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Re-Entry Strategies For The Indian
• The iconic VESPA scooter is re-entering India and this time its under the
original owner the Italian 2 wheeler major Piaggio, reports CNBC-TV18
Swati Khandelwal Jain.
• Having travelled through a 100 countries and selling over 17 million units
globally till date, the question now is can Europe’s most popular scooter
win over the discerning Indian customer.
"The idea of a premium scooter does not exist in the market at this point of
time, again we are not super premium like the bikes of Harley or BMW, but we
are a lifestyle statement sort of a scooter."
-Krishna, AVP Marketing, Piaggio Vehicles Pvt Ltd, India,
Case At A Glance
• This particular case deals with the strategies used for the re-entry of Vespa(PIAGGIO
COMPANY) into the Indian market in 2012.
• The Piaggio Group introduced its popular brand (Vespa) of scooters in the Indian market
during the 1950s through a tie-up with Bachraj Trading Company but they had to
withdraw Vespa from the market due to disputes with the Indian partner.
• The company re-entered the Indian market in the 1980s through a joint venture with
Lohia Machinery Ltd (LML).
• In 1999, Piaggio ended the joint venture with LML. But it re-entered India in 2012 with a
refined model of its Vespa.
• Nevertheless, scooters being a niche segment in the two-wheeler market
in the India, it remained to be seen whether the Vespa would be
Main Issues Related To Case
» The market for scooters in India.
» The reasons for the re-entry of the Vespa into
» The market re-entry strategies of the Vespa.
» Whether the Vespa will be successful.
Company And Product: History
• Piaggio was founded in Genova in 1884 by Rinaldo Piaggio . It offered products
such as scooters, motorcycles, and mopeds in the displacement range of 50cc to
over 1200 cc and under the brands Piaggio , Vespa, Gilera, Derbi , Aprilia , Moto
Guzzi , and Scarabeo.
• The Vespa was a two-wheeled utility vehicle considered as a utilitarian, stylish,
fun, and cheeky product.
• Corradino D'Ascanio designed the Vespa scooter and the first Vespa was produced
in April 1946.
• The Vespa had become the best selling scooter in Europe and that it had appeared
in more than 200 Hollywood movies.
Scooter Market In India
• In the 1950s, there was very limited production of scooters in India.
• Scooters were being manufactured only by Automobile Products of India
(Lambretta) and BTC (Vespa).
• In those days, there was a huge demand for scooters in India and a
shortage of supply.
• In 1972, Kinetic Engineering Ltd entered the Indian scooter market.
• In the 1980s, Bajaj scooters had more than a 60 % market share in the
VESPA IN INDIA
• The Vespa first entered India in the late 1950s through a joint venture with
the Bachraj Trading Corporation(BTC).
• In 1971, two wheeler sales in India registered 0.1 million units per annum
and showed a continuous upward trend However, the Piaggio-BTC joint
venture was terminated in 1971 due to the Indira Gandhi government's
• In 1983, the Vespa scooter re-entered India through a joint venture with
Lohia Machinery Ltd (LML). Vespa scooters were sold successfully for more
than a decade through this joint venture.
• The sales of two wheelers in India went up to 3 million units per annum in
1998 but the partnership between LML and Piaggio ended in 1999.
• In 1999, Piaggio started its own subsidiary in India with Piaggio Vehicles
Pvt Ltd and started producing a three-wheeled utility vehicle under the
brand name Ape .
• In March 2012, Piaggio launched the Vespa scooter at a price of Rs 66,661
positioned at the premium end of the Indian scooter market.
• It invested over $30 million in setting up a manufacturing plant at
Baramati to produce 150,000 units per year.
Focused Point By VESPA
• On the Vespa's heritage and unique values.
• On sustaining the brand image of the Vespa through its communication
• 125 cc engine of superior technology and a 3 valve engine that no other
product in the Indian scooter segment provided.
Though technologically and performance wise, the
Vespa scooter was superior to other products in the Indian
scooter segment, Piaggio pitched the Vespa only as a lifestyle
Consumer Behaviour Studied By
The various consumer factor studied by VESPA are:
• Demographic - Targeted the YOUTH(Above 20-25)
• Personality(Consumer Materialism)
• Technology loving consumers
• Price sensitive consumers(Not Done Correctly )
• Cultural popularity
• It created a digital campaign in collaboration with OgilvyOne Worldwide
and Meridian Communications . As part of the digital campaign, Piaggio
created a 'Once upon a Vespa' contest.
• This contest’s prime focus was on giving the brand’s origin, its effect on
the global two-wheeler market, and its impact on the popular culture.
These Marketing Strategies educated Indians about the Vespa’s rich heritage
and culture in a fun way.........
Main strategies used by VESPA
VESPA used two main strategies:
2. Future Outlook
• The Vespa was priced at a 15-25% premium compared to competing
• The price was close to 40% higher than that of a basic scooter available in
the market(approximately at Rs.67,000, with the on road price coming to
Experts commented that the product would not be sold
on the basis of mileage or resale value and sighted that price
preferred when there was a competition among brands, Vespa
brand developed on the realms of fashion and lifestyle
• In India, there was a clear differentiation made between the premium and
economy segments in both the car and motorcycle markets.
• Experts said brands such as Harley Davidson and Triumph were considered
as premium motorcycles and these in general had much larger engines
and were superior in performance.
• In India, motorcycles like the Rajdoot and the Royal Enfield had got a
premium image with the associated retro feel.
Considering above points:
Vespa aimed at achieving something similar with a retro feel and an Italian
To conclude, it can be said that
• Vespa is trying hard to re-enter into the Indian market but its chances of
getting successful (which is main issue of this case)is not certain.
• The study of consumer behaviour in India with respect to the PRICE
SENSITIVE consumers is not up to the mark.
• No doubt, VESPA should focus on its heritage, unique values and brand
image but at the same time it should carefully focus on the pricing
strategy of the product.
• VESPA should focus more keenly on the CONSUMER BEHAVIOUR as in
country like INDIA, taste and preferences of the consumers change very