Paper on the marketing success story of Bajaj Fans
R Ramkrishnan, A S Radhkrishna & S Kanodia
Bajaj Electricals Limited
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 organised sector stands at 45 per cent and of
the unorganised sector at 55 per cent. The figures
were exactly the opposite in the early Nineties.
Low technology manufacturing process, quality norms,
lower overheads and tax evasion methods have enabled
the un-organised sector to gain larger share of
the market by ensuring a significant price difference.
The local/unorganised brands are quite appealing
to a large section of the price-conscious Indian
consumers, for their lower price points.
The organised 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 organisation act right.
There are 6 major brands in the organised sector
namely: Crompton, Orient, Polar, Khaitan, Usha and
Bajaj. All large players in the industry have their
own manufacturing facilities, which is 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
With liberalisation of imports, low cost world-class
manufacturers of Table, Pedestal and Wall fans from
China offer an active threat to Indian manufacturers.
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
Freshair Fans - 10 per cent
BAJAJ FANS - BEFORE APRIL 2000
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
brands 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
Company ð Distributor ð Retailer ð Consumer
The consumer perception of Bajaj brand in the Electrical
trade has been good overall. However, the brands
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.
BROAD MARKETING DIRECTION
3.1 The Marketing
To make Bajaj Fans a leading
player in the fans market in India, by understanding
and effectively meeting the consumers stated and
unstated needs, so as to achieve a sustained competitive
advantage, while pursuing the path of profitable
growth for the Fans BU and its brands.
The Ansoff Matrix:
Intensive Growth Strategy as illustrated
in the Ansoff matrix.
Bajaj Fans - The Competitive Stance
- Increase the width of the product line and
launch new categories / products
Move towards a Direct distribution system. Benchmark
the market leaders network reach and expand the
retail network aggressively
- Price the products competitively with a higher
Create a unique positioning by capitalising on
a core category benefit, hitherto not appropriated
by any other competitor.
- Use the power of the large organisational infrastructure,
good brand equity and resources to take on major
players head on and invest to grow the business.
The Product - Market Segmentation
Bajaj Fans was earlier focusing only
on the premium segment of ceiling fans and was a
niche player in the market. To have a dominating
position in the fans market based on the strengths
that company had in terms of brand, infrastructure,
management capabilities and understanding of the
fans market, the company decided to target most
of the segments in the fan market by following a
micro-segmentation strategy. The Company believed
that the Right Product at the Right Price Point
for the Right Target Consumer was the Right approach
to creating the Right Competitive Advantage.
THE BRAND POSITIONING
4.1 Brand Architecture of Bajaj Fans
Although Bajaj Fans decided to target
nearly all the segments in the fans market, it was
imperative to have a differentiation and concentrate
on a set of customers in each segment, which will
value the core benefit, which shall be offered by
the Bajaj brand in each segment.
Existence of the product segments such as TPW and
Freshair fans is largely necessitated by the desire
to meet the customer needs in a price segment with
a different product line i.e. a premium end customer
can have a need for a ceiling fan as well as a TPW
and Freshair fans. Therefore the Company decided
to launch sub brands under the mother brand Bajaj
to target each of the customer segments, segmented
on the basis of price and launched a range of ceiling,
TPW and exhaust fans under those sub brands for
premium, economy and sub-economy segments.
The role of the sub brands was to create a differentiation
in the mind of the consumer regarding the brand
image. Thus, the image of the Crown sub-brand was
built to appeal to the Premium Fan customer belonging
to SEC A1, A2 and B1; whereas the Bahar sub-brand
was aimed at the lower end customer.
Introduction of Sub Brands
As many as five new Sub brands were
- Bahar as a low-price Sub economy Fan in Ceiling,
Table & Exhaust Fans
- Maxima as a medium price Sub Economy Fan in
Ceiling and Exhaust
- Grace as an Economy Ceiling Fan.
- Crown as a Premium Ceiling Fan and TPW fans
- Bajaj Midea as a Premium TPW Fans in a tie
up with GD Midea Holding Co.- A unique Co-Branding
exercise with the worlds largest fan manufacturing
company based in China.
- Introduction of multiple sub brands and products
has been a key ingredient to the success of Bajaj
fans. Each sub brands signifies a specific customer
expectation and the companys attempts at
Positioning of the mother brand - Bajaj Fans
The fan consumer is an indifferent
user. The category is a low involvement category
and the decision maker is usually the male head
of the family. There is a widely held consumer belief,
which was unearthed in a systematic probing of indifferent
minds, through extensive research. This insight
is that the fan that moves fastest gives the maximum
air and hence induces maximum cooling and thereby
gives the maximum comfort. As long as the body can
feel the air satisfaction is assured.
