Product Management practices are rich in capabilities as well as specific standard methods and models for analyzing, researching, and creating products.
Product management is now a relatively necessary, clear, and accessible discipline and anyone today can get enough information about the subject on the Internet. There are also numerous product management courses and certification programs.
That’s why instead of the classic approach to presenting information, we decided to share an interesting Case Study.
Before continuing with the story, we recommend that you familiarize yourself with the following topics:
Before addressing production management, let’s discuss what production is. What is production? It is a process of creating goods and offering services.
Emergence and development of Industrial and Production management
Industrial and Production management have a long history and their development began in the early years of technological prosperity.
Product Management, Case Study: Mahindra & Mahindra (M&M)
The two-wheeler industry is presently on cloud nine. The performance of all the players has never been so good in history. Today, in our country happens to be the worlds’ second-largest manufacturer of two-wheelers, next only to Japan and that too trailing by a wafer-thin margin.
The average growth in 2009 to 2010 has been around 30 percent, and the industry promises to grow further by 20–25 percent in 2010 to 2011. Over the previous 10 years, the two-wheeler market has grown nearly ten-fold (from a meager 10 lakh to over 1 crore numbers. The current market scenario, therefore, offers excellent opportunities for new entrants who are capable of introducing quality products, with all frills, at prices the market is ready to pay. This perhaps has been the biggest temptation for the mighty Mahindra & Mahindra (M&M) to decide to enter the two-wheeler market, initially using Kinetic Engineering Ltd. as a strut (M&M has taken over the Firodia Group’s Kinetic Engineering Ltd. scooters for Rs. 100 crore). But, somehow, the other major players in the industry do not seem unduly perturbed by this strategic move of the house of M&M. The important reason, perhaps, is that nearly 90 percent of the two-wheeler market is for motorcycles and M&M is entering this highly competitive market with its not-so-known scooters (even Kinetic Engineering Ltd. could not succeed with its scooters, although the scooter market at the time was quite reasonable), particularly when the market for scooters is declining, without any readily available model in the motorcycle market. It may take M&M quite some time to come out with a motorcycle from its stable.
The Details
The M&M did spend enough time and energy in identifying the two-wheeler market as strategically the right segment for entry and its growth strategies. Its decision to make a bid for the Kinetics Scooter Division at Rs. 100 crore was also the result of strategic analysis of the relevant business environment of the two-wheeler market in the country. The M&M also has a dream of establishing itself as an all-rounder in the automobile industry, with products ranging from small non-gear scooters to heavy-duty trucks. However, it will have to respect the present-day cut-throat competition that exists in the motorcycle market in our country, which is already crowded by the models of behemoths like Hero Honda, Bajaj, Yamaha, Honda and a couple of other players.
The M&M plans to exploit the collaborative advantage it has gained with the access to San Yang Motors of Taiwan who is equipped to provide world-class design for motorcycles. But this will be a long-term strategy, since the overall activity of introducing a successful motorcycle model in the present market would take nearly three to four years of rigorous project work. Hence, M&M for quite some time will have to focus on its scooters’ segment by rejuvenating a market that, although it had fell steeply in the past, is extremely customer-centric today. The other players (Bajaj has exited the scooter market) who still have their layout unaltered for scooters also continue to ensure that their loyal customers do not shift to competition. Hence, even in the scooter market, life is not going to be a cakewalk for M&M.
Reintroduce the FLYTE model
The M&M has correctly chosen to reintroduce the FLYTE model, which has been one of the very few success stories of Kinetic Engineering Ltd. in the recent past, followed by the still not-so-popular DURO model and the RODIO model. The unique selling proposition (USP) for M&M is going to be ‘extra power’ for most of its products in the two-wheeler market. This is one more reason to aggressively advertise its entry-level products for additional load-bearing capacity, driving speed and power. This USP is being challenged by Honda and TVS who are introducing new models not only to retain their market shares but also to make things difficult for new entrants like M&M to the scooter market. The M&M brand equity is reasonably strong in the automobile market as manufacturers and providers of good and reliable products and services. Its dealer network, however, has so far handled only three-wheelers as its simplest product. Dealing in two-wheeler sales and service is altogether a different cup of tea, perhaps demanding frugal tools and techniques for services. It is also learnt that nearly 25 per cent of the erstwhile Kinetic dealers are no more interested in continuing to operate as dealers. Hence, M&M may have to revamp or separate out its two-wheeler dealer network to provide appropriate distribution sales and service support.
Another important aspect that will challenge M&M’s scooter division is how to hold its product pricing as competitively as possible. In the short run, one may incur entry price hit; however, to be reasonably profitable M&M will be forced to revise its prices upwards. The scooter market, in fact the overall two-wheeler market, in our country is extremely price-sensitive and extremely focused on the running and maintenance costs of the vehicles. Making genuine spares available at reasonable prices is yet another challenge.
Ultimate focus on the motorcycle market
The M&M has announced that its ultimate focus is the motorcycle market, which will be the real breadwinner for the division. In case M&M can achieve a runaway success with its scooters and confirm its capability to offer excellent products and services in the two-wheeler segment as well (since M&M already enjoys a very high level of customer satisfaction index [CSI] in the four-wheeler segment), there could be adequate hope for it to make a successful entry into the motorcycle segment.
There are, therefore, many ifs and buts even for the mighty M&M to succeed in the high-potential two-wheeler market. The strategies for product technology, process economics, product distribution and customer service need to be most appropriate for the market. There is no doubt that M&M has taken a very calculated strategic decision to exploit this diversification and growth opportunity, and to fulfil its dream to become a manufacturer of everything in automobiles. At present, the company seems to be dead serious regarding its execution of the two-wheeler project
