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. The growth in two-wheelers has been robust enough to counter the slow down and other factors constraining the overall business activity in the country. Also, rationalization of excise duty in the Union Budget 2002-03 had a positive impact on the demand for motorcycles. We also expect the motorcycles to continue to lead the two-wheeler segment like in all other Asian countries. Available forecasts suggest that this trend would continue for another couple of years and the industry would record nearly double-digit average annual growth up to 2006. During the year, there have been important developments in two-wheeler industry. The competition has strengthened though there are hardly any new entrants into the industry. There is an increasing emphasis on price and this has led to cost cutting efforts all across the industry, thereby, making the customer an ultimate beneficiary. The trend also saw introduction of new motorcycles with capacity ranging from 100 to 180cc bikes. We anticipate that many more new models will be launched during the year and provide customers plenty of choice at competitive prices. Businesses cannot consistently grow at 25-30 per cent. Each business has a tendency to taper and plateau after attaining a particular size. An annual growth rate of 10-12 per cent over a period of time is extremely healthy.
The TCS study rankings are conducted at the motorcycle segment-level to provide comparisons among similar groups of motorcycles. Motorcycles ranking highest in their respective segments for TCS are: Hero Honda CD100 SS (best standard motorcycle segment); Hero Honda Splendor (best executive motorcycle segment); Bajaj Pulsar (best premium motorcycle segment); and Royal Enfield Bullet Electra (best cruiser motorcycle segment). "The relatively low score for the premium segment indicates that most manufacturers have fallen short of meeting the high expectations of these buyers," states Mr. Lochan. "Bajaj Pulsar is one exception with segment-leading ratings across all aspects of ownership experience, particularly on areas related to vehicle styling."
Production, sales growth of the industry
The two-wheeler companies have been operating at high capacities due to high growth rates between 1993 and 1996. The growth is expected to lead to increase in the capacities from present 32 lakhs units to 50 lakhs per annum in the year 2002-03, whereas the actual production estimates by that period at an estimated growth rate of 18% is only 50 lakhs.
Demand In India the two-wheeler provide an easy and popular mode of personal transport for the middle classes. With public transportation system being inadequate and ineffective the demand for the two-wheeler is likely to rise. The two-wheeler sales are expected to touch the 1,786,776 mark by the end of the decade as against the annual sales of 1,249,271 in 2001-02.
Technology
With the birth of liberalization and increasing competition two- wheeler industry has witnessed technological changes. The four- stroke engine is being introduced in place of the traditional populations and fuel inefficient two stroke engine. The smaller capacity engine with the electronic fuel injection is also being used. Bajaj auto is now feeling the need to increase its technological competence. Wit the competition cashing in on the technological competence for their collaborators. So emphasize being laid on lighter and fuel- efficient vehicles. A class of vehicle having fuel efficiency of a moped and sleekness and style of the motorcycles called scooterette is growing. The vehicles offer a fuel efficiency of 60-65 km p/h. They enter into new segment, Bajaj Auto has come out with Bajaj Sunny, TVS with Scooty and Hero Honda has come out with a slender and upgraded version of sleek.
Government policy
The excise duty on two-wheeler, which has previous 10 percent to 30 percent according to the engine capacity, was rationalized is only two categories size. 15 percent for 75 cc engine capacity and 25 percent for above 75 cc engine capacity the excise duty structure has been left untouched since the 1993-94 budget.
Marketing and Distribution
In 1992 the recession brought in an lot of changes in automobile company As a survival tactic, upgradation of product and customer service was essential. Many introduced hire purchase schemes while other offered discount. The fierce competition forced company to innovative marketing strategies and to exploit the export potential of their products. Product diversification, product line extension, consumer finance, holding on to the prick line and upgrading after sales service to ensure post- purchase satisfaction and increasing the distribution network for greater market penetration were some of the methods employed by the manufactures. Two-wheeler manufacturer have adopted a long- term strategy where dealers are involved in establishing in a standardized corporate identity. Dealers have understood the need to create an exclusive ambiance for the customers to experience of pleasure buying. Abundant space, good interior and exterior have brought the dealer tangible return with productivity having risen. Revenue from workshop of the dealers has gone up because more vehicles have been serviced daily.
Two –Wheeler Financing
Though two-wheeler is the most preferred from of transport in India, the fact remains that it is a lower end market product. Most two-wheeler manufacturer like Bajaj Auto and kinetic engineering have set up their own finance company since organized financiers do not think the returns are particularly attractive. The argument given by some financiers is that the price of a Yamaha or Hero Honda is so high that people prefer to buy a second hand car instead. This is particularly true of small town where people desire to own a car and they have the means the two wheeler is then only a second vehicle for the family.
MARKET MECHANICS
Since 1985, when the first Hero Honda it has been and instant hit. A mileage miser with just about adequate performance further backed by image of Honda and Hero Cycles brand of aggressive marketing, it climbed up the sales chart outselling every other motorcycle by ten of thousands every years.
Over the years, company has received its share of accolades, including the National Association of India Award against 200 contenders.
SEGMENTATION, TARGETING & POSITIONING
From the current segmentation, targeting & positioning and consumer surveys we found that our client has targeted the following segments: ♦ Congested areas of urban cities.
♦ Males/Females between the age group of 18-36
♦ Middle class people , mostly officials & executives
The client analysis from our questionnaire it was found that our client has targeted the right segment
HHML is overlooking one feature in bike which is its low maintenance cost and reliability (i.e. less chances of breakdown) which is absent in its competitors. Therefore, in order to meet the sales target, two options are available with the client, one is to redesign the bike and second is to reposition the bike as “Bike with one time investment”. Since redesigning of bike may involve a big task and huge investment therefore we recommended repositioning the bike. COMPANY PROFILE Company : Hero Honda Motors ltd. Company Type : Automotive (Motorcycles & Scooters) Managing Director : Mr. Pawan Munjal
Hero Honda Motors Limited (HHML) started as a Joint Venture between Hero Group, the world's largest bicycle manufacturers and the Honda Motors of Japan. Today HHML is the manufacturer of India's largest selling motorcycles. Coming into existence on January 19, 1984, the company gave India nothing less than a revolution on two-wheels, made even more famous by the 'Fill it - Shut it - Forget it' campaign. With a market share of 42% in the motorcycles segment and 20.16% in the two wheeler industry as a whole, HHML is building on the trust of 1 million customers. The philosophy of HHML has been to produce vehicles based on consumer preferences. They ensured superior quality in style, and excellent performance in terms of fuel efficiency. This helped the company to become the market leader in the motorcycles segment. Fuel efficient bikes managed to overcome the price advantage that scooters had over motorcycles and this has initiated the shift of consumers from scooters to Motorcycles.
Shareholding Pattern
New Models
The company has a large portfolio of brands, with the money-spinners being mainly Splendor (the world's largest selling bike) and Passion. However, the company claims it was the launch of the 150cc CBZ which established Hero Honda as an aspirational brand. "The launch of CBZ got us into a different league altogether. Although the sales are just about 3,000 a month, it made us an overall bike company," says Sobti. Hero Honda would launch a new model in the 100cc-150cc category by the middle of the current year, the Managing Director, Mr. Pawan Munjal, said. Meanwhile, the company is yet to decide on the location of its proposed third manufacturing unit. “The feasibility study is on'', he said, adding that the new plant was likely to come up in the next 18 months. New launches are likely to help Hero Honda gain a market share in the coming quarters.
Hero Honda Motors Ltd, has launched a new 100-cc four-stroke bike, Dawn and CD100 and CD100 SS are likely to be phased out of the market once the new model sells “10,000 plus” units per month, “six months from today”. CD100 model sells close to 15,000 units per month.
Sales Performance It is my privilege to share with you the fact that by the end of the calendar year 2001, Hero Honda became the largest single two-wheeler manufacturer in the country and also in the world. The leading edge got consolidated by the close of financial year 2001-02 with a record sale of 1.43 million units. This is equivalent to 35.2% growth on the previous year sale of 1.03 million units. In the same manner, the market share of the company increased to 48% and 33 % in motorcycles and two-wheelers, respectively. Hero Honda Motor Ltd., the country's largest two-wheeler maker, finished the year 2002-03 with total motorcycle sales of 1,677,535 units; a growth of 18% over last year's sale of 1,425,302 motorcycles. For the month of March 2003, the company posted sales of 115,722 motorcycles compared to 135,464 in March 2002. As reported earlier, the economic slowdown, as a consequent of drought in certain parts of the country, and low agricultural production, affected the demand for a whole lot of durable including motorcycles. Lack of clarity on VAT issues also impacted sales. The company achieved a significant landmark in exceeding its sales turnover target of Rs. 5000 crore during the year; up from Rs. 4539.49 crore in the previous year. Last year, two new models were launched, namely Passion and Joy to address super-style and economy segments. Passion has found its position firm amongst Indian models, only next to Splendor, the largest selling bike in the world in terms of sales performance. Joy was re-launched as Dawn, in April 2002, with changes and value additions to cater to specific needs of the customers. Reportedly Dawn is doing well in its segments and has sold over 10,000 units in the initial months itself. Hero Honda has targeted a sale of over 1.8 million bikes for the year 2002-03. This effort is supplemented by two major launches this year, one in September and the other coinciding with World Cup Series in early 2003, which is being sponsored by Hero Honda Motors Ltd. These bikes will have some novel features and will be in the 100cc plus range. There is an ambitious programme of launching a new range of bikes with technical support from Honda in the coming years. With a slew of such measures the capacity available at present locations can at best support two-million production target at the existing plants. The company, therefore, is looking at the possibility of setting up a third plant to meet the future demand and for which techno- economic study is in progress. New Initiatives Customer and customer satisfaction is the purpose of our being an entity. To increasingly understand him and make him part of our ongoing business we have launched a unique CRM Program called Hero Honda Passport Program. The passport holders not only get concessions on parts and spares but also enjoy the benefit of company organized cultural and sport events. So far six lakh Hero Honda owners have been made members and we would like to soon get to a million figure. Some more initiatives on the aegis of Passport Program are planned for the year 2002-03. Another customer related initiative has been the increase of warranty period to two years since July 2001. This has attracted a great deal of customer attention. During the year the company has added nearly a hundred dealerships and SSPs. In terms of sheer numbers, the network has grown by 16% during the year 2001-02. We would endeavor to increase our reach to every corner of this country. On the operation side after the successful launch of ERP (SAP) last year, the company has now taken up its extensions to cover Human Resource division this year. They are also considering of extending the network to dealers, vendors and other associates. The idea is to increase the network capability to bring about efficiency in operations and also in our response to changes in the market. Motorcycle and step-through sales fell 3.3 per cent in March 2003 but posted a modest six per cent growth in April 2003. With the launch of the of the 100cc motorcycle CD Dawn and the 223cc Karizma the product portfolio of the company now caters to a wide cross section of riders. Hero Honda Motors Ltd. (HHML) has attained the distinction of being the largest two- wheeler company in the world in volume terms. With a new factory on the anvil, it is gearing itself for Operation One Billion, targeting $1 billion revenues in 2002-03. "Next year, we will enter the (dollar) billionaire's club (in revenues). After Operation Million for volumes in 2001-02, our slogan for the next year is Operation One Billion, said Mr. Pawan Munjal, Director & CEO, HHML.
