airports (modified cycles), museums, planetarium etcyLarge Software parks where travel across divisions is timeand effort consumingOf the above four identified target markets, Hypermarkets and Airports that are located in

metropolitansshall be targeted for the initial rollout of the product.

5.3 Product DifferentiationThe possible options for our Wheely to be differentiated amongst the competitors product can

be on any/all of the below mentioned characteristics. Thissection discussesabout how our

product is differentiated which would make our customers (business customers) to select thisamongst the rest.


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Product FormProduct FeaturesPerformanceQualityConformance QualityDurabilityRepairabilityStyleDesign

5.3.1 Product FormThisaspect isabout the product shape, sizeand structure. Wheely should be designed in away which makes it look attractive & also portraying the fact that it can be folded to an

extent when not in use which also takes care of the issue ofspace occupancy.

5.3.2 Product FeaturesAs discussed in the product technology part, our product is coupled with latest technology

revolution of RFID with extended display feature. This would establish aseparatesegment of

audience for our market and could be leveraged upon.

5.3.3 PerformanceOur product allows the customer to shop at ease and this enhances wheely to be a

differentiated product amongst the other products like trolley etc.

5.3.4 QualityHigh standard ofquality of our product provides usan edge over the competitorsand same

can be projected as an USP over the trolleys. Non compromise on this feature would alsohelp us in targeting the premium segment thereby retention of loyal customers can also be

maintained at highest level.

5.3.5 ConformanceQualityThis refers to the degreeat which our product meets up to the required specifications. Productcertifications from recognized organizations like ISO would enable us to promote thequality

as well as features of the product to the intended in a positiveand effective manner.

5.3.6 DurabilityMeasuring the operating life cycle of Wheely and projecting thesame during the promotional

pitch in would help us to tap theaudience interest towards our product.

5.3.7 ReparabilityProviding warranty for specific parts would send a positive message across towards the

quality of the product.

5.3.8 Style & DesignAttractiveness of the product ensures that the business customers would be interested in our

product offerings which in turn might increase their businessamongst theend customers. So

styleand design also actsasa differentiator for Wheely.


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Borrowing the concept ofValue Innovation from Blue Ocean Strategy by W.Chan Kim, wecould say that the product wheely will create valueaddition to its business customers in terms

ofeffectiveness & cost reduction in the long run.

Buyer value will be lifted by raising and creating elements the industry has never offered.

Over time, costsare reduced furtherasscaleeconomies kick in due to the high sales volumes

that superior valuegenerates.

6 Product PolicyThe product to be developed is made out of bicycle. This is the fundamental base over which

the product is built. The product is customized for various customer bases.

6.1 ProductCustomizationThere are three major areas where the Wheely can be used. One unit of the product for

different customers is described below

6.1.1 SupermarketsThis is the biggest customer base that Wheely will target. Primary purpose of the product is

to act asa bicycle cum shopping/carrying cart. Thissegment isagain broadly classified into

Wholesale marketsand retail markets.


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Wholesale markets refer to huge markets where retailersgo to buy supplies. These placesarecharacterized by humongous size and travel between different areas would involve lot of

time. Ifa customer wants to buy limited amount ofsupplies that aresituated at extreme pointshe needs to travel a lot. This is where Wheely comes into play. With Wheely, his purchase is

madesimpler. Now if the product is married with RFID technology then he can easily pay for

the product without unloading he contents. Most of the customers havean account where the

purchaseamount is debited. So the customer can pedal Wheely to his transport vehicleandunload the contentseasily. Organized wholesale marketsarestill new in Indiaand market for

Wheely can grow along with this.

Retail markets refer to Supermarkets where retail customers purchase products. Generally

thesestoresare large in size with different items being located at various locationsacross thestore. With Wheely the purchase is made much simpler. It can also be viewed as a fun

experience. Wheelyssize issmall and maneuverability isexcellent.

Display screens can be installed on Wheelys. These can display the promotional offers of

various products, store map and location of various items in thestore. Apart from this with

the help of RFID scanner information about items in thestore can begot (Calorie content,

expiry date, sizeetc) in different languages.

6.1.2 Manufacturingplants & ITparks Wheely can be used in Manufacturing plants for transport, supervision etc. Generally

Manufacturing plants are characterized by enormous size. Currently supervisors use other

mode of transport like buses to reach a particular point and then walk the remaining distance.

This is not an efficient method. With help of Wheely transport can be made much simpler

and convenient. The display screen can provide information like the plant map,

manufacturing bases, information about production etc.

