How Royal enfield became the King Of Indian bike market? | Business case study

Summary

The video script narrates the remarkable turnaround of Royal Enfield, an iconic motorcycle brand that faced closure multiple times. A 26-year-old, Sidhartha Lal, revitalized the company by focusing on product quality, customer empathy, and building a strong brand identity. His strategies led to a 36-fold increase in sales, transforming Royal Enfield into a global sensation. The story underscores the importance of focused brilliance, customer insights, and product excellence in business success.

Takeaways

• 🏍️ Royal Enfield is an iconic motorcycle brand in India, with the Bullet model being its most recognized.
• 🌍 The brand became global, but faced near-collapse multiple times in its history.
• 📈 Royal Enfield's stock price has seen an incredible rise of 390,000% over the past 25 years.
• 🚀 A pivotal moment was when a 26-year-old, Siddhartha Lal, took over and turned the company around dramatically.
• 🔧 Siddhartha focused on rationalizing the product portfolio, selling off non-core businesses to concentrate on motorcycles.
• 🤔 Empathy was key; Siddhartha went on long road trips to understand customer needs and pain points.
• 🛠️ He identified and addressed six major issues with the bikes, including packaging, engine design, and customer experience.
• 🌡️ Transitioning from a cast iron to an aluminum engine improved weight, heat dissipation, manufacturing cost, and vibration damping.
• 🏬 Royal Enfield revamped its retail stores to create a community feel and organized events to build brand loyalty.
• 🌐 The brand's sales skyrocketed from 25,000 units in 2005 to 920,000 units in 2023, becoming a global sensation.
• 📚 Key business lessons include the importance of focus, customer empathy, product quality, and building a strong brand community.

Q & A

What was the situation of Royal Enfield before Sidhartha Lal took over?

Before Sidhartha Lal took over, Royal Enfield was on the verge of shutting down multiple times and was in a terrible condition. They had a production capacity of 6,000 units a month but could only sell 2,000 units a month.

What was the key strategy Sidhartha Lal employed to turn around Royal Enfield?

Sidhartha Lal focused on portfolio rationalization, empathy with customers, product improvement, and brand building. He sold off non-core businesses, went on a road trip to understand customer needs, improved the bike design, and built a strong brand image.

How did Royal Enfield's sales perform after the changes implemented by Sidhartha Lal?

After Sidhartha Lal's changes, Royal Enfield's sales increased dramatically. They went from selling 25,000 units a year to 920,000 units in 2023, a 36-fold increase.

What were the main issues Sidhartha Lal identified with the Royal Enfield bikes during his road trip?

The main issues identified were damage during packaging and transportation, frequent oil leaks due to separate gearbox and cast engine design, outdated iron engine design not complying with emission norms, kickstart problems, poor sales and after-sales experience, and lack of an emotional connection with the brand.

Why did Royal Enfield struggle when Japanese bikes entered the Indian market?

Royal Enfield struggled because the Japanese bikes were cheaper, lighter, and offered better mileage, which attracted customers away from the heavier and higher maintenance Royal Enfield bikes.

What was the significance of switching from a cast iron engine to an aluminum engine in Royal Enfield bikes?

Switching to an aluminum engine made the bikes lighter, improved handling, reduced engine erosion, provided a smoother ride, and was more cost-effective and environmentally friendly due to lower casting temperatures.

How did Royal Enfield enhance its brand image under Sidhartha Lal's leadership?

Royal Enfield revamped its stores to make them hangout places for bikers, created communities like Enfield Riders community, and organized events to build a strong brand image and connect with customers.

What are the three business lessons that can be learned from Royal Enfield's rise mentioned in the script?

The three business lessons are: 1) Focused Brilliance over scattered Brilliance, 2) The importance of empathy and understanding customer needs through direct conversations, and 3) The power of a great product to revive and sustain a brand.

How did Royal Enfield's stock price perform in the past 25 years compared to other companies like Apple and Tesla?

In the past 25 years, while Apple's stock price increased by 60,000 times and Tesla and Bajaj Finance's stock prices increased by 17,800 and 1,126,000 times respectively, Royal Enfield's stock price shot up by 390,000 times.