MISSION STATEMENT “We, at Hero Honda, are continuously striving for synergy between technology, systems and human resources, to provide products and services that meet the quality, performance and price aspirations of our customers. While doing so, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keep the momentum going to take the company to excellence in the new millennium.”
Leading markets into the new millennium, Hero Honda is in the continuous process of providing innovative products and services which not just incorporate state of the art technology and systems but also meet the aspirations of its customers. Not to mention the highest standards which currently are a benchmark when it comes to business ethics and social responsibilities.
VISSION STATEMENT Aspiring of providing “cheapest” transportation to the poorest of India’s poor. Hero Honda now the leader in the two wheeler industry. Leaders are not born, they evolve over time. It all started on the auspicious i.e. “Baisakhi Day” the 13th of April 1984, when the Hero Honda Motor Company joined hands. On its journey to take on the No. 1 morale, Hero Honda created some prominent milestones…..
This leadership has been achieved only because of its philosophy to excel in all areas. In fact, passion to excel is a credo of the entire Hero Honda family and is a way of life in Hero Honda. The changing Scenario of increasing competition and the entry of new brands has made the credo even more relevant. It serves as a constant reminder to ensure excellence in providing service to the customer. They are providing outstanding customer service.
It is in keeping with Hero Honda’s own passionate commitment to provide ultimate customer satisfaction. Today, they consistently meet and exceed all requirement on quality, cost and delivery.
SERVICE STATEMENT Hero Honda’s constant Endeavor is to support the company's mandate of providing highest level of customer satisfaction by taking CARE of your motorcycle service & maintenance through our vast network of more than 1000 committed dealers & service outlets spread across the country. Our state-of-the-art authorized workshop have well laid out standards for Motorcycle servicing supported by fully equipped infrastructure in terms of quality precision instruments , pneumatic tools & a team of highly trained service technicians. Having your motorcycle serviced at an authorized workshop ensures highest standards of service quality and reliability.
OBJECTIVES
On 22nd March 2001, Hero Honda reaffirmed its undisputed Leadership by achieving record sales of one million bikes in a year. To the precise, 1,029,591. Hero Honda now has its site firmly trained on the semi-urban market, where people want value for money, yet something new.
The target to reach two –million motorcycles mark by 2004. ACHIEVEMENTS
AWARDS AND ACCOLADES
1992 Harvard Business school Awarded for Good Corporate Performance
(Economics Times, 1991)
1993 National Productivity Council Awarded for ‘Best performance in the Automobile Sector.
1994 Hero Honda Chairman declared business man of the year, by Business India magazine.
1995 National small Industries Corporation Ltd. Hon Ours our chairman with the National Award for outstanding contribution towards development of small scale Industries.
1998 Hero Honda becomes Number- 1 motorcycles Brand.
1999 Hero Honda receives ISO 14001 Certification for environment conservation.
2000 Splendor becomes the World’s number –1in two wheeler brand.
National Productivity Award for best performance in Automobiles and tractor sector.
2001 Ranked amongst the top 10 Indian Companies by the Far Eastern Economies Review.
Becomes World’s number –1 largest selling two wheeler. PLANS FOR THE FUTURE
Hero Honda’s performance has been more than satisfactory; it has earned substantial operating margins from a primarily engineering-based manufacturing business. All its stakeholders–promoters, suppliers, dealers and investors–are involved in its growth. It is sure it will maintain margins and grow at 12-15 per cent over the next two-three years, in line with the industry. The company aims to garner 35 per cent of the motorcycle market in the current financial year and has set a growth of 26 per cent for the year. Hero Honda has maintained its overall market share of 43-45 per cent in the motorcycle segment. While in the executive segment the company has lost its market share, it has gained a significant market share in the entry-level segment.
SALES
1 8 0 0 0 0 0 1 6 7 7 5 3 7
1 6 0 0 0 0 0 1 4 2 5 1 9 5 1 4 0 0 0 0 0
1 2 0 0 0 0 0 1 0 2 9 5 5 5 1 0 0 0 0 0 0 7 6 1 2 1 0 8 0 0 0 0 0
6 0 0 0 0 0 5 3 0 6 0 0
4 0 0 0 0 0
2 0 0 0 0 0 9 6 2 0 0 4 3 0 0 0 0 1 9 8 5 - 81 6 9 8 9 - 91 0 9 9 8 - 91 9 9 9 9 - 02 0 0 0 0 - 02 1 0 0 1 - 02 2 0 0 2 - 0 3 MARKET SHARE
1 0 % 4 %
1 9 % 4 4 %
2 3 %
H e r o H oB n a d j a a j TVS
E s c o r t s O t h e r s METHODOLOGY
The nature of the study is general as well as focused on the Marketing mix and strategic option which Hero Honda Motors Ltd. has adopted or it can adopt to outperform its competitors. We tried to collect relevant data. Project depends upon the primary as well as secondary sources, which are as follows.
RESEARCH APPROACH
(I) PRIMARY SURVEY
1. P/S T1 was done visiting Hero Honda Motors Ltd. Corporate office, Basant Lok, Vasant Vihar regarding segmentation, targeting and positioning of their brands in the two wheeler sector. A lot of desk research was also done. Experiments on various motorcycles by riding and checking the difference between them.
2. P/S T2 conducted by visiting Hero Honda Motors Ltd. And retailers of Hero Honda {Khanna Automobiles & ESS AAY Agencies , auto needs(INDIA) Pvt. Ltd).Basic objective was to know their product price, distribution channel, their customers, their process of segmentation ,targeting and positioning in the problems faced by the customers and lastly their views about the model.
3. P/S T3 conducted by taking views of the customers using this model of Hero Honda i.e. Hero Honda splendor. Their view points About the model, their grievances/ complaints about it. Last but not the least their views about modification required in it.
RESEARCH INSTRUMENT
The research instrument used was a structural questionnaire. It was formulated after detailed discussion.
(A) SAMPLING PLAN SAMPLING UNIT: The sampling unit constituted the people in the middle income group for the bikes.
SAMPLING SIZE: the sample size consists of 45 customers, out of which 5 refused to fill the questionnaire and 5 forms were found incomplete.
SAMPLING PROCEDURE: Convenience sampling.
(B) Also used some strategic tools and concepts to observe the Hero Honda Motors LTD. Marketing strategies. These tools and models are:- • BCG MATRIX • PORTER’S FIVE FORCE ANALYSIS • SWOT ANALYSIS • EXPANSION STRATEGIES • COMPETITIVE STRATEGIES
(II) SECONDARY SURVEY
1) S/S T1 was conducted gaining information from different magazines newspaper. And on company from their annual reports and balance sheets.
2) Promotional strategies used at present like sponsoring programs and various event which have no direct bearing on the product. However the main focus is to influence youth- the largest group. e.g. Hero Honda Sa- Re-Ga-Ma.
(III) OTHER SOURCES / TECHNIQUES OF DATA COLLECTION: Internet website of the company.
MAIN REPORT ANALYSIS
Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products and values with each other. In this way marketing is a business function that identifies customer needs and wants, determines which target market the organisation can serve best, and designs appropriate products, services, and programs to serve these markets.
Marketing is much more than isolated business function it is the philosophy that guides the entire organisation. The goal of marketing is to create customer satisfaction profitably by building-value laden relationship with important customers as well as fulfill certain organizational objectives.
People throughout the various kinds of organizations-product or service, profit or non- profit, domestic or global, small or large, need to know how to define and segment a market and how to position themselves strongly by developing need satisfying products and services for chosen target segment. They must know how to price their offerings to make them attractive and affordable and how to choose and manage intermediaries to make their products available to customers. And they need to know how to advertise and promote products so customers will know and want them.
The objectives can be achieved through the implementation of suitable marketing strategy by the organisation. It is the marketing logic that is formulated keeping in mind the needs of the consumers and also strategies of the competitors. The 4 factors affect it are as follows:
Let’s see how Hero Honda has incorporated 4 P’s of Marketing in its organization.
4 P’s OF MARKETING
(I) Product - The tangible offer to the market, which includes the product quality, design, features, branding and packaging.
PRODUCTS Hero Honda has a wide variety of models ranging from the CD Dawn in the value for money market to the 223cc Karizma which has set the new norm in the performance segment.
● The KARIZMA “top of the line” motorcycle from Hero Honda. The bike is based on power and styling. ●. The SUPER SPLENDOR 125 features Hero Honda's new Quantum Core engine which also does duty on the Glamour. The motorcycle also comes with optional disc brakes and electric start.
● The Hero Honda PASSION PLUS adds to this package with a redesigned body, more powerful headlight, comfortable seat and a broader tire.
●The Hero Honda CBZ produces 12.8 BHP and with its attractive styling and disc brakes it is the preferred choice of those looking for a bike with that something extra and also available with optional self start.
● The SPLENDOR having undergone a recent revamp and now sold as the Hero Honda SPLENDOR+ continues to dominate the executive segment of the motorcycle market
● GLAMOUR - New Quantum core 125cc engine from Hero Honda which has a unparallel quality to give better power delivery in the riding zone 0-60kmph than any other motor cycle in 100cc-125cc segment.
● CD-DAWN - A smooth ride over the toughest of roads with maximum fuel efficiency at an affordable price, now one can bid goodbye to all your commuting problems. Scooters ● PLEASURE - Lady Rider exclusively for women customers.
Hero Honda Motors, India's largest motorcycle company, has launched the premium segment 223cc motorcycle Karizma priced at Rs 79,000 (ex-showroom, Delhi). Many of the products which the company have started with, have been phased off. Now the existing products are Karizma, Ambition, CBZ, Splendor, Splendor+, Passion, Passion Plus, CD 100 SS, CD 100 and CD Dawn. Among these we are going to analyze only three – (1) CBZ, (2) Ambition and (3) Splendor. • CBZ • Ambition • Splendor
The TCS study examines customer evaluations at three distinct ownership periods: 1 to 6 months, 7 to 18 months, and 25 to 36 months. This helps in understanding the differences in satisfaction during initial ownership, in-warranty and post-warranty ownership periods. Satisfaction ratings decline as the length of vehicle ownership increases. However, Hero Honda Splendor is among the few models to maintain consistency across the three ownership periods.
