Customer mindset on motorcycles v/s cookers

An image showing motorcycle as a tool for self-expression and Mrs movie showing cooking as oppression.

I had planned to write this post before the movie Mrs was released. Luckily, I didn't, and the movie proved that my line of thinking was true.

I recently bought a motorcycle, a Bajaj Avenger 220 Cruise. Lovely motorcycle. I use it for city riding and have no plans of going on road trips. I care about fuel efficiency. With my requirements, I could have easily purchased some commuter motorcycles and saved myself at least INR 80k. But I didn't because I never wanted to be seen or associated with it. Weird, right? Specifically, I don't want to be seen parking a commuter motorcycle; I am okay with being seen on the road with a commuter motorcycle. After all, it's difficult to spot who's underneath the helmet. Parking spots are usually where people who know me can spot me.

Now, in that same category, my other alternative was Royal Enfield (RE) entry-level models would cost INR 100k more than the Avenger 220 cruise. RE makes excellent motorcycles, and I am a happy shareholder. They make significantly more margins than Bajaj. I went to both of the stores with my brother. The RE guy was highly enthusiastic and helped answer our questions. He then told us he could customise the motorcycle as much as we wanted, and we could spend an extra INR 200k on the MRP. I must admit, the shareholder in me was a bit turned on. The showroom had a whiteboard where sales guys could keep scores. Amazing in-store experience for me and my brother. Then we went to Bajaj showroom. Very basic, no scorecard for salesmen. The salesman described the things and showed us how to bring down the prices. On a bit of questionnaire, he confessed that people they attract go buy something else for even an INR 2-5k difference.

My brother wanted me to buy Royal Enfield, and I was inclined to buy Avenger. He tried to convince me to think of all the memories I would have riding it and the riding experience, and that extra INR 100k spread over 10 years would only be INR 10k.

Now there's another story.

When I was in Bangalore, my brother visited me many years ago, and we went shopping for cookers. We had one criterion: only stainless steel, not aluminium. We went to almost all the shops and asked for the cooker of the lowest price, which fit our criteria, and my brother insisted that we aggressively pit one shopkeeper against another. We also showed them online prices, and we eventually bought the most basic stainless steel cooker from whoever offered it for the cheapest price.

As you see, motorcycles and cookers evoke different reactions in people. When some people think of motorcycles, they imagine all the memories they would make with friends, the riding experience, taking their girlfriends out on dates, etc. RE's marketing does help position itself in this way. Cookers are found inside kitchens where others don't see which cooker you use. They are neither status-increasing nor status-decreasing.

Now, especially in the light of Mrs movie, I don't think anyone buying cookers will get a positive feeling from it. Many would feel "oppressed". When people buy motorcycles, they check all the reviews, and when the day comes, they are excited. The showroom guys click photos. I bet that very few feel excited about buying a cooker today.

Some industries, like motorcycles, can produce large-cap companies, while others don't. And some small caps can never be large caps. Cookers are certainly never going to earn margins like motorcycles. Mrs movie has undone the marketing department's efforts for kitchen item companies. I don't know if the perception is going to change anytime soon.

While I am still formulating my investing strategy around small caps, I find it hard to make a small cap company, which will never be a large cap, a core and significant part of my portfolio. Large-cap companies fulfil more important desires for society than small-caps. A core part of my small-cap strategy might be around whether I can see a world where it fulfils an equally big desire like a large-cap company or not. Let's see.