Marketing Strategy of Hero Honda

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MARKETING STRATEGY OF HERO HONDA

Submitted by

Anuradha Mathuria

1

CERTIFICATE

This is to certify that this dissertation “is the work done by ANURADHA MATHURIA student Marketing Strategy of Hero Honda Student of MBA 2009-11, JAYOTI VIDYAPEETH WOMENS UNIVERSITY”.

This dissertation has the requisite standard for the fulfillment of the Post Graduate Program in Business Administration and has been done under my guidance and supervision during the period 2011.

This dissertation report has not been submitted to any other institution for any kind of assessment or consideration, to the best of my knowledge.

FACULTY MENTOR

Lecturer

Marketing Strategy of Hero Honda Page 2

ACKNOWLEDGEMENT

This report is a synergetic product of many minds. I am grateful for the inspiration and wisdom of all those who were with me in this journey.

I am sincerely thankful to, KP MANAGEMENT COLLEGE for providing me with the opportunity to write a research paper in the form of a dissertation on the topic

To begin with my faculty mentor lecturer Abhilasha kedia KP MANAGEMENT COLLEGE AGRA who encouraged me to do my best. Without his support it would have been very difficult for me to prepare the paper so meaningful.

I am also thankful l to him for his guidance that helped me improve a lot.

ANURADHA MATHURIA

MBA (FM)

KP MANAGEMENT COLLEGE AGRA.


PREFACE

Marketing should not be looked upon in a vacuum or in isolation. It is

an essence taking a view of the whole business organization and

its ultimate objective concern for marketing must penetrate all areas of

the enterprise. Market survey in today’s competitive world is a

must for every organization.

This project is a study of market potential of Hero Honda. The rational

behind this particular study is to find out the present market scenario

of various brands & to find out the corporate need and perception. It

was a pleasurable experience to conduct a research on behalf of Hero

Honda pertaining to the study of the Automobile Sector.

To carry out this research a sample study was pursued where the target

was made to the people of Delhi region. Various statistical and analytical

tools and techniques are applied to ascertain and depict the present

scenario.

Conclusion and there by recommendation has been arrived at by proper

and justified interpretation of the result derived from the above

said analytical tools and techniques.


TABLE OF CONTENTS

S. no. Topic Page no.Executive Summary 8

Introduction Company profileBoard of DirectorsBrief Profile of Directors

9899-

Back ground 10-11

Mission vision 11

Overview automobile sector in India 12

Milestones of hero Honda

Legends of hero Honda

Honda motor Company of Japan

Portfolio of hero groups Business

Swot analysis

PEST analysis

competitors

Brand ambassador

Integrated marketing communication

Consolidated family business

Diversification

Hero Honda marketing mix

Segmentation and targeting

Marketing strategy


BCG matrix

GE matrix

Distribution strategy use to serve the customer and promotional mix

Marketing in rural India

The secret behind hero Honda success

AdvertisingTypes of advertisement

Personal selling

Sales promotion

Direct sellingAchievementsPorter’s five force of competitive position

training

career

Growth models

Implementing changes

Key polices

Research MethodologySecondary dataPrimary dataCollection of information

limitations

Scope of the study

conclusions

Bibliography


EXECUTIVE SUMMARY

During the 80s, Hero Honda became the first company in India to prove that it

was possible to drive a vehicle without polluting the roads. The company

introduced new generation motorcycles that set industry benchmarks for fuel

thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured

the imagination of commuters across India, and Hero Honda sold millions of bikes

purely on the commitment of increased mileage. In today world customer is the

king irrespective of whatever the business may be ,wherever the operations may

be .A good business organization is known by its strong customer loyalty, which

turns to become a unified family.

The project assigned to me by the company was a market study on 100cc

bikes among the dealers and customers with special reference to hero Honda

dealer and loyalty of customers towards the bike. The objective of the study was

to find out the dealers and customers opinion about the 100cc bikes with special

reference to hero Honda dealer to understand how market fluctuations affect

their strategic decision. The research methodology was descriptive in nature

encompassing a sample of 200customers for in-depth analysis It was observed

that 80%of the respondents are interested to purchase Hero Honda motor vehicle

.are in the age group of 18-35. A large part of respondents with majority of 60%


are satisfied with the availability of spare part and remaining 40% says no. It was

observed that the 92% resplendence are either highly satisfied are just satisfied

and remaining 8% are dissatisfied. Different models Hero Honda vehicles can be

introduced for ladies, with better comfort, speed and power, so that it can cater

to the changing tastes of women.