What was the initial reaction of customers to the new Royal Enfield bikes after the changes?

The initial reaction was positive as the changes addressed the issues customers had with the previous models, leading to an increase in sales and a stronger brand image.

How did Royal Enfield differentiate itself from competitors like Harley-Davidson in the international market?

Royal Enfield differentiated itself by focusing on building an aspirational brand, improving product quality, and creating a strong community around its bikes, which appealed to a wide range of customers.

Outlines

00:00

🏍️ The Resurgence of Royal Enfield

The script discusses the remarkable journey of Royal Enfield, an iconic motorcycle brand in India. It highlights the brand's near-demise and subsequent revival under the leadership of Sidhartha Lal. The Bullet model is credited with propelling the brand to global recognition. The script also mentions the impressive increase in Royal Enfield's stock price over the past 25 years, outperforming companies like Apple, Tesla, and Bajaj Finance. The video is sponsored by ODU, a business management software that streamlines customer relationship management.

05:01

🛣️ The Struggles and Market Shifts

This paragraph delves into the challenges faced by Royal Enfield, including its initial failure in the civilian market due to high maintenance requirements and competition from Japanese motorcycles. The brand found a new market in India, particularly with the Indian Army, but faced another downturn in the 1990s with market liberalization. The script outlines the failed attempts by UK and Indian companies to revive the brand and sets the stage for the transformation led by Sidhartha Lal, who identified key issues and customer preferences that would guide the brand's revival strategy.

10:01

🔨 Innovations and Strategic Changes

The script details the strategic moves made by Sidhartha Lal to revive Royal Enfield. These include portfolio rationalization, focusing on the motorcycle business, and practicing empathy by understanding customer needs through direct interaction. Lal identified several issues with the bikes, such as damage during transportation, maintenance costs, outdated engine design, kickstart problems, and poor sales and after-sales service. The paragraph emphasizes the importance of customer insights in driving product improvement and brand strategy.

15:01

🌟 Building an Aspirational Brand

The final paragraph discusses the steps taken to make Royal Enfield an aspirational brand. Sidhartha Lal shifted from a cast iron to an aluminum engine, which resulted in a lighter, more efficient, and smoother ride. Royal Enfield also improved transportation and packaging to prevent bike damage and revamped stores to create a unique brand experience. The creation of communities and events helped build a strong brand identity and customer loyalty. The paragraph concludes with key business lessons from Royal Enfield's success, emphasizing the importance of focus, customer understanding, and product quality.

Keywords

💡Royal Enfield

Royal Enfield is a globally recognized motorcycle brand, particularly admired in India. The brand is known for its iconic Bullet model, which became a symbol of the company's global presence. In the video, it's highlighted how Royal Enfield faced near-collapse but was revived through strategic changes, emphasizing its transformation from the brink of shutdown to a thriving brand.

💡Bullet

The Bullet is a motorcycle model by Royal Enfield that has become synonymous with the brand. It's portrayed as the bike that made Royal Enfield a global icon. The script mentions how the Bullet was central to the brand's fortunes and its role in changing the company's trajectory under the leadership of Sidhartha Lal.

💡Sidhartha Lal

Sidhartha Lal is depicted as the 26-year-old who took over Royal Enfield and implemented strategies that turned the company around. His approach, including focusing on product quality, customer experience, and brand building, is highlighted as instrumental in Royal Enfield's resurgence. He is presented as a key figure in the brand's revival story.

💡Portfolio Rationalization

Portfolio rationalization refers to the strategic decision to streamline a company's range of products or services. In the context of the video, it's mentioned how Sidhartha Lal sold off 13 out of 15 businesses that Eicher Motors operated to focus on growing the motorcycle business, illustrating the concept of concentrated effort over diversification.

💡Empathy

Empathy in the video is discussed as a critical attribute of successful entrepreneurs. It's noted how Sidhartha Lal practiced empathy by going on a road trip and engaging in conversations with customers to understand their needs and pain points, which helped him identify areas for improvement in Royal Enfield's products.

