“Marketing Strategies of Hero Honda Motors Ltd.”
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PROJECT REPORT ON “MARKETING STRATEGIES OF HERO HONDA MOTORS LTD.” prepared by GAURAV SINGH Roll no: 0221131706 SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR BACHELOR DEGREE IN BUSINESS ADMINISTRATION Under the guidance of MRS. PRATHIBA ABROL MRS. POOJA GUPTA Beri Institute of Technology, Training& Research affiliated to {Guru Gobind Singh Indraprastha University, Delhi} ACKNOWLEDGEMENT One of the most pleasant aspects of writing acknowledgement is the opportunity to thank all those who have contributed to it. This report has been made possible through direct and indirect support of various people for whom I wish to express my appreciation and gratitude. I owe my sincere and whole hearted thanks to Mrs. .Pooja Gupta & Mrs. Prathiba Abrol (Project Guide) for constantly guiding me and tackling variety of hurdles with implicit patience throughout my research project and whose deep involvement and interest in the project infused in me great inspiration and confidence in taking up this study in right direction. Without her overall guidance and help the project may not have seen to be completed. In the end, I also want to thank my friends for their support and help during the project. I convey my heart-full affection to all those people who helped and support me during the course, for completion of my Project Report. GAURAV SINGH CONTENT S.NO PARTICULARS PAGE NO. 1.0 Synopsis 2.0 Introduction 2.1 Industry overview 2.2 Company profile 3.0 Methodology 4.0 Main Report Analysis 4.1 Four P’s of Marketing 4.2 Comparative Marketing Strategies 4.3 Strategic Analysis (a) BCG Matrix (b) Five Force Analysis (c) SWOT Analysis (d) Expansion strategies adopted by Hero Honda (i) Expansion through cooperation (ii) Expansion through concentration (iii) Expansion through Diversification (iv)Expansion through Integration 5.0 Competitive Strategies 6.0 Findings 7.0 Conclusions 8.0 Recommendations 9.0 Limitations 12.0 Appendices 13.0 Bibliography OBJECTIVES TITLE: “An In-depth Analysis of Hero Honda Motors Ltd.” To study the marketing mix of Hero Honda Company. To focus on comparative study of different products of Hero Honda company with their success and failure. To study various promotional strategies and know about the current strategies keeping in mind the cut throat competition and arrival of Honda Company in India. To study overall advertising strategies of Hero Honda Company. To study various strategies used by Hero Honda companies by using BCG matrix, Porter’s five force model, Expansion strategies etc. used by Hero Honda. Honda the motorcycle giant entered India in the year 1984 as a joint venture between Hero group and the Honda Motor Company. The company was the first one to launch a four stroke 100-cc motorcycle in the country. The company right since inception has revolutionized the whole motorcycle market, which for long was dominated by two stroke vehicles. The Hero Honda Company through its large product range and competitive pricing followed by a large dealership and after sales service back-up has made other bike manufactures put on their thinking caps to develop novel strategies to combat this motorcycle giant. The company has over all theses years practiced advertising of its production by picking up the USP’s of the products and highlighting them. This has been a roaring success and on date Hero Honda is the leading manufacturer of bikes in India. Hero Honda has been very understanding to its employees. It treats all its employees as the biggest asset of the company. Its innovative HR policies are made to ensure that the best the of talent which the company employees, receives the best of remuneration, also the non monetary incentives given to the employees are such as to maintain the motivation levels to an all time high. SCOPE OF THE PROJECT The project involves, the study of the segmentation, targeting & positioning of Hero Honda two-wheeler in the market. And what people think about it. Hero Honda. It includes carrying out a survey among customers & the industry people as well as the retailers. It also involves the devising of repositioning of the existing brand by some modifications; advertisement should be so made that the targeted segment comes to know what the bike is. How is it better from others? So, that in near future this bike becomes a grand success. Information regarding the market share, cost factors, the marketing and promotional strategies etc was collected from primary data sources. INTRODUCTION HISTORY Before 13th April 1984 Hero Honda was two separate Industry or company or group. And they are Hero Honda group and Honda M. Company. The founder of Hero Honda Group is Brij Mohan Lal Munjal. The founder of Hero Honda Company is Joichiro Honda. The two famous company