The use in IT parksare limited to transportation from the parking lot to officespace. One cart

in the front of Wheely would suffice to carry the laptop bag.

6.1.3 AirportsHere the use of Wheely is much simpler. It will replace the carts currently present in the

airport. There will be two containers. One in the front which will have hand baggageand one

in the back with Check-in baggage. Thescreen can provide the map of theairport, check-in

information, boarding calls, advertisements.

6.2 ProductTechnology & DesignThe Wheely can be divided into 3 parts. Theseare described below

6.2.1 TheCycleThis is the base unit of the Wheely. This is not a technology intensive part. A new cycle

needs to be designed. This needs to besmaller than the usual cycle. Miniature version of one

of the cycles that iseasy to tweak can be used for this purpose. Two carts need to be fixed tothe cycle. The capacity of the cart should be high and research needs to be done to select theappropriate technology for manufacturing it together. Screw needs to be provided that would

enable customers to loosen/tighten the pedalingspeed/tightness.


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6.2.2 The DisplayScreenDisplay screens can be bought form an external vendor. These screen needs to be smart

screens to store, processand display the information. These can begot form the market formany of the big manufacturers. Samsung, LG, Philipsare good starting points though TI can

also provide integrated solutions.

6.2.3 RFID ScannerRFID transmitter and scanner are areas in which TI cycles has limited expertise. By usingelectronic integration companies help TI can design Wheely to suite different customer

needs. A good vendor would be National Instruments who could be the technology integrator

6.3 ManufacturingThe manufacturing of Wheely can be done in theexisting plants of TI itself. TI has its plants

distributed all around India. Manufacturing Wheely wouldnt involve much investment for

TI. If the Wheely is successful and the demands are as expected, separate plant can be

opened.

The manufacturing of the cycle can be done in house. The cycle isgoing to be thesame for

all end users. Thesize of the carts would defer for different customers (Manufacturing plantshavingsmaller carts). This can be done in thesecond stage of manufacturing

The screen can be installed after this. Preloaded information can be got form the customer

before hand to make the process morestream lined. Thescreens need to be purchased form

an vendor. The delivery can either be in the plant orat the place of customer.

RFID scannersand transmitter can beadded at last stage of manufacturing before delivery.

Since TI has limited exposure to electronics related technology, this area is a potential

problem. Expert consulting/ Outsourcing is an option for TI cycles. It can learn the

technology in 2-3 years timeand develop its own expertise. This will also be useful for other

product lines.


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7 Prici PolicyTo determinethe pricing policy for Wheely, we need to analysethe market potentialand the

coststructure,and then cometo acertain pricing methodology to fi up the price point.

7.1 Prici O ecti esThe places where Wheely issupposed to be used, is inshopping malls predominantly,andalso in buildings which necessitate movementacross large distances like in a SoftwareParkand in an airport. And given that there is a zero presence in India for such a product, it is

necessary to first make peopleaccustomed to the product,asa way oflife when visitingtheseplaces. Another significant issue is that since the prospective customers all have deep

pockets, margin compromise might notarise in thiscase- wecan placeareasonable margin

without risking customer base. When we look at the pricing objective modelshown above,weseethatthe presentapproachis on increasingsales,asisthecase withany company that

triesto createa new market forits product. And sincethisis nearly the first playerthat needsto grow the market, it is essential that itshows an increase in the unitsales of the product.

The objectives withregardsto pricinghave been circled asshown in the pictureabove.

7. Total Market Demand (TMD) / SalesPotentialOur focus is on thesi major cities - Mumbai,Bangalore, Chennai, Hyderabad, New Delhi

(NCR) and Kolkata. However the demand is not uniform and we need to make a few

guesstimates on the way. Theapproximate demand forthe number of Wheelys neededisas

follows:


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7.3 CostStructure AnalysisWe first look into the cost structure to understand the reason behind each expense.