💡Product Improvement

The script outlines several product improvements made by Royal Enfield under Sidhartha Lal's leadership, such as shifting from a cast iron to an aluminum engine, improving transportation and packaging to reduce damage, and enhancing the sales and after-sales experience. These changes are highlighted as key to enhancing the brand's appeal and customer satisfaction.

💡Brand Building

Brand building is discussed as a strategic move by Royal Enfield to create an aspirational image and connect with customers emotionally. The video mentions the revamp of stores into hangout places for bikers and the creation of communities like Enfield Riders, which helped in building a strong brand identity and customer loyalty.

💡Aspirational Brand

An aspirational brand is one that customers desire to be associated with due to its perceived value, quality, or status symbol. The video emphasizes how Royal Enfield, under Sidhartha Lal's leadership, transformed from being seen as an engineering company to an aspirational brand, akin to Ferrari or Harley-Davidson, to attract customers.

💡Market Research

Market research is portrayed in the video as more than just data analysis; it's about understanding customers through direct interactions. The script illustrates how Sidhartha Lal's hands-on approach to market research by going on a road trip and talking to customers provided invaluable insights that traditional research methods might miss.

💡Customer Experience

Customer experience refers to the sum of all interactions a customer has with a brand. The video underscores the importance of a positive customer experience by discussing how issues like damaged bikes upon delivery and high maintenance costs were addressed to improve it, which in turn boosted customer satisfaction and loyalty.

💡Business Resilience

Business resilience is the ability of a company to withstand or recover quickly from difficulties. The video script describes how Royal Enfield, despite being on the verge of shutdown multiple times, demonstrated resilience by implementing strategic changes and learning from past failures to become a successful brand.

Highlights

Royal Enfield is a highly admired motorcycle brand in India, with the Bullet model becoming an icon.

Royal Enfield's stock price has increased by 390,000% over the past 25 years.

Royal Enfield faced the risk of shutdown three times in its history.

Sidhartha Lal, at 26, pleaded with the board to save the company and turned it around.

From selling 25,000 units a year, Royal Enfield's sales increased to 920,000 units by 2023.

Royal Enfield's bikes are now sold in 50 countries worldwide.

Sidhartha Lal focused on portfolio rationalization, selling off unrelated businesses to concentrate on motorcycles.

Empathy and customer conversations were key to understanding issues with Royal Enfield's bikes.

Six critical issues were identified with the bikes through direct customer interaction.

The packaging and transportation process was causing damage to the bikes.

The separate gearbox and cast iron engine design led to high maintenance costs.

The outdated iron engine design did not meet modern emission norms.

Royal Enfield bikes had a problematic kickstart mechanism.

Customers had poor sales and after-sales experiences with Royal Enfield.

The brand lacked an emotional connection with customers compared to competitors.

Switching to an aluminum engine provided several advantages, including weight reduction and better heat dissipation.

Royal Enfield improved transportation and packaging to prevent bike damage.

A brand-building strategy was implemented, including revamping stores and creating communities for bikers.

The iconic rise of Royal Enfield teaches the importance of focus, customer empathy, and product quality.

The story of Royal Enfield's revival is a testament to the power of understanding and addressing customer needs.

Transcripts

hi everybody Royal Enfield is one of the

most admired motorcycle brands in India

the mighty Royal Enfield

Bullet went around the

world found its home in India where it

became an

icon it was the motorcycle that made

Royal Enfield into a global brand this

is the enery makes the royalfield the

best motorcycle in the world no other

manufacturer had built a bike like this

before for full production use and the

rest of the world

followed classic was the motorcycle that

changed Royal enfield's fortunes it's

not just Brute Force right and that is

the

[Music]

