Management Consulting Interview Question - Market entry strategy for an Indian Motorcycle Company

Management Consulting Interview Question - Suggest a market entry strategy for an Indian Motorcycle Company

Our client is a two-wheeler Indian Motorcycle company. It wants to enter the foreign markets. Please help them identify which market they should enter. Also, help them with a strategy to do so. 

Market entry for a Motorcycle Manufacturer

Priyanka: I will start by asking a few clarifying questions to understand the problem statement better. 
Interviewer: Yes, please go ahead. 
 

Priyanka:  I would like to understand the client’s motive behind entering foreign markets. Are we looking at capturing the market share, increasing our revenue or profits, or something else?  
Interviewer:  The client wants to understand if the foreign markets are attractive or not. Then the focus will be on getting market share in the attractive markets. 
  
Priyanka:  Does our client have a few foreign markets that they have already shortlisted? 

Interviewer:  To start with, our client is considering North America, Europe, China, Africa, and Southeast Asia. 
 

Priyanka: That’s great. Then I will go one by one and rank these markets in the priority order or stack rank that our client can consider. 

Interviewer:  That’s sounds good. 
 
Priyanka: I would like to know more about our client’s product. What type of motorcycle do we manufacture? - standard, mid-range, sports, luxury, etc. 

Interviewer:  Our client specializes in mid-range motorbikes which are 100-250 cc. 

 

Priyanka: I would like to know more about our client’s product. What type of motorcycle do we manufacture? - entry-level, mid-range, sports, luxury, etc. There are also adventure motorcycles for long journeys. 

Interviewer:  Our client specializes in entry-level motorbikes which are 100-250 cc. 

 

Priyanka: Does our client plan to set up plants in foreign markets and manufacture there or does it want to export from India? This will also help me decide which countries are favorable in what aspect? 

Interviewer:  Our client is planning to export from India itself. 

 

Market Selection 

 

Priyanka: To shortlist or select the markets, I would like to do the following: 

• Understand consumer trends and preferences in each market 
• Understand the market potential and identify markets with a growing demand for motor vehicles 
• Analyze the competitive landscape in the markets 
• Evaluate the regulatory environment 

Interviewer: This looks comprehensive. 

 

Priyanka: Firstly, I will start by evaluating the Europe & North America markets. 
Our client should not consider entering these markets for the following reasons: 

1. Consumers don’t prefer entry-level bikes and are mostly inclined to premium bikes - sports or luxury 
2. North American & European markets are extremely competitive with big players like Harley Davidson, Kawasaki, BMW, KTM, etc. 
3. These markets have stringent regulations regarding emission standards 

So, I would give the lowest priority to these markets. 

 

Priyanka: Now coming to a market like China: 

1. Few established domestic brands dominate the Chinese market, and the market is already very crowded. These established brands are usually preferred by the local people in China. They create barriers for entry of new players. 
2. The entry-level motorcycle market is already saturated. 
3. If an Indian company wants to enter the Chinese market, it should establish some local partnerships with Chinese companies. This might not be in the interest of our client. 
4. Also, the ease of doing business in China is not favorable due to trade conflicts and the underlying political situation.  

Interviewer: Yes, that’s true. Other players have also found it difficult to sustain in Chinese markets. 
 

Priyanka: Do we have some information on South-East Asia or African markets? 

Interviewer: Yes, in South-East Asia, there is a specific variety of bikes called ‘Cubs’. Modifying our client’s bike to ‘cubs’ can take 2-3 years. African countries do not have any specific requirements. 

 

Priyanka: First let’s discuss Southeast Asian countries like Vietnam, Thailand, Indonesia, etc: 

1. In Southeast Asian countries, people usually prefer low-range bikes or scooters given there is a rising middle class.  
2. South-East Asian countries have a growing middle-class population. Hence there is a market potential for affordable fuel-efficient entry-level bikes which our client sells. 
3. While there are local players, there is room for new players as the market is not saturated and our client can explore this market. Given that Southeast Asia is closer to India, we can reduce our logistics costs. 
4. The only challenge I foresee is modifying the client’s bike to Cubs as they are popular due to fuel efficiency. 

Let's just quickly discuss Africa as well. 

1. Africa is an emerging market for two-wheelers. The low-range or entry-level bikes align with the budget-conscious nature of the African population. They will be affordable for the local African population. 
2. As Africa is experiencing growth, there is potential for higher purchase power and growing demand for personal mobility. 
3. The vehicle emission standards in Africa are not strict and regulated. 

 

So, the priority order will be: 

Africa > South-East Asia > China > North America & Europe 

 

Market Entry Strategy 

Given that we have identified the markets our client can enter. I would like to discuss the steps they should follow for market entry. 

• Market Segmentation: We will identify the target customer segments within the above markets to customize our product offerings to meet local tastes and preferences. 
• Channels of Distribution: We should establish and streamline distribution channels based on local market dynamics. These channels could be dealerships, authorized resellers, etc. 
• Local Partnerships: We should also consider local strategic partnerships with distributors so that we can get local knowledge and insights into the market, explore the existing networks, and navigate regulatory complexities. 
• Product Modifications and Compliance: Our client might need to modify their motorcycle models to meet local preferences, emission standards, and external conditions of the foreign markets. We need to ensure that our vehicles comply with local safety and emissions standards. This might require the necessary certifications and approvals. 
• Pricing Strategy: We also need to determine pricing strategies taking into consideration import tariffs, taxes, and local economic conditions. We should offer competitive pricing to attract consumers and gain market share. 
• Marketing and Promotion: We also need to resort to marketing campaigns that resonate with local consumers by highlighting the brand's unique value proposition. 
• After-Sales Experience & Warranty: We need to establish a robust after-sales service network to provide maintenance and support to customers. We should be able to do it better than the local players to win the trust of users. 
• Risk Mitigation: Before entering any market, we should develop a risk mitigation plan to address potential challenges such as political instability, currency fluctuations, or unexpected regulatory changes. We should also be prepared with strategies to adapt to evolving market dynamics. 

In my opinion, entering foreign markets requires 

• Significant investment of resources  
• Long-term commitment.  

Our client should be prepared to navigate challenges and dedicate sufficient time and effort to build brand presence and customer trust in the chosen markets.

To do this a well-researched and carefully executed market entry strategy, will come in handy. 

Interviewer: Thanks, it was a great discussion. 

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