More service station should be established in every part of the city, so

those customers have an easy accessibility. With a strong sales and service

network of 650 Authorized dealership, 1500 authorized service centers and over

1000 certified service points, Hero Honda is growing from strength to strength.

Hero Honda motor should also start producing other models and should add a

different style and variety to their product line. This will surely attract more

customers. This will help to increase the existing goodwill and position in the

market. The experience gained during the analysis and drawing inferences was an

exiting and informative exercise under the guidance of unit head.


INTRODUCTION

Hero Honda Motors Limited is a two wheeler manufacturer based in India. Hero Honda is a joint venture between the Hero Group of India and Honda of Japan.

The company is the largest two wheeler manufacturer in India. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at 108.

Company profile

“Hero” is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited At Dharuhera India. Munjal family and Honda group both own 26% stake in the Company. In 2010, it was reported that Honda planned to sell its stake in the venture to the Munjal family.

During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it - Forget it' that emphasized the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. The technology in the bikes of Hero Honda for almost 26 years (1984–2010) has come from the Japanese counterpart Honda.

Hero Honda has three manufacturing facilities based at Dharuhera, Gudgeon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per year. Hero Honda has a large sales and service network with over 3,000 dealerships and service points across India. Hero Honda has a customer loyalty program since 2000, called the Hero Honda Passport Program.


http://en.wikipedia.org/wiki/Honda

http://en.wikipedia.org/wiki/Hero_Cycles_Ltd

Board of Directors


BOARD OF DIRECTORS

No. Name of the Directors Designation

1 Mr. Brijmohan Lall Munjal Chairman & Whole-time Director

2 Mr. Pawan Munjal Managing Director & C.E.O.

3 Mr. Sunil Kant Munjal Non-Executive Director

4 Mr. Suman Kant Munjal Non-Executive Director

5 Mr. Takashi Nagai Non-Executive Director

6 Mr. Toshiyuki Inuma Non-Executive Director

7 Mr. Paul Edgerley Non-executive & Independent Director

8 Mr. Pradeep Dinodia Non-executive & Independent Director

9 Gen. (Retd.) V. P. Malik Non-executive & Independent Director

10 Mr. Analjit Singh Non-executive & Independent Director

11 Dr. Pritam Singh Non-executive & Independent Director

12 Mr. M. Damodaran Non-executive & Independent Director

13 Mr. Ravi Nath Non-executive & Independent Director

14 Dr. Anand C. Burman Non-executive & Independent Director


http://www.herohonda.com/co_board_directors.htm#14














BRIEF PROFILE OF DIRECTORSMR. BRIJMOHAN LALL MUNJAL

Mr. Brijmohan lall Munjal is the founder Director and chairman of the company and the $ 3.2 hero group. He is the past president of confederation of Indian industry (CII) society of Indian automobile Manufacturers (SIAM) and was a member of the Board of the country’s Central Bank (reserve bank of India). In recognition of his contribution to industry, Mr. Munjal was conferred the padma Bhushan award by the union government.

Mr. Brijmohan lall Munjal is currently on the board of the following companies:

No.Name of Company Nature of Office

1 Hero Honda Motors Limited Chairman and Whole-time Director

2 Hero Honda Finlease Limited Chairman and Director

3 Munjal Showa Limited Chairman and Director

4 Easy Bill Limited Director

5 Rockman Industries Limited Director

6 Shivam Autotech Limited Director

BACKGROUND


Two Wheelers industry in INDIA Early 1950 s, API started manufacturing scooters in India (Librettos).

Later Bajaj Auto Ltd a company become a legend in the global scooter industry.

License Raj (1940 s to 1980 s), did not allow foreign companies to enter into the market.

This made customers to wait for 12 years to buy a scooter.

Only three motorcycle manufacturer were there Royal Enfield, Ideal Jawa & Escorts.

MISSION AND VISION


Mission statement

Hero Honda’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities.

This mission is what drives Hero Honda to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders.

Vision statement

We, at the Hero Group 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 the customers. While doing so, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keeps the momentum going to take the group to excellence in everything we do."

The study was done primarily with the following objective in mind.

To study the brands of hero Honda & consumers perception with its competitors.

To know why people buy hero Honda and why some people prefer other company.

To study the features of different brands that gives a good idea of various products and services offered by the company.

To understand the competitive environment in which the company is operating and is desired to meet customer need and satisfaction.

To provide useful information to the company about the product feature of various competing companies.