SPLENDOR : Specifications
Engine 4-stroke, OHC, single cylinder, air-cooled Displacement 97.2cc Clutch type Manual Clutch Primary - Clutch Secondary Multi-plate wet Transmission 4-speed constant mesh Final Drive Roller chain Ignition Electronic Starting Kick starter Frame Double cradle tubular type Suspension (Front) Telescopic hydraulic fork Suspension (Rear) Swing-arm with hydraulic dampers Dimensions (LxWxH) 1950x720x1040mm Wheel Base 1230 mm Ground Clearance 159 mm Dry Weight 100.3 kg Tyres:Front/Rear 2.75"x18"/2.75"x18" Max.Power 7.2 PS @ 8500 rpm Max.Speed 90 km/h Fuel Tank Capacity 10.5 ltr (1.4 ltr reserve)
CBZ : Specifications
Displacement 156.8 cc
Power 12.8 PS @ 8000 rpm
Torque 1.26 kg.m. @ 6500 rpm
Acceleration 0-60 km/h in 5 seconds
Bore x stroke 63.5 mm x 49.5 mm
Compression ration 8.5:1
Type of brake
Front Drum type (130 mm diameter)
Rear Drum (130 mm diameter)
Type of engine 4-stroke, single cylinder, air-cooled, OHC
Fuel Tank Capacity 12.5 litres (Full)
2.5 litres (Reserve)
Check out these unique features
Transient Power Fuel Control (TPFC) System: For quick acceleration, providing a sudden surge when required. A feature which is used in some of the most advanced cars.
Tachometer and Tripmeter: Tachometer displays the engine rotation speed. And first time feature - the Tripmeter, measures the distance traveled in a trip. Dynamic Vibration Dampers: The dampers incorporated in the handlebar, ensure that your ride is smooth and easy. Air injection system: Inject fresh air into the exhaust port, to meet emission norms. Unique Trapezoidal headlight: Gives the CBZ a distinctly stylish look and helps see clearly in the darkest of night.
Multi lever Lockable seat: Provides storage space. It also doubles as an antitheft mechanism for the CDI unit, R R Unit and the battery, as the side covers can be opened only after unlocking the seat.
Zero crank case evaporative emission: A pollution control feature so advanced that it is for the first time in India. keeping alive the Hero Honda tradition of special care for the environment. So come, test ride the Hero Honda CBZ. Unplug your imagination.
Motorcycling Unplugged
It is equipped with 5 gears and 156.8 cc engine that generate 12.8 PS power and enough to take it from 0-60 km/h in just 5 seconds, effortlessly touch the top speed of 100 km/h. The CBZ also has the widest rear tyre - with a unique treat pattern that is not available on any Indian motorcycle; and large, 130 mm drum brakes. Front disk brake is an optional feature, it enhances the braking performance.
AMBITION
Specification
Engine 4-Stroke, Single Cylinder, Air Cooled, OHC
Displacement 133 cc
Medium Power 11.0 BHP at 800 rpm
Gar Box 5-5 speed constant mash
Clutch Multi-plus wat type
Max speed 100 km/h
Acceleration 0 to 60 km/h in 6 seconds Frame Single Cradle Tubular Diamond Type
Suspension (Front) Telescopic Hydraulic Front Fork
Suspension (Rear) Swing arm with 5 step adjustable Hydraulic shock observer
Type: (Front) 2.75 x 18 x 4 PR
(Rear) 3.00 x 18-4/6 PR
Final Drive Roller Chain
Battery 12V-2.5 Ah (Kick Start) 12V-5Ah (Self start)
Ignition Digital CDI system (AMI)*
Starting Kick Starter/Self Starter**
Wheel base 1285 mm
Ground clearance 150 mm
Length 2030 mm
Width 760 mm
Height 1100 mm PASSION Specification Engine 4-Stroke, Single Cylinder, Air Cooled Bore x Stroke 63.5 mm x 49.5 mm Displacement 156.8 cc Compression Ratio 8.5 : 1 Carburetor Side Draft Type (With TPFC) Engine Oil Capacity 1.2 Litres Clutch Multiplate Wet Type Transmission 5-Speed, Constant Mesh Final Drive Roller Chain Ignition Electronic CDI Starting Kick Starter Frame Diamond Tubular Type Fuel Tank Capacity 12.5 Litres (2.5 Litres Reserve) Suspension (Fr.) Telescopic Hydraulic Fork Suspension (Rr.) Swing Arm with 5-Step Adjustable Hydraulic Damper Drum Version (130 mm Dia.) Disc Version - Caliper Type Types of Brakes (Fr.) - (Rr.) – Drum (130mm Dia.) Dimensions (LxWxH) 2090 mm x 755 mm x 1115 mm Wheel Base 1330 mm Ground Clearance 150 mm Dry Weight 130 kg Tyres (Fr./Rr.) (2.75 x 18-42 P) /(100/90 x 18-56P) Max. Power 12.8 PS @ 8000 rpm Max. Torque 1.26 kgm @ 6500 rpm Acceleration 0 - 60 km/h in 9 seconds Max. Speed 100 km/h
Yamaha Libero to take on Honda's Passion
Yamaha Motor India Ltd, the wholly owned subsidiary of the Japanese two-wheeler major, will be launching a 110cc mobike called Libero during the festival season in October. The bike will be price-positioned against the likes of the Hero Honda and Passion.
The 100cc Passion is priced around Rs 41,000. But Yamaha could well be preparing for a price war in the backdrop of its sales graph turning south after a few months of acceleration, they added.
Libero will be a new entrant in the segment which is already cluttered with bikes such as Dawn, Splendor and Passion (all 100cc bikes from Hero Honda), Boxer and Caliber from Bajaj Auto, Victor from TVS and Yamaha's own Crux, apart from new launches such as the LML Freedom and the Kinetic Boss.
The 100-110cc segment commands more than 90 per cent of the market which is growing at the rate of 45 per cent per annum.
Hero Motors makes a Smart move
Hero Motors, a division of Majestic Auto Ltd, has launched a 75-cc four-stroke step- through bike Smart. The two-wheeler, which claims a record fuel-efficiency of 111 kilometers per litre, will be priced at Rs 19,900 in south and Rs 21,500 in north India. Besides Smart, a 92 cc-engine bike will also be launched in April 2002.
Smart's engine has been developed in collaboration with Briggs and Stratton, Milwaukee, US while design inputs have been secured from Italy-based Idea (the company associated with the designing of Indica). Smart's introductory pricing in southern market is expected to take on two- wheeler major TVS, which commands a bulk of the 25,000 mopeds a month market.
The brand will be supported by a comprehensive Rural Access Programme (RAP), under which the Hero Motors team will hold demonstrations in rural and semi-urban markets and interact directly with rural customers. Hero Honda Unveils 223-cc Karizma
Hero Honda Motors Ltd has launched 223-cc motorcycle ‘Karizma’ (pronounced karitzma), priced at Rs 79,000 (ex-showroom, New Delhi). Initially, the premium sports bike will be rolled out in top 175 dealerships (out of its network of 450 dealerships) in 100 towns. Company managing director Pawan Munjal hoped to sell around 20,000 units of Karizma in 2003-04. ‘‘Between Karizma and CBZ, we would sell over 45,000 units this fiscal. Margins are certainly better than what we can get in entry-level bikes.’’
The company was currently working on the next generation of engines, which would drive a wide range of products in the future, including a new batch of bikes targeted at the volume segment in fiscal 2004-05.
Fill it ,Shut it and Forget it is the slogan that one remembers of Hero Honda in the early days of its bike campaigning. Now, is it moving towards shut it and forget it. For years, Hero Honda has dominated the 2 wheelers market with its CD100,splendor and Passion(relatively new).Now, things are a bit different as there is a lot of cut throat competition as the market is dancing to the tunes of the customer. CBZ was a bike which was good at looks but the same cannot be said about its performance. With the launch of victor, freedom and pulsar150 there was a new segment which was open where there was an emphasis on power and fuel economy also. And now everybody is vying to take the honors for leadership in this segment.
Hero Honda has responded with a 133cc 11BHP 79Km/ltre bike to woo the people who are looking to buy the old frugal 100cc bikes. It has been a couple of months or more since this bike was launched and somehow, I do not see many vehicles (Ambitions) running around.
1) Price:
Somehow, this still is a major factor in India when people buy bikes. They cost around Rs. 30,000 to Rs 51,200 with the disc brakes in Bangalore and around Rs. 56,000 for the electric start option.
2) Looks and Features:
We as humans, first form an impression about things by the way they look to our eyes and it goes without saying that bikes should be appealing to the eyes. Ambition definitely is not a good looking bike simply because it has got some things wrong in its looks. Tank shape and contours: The tank is one of the components that make a bike look like Mr. Handsome or Mr. Ugly.
AMI: Advanced Microprocessor Ignition system which facilitates a good mileage, pickup with better control on ignition timing.
Colors: The Hero Honda bikes come with 9 colors with at least 6 of them good for nothing.
3) Suspension, Stability and Reliability:
Suspension: Should be definitely among the best in the class and should not be the prime suspect for your back problems. It should have adjustable shocks which can be tuned for your liking.
Stability: Cannot really say about stability as it needs some thorough testing.
Reliability: Experience says that bikes have to be relatively maintenance free.
4) Fuel economy and Electrical:
Fuel Economy: This definitely will play on the buying minds if the bike has to succeed.
Electrical: The lighting should be the best.
5) Fit and finish: The quality feel is on the higher side and it definitely gives a lot of satisfaction when one owns one.
6)Specifications: Engine, Displacement, Max power, Gear box, Frame, Cradle, Weight, Top speed, Fuel economy, Braking, Electric start (Optional)
7) Riding impressions:
The pickup is on the faster side of decent and definitely bound to be of some help in the city traffic for short and quick overtaking. The engine should sound soft. The seating position should be comfortable. 8) Publicity: This is the critical aspect of any marketing strategy which has a great impact in the minds of the youth who yearn to have a bike.
9) Verdict: This is the final decision which the customer makes after getting exposed to all the steps said above.
What Does Customer Want?
The customers of Hero Honda, according to the Asst. Manager (Sales) are very particular about the colors that Hero Honda offers in its wide variety of scooters. He said that the customers are very much aware of their purchase. Gone are the days when the sales people could influence the buyer to buy a particular product. Almost 90-93% of the customer, whoever comes to the showroom. Usually comes after he/she had made a decision. So, the work of the sales person is less. The rest 7-10% have some doubts with regard to the purchase of Hero Honda. It is here, where the sales persons have to do some work in convincing the customers about the scooter. The sales person, in this regard conveys the customers about the mileage, strokes and also the parameters that the customers enquire.
DRUM BOXER CT 4 4-SP 100 7.02@85000 1215 150 14.8 40,159 BOXER CT DLX 4 4-SP 100 7.02@85000 1215 150 14.8 40,703 BOXER SUPER H 4 4-SP 100 7.02@85000 1215 150 14.8 41,532 BOXER AT 4 4-SP 100 7.02@85000 1215 150 14.8 37,754 ELIMINATOR 4 5-SP 173.9 15.1@7500 1460 ---- 14 95,840 PULSAR 150 ES 4 5-SP 111.6 12@8500 1265 155 18 58,533 PULSAR 150 4 5-SP 143.91 12@8500 1265 155 18 54,675 PULSAR 180 4 5-SP 143.91 15@8000 1265 155 18 64,118
(II) PRICE
Pricing is a important component of marketing mix of the firm. Determining the prices of different products of a firm is very difficult task of the marketing manager. Price denotes money value of a product. If represent the amount of money for which a product can be exchange. In other words, prices represents the money which the buyer pays to the seller for a product price represent the exchange value of goods and services in terms of money. Price is all around.
