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Kinetic plans to maintain adspend in 2004-05

24-May-2004
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Kinetic plans to maintain adspend in 2004-05

Two-wheeler maker Kinetic group spent Rs 70 crore in advertising and promotion (A&P) in fiscal 2003-04, which represented a sharp 30 per cent jump over fiscal 2002-03. The group is planning to maintain the same level of A&P spending in fiscal 2004-05.

Beginning current fiscal 2004-05, Kinetic has also developed a new sales and service concept ‘Focus City’, wherein each of the group’s sales officer and service engineers will be accountable for the performance of three cities or three dealers. The plan covers 300 of the Kinetic’s overall 450 two-wheeler dealerships and involves 100 service engineers and 100 sales officers.

Speaking to FE, Kinetic Engineering vice-president Punit Chaudhry said: ‘‘The A&P expenditure jumped by over 30 per cent because the Kinetic group launched scooter Nova and Zing besides four bikes in 2003-04. This fiscal 2004-05 we intend to maintain this A&P spend of Rs 70 crore.’’

The Kinetic group, which secured around 80 per cent of its revenues from two companies Kinetic Engineering, (which makes bikes, mopeds and step thrus), and Kinetic Motors (which makes scooters and scooterettes) is looking at a 25 increase in net sales in 2004-05. The group saw its net sales jump to Rs 1,000 crore in 2003-04, up from Rs 900 crore in 2002-03.

In terms of volumes, Kinetic is aiming at sales of one lakh bikes, 1.2 lakh scooters and 35,000 mopeds and step-thrus in 2004-05. As per the figures provided by the company, Kinetic sold 75,000 bikes, one lakh scooters and 25,000 mopeds and step-thrus in 2003-04. While bikes’ sales almost doubled from fiscal 2002-03, scooter and moped sales didn’t change significantly.

Mr Chaudhry said the group devoted its resources in 2003-04 to launch a slew of products and expand its dealership from 300 to 450 in 400 towns with over 600 service points.

‘‘This year we plan to build on last year’s expansion, which was aimed at increasing our motorcycle penetration in various towns,” he adds.

Kinetic’s escalating A&P expenses is clearly the result of intense competition in both the scooter (where Honda has emerged as a dominant player) and motorcycle market (where the power-play of Hero Honda, Bajaj Auto and TVS makes the job of new entrants a lot more challenging).

Kinetic is hoping its new focus on positioning its economy bike brand Boss as a fuel-efficient champion will inspire new converts. In 2003-04, Kinetic got 95 per cent of its bike sales from Boss. In the current fiscal 2004-05, the group hopes that its more expensive brands 170-cc Lazer (Rs 50,000), 170-cc GF (Rs 46,000) and 115-cc Velocity (Rs 39,000) will account for 50 per cent of bike sales, and the remaining will come from Boss.

Says Mr Chaudhury, ‘‘GF-170 and Lazer sell around 200-300 units a month. We are now targeting 1,000 units a month for these brands.’’

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