Friday, December 11, 2009

GOOD BYE BAJAJ Scooters : A Case Study of Product Pruning Strategy

Bajaj to stop scooter production, focus on motorcycles.
Bajaj find there is enough market space
for making motor cycles than scooters.
Recently with the launch of Tata NANO, Bajaj Auto
are in talk with Nissan to manufacture passenger cars
below US$ 3000 .

Customers do have a perception problem about firms.
To become an passenger car manufacturer overnight is
difficult , without having any prior experience of
manufacturing cars.

"Marketing is not a battle of products but a
battle of Perceptions."Rise & Trout

Keeping in mind the Passenger Car market, Bajaj
rightly walked out from manufacturing Scooters, which
was considered to the darling of the great Indian
middle class and was amongst one of first Indian
manufactures to sell FINISHED goods in the
international market.

I think in this is an excellent strategic move
Mr. Rajeev Bajaj have taken to stop manufacturing

Here this can a CASE STUDY of PRUNING of a product.

What and why firms do Pruning of a Product.

We have seen about product PRUNING, in other words
winding up or discontinuing a product due to
following reasons:

Demand Shifts due to Consumers Behavioral Change:
Declining demand or shift of change in taste of the consumers.

Insufficient Financial Returns: Sometimes the
pruning is done insufficient financial returns.
High Sundry debtors, or large sales cycle time
with low returns and high pressure on bottom
line will force the firms to go for product PRUNING.

Optimum Resources Utilization: Product PRUNING
enables the Firm to dedicate its resources to
its best products, and optimally utilize all
its resources.

Product Mix Alteration: The firm must first
evaluate whether a product or marketing mix
modification could revive demand for the ailing
product. If it finds it’s difficult it will
check out from the market by PRUNING.

Market or Segment Attractiveness: Certain price
/market/segments become attractive as because
that segments growth is phenomenal. So firms
operating in a particular segment do a product
PRUNING and slowly switch to that high growth segment.

Innovation and R & D: Successful firms continuously
stress on innovation and R&D, in order to value adds
to its product line. Product innovation is also a
process. Successful innovation helps a firm to do
existing product PRUNING.

Timing: Last but not the least the Timing is also a
very important matter at the time in PRUNING a
product. A product may be pruned gradually by
discontinuing all promotion expenditures .


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