M&M rolls out Rs 75 crore ad campaign for two wheelers

  • Aug 14, 2015
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Mahindra 2 Wheelers infuses Rs 500 crore in biz, rolls out biggest ad campaign of Rs 75 crore to come back in the race.

Mahindra Mojo launching soon in India

Automaker Mahindra and Mahindra has rolled out a Rs 75 crore advertisement campaign for its two-wheeler business over the period of two months, which is the biggest marketing campaign by any Mahindra Group company in its history so far.

The ad blitz is yet another attempt by the company to be part of the mainstream and shore up sales at the company's two-wheeler unit, which after seven years of operations holds just 1-2 percent market share and has accumulated losses of over Rs 1,000 crore.

While some analysts and investors have suggested that M&M should exit the two-wheeler segment, people aware of the company's plan said it has infused Rs 450 - 500 crore in this unit in the last one year.

Rajesh Jejurikar, President and Chief Executive for Mahindra and Mahindra's two-wheeler business, said that the company needs to be perceived as a serious player in the two-wheeler segment.

"To succeed in a competitive category, you need to have a disproportionate amount of marketing voice to stand out, otherwise you are not breaking through," Jejurikar said. "At sub-optimal levels of marketing, you are not considered as a serious player and if you are not considered a serious player, why should anybody consider you as their option."

A little more than a month into the advertising blitz and the company claims that queries at dealerships has more than doubled.
In 2014-15, the company's sales declined 18 percent from a year ago to 165,000 units, resulting in an annual loss of Rs 528.87 crore on a turnover of Rs 724 crore. The current fiscal too has not started on a good note. Sales are down over 30% from a year ago to 10,000 units a month.

Jejurikar said the advertising campaign - it is the highest ever ad spend by a Mahindra Group company in such a short time span - will make M&M amongst the top 10 advertising spenders in the country in the coming months, with a mind-share of 14 - 15 percent.

Mahindra Gusto scooter has received luke warm response in the market so far

Ambitious Targets

On the back of the ad campaign, the company is aiming to sell 30,000 - 35,000 units per month, or three times the company's current average, Jejurikar said. "We should get to 3 percent (from 1 - 2 percent) market share in the short term, that is our milestone and not the ambition, our mid-term goal is to touch 1 million annual sales in the coming three years," Jejurikar said.

But for the company to take such an audacious move on the back of piling losses, it has spent a concerted effort on ground zero over the last couple of months to precede this big promotion push. The company had organised roadshow across 40 urban towns and 700 rural cities to make prospective buyers test ride their vehicle and bring Mahindra into consideration set.

"The important part of getting into consideration set was to make people experience our bikes, with over 3.5 lakh test rides, the base is ready with us to start working on the conversion," said Jejurikar.

Jejurikar said the company will be introducing new variants on the Gusto and Centuro platform in the coming 12 - 18 months. This will include its premium-segment bike Mojo, which Jejurikar said will be launched before the end of the calendar year.

Rajesh Jejurikar - President and Chief Executive - Mahindra and Mahindra Two-wheeler business

Jejurikar's Comeback Trail

In his second stint at Mahindra, Jejurikar took over the reins of the company's ailing two-wheeler business at the beginning of last fiscal with accumulated losses in excess of Rs 700 crore.

"This advertising campaign - the highest ever ad spend by a Mahindra Group company in such a short time span - will make M&M amongst the top 10 advertising spenders in the country in the coming months, with a mind-share of 14 - 15 percent."

Even as company has pumped fresh equity into the unit in the last 15 months, and acquired Peugeot Scooters during the period, its sales in the domestic market have been on a slide.

Pawan Goenka, the ED of Mahindra Group, and Jejurikar have worked on several fronts, including getting quality right, improving cost structure and re-vitalising the dealer network with a new reward system.

The company has also put in place new territory managers who will work closely with dealers to improve efficacy. The company has also kick-started the process of selling two-wheelers through its automotive and tractor dealerships across 100 outlets.

"We are undertaking a number of initiatives. On its own they may seem small, but once you tie them together, you see the combined benefit which is very significant," said Jejurikar.

The former marketing head of Mahindra's automotive business who played a key part in the success of Scorpio, said the marketing challenge in the two-wheeler business is similar to what he faced during the initial phase of Scorpio.

According to Jejurikar, with the company incurring losses year-on-year, it took some effort to get the board's approval.

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