Price factor has very well been touched by the manufacturers. The manufacturers are charging very comparatively cheaper price i.e. Rs 45000 approx. The pricing strategy of the company is very set. they price their product according to the cost of production and also by keeping an eye on the price of the competitors of that segment and demand of the product in the market.
A pricing strategy which ensures an average manufacturer margin gives dealer an adequate return and created a reputation with consumers like “a company selling a good quality product at a reasonable price. Industry focus them selves the low cost producer with good quality and aimed to maintain the price advantage in every market of two wheelers.
The amount of money that customer pays for the product. The price of the product should commensurate with its perceived value. If does not, the buyers will turn to competitors products.
Hero Honda, which has a technology tie-up with Japan's Honda Motors, was currently discussing the feasibility of manufacturing scooters for the Indian market, Mr. Munjal said. However, the company has a binding clause with Honda's scooter manufacturing Indian subsidiary, preventing it from making scooters till 2004.
Hero Honda group ensures an easily affordable pricing through excellent transportation to common man. I fixes customer centric pricing that provide customer total satisfaction.
Hero Honda’s pricing objectives are: List price, Discount, Financing schemes, Credit terms, and Maximizes profits. Hero Honda group ensures an easily affordable pricing through excellent transportation to common man. It fixes customer centric pricing that provides the customer with total satisfaction. (III) PLACE – Includes the various activities the company undertakes to make the product accessible and available to a large number of target customers.
DISTRIBUTION
HERO HONDA HAS direct contact with the dealers. There are no middlemen involved. The dealers directly sell to the customers. The channel is of 1st level which has only the dealers as the link between the customers and the company.
Distribution Channel
Manufacturer Dealer Customer
Sub-dealer
How Promptly The Work Done?
The dealers keep in contact with the manufacturer or the head office or the regional office. As the order fax reach the manufacturer, as in Delhi it takes only one-nights time of transit from the manufacturer to the dealer. The dealers in far off places like in Assam, South India and others, it takes a maximum of 7 days to reach the placed order due to the transit.
Basically, the delay of delivery of the order is basically due to the transit time. The transit time in near places is not more than one night.
How The Transit Done? The manufacturer's have their own transportation facilities. The manufacturers have trucks which can load 18-25 units of bikes at a time, individually. When the units are dispatched from the factory, or manufacturing it, it is in its standard form and accessories like seat cover, handle cover, back-looking glass and others are not part of the standard unit of the two wheeler of Hero Honda.
The transportation trucks straightway reach the warehouses of the dealers. In case the warehouse of the dealer is not there then the trucks straight away come to the dealers showroom where they usually have some place for storing the stock as in the case of Daryaganj dealer. The Daryaganj dealer's stock is stored in the place just behind the showroom. For this particular dealer the transportation cost to bring the units from the warehouse to the showroom is saved and thus the distribution cost is saved. But there are dealers like in Green Park, this dealer does not have their ware house nearby to the showroom which means that this dealer has to keep their own transportation system to bring the units from the warehouse to the showroom which is not cost effective.
The sub-dealers usually hire the trucks to get the units delivered to their outlets. Sometimes the dealer’s truck is used by the sub-dealers to carry the units to their outlets on goof faith. If the sub-dealer is the part of the same dealer then the transportation charges are less and if hired then the cost is high for the sub-dealers.
(IV) Promotion – The fourth marketing mix tool, includes all the activities the company undertakes to communicate and promote its products to the target market. It consists of advertising, sales promotion, public relations, and direct and online marketing.
Faced with unrelenting global competition, and ever more powerful and demanding customers, companies across the world have come to realize that their old ways of operating – their long standing methods for developing, making, selling and servicing products – are no longer adequate. They have also discovered that their existing tools for improving operations are not making a dent in persistent problems of high cost, poor quality and inadequate service. In order to address these problems, these companies are taking measures more radical than they have ever taken before. They have begun to re-engineer, they have ripped apart their old ways of doing things and started with clean sheets of paper. Hero Honda has effectively evolved remarkable marketing strategies for its 4P’s. It is because of this that Hero Honda has been able to come out a niche for itself. But before we discuss the strategies for the 4Ps separately, it is imperative that we know about the marketing strategy. This is what keeps the Hero Honda going and have reinforced its leadership in the motor bike segment.
The internet’s greatest potential has been superbly exploited by the small business ventures to reach customers directly. The market had virtually opened quickly to market changes by providing accurate market intelligence, faster communication and greater planning time. This helped to reduce the market volatility the dealer to understand the significance and value of e-commerce and benefits of embracing the latest in information technology, and initiate concrete steps to capitalize on it. The marketing is also done through sales promotions, Advertisement, publicity, etc.
Strong dealer relationship expands the scope of the commercial paper programme in an organization and Hero Honda is doing that. They are doing the communication through newspaper, magazines and television channels, etc.
When Do They Sell More?
Hero Honda scooters peak season selling state from the month of April, just after the budget and after the month of November the sells become slack. This is mainly due to the people think that the budget can reduce the prices and moreover the budget usually brings in a difference at Rs. 1000 - 1500. This is an important factor for increasing in sells. Usually in the month of November the manufacturer comes with re-modeling and also new launches. People wait till the month of April to see whether the prices are slashed or not.
ADVERTISEMENT STRATEGIES Advertisement, local events sponsorship and promotions and inviting a prominent personality for the inaugural or first like delivery function would contribute effectively in generating a wider local interest and attention.
Hero Honda’s latest DKD –2 commercial its two brand starring its Ambassador and India’s heart throbs, Hritik Roshan and Sourav Ganguly, truly reflects the multi fact roles that today’s new generation plays. The commercial reflecting the charisma and vibrancy of these two stars, takes “Desh Ki Dhadkan” to dazzling new heights. It is young, colorful and vibrant and represent the icons of contemporary times. And it will go a long way in strengthening the leadership status of the product by the mile.
The new commercial is powerful film repeat with an impressive storyline. The effort to pack the story, drama and impact in just 60 seconds was phenomenal challenge itself. The idea was born itself. The idea was born out of the very essence of “Hero and Stars”. Keeping in mind would cause on the drama and impact it would cause on the audience. It is a commercial packed with action where today’s heart throbs, Hritik and sourav, are seen tackling new roles. The story starts in a field adjoining a hill with two cool men, Hritik and Sourav on Hero Honda bikes and Passion respectively.
Both Sameer and Aditya win lifetime opportunity act with Hritik and Sourav, the two star heartthrobs of millions in India and all four will be seen in action in the new commercial DKD-2.
These are some of the Slogan for every product (Bike) and these are following:-
CD-100 : Fill it, shut it and Forget it.
CD100SS : Tough and Rugged.
Splendor : Designed to Excel.
Street Smart : License to enjoy.
Passion : When style matters, Bike born in studio not in factory. CBZ : Motorcycling Unplugged.
Hero Honda : Leading the way.
Celebrity Endorsement: Hero Honda has roped in film actor Hrithik Roshan, Captain of Indian Cricket team Sourav Ganguly, Mohammed Kaif, Harbhajan Singh, Zaheer Khan, Yuvraj Singh and Virender Sehwag as its brand ambassadors.The four players will join the current Hero Honda brand ambassador and captain of the Indian team, Sourav Ganguly, to form the Hero Honda `Team Ambition'. Incidentally, the `Ambition' is also Hero Honda's latest launch in the market. Announcing the formation of the Hero Honda `Team Ambition', Mr. Pawan Munjal, said, "Indian Cricket and Hero Honda have both made the nation proud and helped the world recognize India's potential. The `Team Ambition' has many similarities in personality with Hero Honda, such as `splendor of performance', `passion to excel' and `ambition to win".
In their role as brand ambassadors, the `Team Ambition' would soon star in Hero Honda's new commercials. As part of the association, Hero Honda will also find prominence on the bats to be used by Yuvraj Singh and Zaheer Khan in the forthcoming cricket events.
Sourav Ganguly, who has been associated with Hero Honda since 1999, said, "Through Team Ambition, we are looking forward to communicate more directly with over 6 million Hero Honda customers in India and the millions more added every year."
Mr. Atul Sobti (Senior Vice-President, Marketing and Sales) Hero Honda says, "Hero Honda has been promoting cricket for over a decade now. Starting with the memorable Hero Cup in 1993, we have adequately benefited through the promotion of this national fervor.
Cricket is one sport which binds our entire nation and is, perhaps, the largest platform in the world, enabling companies to communicate with millions of consumers in the shortest possible time."
The `Team Ambition' would also provide coaching and guidance to the budding talent in the country and support cricket projects undertaken by Hero Honda in India and abroad, a company release said. Hero Honda will keep up its promotional activities with emphasis on cricket and entertainment. The company claims that its Desh Ki Dhadkan campaign featuring brand ambassadors Saurav Ganguly and Hrithik Roshan has received a very good response and helped build the company's image. Last year, the company spent around Rs 90 crore on advertising and marketing.
SALES PROMOTION
A fundamental concern of any customer during the purchase Of a double product is the quality and provision of efficient service. After all queries on product quality, performance, features and benefits have been satisfied, the customer invariably focuses on the service factor for the product as the end objectives is to ensure trouble free operation. In this respect servicing acquires paramount importance and Hero Honda’s focus and emphasis on these key result area have been instrumental in establishing its superiority and technological edge in the market. The host of training programmes and relationship enchantment activity additionally backs the spates of servicing camp, organized throughout the country. The active support of servicing and co- operation rendered by the dealer in the form of logistics and infrastructure further aid in making such programmes highly meaningful and valuable. They are doing free check up camps reinforce customer trust. Service advisor’s collecting information from a customer about his satisfaction level after the servicing of their bike. For the promotion of products the Hero Honda dealer rally. Hero Honda is organizing so many events in sports, cultural programmes, film -festivals etc for the promotion of the product eg. Hero Honda NKP salue Challenger Cricket Cup brings new talent to the force, MALTA Junior Tennis Tournament, Hero Honda social’s Commitment rehabilitating children affected by violence, operational,
Relief, donation for drought relief, Rota Trade Mela 2000, Road Show, Training programmers to enhance quality of service, free back up camps reinforce customer’s trust, ride safe programmes held for Delhi Traffic Police, Mobile Revolution in servicing etc. The powerful benefits of test rides, special promotions and communication drives to draw in the initial customers, preparation of accurate customer information forms to create a customers database, offer of finance facility and active steps to impart specific transiting at the dealer’s sales and services levels would be essential steps to achieving the brand and the company objectives. Mr. Uppal also touched upon the servicing policy for passion and cautioned the invitees to remain alert for substitution in Hero Honda brands among its customers. The sales increase would have do be targeted from new customers and not its existing ones. The key attitude that would constantly contribute towards sales would be total and passionate commitment. PUBLICITY
For the purpose of publicity Hero Honda is always organizing different events, etc. and they are always inviting celebrities from film, sports, media, politics, etc. There is some of event and parties are as follows:-
The Hero Honda stardust millennium Honours and BFJA awards for Bengali films. In a gesture that honors and salutes some of the finest talent in south Indian Cinema. Hero Honda also security sponsored the 20th Cinema Express Awards.