Overview automobile sector in India

The automobile sector is one of the fastest growing manufacturing sectors in India.

In the 90s the industry witnessed an average growth rate of above 20 percent.

Indian automobile industry is characterized by a very high percentage 75 percent).of two wheeler production, ranking second only to Taiwan.

The world leaders in the sectors are evincing keen interest in established manufacturing facilities for manufacturing and assembling components.

A political stable and vibrant state, Andhra Pradesh is centrally located with the support of seaports, international airports, assured and reliable power supply abundant water, broad base of auto component manufacturers, highly trained, skilled and disciplined manpower and is therefore, the preferred location for automobile industries.

The interest of the state has been duly noted by global auto majors, who have indicated their interest to consider Andhra Pradesh for establishing manufacturing facility.

The government of Andhra Pradesh invites leaders in the industry to set up manufacturing facilities to manufacture vehicles or vehicle components in the state. The ideal places to locate companies in the auto sector are Hyderabad – Zaheerabad Visakhapatnam –Kakinada, krishnapatnam- tada Sathiveedu and Vijayawada- Guntur corridors.

The government is also formulating an auto policy, which would give a proper direction to growth of the sector.

There are more than 20 auto- component manufacturing companies in the state.

There are more than 20 auto- component manufacturing companies in the state, manufacturing components such as grey- iron casting, precision


aluminum casting, leaf springs, oils and lubricants, diesel fuel injection equipment electronics and auto electronics and auto electrical, front axles, gears forging machined components, pressed metal components, pistons, cylinder liners, nozzles delivery valves, starter motors, alternators, electronic regulators, high pressure die castings clutch covers, fuel filters, etc.

Most of these components are presently being supplied to hero Honda TVS Suzuki Escorts Yamaha Bajaj and other Amaron Batteries are manufactured in chittoor district. Around 119 components manufacturers have been certified for ISO 9000 quality standard set by government and motors association.

HERO HONDA MANDATE

Hero Honda is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and world-class products with cutting edge technology from Honda Motor Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership Status.


MILESTONES OF HERO HONDA

Hero's success saga contains an element of spirit and enterprise; of achievement through grit and determination, coupled with vision and meticulous planning.

1956 Hero Cycles Limited is established.

1961 Rock man Cycles Industries Limited established, which the largest manufacturer of bicycle chains and hubs is today.

1963 It pioneered bicycle exports from India - a foray into the international market.

1971 Highway Cycles was set up to meet the demands of Hero Cycles. It is today the largest manufacturer of single speed and multi-speed freewheels.1975 Hero Cycles Limited became the largest manufacturer of bicycles in India.

1978 Majestic Auto Limited was formed and the Hero Majesty Moped was introduced.

1981 Munjal Castings established.

1984 Hero Honda Motors Limited established in joint venture with Honda Motors of Japan, to manufacture motorcycles.


1985 Munjal Showa Limited established to manufacture shock absorbers and struts and is today among the top two shock absorber manufacturing companies in India.

1985 The 100 cc Hero Honda Motorcycle arrived and by 1988 was the No. 1 among all motorcycles in India.

1986 Hero Cycles Limited entered the Guinness Book of Records as the largest bicycle manufacturer in the World.

1987 Hero Motors, a division of Majestic Auto Limited set up in collaboration with Steyr Daimler Puch of Austria.

1987 Gujarat Cycles Limited, now known as Munjal Auto Industries Limited was established to manufacture and export state-of-the-art bicycles and allied products in its fully automated plant at Waghodia.

1987 Sunbeam Auto Limited, earlier a unit of Highway Cycles Limited, established as an ancillary to Hero Honda. It is the largest die casting plant in India.

1988 Introduced "Hero Puch" from Hero Motors Limited. This revolutionary machine immediately set new records of petrol efficiency and usable power in 50 - 65 cc machines.


LEGENDS OF HERO HONDA

The HERO GROUP

Mr. Brijmohan lall Munjal is the founder director and chairman of the company and $ 2.8 billion hero group.

He is the past president of confederation of Indian industry (CII), society of Indian automobile manufacturers (SIAM) and was a member of the Board of the country’s central bank (Reserve Bank of India).

In recognition of his contribution to industry, Mr. Lall was conferred the padma Bhushan Award by the Union Government.

HONDA MOTOR COMPANY OF JAPAN

Founded in 1946 as the Honda Technical Institute: - Mr. Soichiro Honda produced 1st Bicycle engine.

