How Royal enfield became the King Of Indian bike market? | Business case study
Summary
TLDRThe 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
- ποΈ Royal Enfield is an iconic motorcycle brand in India, with the Bullet model being its most recognized.
- π The brand became global, but faced near-collapse multiple times in its history.
- π Royal Enfield's stock price has seen an incredible rise of 390,000% over the past 25 years.
- π A pivotal moment was when a 26-year-old, Siddhartha Lal, took over and turned the company around dramatically.
- π§ Siddhartha focused on rationalizing the product portfolio, selling off non-core businesses to concentrate on motorcycles.
- π€ Empathy was key; Siddhartha went on long road trips to understand customer needs and pain points.
- π οΈ He identified and addressed six major issues with the bikes, including packaging, engine design, and customer experience.
- π‘οΈ Transitioning from a cast iron to an aluminum engine improved weight, heat dissipation, manufacturing cost, and vibration damping.
- π¬ Royal Enfield revamped its retail stores to create a community feel and organized events to build brand loyalty.
- π The brand's sales skyrocketed from 25,000 units in 2005 to 920,000 units in 2023, becoming a global sensation.
- π 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
ποΈ 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.
π£οΈ 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.
π¨ 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.
π 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.
Mindmap
Keywords
π‘Royal Enfield
π‘Bullet
π‘Sidhartha Lal
π‘Portfolio Rationalization
π‘Empathy
π‘Product Improvement
π‘Brand Building
π‘Aspirational Brand
π‘Market Research
π‘Customer Experience
π‘Business Resilience
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
Enfield this video is brought to you by
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episode sound that
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 600Β°
C for cast ion the casting temperature
stands at 1, 1200Β° 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 60Β°
is far lesser as compared to 1, 1200Β° 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
if you learn something valuable please
make sure to hit the like button in
order to make y Baba happy and for more
such insightful business and political
case studies please subscribe to our
Channel thank you so much for watching I
will see you in the next one bye-bye
[Music]
[Music]
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