merged with each other on 13th of April 1984 and it becomes Hero Honda Motors Limited. Hero Honda began operation with the Establishment of the Dharuhera plant in 1985. Covering a total area of 58,000 sq.mts., this fully automated plant is equipped with state of art machinery, an in house R and D set up and today it produce an bike every 30 seconds. To meet the growing demand, Hero Honda opened another unit in Gurgaon, using FMs technology. Spread over 47,000 sq. Mts. It is rated as one of the most modern motorcycle manufacturing plant in the world. The average production is 1800 bikes every day. The 10 year contract that the Hero Honda Group had signed with Honda runs out in 2004. Honda has already set up 100 percent subsidiary in India, to make scooters (to begin with). Under the 10 year agreement first signed in 1984 and renewed in 1994, the Japanese firm is free to make motorcycles independently after 2004. Pawan Kant Munjal is confident that the relationship between Hero Honda in very deep- rooted, and the story of mutual interest will remain valid. He also says, by 2004, we probably would be close to the two million motorcycles mark. That would mean about Rs. 10,000 Crore in revenue turnover, which is huge. There are two graphs to shows the profit after tax and total income and bile sales in units since from 1995 to 2001. AUTO INDUSTRY- A REVIEW INTRODUCTION The Rs. 5500 crore Indian two wheeler segment is the second largest market fin the world after China. India’s two wheeler production is the third largest in the world after Japan and China. India has a well- developed two wheeler market with around 15 million households owning two-wheeler. The Indian two wheeler industry made a modest beginning in the early 1950 when Automobile Product of India ( API ) started manufacturing scooter in India. Until 1958, API and Enfield ( motorcycle) were the only two production. In 1948, Bajaj auto began trading in imported Vespa scooter and the three – wheeler- finally, in 1960’s. it set up shop to manufacturer them in technical collaboration with piaggio of Italy. The agreement expired in 1971. In the initial stages, the scooters segment was regulated regime, foreign company was not allowed to operate in India, and waiting time for getting Bajaj scooters was as high as 12 years. Java, and escort. While the Enfield bullet was a four strokes bike, the Java and Rajdoot were two-stroke bikes. The motorcycles industry was originally dominated by Enfield with 350 cc bikes. The motorcycles industry was cc segment. The two wheelers segment was opened up to foreign competition in the mid 1980’s which saw the entry of the Japanese manufactures into the country. CLASSIFICATION OF THE INDUSTRY The two-wheeler segment can be categorized into the scooter, mopeds, and motorcycles. Motorcycles: this segment has shown the best performance in the recent years. The market leaders in this section are Bajaj Auto amongst TVs Suzuki, Hero Honda and Escort. The splendor is the most popular segment among motorcycles. Two Wheeler Industry The Indian two wheeler segment contributes the largest volumes amongst all the segments in automobile industry. Though the segment can be broadly categorized into 3 sub-segments viz.; scooters, motorcycles and mopeds; some categories introduced in the market are a combination of two or more segments e.g. scooterettes and step-thru's. In the last four to five years, the two-wheeler market has witnessed a marked shift towards motorcycles at the expense of scooters. In the rural areas, consumers have come to prefer sturdier bikes to withstand the bad road conditions. In the process the share of motorcycle segment has grown from 48% to 58%, the share of scooters declined drastically from 33% to 25%, while that of mopeds declined by 2% from 19% to 17% during the year 2000-01. The Euro emission norms effective from April 2000 led to the existing players in the two- stroke segment to install catalytic converters. All the new models are now being replaced by 4-stroke motorcycles. Excise duty on motorcycles has been reduced from 32% to 24% , resulting in price reduction, which has aided in propelling the demand for motorcycles. Within the two-wheeler industry, motorcycle segment grew at a phenomenally high rate of 35% as against a deceleration of 3% for scooters and 27% for mopeds. In fact, motorcycle has been taking away the share of scooters and mopeds in a 4.3 million two-wheeler market and surging ahead with its market share of 68%. The increasing demand from semi-urban and rural segments may have caused this positive shift towards motorcycles. Also, easy credit coupled with low interest rate regime, constrained personal transport, increasing income levels in middle class and higher aspirations of young people all seem to be the factors responsible for such high growth in two-wheelers.