Himalayan and you would be shocked to

know that in the past 25 years while the

stock price of Apple has shot up by

60,000 from the day of listing if you

look at Tesla and baj finance their

stock prices shot up by 17,800

and 1 lak 126,000 respectively whereas

if you look at the stock price of ier

Motors it has shot up by

390,000

per. yes 3 lakh

90,000 and while most people know Royal

Enfield to be a legendary brand today

what they don't know is that Royal

Enfield was on the verge of shutting

down not once not twice but Thrice in

its history and Royal Enfield was in

such a terrible condition that first a

UK company tried tried to revive it but

they failed then an Indian company

called Madras Motors tried to revive it

but they again failed and then even ier

Motors tried for six long years but they

still couldn't revive the company and

just when ier Motors was about to shut

down the company a 26-year-old boy named

sidharta Lal pleaded with the board to

give him one last chance and this boy

ended up doing something so incredible

that back in 200 Royal Enfield had a

capacity of 6,000 units a month but they

could only sell 2,000 units a month but

after sidharta took over in just a few

years they went from selling 25,000

units a year to 50,000 units to 100,000

units to 200,000 units and then to touch

400,000 units and as of 2023 Royal

Enfield has seen its sales shot up by 36

times to hit 920,000 units sold in a

single freaking year and today Royal

Enfield sells bikes not just in India

but it also EXP fors bikes to 50 other

countries all across the world so the

question we here is when three big

companies could not revive a brand what

did this 26-year-old boy do differently

because of which today Royal Enfield has

become a global sensation what were his

business strategies that saved Royal

Enfield from shutting down and what are

the business lessons that we need to

learn from the iconic rise of Royal

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that the story of Royal Enfield began

