GAZI and the Shock Absorber Market in Thailand

Siam Suspension Innovation Co. Ltd. (SSI) in 2004 manufactured the first local brand of shock absorber for motor cycles (GAZI brand) in Thailand. This case documents how several entrepreneurs with a passion for motorcycles grasped an opportunity to invent, manufacture and successfully brand a decorative shock absorber for the ubiquitous motorcycle riders of Thailand. Prior to the development of the GAZI brand, shock absorbers were simply just another OEM (original equipment manufacturer) component on a motor bike that was typically only replaced when it was worn out. Shock absorbers were differentiated on their performance characteristics of smoothness of ride. Siam Suspension Company (SSI) changed all that with their decorative GAZI brand that had a mass appeal to consumers under 25 years who possessed a 125–150cc motorcycle (by far the largest segment) who simply wanted their motorcycles to look attractive.Rather than compete in the high volume, low margin standard shock absorber segment, SSI positioned GAZI as a decorative shock absorber. However, because GAZI used a new innovative gas filled technology (all other brands used oil filled cylinders) it also gave a much smoother ride on the rough roads of Thailand. GAZI's management initially created a “first-mover” advantage by targeting Gen Y consumers and convincing them to use shock absorbers to decorate their motorcycles. Hence a replacement market was born for decorative shock absorbers, with many riders replacing the OEM shocks as soon as they purchased a new motorcycle. Sales grew at a rapid pace until other manufacturers of standard shocks saw the success of GAZI. At this time the barriers to entry were quite low. As a SME (small to medium size enterprise) with limited capital, the challenge for SSI in 2012 is how to regroup and stay one step ahead of the competition and protect its market share from further erosion.