The sponsorship of the women’s World Cup in 1997 came next, then the ICC Cricket World Cup 2003.
Hero Honda, the largest two wheeler leader in Indian sponsored the 21st Cinema express Awards named Marketing Convention 2001. In which priyanka Chopra, Miss World, Lara Dutta (Miss Universe), Diya Mirza (Miss Asia Pacific), Sourav Ganguly (Indian Cricket Captain), Dealer Mehndi, Mr. Harsha Bhogle (the famous cricket commentator) etc.
Dandiya programme at Kota and Banswara. In this Ms Sunita Rao, the popular singer entertains at the festivals at the Dandiya Programme.
It also include thrill and the excitement at the Hero Honda Master Golf tournament. In this tournament Kapil Dev, virendra sehwag, Pronoy Roy, Milkha Singh and so many celebrities were present.
Galaxy of stars add to the glitter Surat rang 2002. Pinaz Masani, the famous gazhal singer, Kavita Krishnamurthy the famous play back Singer, Shibani Kashyap the pop singer are the main highlight of this programme.
Hero Honda sponsor’s 20th Cinema Express Awards and the main celebrities of this programme are evergreen Hero Devanand, Film Makers Hero Honda sponsor Army ordnance Corp Motor Cycle Expedition.
PROMOTION POLICY
A. COMPANY GIVE ADVERTISEMENT IN DIFFERENT MEDIA VEHICLES TIME TO TIME. LIKE IN TV, MAGAZINES, NEWSPAPER, ETC.
B. HERO HONDA ALSO ORGANISES FREE SERVICE CAMPS EVERY YEAR.
C. HERO HONDA ALSO TAKE^ART IN TRADE FAIR
D. HERO HONDAWITH THE HELP OF ICICI BANK PROVIDES LOAN TO THE CUTOMERS & ALSO PROVIDE EASY MONTEHALY INSTAMENT SCHEME TO CUSTOMERS.
E. HERO HONDA GIVES HUGE COMMISSION TO THEIR DEALERS. ADVERTISING CAMPAIGN
OF
HERO HONDA BIKES
Advertising Communication is a tool for success in today’s competitive environment & no product can be a success if not backed by some really marketing communication strategies. And, to play this role, an ad agency is required. PERCEPT Advertising Ltd. is such an ad agency, which not only meets the needs of the client related to marketing communication but also actually plays a significant role in providing complete integrated marketing solutions.
PERCEPT is a young & dynamic team of professionals. They have a rare blend of creativity and business sense. They have an in-depth knowledge of media selection & a strong pulse of the consumer’s mind. PERCEPT provides integrated marketing solutions that are innovative. More importantly, they deliver with the same zest & enthusiasm.
HERO HONDA PASSION is an ongoing campaign, which has been recently up by PERCEPT Advertising Ltd. Before the launch of PASSION , the company had already been in a leading market situation with two of its previous brands i.e., HERO HONDA SPLENDOR & HERO HONDA CBZ. With the launch of PASSION , the company has tried to offer the Indian customer with more choice & a better range of product category to suit the needs of the customer. The product has been targeted to that segment of the target market, which was looking for a blend of SPLENDOR & CBZ. This bike has helped in filling that void in the minds of the customer.
The Making of the AD Campaign on PASSION takes us to an interesting journey into the world of advertising to have an insight, learn & understand the dynamics of contemporary ad making concept & practices.
SEQUENCE OF EVENTS- A SUMMARY ♦ It all started few months back when PERCEPT Advertising Ltd. was already involved in doing Corporate Communication for HERO HONDA since quite some time when they had been assigned to plan & create the launching ad of this new bike called PASSION.
♦ The representatives from both, HERO HONDA & PERCEPT met & discussed the initial strategies vis-à-vis launching of the campaign.
♦ “STYEL” was the one-world brief given to the agency. The agency took this one world brief onto different wavelengths.
♦ “STYEL WORKS”- Any other USP like power or mileage was not at all kept in thought, art copy or spirit while designing the creative. The idea was only that the STYEL matters.
♦ Then came the question that STYEL matters, but then what’s so special about PASSION , and the correlation was drawn that when STYEL matters you get to have PASSION or PASSION exits, when STYLE matters. Here the creative has tried to draw a correlation between the products with its appeal.
♦ Finally, amidst a lot of discussions and creative brainstorming, the final punch line emerged as……… “BORN IN A STUDIO, NOT IN A FACTORY”. This thought clicked with the bike and was in sync with the graphics, design and photography shown in the campaign. It gave an impression of the carved and customized product made to suit the requirements highlighting the “Look Good” factor. The core idea behind this kind of approach was to reach all masses, but still focussing on its target market.
♦ The various stages of account planning, media planning, creative art work, copy and the production processes through which the campaign, passed, came out very well for the launch of the product ad-campaign.
And on the 15 th and 16 th of January, the agency went on with the nationwide launch of the ad-campaign, starting with initial print insertions in the leading dailies of New Delhi. These Print-Ad insertions were shortly followed by PASSION- TVC Hero Group, the world’s largest bicycle manufacturers and the Honda Motor Company of Japan on January 19, 1984. Today it is the leading manufacturer of motorcycles in India. Trusted by order 40 lakhs customers, Hero Honda commands 47% market share (based on Apr- Sept 2000 sales) making it a veritable gaint in the motorcycle industry. Add to that technological excellence, an expansive nationwide dealer network, and reliable after sales service, you have one of the most customer- friendly companies. Mr. Brijmohan Lall the Chairman and Managing Director says that “We will continue to make every effort required for the development of the motorcycle industry, through new product development, technological innovation, investment in equipment and facilities and through and through efficient management.”
This is proved by the company’ sales over the years:
1985.86 43,000 units
1989.90 96,200 units
1998.99 5,30,600 units
1998.100 7,61,210 units
2000-01 8,81,110 units
In fact, ever second bike sold in India today is a Hero Honda! Customer satisfaction, a high quality product, the strength of Honda technology and the Hero group’s dynamism have helped HHML scale new frontiers and exceed limits.
Hero Hoda Motors Ltd. has always been a market leader which has always strived to excel & has set an example for others to follow. Hero Honda as the motorcycle manufacturer shot to fame with its first offering, the CD 100 that captivated a nation with its 80-kmpl fuel efficiency. That was the single most important entrant into the market that transformed us from a performance-loving nation to a population of econo-misers. The more successful CD 100SS followed up the CD 100, the bomber on the sales charts, the sleek and the bes-selling bike in the world, the SPLENDOR. Somehow the SPLENDOR has always managed to invoke feelings of awe. Five odd years in production and the bike’s appeal and aura shows no tinge of fade or wane. Along the way it has gathered accolades among them the high spangled glitter of the best selling bike on the planet. Recent times have seen the 100 CC four-stroke segment split into two distinct subgroups, the lower end dominated by the Bajaj Boxer and the Hero Honda CD 100SS and the mid segment where the SPLENDOR and Bajaj Caliber have been joined by the LML Energy. And then there is the newly formed top end segment presently inhabited by the LML Adreno – now to be joined by the PASSION. Whether the PASSION goes on to capture the imagination of the nation as almost all Hero Honda products have done, remains to be seen.
CD 100
‘FILL IT, SHUT IT and FORGET IT’
Their very first model in the product line of motorcycles was CD 100. Launched in May 1985, it is legendary, “Fill it Shut it Forget it” motorcycle. It was India’s first 100cc, 4-stroke motorcycle. Its simple design and fuel-efficient is accepted in both rural as well as urban areas.
CD 100SS
APKA DAMDAR HAMSAFAR
CD 100SS was launched in November 1991, it is tough and rugged motorcycle. It has wider rear tyre for better road grip, stability and safety. It also has a special engine guard to protect engine from sand, mud and stones. All this is available in CD 100SS along with the fuel economy and riding comfort.
SPLENDOR
DESIGNED TO EXCELL
Splendor- a masterpiece was launched in January 1994. It was designed with riding comfort in mind, with a contoured low-slung seat, specially designed handle-bar and a strong double-cradled tubular frame. Its unique and performance has made it the “Largest selling motorcycle in the World”. It’s a bike that will always be recalled as a turning point in the India motorcycles industry. It gave the Indian customer something more than just basic fuel efficiency. Smart
License to Enjoy
It is very good example of technology coming up with a brilliant solution to frustrating, everyday traffic problems. The street Smart is equipped with a unique ‘City Clutch’ and Rotary Gears; which help you handle stop-start city traffic with ease. It is a bike from the world’s favorite Honda Cub family. This 4-stroke, 100cc bike from Hero Honda delivers great pick-up with remarkable economy. Rotary gears and Auto-Clutch make it amazingly maneuverable. So you can smile your way in and out of crowded traffic. From zipping down to the bazaar, to going on picnics, the sheer convenience of riding makes Street Smart the smartest choice for the entire family.
CBZ
Motorcycling Unplugged
Launched in April 1999 it offers a unique blend of Style and Power. It has redefined the motorcycling experience in India. It has a trapezoidal headlight, which gives it a stylish look. It is equipped with TPFC (Transient Power Fuel control), which helps in sudden acceleration required while overtaking. THE MAKING OF AN AD CAMPAIGN
… OF THE VERY LATEST, WELL DESIGNED & MOST STYLISH BIKE EVRY LAUNCHED ON INDIAN ROADS CALLED… PASSION
It all started a few months back in September 2000 when PERCEPT Advertising Ltd. had been involved in handling Corporate Communication & Event Management for Indian Two-Wheeler giant HERO HONDA Motors Ltd.
Through the relationship between HERO HONDA Motors Ltd. & PRECEPT Advertising Ltd. has been for more than eight years now but more recently PERCEPT Advertising Ltd. has been actively involved in doing multi various Integrated Marketing Communication activities for one of its most valued client HERO HONDA Motors Ltd.
PREVIOUS CAMPAIGNS DONE BY PERCEPT FOR
HERO HONDA MOTORS LTD. (HHML)
PERCEPT Advertising Ltd. has done lot many corporate communication Ad Campaigns for HERO HONDA previously. Various Car Rallies, Cultural Events & Sports championships especially Golf Championship organized by HERO HONDA Motors Ltd. have been nicely & very impressively designed & launched by PERCEPT Advertising Ltd.
Most recently, PERCEPT also designed an Ad Campaign for HERO HONDA issued in the interest of public safety. The Ad features Indian Cricket Captain SAURAV GANGULY who happens to be one of the Brand Ambassadors for HERO HONDA. The Ad display the celebrity wearing a cricket helmet with a message which goes…….
“BE SMART. RIDE SAFELY. ALWAYS WEAR A HELMET”. The message had been designed keeping in view of the increasing road casualties due to non- compliance of proper safety rules. The message though has been designed keeping public safety in mind & HERO HONDA Motors Ltd. fulfilling its responsibilities of being a good corporate. This TV commercial is slated to be on air very shortly.