with World War II and the bikes of Royal

Enfield were born out of the fires of

World War

II po September 1939

the German fo begins its ruthless March

of conquest and sets the stage for World

War II this just one

scene I

mean if

freedom is your

peril you got to do

something this little lightweight

motorcycle that was used to be

parachuted from the aircraft to help

support the troops the rolling field

flying flea is the most fantastic story

imagine these motorcycles could be

parachuted Behind Enemy Lines but after

the war when the civilians started using

these bikes these bikes required very

high maintenance they often broke down

and they were super heavy to handle so

when the Japanese bikes entered the

market Royal Enfield as a brand died a

miserable death but this is when the

company found a market in India and

started selling to the Indian army soon

enough all thanks to narui they started

Manufacturing in India and became the

favorite bike of the Indian

Army but again it was the same old

terrible product that survived just

because India didn't have enough options

but again in the 1990s just like in the

UK when India got liberalized several

Japanese bikes enter the market and just

like in the UK they killed the sales of

Royal Enfield and just when the brand

was about to die ier Motors bought Royal

Enfield and tried to revive the brand

but again even they couldn't do anything

significant in the next 6 years and this

is when sidhart alal took over Royal

Enfield so the question over here is

when the britishers couldn't turn the

company around when Madras Motors

couldn't do anything to revive Royal

Enfield after 6 years of struggle even

when ier Motors themselves failed what

exactly did sidharta Lal do different

now amongst the several things that

sidharta Lal did we found four important

things that changed the fate of Royal

Enfield in India the First Act was

portfolio rationalization in fact Dr

Willman once said at podcast that while

good entrepreneurs dabble with scattered

Brilliance great entrepreneurs win with

focused Brilliance and in this case back

then iur Motors had multiple businesses

ranging from Footwear to Apper to even

trucks and sidharta realized that he

wouldn't be able to focus on growing the

bike business if he was too distracted

so the first thing he did after taking

over was to sell 13 out of the 15

businesses that ier operated why because

while ier dabbled with scattered

Brilliance sidharta wanted to win with

four focused Brilliance the second piece

of wisdom is perhaps the most underrated

and yet the most powerful attribute of

great entrepreneurs which is the

practice of empathy and they say that

great market research doesn't stem from

excels and McKenzie decks but from the

conversations that you have with your

customers in this case in spite of being

the son of a millionaire sidharta got

his hands dirty and chose to live the

life of his customers to understand what

the customers are going through so

sidharta got his bike and went on a road

trip not for days or weeks but for

months just so that he could have

meaningful conversations with the

customers and in this trip sidarta had

Rich conversations with his customers

and he asked them kab why did you choose

the Japanese bikes over Royal infield

what did you like about Royal infield

what would make you buy a Royal Enfield

and what exactly should they change to

make them buy a royal infield and after

he did it he even made his employees

practice empathy with the customers by

doing the exact same thing which is by

going on a road trip and talking to

customers and after connecting with

other Riders and riding the bike himself

sidharta could identify six issues with

the bike which no market research report

could tell him so the question is what

were these issues now listen to this

very very carefully because this is the

power of customer Insight the first

issue that he could find was the

packaging and transportation and this is

when he realized that while the bikes

were being packaged and transported to

the retail stores a lot of these bikes

were actually getting damaged but the

problem was that they came to know about

this damage only when the customer

started riding it so do you realize

after you buy the new bike you as a

customer will find something faulty then

you will have to take it to the store

and then get the bike fixed so this

resulted into terrible customer

experience and more importantly when you

buy a new bike and you see something

faulty it kind of turns you off right

this was the first issue that sidharta

identified secondly he realized the

problem with separate gearbox and the

cast engine and while conducting the MPD

experience he understood that this

design was making the bikes prone to

frequent oil because of which the

maintenance cost for the Riders was very

high and it caused a lot of trouble to

the Riders thirdly the outdated iron

engine design did not comply with the

modern and stricter emission Norms which

also invited regulatory concerns

fourthly there was a Kickstart problem

in the bikes and while all of the bikes

had a sell start button Royal Enfield

bikes had a Kickstart in fact one of my

old friends even told me that the bikes

back then had such a terrible kick

mechanism that while he kicked the bike

his leg would hit a part of the bike and

it would hurt him number five he found

that the customers had issue with sales

and after sales experience with Royal

Enfield and lastly as soon as new cheap

lightweight better mileage bikes came

into the market people started buying

them because they didn't feel that

connection with the Royal Enfield brand

it's like today customers buy overpriced

Jordan not because of its features but

because of the emotional connection that

they have with the Jordan story but if

the popularity of Michael Jordan Fades

away and kids don't and the Jordan story

why would they pay extra just to buy a

pair of Jordans right same was the case

with royan Enfield back then so with all

this data sidharta understood that the

Royal Enfield brand needs to be

aspirational that aspiration will lead

to an initial boost in sales and when

the sale happens the products need to be

super amazing which will eventually lead

to more brand value and will result into

more sales so the first thing that

sidharta did was that he moved from a

cast iron engine to an aluminium engine

and this alone gave some incredible

advantages to the bike design and if you

understand the Delta of the change that

it brought to the bikes it will blow

your

[Music]