Bajaj Fans decided to capitalize on this core category
benefit sought by the consumer and decided to position
the umbrella brand Bajaj Fans as a range of Subse
Tez or Incredibly Fast fans and
hence a range with the highest air delivery. The
Subse Tez tag line also made the fans
being perceived as Technically Superior,
which was an added consumer benefit.
KEY ELEMENTS OF THE MARKETING STRATEGY
l Launch high quality decorative fans with better
designs in the premium segment.
l Launch high quality decorative and non-decorative
but contemporary fans in the Economy Segment corresponding
to the consumer needs of this segment.
l Launch basic products without any frills to
meet the needs of sub-economy segment aimed at
providing an up-gradation platform to the customer
from the unorganised sector.
Launch a new range of TPW fans in the
premium and economy segments.
Launch a new range of Freshair fans
in the economy and sub-economy segments.
To bring the products in line with
the positioning strategy the Revolutions Per Minute
(RPM) of all products was increased from 330RPM
to around 400RPM to ensure higher Air Flow Velocity.
Launched the Bajaj Midea range of TPW fans in the
Launched the Crown range of TPW fans in the Premium
Launched decorative & non-decorative fans in
the economy segment of ceiling fans - Grace, Grace
Gold & Ultima.
Launched basic models with no special features in
the sub economy segment - Bahar & Maxima
company follows a competitive pricing strategy in
all major markets for all product segments
The strategy to enter the lower price segments was
executed through launch of differentiated models
aimed at the lower price segments.
Earlier all Economy and Premium ceiling fans were
sold at around Rs.1000 and Rs.1200 respectively
to the customer. Sub-Economy ceiling fans were introduced
at a customer price of less than Rs.900.
The company introduced their Maxima ceiling fans
at a customer price of Rs.900 and Bahar ceiling
fans at a customer price of Rs.800. However, one
of the organised sector competitors (say Competitor
A) introduced a ceiling fan model at a customer
price of Rs.700. Today the sub economy segment is
being actively looked at by most major competitors.
The pricing innovation aimed at the Bottom of the
Pyramid mass market has been a key element of the
Bajaj Fans success story.
All the carton graphics were
revamped in line with a new theme of Elements
of Nature. The Fans business being an Air
business, took up the image of moving clouds as
a graphical motif for its packaging and a
new set of Carton graphics were implemented for
the entire product range. This theme was also incorporated
in the Posters, POPs, the shop boards and all other
communication elements to give Bajaj fans a unique
and instantly recognisable in-shop identity.
Television as the main media
It was important to create high aided and unaided
brand recall related to the fans category in the
minds of the consumer. Fan as a product category
has no major regional disparities in sale. Much
of the sale of organised sector is in the metro,
Class I and Class II markets. The cable and satellite
penetration in these markets is very high. It was
therefore strategised to shift from the traditional
way of promoting fans in print media to TV advertising
through major C&S channels like Star, Sony and
TVCs of 10, 20 & 30 secs were developed
based on a positioning Bajaj Fans Sabse Tez
in Hindi and various regional languages such as
Tamil, Kannada, Telegu, Malayalam & Bengali.
A CD Rom containing some recent TVCs is submitted
alongwith the Paper.
The Paper Weight TVC won a Silver Abby for 2002
and has been widely acclaimed. The Door Closer press
ad won a Silver Abby for 2002 and the Fish Bowl
press ad won a Bronze at the International ADFEST
at for Asia Pacific 2002.
brand visibility at the market place
Initiated various Ground level activities
by hiring promoters in key wholesale and large retail
markets for fans. These promoters were dressed in
branded T-shirts and caps and were asked to distribute
leaflets of Bajaj fans to the potential customers
and to detail the products at the Point of Sale.
When visiting the market, they would carry placards
with the core communication message of Bajaj fans
Subse Tez. This created a lot of excitement
in the market and customers started asking for Bajaj
Attractive POPs, Display schemes and Mystery Customer
Contests were also run for the dealers for better
display of products and packaging on the retail
shelves by the retailers and for a Channel Push.