S.No Cost Element Unit Cost

Unit Cost*Volume(Initial rollout of 3600

units is considered forvolume)

1 Tech Cost

R&D

Tech Transfer

Lump Sum

= 4000000

2 NPD Cost

Wireless feature

Displaying machine

Cycle with two carts

Central mini server

500

500

1400

10000

1800000

1800000

5040000

10000*2*34

3 Marketing Cost

Distribution

SG&A

Promotion

278

555

1389

1000000

2000000

5000000

Demand per city (Pilot Launch - Bangalore) Number of cycles / Percentage

N

er of vi

itor

er all

/ y er arket

er

ay

N

er of all

/ y er arket

i t e

ity

Total vi

itor

er

ay to t e all

/ y er arket

Ca t

re rate i t e all

/ y er arket

%

Total Demand from the Malls/Hypermarkets 15000

N

er of vi

itor

to t e air ort (Do +I t) er

ay

Ca t

re rate i t e air ort

%

Total Demand from theairports 1561.6

N

er of large Software Park

Average N

er of e

loyee

er large Software Park

Ca t

re rate i t e

oftware ark

%

Total Demand from thesoftware parks 3000

Total Demand from the city 19562

Multiplication factor for the6 cities 3

Replacement Rate / Life of the product 3 years

Total Demandevery year onanaverage 19562


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The Fixed Costsare theTechnology Costs, for developing the vehicle, while therest oftheheads for the New Product Development and theMarketing costs are variable- An overall

investment of Rs.4 lakhs is estimated to be incurred on the Research and TechnologyDevelopmentand theTransfer ofTechnology - Hyuk-Jae Chang from the United Stateshas

created a prototype of this bike, without the advanced technological devices and the basictechnology can berented. Asregardsthe othercosts,the CentralMini Serveristhe onethat

costs the maximum expense per bike - the reason being that the RAM, GPRS and othermemory/databases need to be stored within the bike, so that the data on the availability of

productsis updated on areal-time basis,and also because ofthesupportinghardwarelikethechargerthatinvolvesheavy expense. Theitemsareactually obtained on a perunit basisafter

approximating the overall expenditure and calculating the costs per unit. Another

technological feature is a basic display, the lists the items in the cart and the total expense

incurred forallthe products purchased. Thisisa basic wirelessRFID mechanism, wherein an

RFID chip in the cart detects the items after it is swiped across and a wireless mechanism

transfersthe data from thecartto the display meter- basicradio technology can enablethis

feature, and the costs incurred are not too high, a basic figure ofRs. is given for the

entiresetup.

7.4 CompetitorsPricing StrategyAt present, there is virtually zero competition for Wheely in India, or anywhere else in the

developing world. Thus, there isan opportunity to createan entirely new customersegment

and takingadvantage ofthe first-moveradvantage. Butthereisalso a necessity to shorten theproduction cycle, because ofthe fact that it is easy for a competitor to move in and have a

joint-venture and start rolling out foldable eco-friendly cycles. Another important aspect is

the geographicalspread - TI Cycles has a dominating presence in the South, whereas Hero

Cycleshasa very strong presencein therest ofthecountry. Thusitis necessary thatTI takes

Dahon foldable bike - Not a major

competitor/player in this market


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the product to the market at theshortest possible time, and increases its distribution networkacross the B2B channel, for havinga bettershot at capturinga wider market base.

7.5 PricingMethodologyThis is the most important part of the entire pricing component - there are 4 pricing

methodologies, as isexplained below in detail:

oCost-Plus Pricing - Calculating the basic product price (direct + indirect + fixed) on a per-unit basisand then includingan additional amount depending on the marginsexpected

oSealed-Bid Pricing - Pricequotessolicited by governmental and other public agencies toensure objective consideration of competitive bids.

oPerceived Value Pricing - Pricing methodology in which respondents/users compare theprices of the product with thosealready existing in the market

oPublished-list Pricing - Basic pricingadvertised, subject to a discountFrom the above four pricing methodologies, based on the product under consideration, it

seemsappropriate to adopt a cost-plus pricing. This kind of pricing leaves usa cushion to list

different pricesat different points of time based on the demand and the type of customers that

weare lookingat.

Fixingapricepoint: We had already estimated the cost ofa cycle with all the featuresat a

price of Rs. 14618. Subtract the wirelessand mini server costsand the cost price forairports

and comes to around Rs.5000, with certain features that might be useful, like GPRS.

However what is important is the margin. Traditionally TI cycles has kept an operating

margin ofaround 20% - and given that one or two middle-men might requirea commission,

it issafe to assumea mark-up ofanywherearound 30% of the basic cost price - That wouldmake the product price pointsas follows:

Retail Formats - Price product issold Rs.19,003 ~ Rs.19000 /-

Airports & IT Parks - SellingPrice Rs.6500 /-

These are some of the steps that are involved in the pricing of Wheely - the cost of the

product might seem slightly high at supermarkets, but given the demand, the margin can be

reduced to anywherearound 5-15%at the initial stages, and with some basic amenitiesadded

or removed as per customer preference, the basic retail shop model can come to as low as

Rs.12000/- if need be.


