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A Paper on the marketing success story of Bajaj Fans
R Ramkrishnan, A S Radhkrishna & S Kanodia
Bajaj Electricals Limited

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 scale.
With liberalisation of imports, low cost world-class manufacturers of Table, Pedestal and Wall fans from China offer an active threat to Indian manufacturers.

1.1 Market Segmentation
The fans market is segmented based on price, quality and aesthetics.
The Fan industry has the following Product based segmentation and shares:
Ceiling Fans - 70 per cent
Table/ Wall / Pedestal (TPW) Fans - 20 per cent
Freshair Fans - 10 per cent
Bajaj Electricals Limited entered the Fans business by distributing fans manufactured by a small fan company called Matchwel Electricals Pvt. Ltd. located in Pune in the ‘50s. Bajaj Electricals Ltd acquired a controlling stake in this company in the early ‘60s and this subsidiary was merged with Bajaj Electricals Ltd in the year 1984. Bajaj fans had the lowest share in the organised sector with a market share of only 7.6 per cent and a market share of only 3.6 per cent of the total market.
Bajaj was also present mainly in the premium ceiling fans segment; that meant that it was targeting only 14 per cent of the total Organised Sector market for fans of which Bajaj had a 20 per cent market share and was considered as a strong player.The brand’s advertising Share of Spend was only 12 per cent of the total category spends on advertising.The brand was not in the consideration set of many consumers as word of mouth franchise was weak.
The channel used by Bajaj to market the fans was an Indirect Distribution Model thanks largely to the legacy of the Appliances business of Bajaj Electricals, which is still based on an Indirect Distribution model:
Company ð Distributor ð Retailer ð Consumer
The consumer perception of Bajaj brand in the Electrical trade has been good overall. However, the brand’s presence in the fans category in the minds of the consumer was missing. As a result the brand was not included in the consideration set of the consumers for fans purchase.
Bajaj also has a very strong all India logistics with a round 20 Branches and a strong after sales service infrastructure with around 200 Service Franchisees and a good synergy of its Appliances product lines in the channel, many of who also sell fans.

3.1 The Marketing Vision
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.

3.2 The Ansoff Matrix:
Intensive Growth Strategy as illustrated in the Ansoff matrix.

3.3 Bajaj Fans - The Competitive Stance

  1. 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
  2. Price the products competitively with a higher deliverable value.
    Create a unique positioning by capitalising on a core category benefit, hitherto not appropriated by any other competitor.
  3. 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.

3.4 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.

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.

4.2 Introduction of Sub Brands
As many as five new Sub brands were introduced

  1. Bahar as a low-price Sub economy Fan in Ceiling, Table & Exhaust Fans
  2. Maxima as a medium price Sub Economy Fan in Ceiling and Exhaust
  3. Grace as an Economy Ceiling Fan.
  4. Crown as a Premium Ceiling Fan and TPW fans
  5. 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.
  6. 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 company’s attempts at meeting them.

4.3 Positioning of the mother brand - Bajaj Fans

Key Consumer insights:
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.


5.1 Product Strategy
Ceiling Fans

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.

TPW Fans
Launch a new range of TPW fans in the premium and economy segments.

Freshair Fans
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 premium segment.
Launched the Crown range of TPW fans in the Premium segment.
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

5.2 Pricing Strategy
The 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.

5.3 Packaging Strategy
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 it’s 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.

5.4 Promotion Strategy
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 Zee.
TVC’s 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.

Increased 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 fans.
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 quite encouraging.

5.5 Distribution Strategy
Reach of potential through “Mission Excel Initiative”
The aim under this initiative was to understand the reach of Potential of the retailer’s 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 Distribution.
Retail Performance Standard (RPS)
The Francis Kanoi database was used to know the width of distribution of leading players in the market.
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 competitor.
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.

Change 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

Separate 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 company’s advertising, dealer margins were compressed which created a serious dissonance in the minds of their dealers.
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 company’s 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 to:
l Sustain growth in the economy and premium range of fans.
l Successfully establish a new network, which was hitherto unavailable to it, comprising of dealers who were primarily dealing with unorganised sector fans.
l Ensure healthy Trade margins.

Increasing Shop Share
In the consumer durable market the consumer depends on the dealer’s 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 was offered
l Efforts at gaining Dealer loyalty were undertaken

Dealer Loyalty
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 company’s 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 were:

  • 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 and Singapore.
  • Bajaj Fan Dealers Privilege Club l First by any Fan company
    • For long term CRM
    • Membership by invitation only
    • 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 Company.

Direct Mailers
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 it’s kind activity by any company in the Industry and resulted in nearly 1000 responses.

Dealer Meets
Dealer and Sub Dealer meets were organised to gain their confidence share with them the company’s 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 Bajaj”.

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.


6.1 Distribution Network
Company’s 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.

6.2 Brand Recall

  • 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.

6.3 Sales Performance

  • 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 the above.
  • 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.

6.4 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 it’s 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.

Questions to ponder
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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