But the ad that actually made the Industry & the Nation zapped was the one which was created as a part of HERO HONDA’s Corporate Communication which painted a wholesome & multicultural portrait of the nation & sending a unifying message which was instantly relating with the masses. The Ad Campaign was DESH KI DHADKAN (THE HEARTBEAT OF INDIA) which had an electrifying jingle “YEHI HAI DESH KI DHADKAN” & still features in the electronic media. The Ad Campaign depicts people from all walks of life, from different geographic regions, cultural backgrounds & religious beliefs. The Ad Campaign establishes a blend of all cultures, traditions & customs & successfully a paints a picture of Happy, Peaceful, Loving & Progressive India. The theme behind the Ad Campaigns is “UNITY IN DIVERSITY”.
The DESH KI DHADKAN AD has been a very positive rub-off, capturing the moods of the people. The audience who saw the Ad could connect emotions very well with the brands of HHML. This established HERO HONDA as one that drives that nation. The Ad gelled very well with the corporate image & helped HHML to maintain & sustain the brand equity.
Meanwhile, HERO HONDA decided to launch its newest & deadliest weapon from its arsenal… The most latest, sleekly designed passionately stylish motorbike PASSION in the 100cc, Four Stroke category. The bike has been positioned as the Statement of Style for today’s generation. MARKETING SITUATION FOR THE AD CAMPAIGN OF …PASSION
A CHRONOLOGICAL STUDY OF HHML’S MARKETING SYTLES
Right since its inception in 1984 the Indian Two-Wheeler Giant HERO HONDA Motors Ltd. has been coming out with several variants of its Motorbike Product line & it has been repeatedly proving its metal in the Motorcycle Industry.
In early eighties, HERO HONDA Ltd. had signed FCB ULKA as their Ad Agency to design & launch their product ads. HERO HONDA initially came out with CD 100 –“The FILL IT, SHUT IT, FORGET IT” bike in the 100cc, Four Stroke category for which the campaign was made by FCB ULKA.
Soon after this, HERO HONDA did some Minor Model Changes (MMC) in its existing model and designed a new variant called CD 100SS. This bike had better looks & had some really good physical features. The most significant features were CD 100SS has better shock absorbers & an engine guard was provided in it.
From here onwards, HERO HONDA switched over its ad agency and signed Hindustan Thompson Associates widely Known as HTA. HTA designed several ads for HERO HONDA for all successive variants that HERO HONDA came out with CD 100SS till its most recent variant called CBZ, all ads were designed by HTA.
The marketing situation when the PASSION was launched was adequate because it was planned for January’2001 itself. This was the time just before when certain major happenings are expected to happen in the Indian Two-Wheeler & Motorbike Industry. Firstly, HERO HONDA who was producing about a million bikes per year till recently has planned to expand its capacity to produce 1.25 million motorbikes per year since the current financial year. Secondly, in April’2001 HERO HONDA Motors Ltd. is expected to overtake BAJAJ AUTO PVT.LTD. in capturing the highest market share in the Two-Wheeler Motorcycle category in India. So, Launching of PASSION was done to capture the potential targets market.
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THE PRODUCT
The most recent, stylist, jazzy, sexy-looking bike called PASSION was launched on 7th January 2001 amidst lot of fanfare & celebrations. Before the launch of PASSION the company had already been in a leading market situation with two of its previous brands i.e., SPLENDOR & CBZ. With the launch of PASSION the company has tried to offer the Indian customer with more choice & a better range of product category to suit the needs of the customer. The product has been targeted to that segment of the target market, which is looking for a blend of SPLENDOR & CBZ.
The bike helps in filling that void in the minds of customer. In other words, PASSION possesses all those elements that a trendy, stylish, classy, looking yet powerful & fuel-efficient bike must have.
The most significant USP of PASSION is “WHEN STYLE MATTERS” or “PASSION EXISTS- WHEN STYLE MATTERS”. The positioning has been clearly done on the “STYLE” – The “LOOK GOOD” factor of the bike. Any other USP like power or mileage was not at all kept in thought, art, copy or spirit while designing the creative. The idea was that the “STYLE WORKS” which gave the thought “WHEN STYLE MATTERS…YOU GOT TO HAVE PASSION or WHEN STYLE MATTERS…GO FOR PASSION’ .
The product HERO HONDA PASSION is a high involvement product, which creates an inherent interest in the minds of the user.
The decision-maker in case of this product would be a user himself. In other worlds, there would be no Opinion Leaders involved in the purchase of this product. The bike is positioned as it is made for a very young, lively, sporty youth for whom this bike is an extension to his personality. Hence, the decision-maker would be the user himself in the case of this product.
The product has several aces up its sleeve and it places itself above several competitor’s model available in the market in terms of style & looks on one hand whereas fuel efficiency & power on the other.
THE COMPETITORS POSITIONING
The trends of positioning in this segment have been based upon various other psychograpic aspects like emotional appeal, which is on the non-rational side. For eg. Kawasaki Bajaj CALIBER , one of the main competitors to PASSION has been using the emotional plank to position its product. The Ad Campaign “The Unshakeable” shows a guy in his late twenties, who has faced defeat in his love life but still goes on… thereby conveying the message of “an unshakeable by adverse circumstances”. The competitors have also been positioning their bikes on the rational appeal based on attributes like more power, greater mileage & reliability etc. HERO HONDA in their earlier launched variants has also used all these positioning appeals. THE TARGET AUDIENCE
DEMOGRAPHIC PROFILE OF THE BUYER
The buyer is a youth in the age category of 18-30 years of male gender.
The location of the targeted buyer would be Urban & Semi-Urban areas.
The geographical region covers the entire country on the whole.
The educational background of the buyer would be of graduate level & above which shows that the target audience of the product belongs to the educated class of people.
The product is targeted towards the people belonging to the SEC-A & SEC-B of the classifications of the society.
Income category would be Rs. 10,000/- plus M.H.I. PSYCHOGRAPHIC PROFILE OF THE BUYER
The targeted buyer is a young enthusiastic guy who likes quality.
He considers the bike as an extension to his personality.
He is a style ‘n’ look conscious guy.
Someone who wants something decent which is priced competitive.
He also expects all such regular features, which a typical HERO HONDA bike would have like fuel efficiency & greater pick-up.
He also has a keen eye for details like sleekness, aerodynamism and better road grip in the bike.
He who would like to have eyes turning on him when he is riding the bike.
MEDIA PLANNING
Media Planning of PASSION is being handled by CARAT INDIA LTD., an associate and media arm of PERCEPT Advertising Ltd. A media firm, which is the Indian subsidiary of CARAT WORLDWIDE, a US$ 12 billion group.
MEDIA PLANNING HAS BEEN CATEGORIZED INTO THREE SUB-SECTIONS
Media Scheduling
Media booking
Media Execution / Operations MEDIA SCHEDULING
CARAT INDIA LTD. designed the entire layout & planned the media scheduling for the ad campaign… PASSION.
MEDIA BOOKING
Once the media scheduling is done, and the initial launch dates in the various media is finalized, the availability of the required space sizes, places & timings in media vehicles & sub-vehicles is looked upon & booked / bought, depending upon its availability pattern. In case of media buying for PASSION the initial planning was to come out with the full-page blow-ups in various leading newspapers. But since the required size of space in all the chosen sub-vehicles in newspapers was not available, it went against the initial launching media plan & thus existing scheduling was amended to make a 320 CC (8 Columns X 40 Cms.) print ad in all the sub- vehicles of newspapers & which was available at that time.
Later on, time & slot bookings in various cable channels & programs (Sub-vehicles of T.V) were done in the electronic media.
MEDIA EXECUTION / OPERATIONS
Media execution is also being handled by CARAT India Ltd., which is looking after the various aspects of media operations. Followed by the initial launch in the print media, T.V Commercial of PASSION has also started featuring in various cable channels & programms. TECHNICAL SPECIFICATION AND PRICE
HERO HONDA MOTORS
Str Tr Eng Max Whe Ge Fuel Price ok ans ine power el ar (ltrs (Mu Manufactu e mis cap bhp@rp base cle ) mbai rer sio acit m (mm ar ) n y ) (m m) CD-100SS 4 4-SP 97.2 7.0@8000 1220 165 10.1 42,530 DAWN 4 4-SP 97.2 7.0@8000 1220 165 10.1 40,842 SPLENDOR 4 4-SP 97.2 7.2@8500 1230 159 10.5 46,195 CBZ-DISC 4 5-SP 156.8 12.8@8000 1330 150 10.5 58,389 PASSION 4 4-SP 97.2 7.2@8500 1230 159 10.5 47,341 AMBITION 5-SP 5-SP 133 11@8000 1285 150 12.5 49,420 DRUM AMBITION 4 5-SP 133 11@8000 1285 150 12.5 52,421 DISC AMBITION 4 5-SP 133 11@8000 1285 150 12.5 57,485 DISC ES
M arket S hare
6 0 5 0 e g
a 4 0 t
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P 1 0 0 B ajaj AH uto e r o K i n e t i cLML M a j e s tTVS i c Y a m a h a H o n d a A u t o M o t o r s M ajor P layers
M arket S hareM 2003-2004 arket S hare 2004-2005
Major players Market Share (in %age) 2004-2005 2006-2007 Bajaj Auto 23.34 27.09 Hero Honda 48.76 51.51 Kinetic 1.25 0.8 LML 3.86 1.43 Majestic Auto 0.21 0.09 TVS Motors 16.37 12.91 Yamaha 5.56 4.29 30 25.21 25 17.48 20.4 20 GROWTHOF THE INDUSTRY 15 STEADY CLIMB 10 figures in Crore
5
0
-5
-10 -7 -11
-15 1997-98 1998-99 1999-00 2000-01 2001-02 3 5 0 0 3 , 1 7 0
3 0 0 0
2 5 0 0 2 , 2 7 0
2 0 0 0
1 , 5 5 3
1 5 0 0 1 , 1 5 6 7 8 3 1 0 0 0 6 4 1
5 0 0 2 5 0 7 6 . 7 1 2 1 . 4 1 9 2 . 1 2 6 . 5 5 0 . 4 0 1 9 9 5 - 91 6 9 9 6 - 91 7 9 9 7 -1 9 9 8 9 8 - 11 9 9 9 9 9 9 - 02 0 0 0 0 - 0 1
P ro fit A fte rT T otal ax In com e COMPARISON OF HERO HONDA’S THREE PRODUCTS
CBZ
While CBZ was introduced the market for 150c segment war not quite well developed. It was a niche market with a number of unsatisfied and unrecognized customer who aspired for more power, life style and speed. So it can be concluded that the product the strategy was diversification. The customers were to be taught about their unrealized needs. For that the company had to use informative as well as aspirational advertisement
To make the customers understand that the bike was for the upper class market, it was priced a premium also.
AMBITION
In the case of ambition, the market for 100+cc segment already existed. The company introduced the bike as a new product. For the company it was the first bike in the highly demanded 100-125cc segment. Here the company has adopted the product development strategy.
The company has priced this product competitively
SPLENDOR
Splendor came to the scenario as a more efficient bike catering to the needs of the 100cc segment, which at that time was served by many others.
The analysis reveals that the company has adopted Market penetration as its strategy. For that, advertising mainly focusing on its superior quality, were then released. Fuel efficiency coupled with zero maintenance was projected as a key differentiator. ANALYSIS OF MARKET RESEARCH
Q1. Please mention your AGE GROUP?