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8 MarketingCommunicationAsthe wheely primarily catersto thetransportation & storage needs ofshoppers;in ashopper

mall orretailstore ourmain targetsegment would bethesupermarketsand thehypermarkets.

In addition, large manufacturing facilities and software complexes can use our product,which would be oursecondary targetsegment.

We follow the AIDA model ofResponse Hierarchy to structure our promotionalefforts. The

followinggraphicillustratesthesame:

As our product wheely is an innovation in the bicycle and transportation segment,

aggressive promotional campaigns will have to be carried to generate the required level of

awareness. In other words,thereis no precedentand wehaveto firmly establish ourselvesas

havingcreated this particularbl !

As the product is targeted towardscertain well-defined segments, it does not make much

commercialsense to invest in advertisements. Beyond outdoor ads, we intend to invest the

bulkofthe money in below-the-line promotionalactivities.

8.1.1.1 Promotional Objectives:oTo inform prospective B2B customers in the retail, manufacturing & office space of ournew offeringoTo generate demand & establish new productacceptanceoTo create brand equity forWheely in the minds ofthe prospectivecustomers


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8.2 PromotionalMix:8.2.1 Advertising:We would be printing catalogsand brochures to mail to identified prospectssuch as the retail

giants, whole-salersand othersegmentsas identified earlier.

Radio, TVCs and billboards are ruled out as options as they are not cost-effective in thiscontext.

Social Media tools (Like Facebook, twitter, blogs) could be use to createawareness. Besides

setting up pages for the product, with detailed information and hosting discussions we

could ride piggyback on the digital marketing efforts of big retail giants. There are many

blogsand forums that areshadow sponsored by Wal-Mart and other chains, that discuss the

latest innovations in the retail space. We could grab mind-share by either participating in the

discussions oradvertising on such forums.

8.2.2 PersonalSelling:TI cycles hasaseparate division that manufactures high-grade equipment specially for B2Bcustomers. These customers have manufacturingentities that could benefit from the usage of

our product. These customers could be persuaded to buy the Wheely through the means ofanoral & possibly physical demonstration.

8.2.3 Sales Promotions:We intend to invest a major part of our budget into sales promotions to induce trial and create

equity for the product. This includes free product samples, sweepstakes, contests, tie-ins,

exhibitionsetc.

Such communication will be employed for a pre-determined, limited time to increase

customer demand. Freesamples can be provided to thesegments identified earlier during thesales force interaction with the client.

At hypermarkets, we can provide free trial foran entire day. We encourage the wholesaleshops customers to evaluate the product, as they are our focus customers who would look tosave time on moving their purchased goods in and out. Enter the wheely.

TI Cycles actively participates in Trade Fairs and Expos to reach out to institutional

customers. This year, it will be participating in the India International Trade Fair (IITF) aswell as the Urban Mobility India Expo that invites key ministers, policymakers, decision

makers, private players, non-governmental organizations, academic institutions, private

associationsand all stakeholders that operate in the realm of urban transport and sustainable

cities. We intend to participate in these exhibitions to attract walk-in customers from the

industry who could not only end up being potential long-term accounts but agood source of

positive word of mouth.

8.2.4 PublicRelations:Planting significant news and favourable presentations in retail & industrial journals,submitting the product for review, and endorsement of the same by key business figuresat

seminars/conferences.


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For budgeting purposes, we use theObjective-and-Task Method to determine our marketingcommunication budget.

For thesame, we have performed thesesteps:

Step 1: Definespecific marcom objectives (promotional objectives mentioned earlier)

Step2: Determine the tasks that must be performed to achieve these objectives (promotionalmix)

Going further, we need to estimate the costs of preforming these tasksand form our budgets

accordingly.


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9 SalesforcedesignCustomers in the Indian market are not used to Wheely and perceive it a novel product and

hence sufficient effort will be needed on part of the sales force to convince the customerswhile trying to sell the product. On the whole, the fundamental approach behind the sales

force design would be to make maximum use of theexisting TI cyclessales force.

9.1 SalesforceobjectivesMajority of thesales forceseffort would bespent on finding new customersand hence our

sales force design will also primarily focus on this process. Our primary objective is to havea

massive product launch and acquire a critical mass of customers to start with. Hence theprospecting process will make use ofadvanced data miningand database techniquesand use

of trade magazines and journals to collect information about prospects which can then be

utilized by thesales force to take thesales pitch forward.