Today with over 100 plants in 33 countries selling 11 million product units.

Expertise lawn movers, Generators, scooters, Motorcycles & cars.


PORTFOLIO OF HERO GROUPS BUSINESS BICYCLES

Hero cycles

Established in 1956Product: - Bicycles

Hero cycles limited

Established its 2nd unit in 1988Products: - Bicycles

Gujarat cycles Limited

Established in 1998Products: - Bicycles

AUTO TWO WHEELERS

HERO HONDA MOTORS LIMITED

Established in 1983 in New Delhi

Product: - Motorcycles

Collaborator: - Honda motors co. ltd Japan

Majestic auto limited


Established in 1978

Product: - Mopeds and fitness Equipment

Hero motors (A division of Majestic Auto Limited)

Established in 1988

Product: - Mini –Motorcycles, scooters

Collaborator: - Steyr Daimler puch, Austria and Malguti, Italy

Bicycle and Auto components

Established in 1960

Products: - Automotive and bicycle chains, steel and aluminum Hubs.

Highway cycle industries limited

Products:- freewheels and special Machine Tools

Munjal Showa Limited:

Established in 1985

Products: - shock Absorbers

Collaborator: - Showa Manufacturing co. Japan

Casting & Steel

Munjal casting

Established in 1981


Products: - non ferrous casting

Sunbeam casting

Established in 1987

Products: - Non ferrous castings

Hero cycles- cold rolling Division

Established in 1990

Products: - cold Rolled steel sheers and coils services

Hero exports

Established in 1993

Products: - International trading company dealing in commodities and engineering items

Hero corporate services

Established in 1995

Products: - corporate services in finance, HRD, IT, and strategic planning


Munjal Sales Corporation

Established in 1975

Products: - sole selling agents of bicycles and bicycles parts for India

CBZ

The Hero Honda CBZ (pronounced Cee Bee Zee) is the latest offering from Hero Honda for the Indian market. With a 156cc engine, the company claims that the bike has a top speed of 100kph within 5.6 seconds. Though the bike has the largest displacement engine, its top speed doesn’t match up to many of its competitors. In all other respects, it is a bit too early to decide whether the CBZ will sell in the same numbers as the Splendor. Though the initial market response has been good, only time will be the final arbiter.


Swot Analysis

Strengths

Ability to understand customer’s needs and wants recognized and established brand name effective advertising capability strong distribution network and service centers due to the entire customer base is covered.


Weakness

R&D is not close to the Hero manufacturing plant Hero is vulnerable in the joint venture because Honda motor company has so much power.

The technological changes in the bike sector occurred at a very rate. Bajaj Auto ltd. patented the DTS-I model of the pulsar. The technology was introduces by hero Honda into the market with the launch of the ambition, but it was not patented.

Opportunities

Global expansion into the Caribbean and Central America Expansion of target market (including women) to become India’s leader in the scooter market hero Honda can capitalize on its superior distribution channel to facilitate the selling of more bikes. Hero group entered into aviation sector and invested 500 Cr in M.P.SEZ.

Threats

Honda motorcycles and scooters India can take away market share and cause joint venture to go sour Bajaj motors, TVS Motors are strong competitors Bajaj Auto has found popularity with both its low-end and premium offerings, which have helped chip away at hero Honda’s dominance.


PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:

Political Economic Social Technological

The acronym PEST (or sometimes rearranged as “STEP” is used to describe a framework for the analysis of these macro environment factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram.

Political factors

Political factors include government regulations and legal issues and define both formal and informal rules under which the firms operate. Some examples include:

Tax policy Employment laws Environment regulations Trade restrictions and tariffs Political stability


Economic factors

Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. The following are examples of factors in the macro economy.

Economic growth Interest rates Exchange rates Inflation rate

Social factors

Social factors include the demographic and cultural aspects of the external microenvironment. These factors affect customer needs and the size of potential markets. Some social factors include:

Health consciousness Population growth rate Age distribution Career attitudes Emphasis on safety

Technological factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

R&D activity Automation Technology incentives Rate of technological change


Competitors

TVS- Suzuki

Started in 1982 as Indian Motorcycles Pvt. Ltd in collaboration with Suzuki (Japan .Later named as TVS – Suzuki Limited which is now one of the leading two – wheeler Manufacturers in India.

Their Innovations

Suzuki Max 100R

TVS Scooty TVS Samurai TVS fiero


Kinetic Honda ltd

Came into Existence in 1970. Kinetic Engineering Ltd was the beneficiary of Honda’s a joint venture with Japanese company Brought KHL in the market. The terms of the agreement specified that KHL could not enter the Motorcycle business.