3 6 A b o v e 1 8 - 2 0 1 0 % 9 %
Q2.) Please mention your income group ( per annum in thousand)
2 1 - 2 5 3 1 - 3 5 3 3 % 3 7 %
2 6 - 3 0 1 1 % Q2. Please mention your income group ( per annum in thousand)?
1 7 5 a b o v e 1 5 0 - 1 7 5 7 5 - 1 0 0 4 % 1 1 % 1 7 % ROUP (PER ANNUM IN THOUSAND) 1 2 5 - 1 5 0 1 1 %
1 0 0 - 1 2 5 5 7 %
Q3.GENDER. F e m a l e M a l e 4 5 % 5 5 % Q4. OCCUPATION.
7 0 6 7 6 0 5 0 4 0 3 0 1 7 2 0 5 1 0 6 5 0 O f f iC c l i e aS r l s i t c u aF d l i e rR ns t t e t i r e d j o b b e r s Q5. Three Motorcycle Companies that comes in your mind.
3 5 3 2
3 0
2 5
2 0 1 8 2 0 1 7
1 5
1 0 4
5
Things0 that you looked while purchasing a bike? TVSL HHML BAL EYML RE Q6. What are the things that you look while purchasing a bike?
8 0 7 5 7 1 6 9 6 8 7 0
6 0
5 0
4 0 3 3 3 2
3 0
2 0
1 0
0 F u e l L o o k s L o w R e lia b ility L e a s t L o w p r i c e e f f i c i e n c y m aintenance( l e s s p h y s i c a l c o s t c h a n c e s e o f f f e c t s b r e a k d o w n ) Q7.How did you get to know about Hero Honda that you are having at present?
40
35
30
25
20
15
10
5
0 FAM ILY FRIENDS ADS. DEALERS Q8. Which other bikes would you prefer to buy?
4 5
4 0
3 5
3 0
2 5
2 0
1 5
1 0
5
0 Y a m a h a LML TVS B a j a j Q9. Why do you prefer Hero Honda Splendor than other bike?
80 71 66 70
60
50
40 33
30
14 20
10
0 Maintenance Looks Physical efforts Fuel economy cost Q 10. what is the image of HERO HONDA in your mind?
35 35 32
30
25
16 20
13 15
10
4
5
0 economic durable smooth safe tough MARKET SHARES (%)
MODEL 2002 2003
Premium/lifestyle category (Rs 45.25 29.16 50000 and above)
Commuter/Smart Category (Rs 64.80 56.16 40000-50000)
Economy category (Rs 30000- 21.71 32.95 40000)
In the typical Boston Consulting Group (BCG) matrix, a company could move from 'star' to 'cash cow' pretty quickly say a year or two and therefore one needs to ride these two years completely and then get into another stock which is going to turn into a star, at the stage of emergence.
RESULTS
After a study of various Hero Honda customers, we found the following:
♦ Geographical Distribution:
About 98% of the customers surveyed belong to congested areas of Delhi.
♦ Age group of customers:
About 90% of the customers were within in the age group of 20-35 ♦ Income group of customers:
Most of the customers surveyed belong to middle income group.
♦ Occupation of the customers:
84% of the customers surveyed were official/ salesmen and 11% were students & first jobbers.
♦ Percentage share of HHML in two wheeler segment:
HHML holds 46% share (see annexure)
♦ Customers preferences while purchasing a bike:
Fuel efficiency, looks, Low maintenance cost, Reliability
♦ Competitors of Hero Honda:
According to the survey reports the main rivals of Hero Honda are Yamaha, Bajaj Auto, TVS Suzuki.
♦ Preference of Hero Honda over competitors:
About 89% of the customers believe that Hero Honda is better than the competitors because of low maintenance cost and fuel efficiency.
Strategic Analysis BCG MATRIX:
Glamour Achiever Karizma Pleasure
Splender + Passion + CBZ CD dawn Ambition
In order to make a workable marketing plan the management has to evaluate the business making up the company. The company will want to put strong resources in to its more profitable business and phase down or drop its weaker ones. Using the BOSTON consulting group (BCG) Approach, a company classified its all products according to the growth share matrix. On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. By dividing the growth share matrix as indicated, 4 types of products can be distinguished. Examples of Hero Honda’s Motorcycles in different categories are: 1.STARS: It includes KARIZMA. This motor cycle enjoys a solid market share and still there is a great market potential in this sector. They often need heavy investment to finance their rapid growth.
2.QUESTION MARK: It includes GLAMOUR, ACHIEVER AND PLEASURE. These motorcycles fall under this category because both of these brands are quite new and do not have much market share in this product category, but there is quite strong potential in markets of these products.
3.CASH COW: It includes SPLENDOR+, PASSION+ and CD-DAWN; these motorcycles fall under this category because these products dominate the motorcycle market and have captured more than half of the market. Tough its market share is quite high; there is low market potential for these products
4DOG: It includes CBZ and AMBITION. These Motor cycles falls under this category because they do not enjoy much of the market share. Despite its low market share, there is a low market potential in this sector..
Hero Honda Motors Limited is a Star which has high market share and a high growth rate.
They developed fuel efficient motorcycles at a time when everyone was producing 2-stroke motorcycles. This made them gain market share at a rapid pace and helped them to become the market leaders in the motorcycle segment. Having set its focus on customer satisfaction, the company is determined to provide products and services that meet the quality, performance and price aspirations of their customers. HHML wants to provide its customers with value for their money.
Hero Honda's motorcycles account for over 45% of the entire motorcycles market. The various brands of Hero Honda are Splendor, CBZ, Passion, Sleek, and Ambition. Splendor enjoys nearly 30% of the total motorcycles market.
COMPANY SALES UNITS 2002 MARKET SHARE
HERO 417014 46.01 HONDA
BAJAJ 219554 24.22 AUTO
TVS SUZUKI 162081 17.88
OTHERS 107673 11.88
SWOT ANALYSIS OF HERO HONDA External Environment (Opportunity & Threat analysis)
Business SWOT Analysis Mission Internal Environment (Strengths/ Weakness Analysis)
STRENGTHS
• Technological support from Honda Motors, Japan due to an extended collaboration till 2014. • The company has a deeply penetrated dealer network. • The company provides good after sales service to its well-established dealer network. • The company enjoys a huge market share. • The company continuously focuses on cost management and operating efficiency. WEAKNESSES
• The company does not have a product catering to Rs 25000 –Rs 30000 segment. • The company imports about 31% of its spare requirements that makes the company vulnerable to the imports policies of the Government. • The company is unable to produce motorbikes customized to the needs of the foreign markets which hinders the growth of the company which it can achieve through exporting. • Dependency on Honda: Unlike its competitors, Hero Honda is yet to prove its capabilities in terms of developing an indigenous product devoid of any major support from the technological partner. • Though Hero Honda did launch new motorcycles, it has failed to attract consumer attention.
OPPORTUNITIES
• The motorcycle segment is growing at the rate of 33%, which provides a great opportunity for the company to cash on. • The market is experiencing a shift in the customer preference for the 4-stroke bikes. This again provides an excellent opportunity to Hero Honda to leverage its market share and market leadership for sustained profitability. • The extended collaboration is also a big opportunity for the company. • The improvement in road conditions under the National Highway Development Programme will boost demand. As road linkages and connectivity improve, motorcycle requirements- especially for high powered- will go up. • The company is looking at a joint market share of 50% in the two wheeler market. • Strong demand for bikes is coming from India’s vast rural areas after the best monsoon in a decade. • Increasing income levels in the middle class families. • Higher aspirations of young people. THREATS
• The increasing competition from various competitors like Bajaj, TVS and many more causing drop in profitability of the company which is the biggest threat for the company. • Rising cost of fuel. • The earlier phenomenal growth rates of the bike sector may not be seen in the coming areas. EXPANSION STRATEGIES ADOPTED BY HERO HONDA
ExpansionExpansion StrategiesStrategies
ThroughThrough ThroughThrough ThroughThrough ThroughThrough CooperationCooperation ConcentrationConcentration DiversificationDiversification IntegrationIntegration
MarketMarket MarketMarket ProductProduct PenetrationPenetration DevelopmentDevelopment DevelopmentDevelopment
Expansion through Cooperation
Joint venture: Joint ventures
RECENT FACTS ABOUT THE JOINT VENTURE:
• Honda to continue to provide Hero Honda with full and latest technological support • Honda and Hero Honda to develop and expand the two-wheeler business in India where they want to acquire 50% market share of two-wheeler market. • Agree to strengthen model line up
Honda Motor Co. Ltd., Japan, today renewed its Technical Collaboration Agreement with Hero Honda Motors Ltd., one of its most successful two-wheeler Joint Ventures worldwide. The agreement has been renewed for another 10 years i.e. 2014. Expansion Through Concentration
In practical terms, concentration strategies involve investment of resources in a product line for an identified market with help of proven technology. Hero Honda has been consistently concentrating on two-wheelers for the last several years as it finds it to be a high-growth and attractive industry to invest in. it has tried various means to sustain its market share in a competitive market. It is a formidable competitor for its rivals with proven products manufactured through tried & tested technology, and sold in familiar markets. 1.
MARKET LED STRATEGIC CHOICE/OPTION
STRATEGY:
They must address the need for power in a new premium category and not in commuter bikes.
1. Consumers are basically looking for fuel efficiency, durability, style, power and price. Its products the Splendor & Passion offer fuel efficiency and durability. CBZ offers style. Power and price bikes. Now they must look for new products.
2. Not having proper in-house Product Engineering skills have caused Hero Honda dearly. They must hence improve in-house Product Engineering skills.
3. Lack of product creation skills also means that the speed at which Hero Honda launches new products is likely to be less than that of its rivals. Thus to launch new products at a speed in line with their competitors is one strategy that Hero Honda must look in to cash on.
4. The company uses both imported and indigenous raw materials and components to manufacture the motorcycles. As a result, the increase or decrease in the import tariffs has an impact on the company's bottomline. The proportion of imported and indigenous raw materials, components and spares used in FY02 is as follows:
Imported Indigenous (as % of total) (as % of total) Raw Material & 17.90 82.1 Components
Spares 31.21 68.78
Hence the company must try to use more of localized/indigenous components.
1) MARKET PENETRATION
A firm may attempt focusing intensely on existing markets with its present product by using a market penetration type of concentration.
Splender Splender Plus Super Splender
ADOPTED BY HERO HONDA: Hero Honda has adopted penetration strategy by increasing its existing product in the existing market by increasing the variety and features of the same brand. The best example of this is Hero Honda has launched a new 125cc 'next-generation' engine. The futuristic Quantum Core engine developed specially for the Indian customer, powers Hero Honda's new offering, the 'sarva guna sampanna' Super Splendor. The quantum core engine has an unprecedented combination of fuel-efficiency and power, the company says.