Post the prospecting process, targeting the customer will requiresufficient timeas the salesforce team will be needed to understand the needs of the customer before movingahead to

meet the customers. Sales force will also be in charge of communicating the product

attributes to the customers and hence sufficient training needs to be given to them. Otherimportant parameters that will be used in evaluating the design ofsales forceare theselling,servicingand information gatheringskills of thesales force.

9.2 SalesforcestrategiesThe customers of Wheely are vastly different from each otherand henceseparatesales team

would be required for each domain foreffective targeting. Considering the product features

and ourstrategic intent, we plan to havesales representative who will talk to aspecific buyer.

Hence our sales strategy would be to have a one-one relationship and this will help us to

leverage our sales forces skills and have a close relationship with the customers. This

strategy will also help usenhance our customersatisfaction.

9.3 SalesforcestructureGiven the diverse nature and domain of the target customers and the constraints posed by

diversity in languages, we propose to havea customer focused sales force. Customers would

be grouped based on their industry and dedicated sales force will be assigned to each

industry. This will help us to make our sales force specialize in a particular industry and

thereby deliveradditional value to our clients.


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Fixed amount: INR 6K

Variable pay:Percentage of deal size linked to conversion

House Rent Allowance: INR 3-4 K

Food Allowance:1-2 K based on actual bills

Travel Allowance: INR 200-500 per day

9.4 Salesforcesize

We believe that Wheely hasa huge potential considering the growth that are being written

about for the retail and airline industry which will be our major customers. For the first year,

we are hopeful to get at least 2-3 customers in the airline industry and 5-7 in the retail

industry. Further weexpect to get about 8-10 customers in the manufacturingsector. In order

to achieve the aforementioned customer base, we believe that the sales force will need to

havea call frequency ofabout 45-60 per year. Hence we believe that a total of 20-25 salesrepresentatives will be needed for the first yearso as to achieve the intended customer base.

9.5 SalesforcecompensationThe compensation package for the sales force will be a combination of fixed and variable

pay. The variable pay will be linked to theirsales target which will serveasa motivation for

them to work moreefficiently.

9.6 Salesforcemanagement Thesales force management process in TI cycles will be handled by theexisting HR team.

The recruitment and selection ofsales representatives will be carried out by theseniorsales

managers in coordination with the HR team.

Recruitment and selection will carried out through a interview where the skills, past

experienceand motivation of the representatives will be tested.

The sales representatives post selection will be asked to undertake a mandatory structured

training programme where A-Z ofsales will be taught. The training will be conducted by the

Trainingand Development team of TI cycles.

Expected no# of customers: 20Call frequencies: 45-60Average no# of calls by sales representative in a year: 50-60Sales forcesize: 20-25


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Adequate and flexible compensation policy and other perks with a good workingenvironment and working culture will help us keep the sales representatives motivated and

weexpect that this policy of ours will beadvantageous to us in the long term.

9.7 SalesforceevaluationPeriodic appraisals would be conducted to ascertain the performance of the sales

representative. Each sales representatives performance will be ranked on the followingparameters:

oIncremental salesgrowthoMeeting of monthly sales targetoCustomersatisfactionoServicequalityoNo# of orders converted / No# ofsales call madeoAdherence to organizational processes9.8 EnhancingsalesforceeffectivenessA sales representatives core skills are his sales skills, negotiation ability and relationship

skills. Hence it is important to hone them so as to keep the sales representative highly

productive. Thus we plan to hire external agencies that specialize in imparting training on

negotiation and customer relationship management to provide training to our sales

representatives on a periodic basis.


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10 Annexure10.1 Annexure 1: Excerptofinterviewwith former EmployeeofTIcyclesWhatcouldbetheballparkestimateofsuch aproductinthemarket? Retailsegment:15,000 with all theextra features. 5,000 without the basketsAirports: INR 4000 forasimple cycle used for transport

WhatwouldbethemarginsthatTIwouldbewillingtoselltheproduct? 20% for Special segment. This would be maintained forany new product launch.

Whatallrequirementsareneededformanufacturing Wheeley?Design: New cycle that issmaller in size. This wouldnt bea problem for TI as it is one of

the frontrunners in the market.

Technology: TI has no experience in RFID technology. It needs to developed R&D

expertise.