An effective public relations campaign
was also started to get favorable word of mouth
publicity and press coverage. The results have been
Reach of potential through
Mission Excel Initiative
The aim under this initiative was to understand
the reach of Potential of the retailers of
the company in the total market and ensure presence
and high shop share at key retail outlets, which
had a high share of the defined market. This enabled
the Company to explore a larger part of the defined
market potential by being present in larger retailers
counters in a stronger manner. This activity leads
to an improvement in both the width and depth of
Retail Performance Standard (RPS)
The Francis Kanoi database was used to know the
width of distribution of leading players in the
The leading player was benchmarked and a Retail
Performance Standard was developed for all markets,
which were based on the ratio of our presence in
the number of retail counters vs. that of the benchmarked
An action plan was developed and executed to ensure
that Bajaj brand gains an entry in the selected
retail outlets where the benchmarked competitor
was present, so as to achieve the targeted RPS.
in Distribution Strategy
Bajaj decided to reduce the additional
layers of distributors wherever feasible, which
was increasing the distribution costs for the company
over that of the competitors. Instead a switch over
was made to the industry norm of supplying fans
directly to major fans retailers and whole sellers
and allowing for adequate width of distribution
as per the market forces.
Company ð Retailer ðConsumer
Network for Sub-Economy fans
Competitor A (mentioned earlier)
was the first to introduce a range of sub-economy
ceiling fans. However they offered this model to
all their dealers and further advertised the price
of this model very strongly. This affected them
adversely in 2 ways. On the one hand the sub-economy
model ate into their sale of economy and premium
models whose sales declined rapidly while their
overall sales remained constant. On the other hand,
as the customers knew the price through the companys
advertising, dealer margins were compressed which
created a serious dissonance in the minds of their
Having learnt from this, Bajaj clearly made it a
policy to establish a parallel distribution network
for the sub-economy fans, which comprised of dealers
who were primarily un-organised sector fan dealers.
The company also decided, as far as possible, not
to offer the sub-economy fans to its existing dealers
of economy and premium fans. Wherever it had to
offer sub-economy fans to some of its very important
existing dealers, it insisted on a minimum growth
of 20 per cent from such dealers in the economy
and premium range of fans. It also did not advertise
the sub-economy fans at all. The companys
objective in introducing the sub-economy fans was
clearly to take share from the growing un-organised
sector market while sustaining growths in the economy
and premium segments. A sub objective was also to
take away some share from the Economy segment fans
of the other organised sector players.
This distribution strategy enabled the company
l Sustain growth in the economy and premium range
l Successfully establish a new network, which was
hitherto unavailable to it, comprising of dealers
who were primarily dealing with unorganised sector
l Ensure healthy Trade margins.
Increasing Shop Share
In the consumer durable market the consumer depends
on the dealers recommendation for a brand.
Hence it was important to ensure that key dealers
were encouraged to recommend Bajaj Fans to the customer.
For this the Company ensured that:
l Attractive margins were given to dealers
l An attractive and comprehensive range of products
l Efforts at gaining Dealer loyalty were undertaken
Simply increasing the margins of dealers
by offering higher discounts was not the best form
to gain dealer loyalty. This was because any other
organised sector brand could match the offer immediately
and nullify the companys price advantage.
Instead, since 2001 the Company has introduced a
number of programs to increase dealer loyalty towards
Bajaj Fans, thereby encouraging them to recommend
our fan over other brands, to the customer. These
- Summer Hungama Scheme
Special gifts to dealers,
which included household appliances and travel
within the country and abroad. Key dealers were
encouraged to qualify for travel incentives and
were taken for the trip along with their spouse.
This helped in increasing the bonding with key
dealers. Trips were arranged to Bangkok, Mauritius
- Bajaj Fan Dealers
Privilege Club l First by any Fan company
- For long term CRM
- Membership by invitation
- Only Crème
de la Crème fan dealers invited
- Special rewards,
gifts, trophies and certificates
- Annual conference
at a foreign location
- Criteria for qualification
- Sales Volume, Growth, Payment Efficiency.
- To honor our key dealers
and make them feel important and valued.
- The company invited
only 100 top dealers of the country of which
81 dealers qualified. They were taken on a
trip to Dubai with the top Management of the
Khulja Sim Sim: The company identified
some key retail counters across India & sent
them mailers directly from H.O. Branches were asked
to open these counters directly or increase shop
shares through existing distributors. This was a
first of its kind activity by any company
in the Industry and resulted in nearly 1000 responses.
Dealer and Sub Dealer meets were organised
to gain their confidence share with them the companys
strategies and future plans and obtains their feedback
on how to collectively grow in volumes and profits.
Most importantly such meets created a strong bond
between the company and its dealers and sub-dealers
and made them feel an important part of Team
5.6 People Strategy
Another major step taken by the company
was on the people front. The Organisation Structure
was revamped and the company moved from a complex
matrix structure to a SBU based organisation with
shared services. The Fans SBU had a change in leadership
with a younger, dynamic and more risk taking people
oriented leader. Appropriate structures were formed
for Sales, Marketing and Supply Chain functions
alongwith a revamping of the Manufacturing and Design
& development teams. The Head of Sales had a
team of Regional Managers, Area Managers and Territory
Sales In-charges to support him. The organisation
was also revamped into seven responsibility levels
from the previous 19 salary grades to make the career
progression faster and to reward good performers.
