From fashion we moved on to bicycles, investigating the journey from cycles to cycling at TI Cycles of India (a division of Tube Investments of India, Ltd.).
Ironically, our trip to TI’s headquarters was the bumpiest ride in Chennai. Pavement gave way to mud roads, where pot holes the size of small cars dotted the street filled with muddy water from Monday evening’s monsoon. Our bus (“Wheels”) felt more like a roller coaster than a vehicle. Not exactly the place I’d like to venture with my road bike. Once on the grounds of TI, the scene was completely different. There were groves of trees, orderly parking for bicycles, and no trash. After a delicious home cooked lunch, we were escorted to a presentation with Mr. Rajesh Mani, GM of Marketing and Retail. After his presentation, we toured two factories – one producing bikes for export to France and the other domestic cycles.
A bumpy road for a bike ride.
My observations fell into three categories.
1. Structured marketing and segmentation efforts
Having trained at Coca-Cola before TI, Rajesh spoke in marketing language familiar to all of us from our core class last Winter. TI has consistently outperformed market growth across all categories of bicycles by using smart marketing tactics: market and customer segmentation, astute distribution management, and product innovation.
TI made a conscious choice to focus on the middle to upper end of the bicycle market, with units generally priced >$100. TI markets their own brands (Hercules and BSA) as well as is the exclusive distributor in India of high end brands like Cannondale and Schwinn. Retail outlets range from exclusive stores in larger urban areas to third party distributors who help cover rural towns. They have even started a “bike café” where cyclists can meet for brunch or coffee after an early morning ride.
To get customers into stores and thinking of TI, the past few years included a campaign to move from “cycles to cycling” – including bike rides, partnerships with cricket players, and granting bicycles to top students. And finally, TI is building on its heritage of innovation – and this year launched the Montra line, the first carbon fiber bikes designed and manufactured in India for Indian consumers. Priced at ~$250+, these bikes are a first step toward the higher end of the bicycle market.
2. Not your average factory tour
Having a background in financial services, I have been keen on any opportunity to walk around a factory or warehouse during my time at Tuck. But nothing I have seen yet can compare to the access we were granted at TI. Unfortunately, we were not allowed to bring cameras but it was a true glimpse into manufacturing outside the developed world. Guided by members of the Operations team, we first witnessed the construction of bikes for export to France before seeing the assembly of bikes for domestic consumption. We saw women lacing spokes into prefabricated rims and workers placing stickers on competed bikes by hand. But the really interesting part was deep in the first factory. Since TI fabricates the frames on site for the exports and higher end bikes, we witnessed welding mere inches from where we were walking, workers cutting tubes to size spraying shavings onto our path, and men hand painting frames.
We were all struck by the mixture of automation and manual labor, though it appeared that TI was moving toward more automation as labor costs increase. We were able to see new automated welding machines on the floor as a sign of what is to come.
3. Women in the workplace
From our conversations to date, and observations – the formal workforce in India is still largely dominated by men. However, it was striking to see the large number of women employed at TI. Speaking with Rajesh after our tour, we learned that this is not an accident. A few years ago, the company decided to set a goal of hiring 30% women in all roles – from marketing to the factory floor.
This corporate diversity initiative yielded unexpected results – they have seen a reduction in turnover and absenteeism and an increase in productivity from these new workers. Especially in skilled factory roles, like welding, this drastically reduces costs since it is so expensive to train a new worker in the craft.
I asked about how these women are able to manage child care, since in India women are still predominately the primary caregivers and often do not work outside the home after marriage. Rajesh informed us that TI provides child care and school facilities on campus to help their workers manage family responsibilities without threatening attendance.
TI certainly has challenges ahead, in particular working to encourage infrastructure development (a common theme in our company visits). But we all walked away with a new appreciation for how targeted product development and creative marketing campaigns can drive growth.
Tuck India LE 2012 visiting TI Cycles