Technology Integration: Again, integrating RFID into the product would involveexpertise. This can mostly be outsourced

Manufacturing Technology: Changes needs to be done in the plant. If the productionquantity is high, new plant needs to be developed. Theexcess capacities in some plant can

also be used.Howcanthetargetmarketbereached?

Advertisements would be ineffective. Sales force needs to be used.

Howmuch moneywouldTIbewillingtoinvestinmarketingcommunication?Maximum of INR 1C (This value was got from inputs form Balance Sheet of the

company)

Howmuch wouldbethecostofdevelopingnewdistributionchannel ?Existing channel wont besufficient. The number of destinations isgoing to be limited. So

maximum of 5L with ashare in profit forevery unit. This number isan estimate that may

not beaccurate.

CantheexistingSalesforcebeleveragedforselling Wheely?The sales force needs be trained. Existing sales force wont have expertise in selling

Wheeley. Their current target customers are not majouraccounts. Its essentially formmoving from B2C to B2B

DoesTI haveapolicyoftrainingtheSalesforce? Externalagencies.This option can beentertained. Current policies cant be confirmed


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11 AbstractOur product Wheely isa compact, flexibleand environment-friendly bicycle cum shopping

cart, catering to the transportation and storage needs ofshoppers in ashopping mall or retailstore. It has the make similar to a bicycle but has a cart in the front and back portion to

facilitate carriage ofshoppingarticles. The product is foldableand occupies1/4th

of thespace

ofa normal bicycle.

Wheely is ideal forshoppers in retail storesand malls who experience fatigueand tiredness

due to carrying purchased articles on their own. This product can be modified to suit other

needs. The manufacturing of this product can be taken up by any large cycle manufacturer

and can be sold to hypermarkets and for movement between two divisions in large

manufacturing facilitiesand in software complexes.

TI Cycles are the second largest manufacturers of bicycles in India, and Wheely is just a

logical extension of the modern bicycle. Thus, TI cycles can use its existing production

capabilitiesand expertise for manufacturing Wheely and its economies ofscale will ensure

theavailability of Wheely at lower prices. But long-term expertise needs to be developed in

RFID, wireless technologies, designing cyclesand human resources required for thesame.

The objective of our customeranalysis was to determine the customer-specific product

modifications required for Wheely. We conducted in-depth interviews with employeesand

managers of hypermarkets, IT firmsand facility management service providers.

We observed how employees use the bicycles provided for internal transportation in

campuses of IT firms, how people used shopping carts/trolleysand how they used luggage

trolleysat airports. Wealso studied the customerexpectationsat hypermarkets, airportsand

IT Parks. Based on competitoranalysis, manufacturing Wheely was favourable for TI cycle.

The marketing objectives of the project are to reach asales volume of 3600 units in a year

with focus on airports/hypermarkets and to cover at least 50% premium customers inhypermarketsand airports market initially. As this product will be used in hypermarketsand

airports, B2C positioning is considered for B2B marketing of the product. Thus the

positioning of the product isasa high importance (expensive) product in the initially on the

B2B front before being positioned asa low importance product asa long term viable option

along with B2C positioning of the product.

Product differentiation is done based on Product Form, Product Features, Performance,Quality, Conformance Quality, Durability, Repairability, Styleand Design, based on Value

Innovation concept.

For the pricing policy, theapproach is on increasingsales, as is the case with any companythat tries to create a new market for its product. Our focus is on the six major cities -

Mumbai, Bangalore, Chennai, Hyderabad, New Delhi (NCR) and Kolkata. The Fixed Costsare the Technology Costs, for developing the vehicle, while the rest of the heads for the New

Product Development and the Marketing costsare variable.


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We follow the AIDA model for marketing communication. The fundamental approachbehind thesales force design would be to make maximum use of theexisting TI cyclessales

force.

12 Bibliographyi) Hague, Paul A Practical Guide to Market Researchii) http://www.rncos.com/Blog/2009/08/India-Tier-Cities-May-Have-300-Hypermarkets-

by-2011.html

iii)http://www.cygnusindia.com/Industry%20Insight-Hypermarkets-Executive%20Summary%20&%20TOC-May%202004.pdf

iv)http://www.karnataka.com/watch/blr-airport/projected-passenger-traffic.htmlv) http://www.indiacatalog.com/it_directory/itparks.htmlvi)http://www.indiamike.com/india/bangalore-f25/supermarkets-in-bangalore-t80060/vii)http://www.consumercourt.in/bike/33192-ti-cycles-india.htmlviii) http://www.jstor.org/stable/4164947

.

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