A new set of Job Descriptions and Key performance
Indicators (KPIs) were implemented alongwith a substantial
improvement in various processes such as Planning,
Supply Chain, information management, review processes
etc. A number of poor performers were weeded out
and replaced with good talent from the Fans industry.
A new Performance Incentive Scheme and a new Performance
Appraisal process were also implemented to ensure
good talent management. Deserving people were promoted
from within and better career rewards and punishments
were implemented. All these coupled with appropriate
decision making empowerment and delegation resulted
in a transformed and result hungry team. The people
in the Fans BU were the single biggest contributors
to the Fans BU success story.
THE RESULTS ACHIEVED
Companys overall distribution
network increased from approximately 6000 retailers
in 1999-00 to approximately 10000 retailers in 2002-03.
The direct dealer network has been increasing every
year at a healthy rate.
Highest Increase in TOMA & UAA
scores in the Organised Sector.
- TOMA for Bajaj Fans jumped from 7th position
to joint 4th position.
- UAA for Bajaj Fans jumped from 7th position
to 4th position.
- The Sales have grown from Rs 5730 Lacs in 1999-00
to Rs 9350 Lacs in 2002-03. In 2002-03, achieved
CAGR over 1999-2000 of 17.7 per cent and the projected
CAGR in 2002-03 over 1999-2000 is also 17.7 per
cent. This achievement, in a sluggish market situation
has been an extraordinary performance.
- Total Sales in 2002-03 achieved a CAGR over
1999-00 of 20.1 per cent & projected CAGR
in 2003-04 over 1999-00 is 19.7 per cent. The
contribution of Trade to Total sales has increased
from 55 per cent in 1999-00 to nearly 80 per cent
in 2002-03.The Trade sales being sustainable and
repeatable, shows a basic strengthening of the
brand and greater channel and customer acceptance.
The consistently high growth rates also reflect
- Growth of Bajaj Fans higher than the Industry
Growth in all the years except 2001-02 & expected
to be higher in 2003-04. 2001-02 was impacted
due to the high growth in the previous year and
poor Institutional sales.
- In 2001-02 Trade Sales grew at 10 per cent.
However, lost Sales of 40,000 fans sales (decline
of 20 per cent) in CSD and 19000 fans sale (decline
of 27 per cent) to Institutions, as Bajaj was
not awarded D.G.S & D Rate contract.
Profit Performance (Contribution after Publicity)
In 2003-03 achieved CAGR over
1999-00 of 30.8 per cent & projected CAGR in
2003-04 over 1999-00 is 40.7 per cent. This shows
that the Sales performance has not been at the cost
of the Profitability performance. The business is
now on a self-sustaining profitable growth platform.
6.5 Publicity Spends
l The results in terms of Sales performance and
improvement in the brand strengths have been achieved
without a prohibitive increase in media spend.
In one of the earlier paras
under Segmentation it was said that The Company
believed that the Right Product at the Right Price
Point for the Right Target Consumer was the Right
approach to creating the Right Competitive Advantage.
Indeed the substantial success achieved by Brand
Bajaj Fans, whether it be in terms of the Sales
Performance, Market share gains, Profit performance,
Image improvements, Increase in Consumer Demand,
Network related improvements, Dealer Loyalty and
the overall Brand strengths, has been a vindication
of this firm belief. The Fans BU has been a trail
blazer within the company in terms of energinising
and electrifying Team Bajaj Electricals with its
sterling performance and substantial achievements.
In fact, the Fans team has set an example for the
rest of the company to follow and emulate.
But the greatest tribute to the marketing success
are the many Lacs of new customers whom the company
has been able to add year after year, who in turn
also become the spokespersons for brand Bajaj Fans.
The brand now looks to the future with renewed hope,
optimism and confidence.
1. What role did initiatives towards
strengthening relationhips with dealers play in
pushing the sales of Bajaj Fans?
2. How would you rate the publicity campaign of
Bajaj Fans and why?
3. Can Bajaj view the unorganised sector in the
fans industry as an opportunity for further growth/penetration?
This case study was shortlisted for the SPJIMR
Marketing Impact Awards 2003 organised by the S
P Jain Institute of Management & Research in
association with Strategic Marketing. This annual
event showcases effectiveness of
marketing initiatives and its impact on organisations.
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