TI CYCLES: NEW PRODUCT STRATEGY
TI Cycles was established by the Murugappa Group in the year 1949, in collaboration with Tube Investments, UK. The first Hercules bicycle rolled out in 1951. Three more brands were added to the portfolio - Phillips in 1959, BSA in 1964 and Montra in 2011. Today, TI Cycles is the leader in the ‘specials’ segment. It has a network of around 1,500 primary dealers and 10,000 secondary dealers. TI Cycles has the capacity to manufacture 4 million cycles a year at 3 plants across India - Chennai in the South, Nasik in the West and Noida in the North. This is supported by 4 zonal offices and 4 warehouses across the country. The first MTB, the first geared bike, the first Shox model, the first girls’ bike, the first kids’ bike, the first light roadster and the first carbon frame bike were all introduced by TI Cycles. TI Cycles has introduced BSA Hercules exclusive stores, which have revolutionised the bicycle outlet in India. A one-stop premium shop for all bicycling and fitness requirements. Living up to its dynamic vision of going beyond just bicycles, TI Cycles has also made a foray into Fitness and Infants under the brands of BSA Workouts and BSA Toddlers respectively. Competitors of TI Cycles:
TI cycle faced competition both in the domestic and the international market. In the domestic market the main competitors were Hero, Atlas and Avon. Internationally it faced competition from the Chinese market due to their low cost production. The sales of various players in the industry in different categories of bicycles in 1996-1997 (Figures in # 000s)
Types of Cycles
The company faced a number of issues through the years.
Stagnant sales and increased competition in the Standard and Special bicycles. Its competitor Hero Cycles became the largest producer of low cost, value for money ‘Standard’ bicycles. In smaller towns with a population of less than one lakh, the company had a partial presence. Dealers had lost interest in selling the ‘Standard’ category of TI cycles. In the new product development, manufacturing segment was not involved at the product design stage In 1996-97, increased production costs at home, tariff changes in European Community (EC), and currency fluctuations made exports an unsustainable proposition. Exports declined in 1996-97. The Export Oriented Unit (EOU) incurred a loss of Rs 1.22 crore. The company had a risk averse culture
In 1996-97, the domestic sales volume declined to 1.63 million (Rs 1836.80 million) and the exports declined substantially to Rs 3,00,000 (Rs 289.46 million). The export sales got affected primarily by the devaluation of Chinese currency and the imposition of import duties on Indian bicycles by the EC The company lost its exclusivity when competitors from the North entered the industry and built leadership positions on the basis of lower price. The new entrants did not have to set up integrated facilities like TI Cycles. They made a few core parts like frames and forks, did the painting, bought complementary parts from independent manufacturers, and prepared the ready-to-assemble kits. There was a cost differential of about 10 per cent between TI Cycles and the other key competitors. This was primarily because of the company’s integrated nature of manufacturing and the higher wage costs at TI cycles. The company’s share of Indian exports to EU fell from 57 per cent to 45 per cent. This was primarily due to its failure to compete on prices. Its early starter lead was neutralized by other domestic competitors. Chinese producers with their low production costs became the...
Please join StudyMode to read the full document