Bajaj Auto

Came into Existence in the year 1945, imported scooters and three wheelers from Italy for sale in India. Scooter Production started in 1961 and three wheelers followed in 1962. By entered into a technical collaboration agreement with Kawasaki of Japan Production of Kawasaki 100cc motorcycles started in 1986.


Escorts-Yamaha

EYML is a joint venture between escorts ltd. Yamaha motors co. Japan in 1985.

By June 2000, the Investment Ratio of YMC was 74%.


Brand ambassador

The company singed the Indian skipper of cricket team Saurav, Ganguly, virender Sehvag Harbhajan Singh Zaheer khan & yuvraj Singh as its brand ambassadors joining the ad campaign together to promote “Ambition”. All of these celebrities are the member of Indian cricket team and very much popular in younger generation. In the last year with the launch of its new premium bike Karizma hero Honda signed its new brand ambassador who is a cine star and is also very popular. He is Hritik Roshan.

Integrated Marketing Communication

1st bike with four stroke engine launched in India

Hero Honda has a large portfolio of products (13 motorcycles and one scooter)

Hero Honda's bikes are sold and serviced through a network of over 3500 customer touch points, comprising a mix of dealers, service centres and stockiest located across rural and urban India.


Through its domination of cricket and association with shows like MTV Roadies, it was always focused on the youth.

Hero Honda also tapped rural India Har gaon, har angan

Additional sale of 15,000-16,000 motorcycles Focus on market share rather than profits

Launched Just for HER scooter Pleasure.


CONSOLIDATED FAMILY BUSINESS

The Hero Group is a strong family run business - there is no other Group that has so successfully managed to stay together for nearly 50 years. The system is to bring in any new family member, coming of age, within the fold of the existing business or set him up in a new business. The third generation is already actively involved in existing as well as the new initiatives within the Group.

The Group's future is being consolidated with the same zeal by the second and the third generations of the family, aided by workers who typify the hardy spirit of the Punjab.


DIVERSIFICATION

Throughout the years of mammoth growth, the Group Chairman, Mr. Lall has actively looked at diversification. A significant level of backward integration in its manufacturing activities has been substantial in the Group's growth and led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto Components and Munjal Showa Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic Auto Limited, where the first indigenously designed moped, Hero Majestic, went into commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in 1984 to manufacture 1000 cc motorcycles.

The Munjal also took a foray into other segments like exports, financial services, information technology, which includes customer response services and software development. Further expansion is expected in the areas of Insurance and Telecommunication.


HERO HONDA MARKETING MIX

PRODUCT PRICE PLACE PROMOTION

PRODUCT CD – Dawn, Splendor, Passion, Glamour, CBZ, Karizma etc.


PRICE Price of Hero Honda bikes start from Rs.30000 to Rs.70000.

PROMOTION T.V. Add. News paper Add. Magazine Add. FM Radio Hoardings etc.

PLACE All over INDIA


SEGMENTATION & TARGETING

Splendor – Price oriented people. Glamour – Price as well as tech. oriented people. Karizma – Status oriented.

POSITIONING

World’s largest motorcycle manufacture company. It was commemorated by sales of over 15 million motorcycles.


MARKETING STRATEGY

A through understanding of the fast-changing consumer behavior, new market segments and product opportunistes along With sensitivity to changing Customer needs, form the core of Hero's marketing strategy and philosophy. At Hero we essentially have a completely customer-driven approach. A nation-wide dealer network comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise holders for motocycles, ensures convenaient Access to the Group's products across the country. With a deep sense of belonging to the Hero fraternity, the Groups dealer network has catalyzed growth andacted as a strong bridge between the customer and the Group.

Conventionally, very few Indian bicycle manufacturers were interested in exports. However, the Hero Group's foray into the overseas markets pioneered Indian exports in the bicycle segment as early as 1963. It was a move prompted primarily by the need to be attuned to the global market place. While initial exports were restricted to Africa and the Middle East, today more than 50 percent of the Group's bicycle exports meet the demands of sophisticated markets in Europe and America. This is primarily because of appropriate product development and excellent quality that Hero offers. Let,s compare scooters from all major


manufacturers from once king of scooter market Bajaj to Japanese Suzuki and Hondas.