Hero Honda first launched Splender in the market and we have to accept that it was a success. But instead of that it adopted the strategy of product development which a good company should adopt to remain the competitive market. It has re-launched it as Splender Plus with improved looks, crystal lights, Disk brakes and many other features. It gave a boost to the sale of the bike and increased its market share as well as goodwill. Then again after some time it launched Super Splender with addition features and improved engine i.e. “Quantum-core engine”
Splender Splender plus Super Splender (Splender plus) Engine : 4-stroke, single cylinder lair-cooled, OHC Displacement : 97.2.cc
(Super Splender) Engine(Quantum core) : 4-Stroke OHC, Single Cylinder, Air Cooled Displacement : 124.7 cc
2) MARKET DEVELOPMENT In this expansion through concentration companies try to attract new users for existing products resulting in a market development type of concentration. In this the company enters into a new market.
ADOPTED BY HERO HONDA: Market development for every company is extremely essential and same is the case with Hero Honda. They have already exporting to 4 countries Brazil, Nigeria, Sri Lanka & Bangladesh. It has two dealers in Sri Lanka and getting a positive response from there which will lead them to market development in that country. 3) PRODUCT DEVELOPMENT:
Another alternative of expansion through concentration for any company is to introduce newer products in existing markets. For this they have to constantly try to bring out new products to satisfy the customers needs and wants.
ADOPTED BY HERO HONDA Karizma – Hero Honda introduced Karizma Motorbike with 223 cc four-stroke air-cooled engine Price around Rs 79000 which was a new product as before this launch there was no choice for those consumers who wants to enjoy a sports Bike. Hero Honda saw an opportunity in this segment and launched Karizma with full of Josh in its existing market of Youth as this bike was fast, good in looks it was to capture a good market but the problem lies with this new product was its price which was revised and was given a price tag of around Rs 69000 few months ago this resulted in a good growth in its market share.
Achiever - Motorcycle with 149 cc four-stroke air- cooled engine Price: Rs 48,200. This was the strategy of the company to offer the customer those who are found of power with mileage. This was the part of product development strategy where it was introduced for the same market with improved product.
CD Dawn - Motorcycle with 97 cc four-stroke air-cooled engine Price: Rs 31,899. This product was targeted to the Rural market as there the customer wants motorcycle with high mileage and Low in cost. EXPANSION THROUGH DIVERSIFICATION Diversification means separately identifiable investment made by an existing industrial unit in the fixed capital assets to set up a project for manufacturing of new product(s) provided that the additional investment in the fixed assets is not less than 25% of the gross fixed capital and increase of additional employment is at least by 10%.
Diversification may involve internal or external, related or unrelated, horizontal or vertical, active or passive dimensions There are mainly three reasons for an organization to adopt the diversification strategies. These reasons are following: • To minimize risk As we invest our capital in more than one business, the failure in any of the business will not destabilize the whole of the organization. Hence, the risk get diluted.
• To capitalize on organizational strengths and minimize the weakness - Diversification helps an organization to use its strengths in other businesses also. And it helps it minimizes the weakness, because a weak organization in one business can be a strong player in other business.
• To escape Environmental & Regulatory factors - When a business is forced by either the Environmental or Regulatory factors, Diversification is the only way out. Because environment and regulations change with every product, so by changing the product, the organization can still function. EXPANSION THROUGH INTEGRATION Integration basically means combining activities related to the present activity of the firm. The integration that HHML had applied for its expansion strategy is VERTICAL INTEGRATION.
VERTICAL INTEGRATION: - When an organization start making new products that serve its own needs, vertical integration takes place. In other words, any new activity undertaken with the purpose of either supplying inputs (such as, raw material) which is known as Backward integration or serving as a customer for the output it is known as Forward integration. BACKWARD INTEGRATION APPLIED BY HHML: ENGINE PLANT STARTED: As in 1983 a joint venture that began between the Hero group of India and Honda from Japan. Then in the year 1985 company produced its first bike i.e. CD 100 and then in the year 1987 company established its first engine plant and in 1989 the Company produced its 3,00,000th motorcycle. In 2001 Hero Honda manufactured its 50,00,000th motorbike. Hero Honda has a reputation of being the most fuel-efficient and the world's single largest two wheeler Company. Shri Brijmohan Lall Munjal is the chairman and managing director of this Company. Both the manufacturing plants are located in Hariyana, one at Dharuhera (district Rewari) and the other in Gurgaon. The Gurgaon plant is situated on the Delhi- Jaipur Highway, in Sector 33. The Dharuhera plant, set up in 1987 in the Dharuhera Industrial Area, is spread over an area of 140 acres. Now the company is also planning to open its third plant COMPETITIVE STRATEGY Analyzing competitors is an integral part of strategic planning. In identifying their firms current and potential competitors, executives must consider several important variables:
. How do other firms define the scope of their market? . How similar are the benefits that customers derive from the products and services that other firms offer? . How committed are other firms to the industry? This sheds light on the long term intensions and goals of the competitors.
FINDINGS
• Hero Honda happens to be the world’s largest manufacturer of two-wheelers
• Hero Honda, the ‘world no.1’ two wheeler manufacturer for the fifth year in a row.
• Hero Honda owns world’s best selling Motorcycle brand – Hero Honda Splender.
• Hero Honda has a reputation of being the most fuel-efficient and the world's single largest two wheeler company.
• Hero Honda renewed its technical collaboration with Honda motor Corporation of Japan for another 10 years up to 2014. This will give Hero Honda access To Honda’s technology for another 10 years for developing new products.
• Hero Honda continues to dominate the domestic motorcycle segment as the no. 1 player.
• Domestic market share at 51.51%.
• Hero Honda offers Motorcycles between the price band of 30k-80k, to penetrate deep into the market.
• Hero Honda’s strategy for entering into the rural market has been successful as it has provided low priced and fuel efficient motorcycles.
• Every second motorcycle sold in the country in 04-05 is a hero Honda motorcycle. • The company’s sales crossed the landmark of 3-million, for the first time ever in the Indian two-wheeler industry tallying to 30,00,751 units for FY 05-06.
• Hero Honda’s cumulative sales for motorcycles for the period April 05-march 06 has also registered a significant growth of 13.72% over the corresponding period in the previous year.
• 125cc offering, the ‘sarva guna sampanna’ super splendor, the bike, which comes with Hero Honda’s next-generation quantum core engine, promising an unprecedented combination of top-class fuel-efficiency and improved power.
• Hero Honda family has grown to include over one crore satisfied customers, reflecting its long and fulfilling journey. • Hero Honda is now facing tough competition from new upcoming motorcycle brand “BAJAJ”. The models like Pulsar DTSI, Discover, CT 100, Platina etc are appreciated by customers, especially by youth. Products like Pulsar DTS-FI (200 CC) is giving tough competition to Karizma.
CONCLUSION
From the customers survey and desk research we conclude that:
"We are confident that we will continue getting technology from Honda." Honda, for its part, has also made similar statements. However, industry analysts do have doubts. Says an industry analyst, "Honda's track record in India does lead to some apprehensions. An analysis of Honda's past tie-ups in India would prove so. For instance, Honda exited the joint venture with Kinetic by selling its stake to the promoters and launched a replica of Kinetic Honda's ungeared scooter; its 60:40 venture with SIEL for cars progressively became a 99:1 partnership and its venture with the Shriram group for gensets ended when it bought out Shriram's stake. This does throw up some questions with regards to the path ahead for Hero Honda." These examples prove that Honda has always wanted to have its own entity, says another analyst.
Most of the customers of Hero Honda belong to congested areas. They mostly belong to middle class and are mostly officials/ executives. Thus, we conclude client has targeted the right segment.
From the findings we conclude that a customers while purchasing a bike, customers takes into consideration mainly fuel efficiency, good looks, low maintenance cost and reliability.
The main competitors of Hero Honda are Bajaj Auto, Yamaha, TVS, Suzuki.
The consumer preference basically depends upon wider network and better services.
Customers are influenced more to buy a product by advertisements rather than dealer friend’s or family recommendations.
There are challenges ahead too for the company. The Hero group's agreement with Honda ends in 2004 after which HMSI will be free to launch its own motorcycles in India. Says Munjal, RECOMMENDATIONS
After the complete analysis of entire assignment we put forward a set of recommendations which are a follows:
Since the company has targeted the right segments, but the reason for the low sales of Hero Honda is competition from Bajaj Auto. Hero Honda should regularly look to develop new products and new features among the existing products to face the competition from Bajaj Auto.
Cbz is high price and moreover the client has positioned the bike as “city ride made easy” fuel –efficient bike as a result of which if comes in direct competition with Bajaj Pulsar DTSI (150 CC and 180 CC). So Hero Honda should also concentrate on this segment as it has great potential.
TVS Victor and Bajaj Discover: But HHML is overlooking one feature in bike, which is its low maintenance, and reliability (i.e. less chances of breakdown) which are absent in its competitors. Therefore in order to meet the sales target, two options are available with the client, one is to redesign the bike and second is to reposition the bike as “bike with one time investment” since redesigning of bike may involve a big task and huge investment therefore we recommended repositioning the bike.
In order to increase the market share, promotional activities should be encouraged through advertisements to attract the male & female segment.
Hero Honda, if it starts functioning independently, has to innovate and develop their own technology to support their growth aspirations.
The dissatisfied customers should be dealt with appropriately should be satisfied so that they do not break the relationship with company. LIMITATIONS
1. Due to lack of time I was not able to cover many customers.
2. As I reside in Delhi, so customers of Delhi were taken into account.
3. Answers given by the customers may be biased one.
4. Research work was confined to definite area in Delhi. APPENDICES
QUESTIONNAIRE
CONSUMER SURVEY Name :______Address:______
Q1. Please mention your age group. 18-20 21-25 26-30 31-35 36- above
Q2.) Please mention your income group ( per annum in thousand). 75-100 100-125 125-150 150-175 175 & above
Q3) Gender . Male Female
Q4) please mention your occupation. Officials Clerical or Salesmen Student First Jobbers Retired
Q5) Name three motorcycle companies that come to your mind. Hero Honda Motor Ltd. Bajaj Auto Ltd. Escort Yamaha Motors Ltd. Royal Enfield TVS Ltd. Q6) What are the things that you look while purchasing a bike? Fuel efficiency Looks Low maintenance cost Reliability( less chances of breakdown) Least physical efforts Low price
Q7) How did you get to know about Hero Honda that you having at present? Advertisement Family information Friend’s recommendation Dealer’s recommendation
Q8) Which other bike would bike you have preferred to buy? Yamaha LML Tvs motors Bajaj Pulsar
Q9) Prefer Hero Honda splendor than other bike because of: Fuel economy Less physical efforts Better looks Low maintenance cost
Q10) what is the image of HERO HONDA in your mind? Economical Durable Smooth Bike Safe Bike Rough and Tough
BIBLIOGRAPHY
NEWS AND VIEWS FROM MARKETING DIVISION OF HERO HONDA.
AME BUSINESS MAGAZINE.
AUTO MAGAZINE.
BUSINESS INDIA
FINANCIAL EXPRESS
BUSINESS LINE
OVER DRIVE MAGAZINE.
WWW. INDIAINFOLINE.COM
WWW. HEROHONDA.COM
WWW.ECONOMICTIMES.COM