mind firstly aluminium has a density of

2,700 kg per M Cube whereas cast iron

has a density of 7,200 kg per M Cube so

if you make a cube of 1 m x 1 m x 1 M

while a cast iron Cube would weigh 7,200

kgs and aluminium Cube would weigh just

2,700 kgs so do you realize aluminium is

insanely lighter than cast IR now for a

typical 350cc motorcycle engine this

could mean a weight reduction of

anywhere between 15 to 20 kgs and

obviously when the weight of the engine

is reduced by 15 to 20 kgs you can

handle the bike more easily you can

accelerate with less power the braking

becomes much easier and more importantly

the bike also becomes more fuel

efficient this is the first first

superpow that aluminium brings to the

table the second superpow is better heat

dissipation now if you look at the

thermal conductivity of aluminium versus

cast ion while aluminium has a thermal

conductivity of 205 wat per met Kelvin

cast iion stands at 50 wats per meter

Kelvin so in simple words heat can

travel almost four times faster through

aluminium than through cast iron in fact

my physics teacher once explained that

if heat is the car that has to travel

from aluminium versus cast IR while

aluminium acts like a highway for heat

where heat can travel quickly from point

A to point B cast iron acts like a bumpy

Village Road where heat travels very

very slowly now what this does to the

engine is that while a cast iron engine

takes a lot of time to heat and cool

aluminum will heat up quickly and then

when the heat moves out of the engine it

will reach the coolant quickly and it

will cool down the engine also very very

quickly so this heat dissipation red

reduces engine damage due to reduced

heat stress thirdly if you look at the

casting temperatures while the casting

temperature of aluminium stands at 600°

C for cast ion the casting temperature

stands at 1, 1200° C and if you don't

understand casting temperature it's very

very simple casting temperature refers

to the temperature at which molten metal

is poured into a mold to create a

desired shape so obviously the energy

required to achieve a casting

temperature of 60°

is far lesser as compared to 1, 1200° C

so this results into both less

manufacturing cost and less carbon

footprint and lastly there is the

advantage of damping capacity for those

who don't know damping capacity is a

measure of how effectively a material

can dampen or reduce vibrations in this

case when we say that aluminium has

three times more damping capacity than

cast iron it means when the engine

vibrates the cast iron block and

components do do not absorb much of the

vibrational energy and they transmit

these vibrations onto the bike and this

causes discomfort to the driver and also

erodes the engine parts whereas if you

look at aluminium aluminium by default

absorbs a lot of these vibrations in

such a way that even at high speeds the

bike moves very very smoothly because it

vibrates less so this gives Comfort to

the driver prevents damage to the engine

due to vibrations and also results into

less noise so do you realize just

because they shifted from cast iron to

aluminium Royal Enfield bikes had five

advantages lesser cost lighter weight

better handling less erosion of engine

health and most importantly a much

smoother ride this was one of the

biggest moves that sidharta made

fourthly Royal Enfield spent a lot of

money on improving their transportation

and changed their packaging to make sure

that bikes don't get damaged when they

enter the store and lastly sidharta

deployed a very unique brand building

strategy in the Indian market so after

his long Tour on the Royal Enfield and

after meeting with a lot of riders he

realized that Royal Enfield was seen

more as an engineering and Manufacturing

Company rather than an aspirational

brand like Ferrari or Harley-Davidson so

they did two things to connect with the

customers firstly they revamped their

stores and turned them into hang out

places for bikers where they could

experience the Royal Enfield die style

and these new stores had the feel of an

international retro cool brand which no

other bike company had and you you must

have noticed that Royal Enfield brand

Outlets are so loud and so appealing

that even if you don't want to buy a

Royal Enfield the store still catches

your attention secondly they created

communities like Enfield Riders

community and they also organized events

like motorers hello mote you know this

is the energy which makes a royal infeld

to make the best motorcycle in the

world there's just something about the

new ones where inspiration has been

taken more than any anything though

they're just wonderful motorcycles to

ride so this community and new store

design brought together many riders with

the same passion for bikes and more

importantly it created a tribe for

fellow bikers to connect with each other

and eventually connect the bike and the

brand itself this is how by spending

time with the customers to find the most

important problems of the brand by

changing the design of the engine by

building a brand value with stores and

community and most importantly by taking

care of the small things from the

gearbox to the Kickstart sidat revived a

company that failed thce and turned it

into one of the most iconic brands in

the Indian business ecosystem this is

the reason why today Royal Enfield sales

have shot up by 36 times from a mere

25,000 units sold in 2005 to an insane

920,000 units sold in

2023 and this brings us to the last part

of the episode and that are the business

lessons that we need to learn from the

iconic rise of Royal Enfield lesson

number one one as Dr Wiman once said

while good entrepreneurs dabble with

scattered Brilliance great entrepreneurs

win with focused Brilliance lesson

number two great market research doesn't

stem from excels and McKenzie decks but

from the rich conversations that you

have with your customers and your

potential customers in this case in

spite of being the son of a millionaire

sidharta got his hands dirty and chose

to live the life of his customers before

he tried to revive the company and that

is the reason why he was able to make

the most important change that revived

the Royal Enfield brand lesson number

three no matter how big a brand you are

if you have a bad product you are only

one step away from dying at the same

time if you have a great product even a

giant can't shake you in this case Royal

Enfield was big in UK and India both but

as soon as the Japanese bikes enter the

market they crushed the Royal Enfield

brand with a great product and at the

same time when Royal Enfield by itself

built a great product it was a dying

brand and yet it went on to beat the

likes of Harley-Davidson in the inter

Market that is the power of a great

product these are the lessons that you

need to learn from the iconic rise of

Royal Enfield and I just hope you learn

something valuable from this case study

that's all from my side for today guys

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Channel thank you so much for watching I

will see you in the next one bye-bye

[Music]

[Music]