The Group has under taken a steady up gradation of technologies and there has been diversifications and setting up of newer establishments to meet stringent international standards. At the coré of it all is a customer-centric scheme of polices and production ... and the Bottom line is to "Add Value while Engineering Satisfaction."

BCG MATRIX


STAR

SPLENDOR’S – series (plus & super) PASSION’s – series (simple & plus) CBZ KARIZMA

QUESTION MARKS

Hunk CBZ- extreme Pleasure

CASH FLOWS

CD deluxe CD 100ss CD dawn


Dogs

Achiever Honda joy Glamour Ambition

GE NINE- CELL MATRIX


GE NINE- CELL MATRIX


SPLENDOR’S- SERIES

PASSION’S SERIES

CBZ- EXTREMEPLEASURE

CBZ

KARIZMA

HUNK

GLAMOUR

AMBITION

CD DELUXE

CD DAWN

HONDA JOY ACHIEVER

CD 100SS

Distribution Strategy use to serve the Customer and Promotional Mix

Focus on rural markets: Unlike peers, Hero Honda is actively focused on building its presence in rural markets. In December 2007, it launched a pan-India program called µHaarGaon,HaarAangan (every village, every house). As the program achieves critical mass, it will help the company to build a sustainable competitive advantage. Although it is difficult to segregate between urban and rural demand as the rural buyer also buys from urban dealers, the rural market contributes about 45% of Hero Honda¶s domestic sales (based on company estimates).

Favorable demographics ± lower penetration, higher income: The rural market is Underpenetrated and offers huge opportunity for 2-wheeler players. As per NSSO 2005 Data, household penetration of 2-wheelers in rural areas is 8% as against 23% in urban Areas. This coupled with increasing income (driven by increase in farm income, farm loan Waiver, etc) and improving infrastructure augurs well for 2-wheeler demand in rural areas.


RURAL MARKETING- CHALLENGES AND OPPORTUNITIES Our nation is classified in around 450 districts, and approximately 630000

villages which can be sorted in different parameters such as literacy levels, accessibility, income levels, distances from nearest towns, etc.

Therefore, marketers need to understand the social dynamics and attitude variation within each village the rural market certainly offers a big attraction to marketers.

Rural marketing involves more intensive personal selling efforts compared to urban marketing.

Marketers need to understand the psyche

of the rural consumers and then act accordingly.

This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, meals and other activities where they assemble.


Marketing in Rural India

In September-98 they established rural marketing sales.

They did not rely on T.V or press advertisement but focused on parameters like fares, meals etc.

Looking at the ‘kuchha’ roads of village they positioned their mobile as tough vehicle.

Their advertisements showed Dharmendra riding Escort with the punch line

‘Jandar Sawari, Shandar Sawari’. Wall paintings, Posters nearby Dabbas.

On vehicle advertising- local trains, ST buses.

Free samples, Demonstration of the product, Door-to-Door service.

On ground activities- Puppetry, Cinema Slides.


THE SECRET BEHIND HERO HONDA'S SUCCESS

Many continue to be surprised at the ability of India 's 2-wheeler segment to buck the present recessionary trend in the economy. What, they ask themselves, accounts for such resilience: competitive pricing? Quality? Technology? Or, is it ready availability? Mr. Brijmohan Lall Munjal, chairman, Hero Group of Companies, addresses some of these issues in an interview with Soumya Kanti Mitra. What makes the 2-wheeler segment so impervious to demand fluctuations? A 2-wheeler is the most necessary consumer durable goods owned by lower Middle, and middle class, households. There is multiple ownership of this product in such households.

Firstly, there is an income effect that influences 2-wheeler demand. Per Capita GDP growth of 3.7 per cent per annum has been pushing households up into higher income brackets. The push effect is more in lower and middle- income groups - hence the increased demand. It also links up with the higher contributions of the service sector to GDP; the income impact of that has been greater on lower income households. A second major reason is the inadequate public transport. The percentage of people who use public transport has fallen from 85 per cent to 75. Entry-level transport options like two- and three-wheelers have mostly filled this gap. They have also become a sort of necessity and thus do not show heavy fluctuations in demand.

Increased demand for two-wheelers from households has also led financial institutions to increase credit in a sustained way in the last three or four years. That too has imparted stability to this item, compared to others. A good proportion of sales owes to replacement demand.


Advertising

o Discarded product categorization on the basis of engine size.

o Product differentiation was the key.

o Avoided customer confusion of products.

o Karizma (premium segment) comes with the punch line, “Always game”.

o The ad for the premium segment Hunk doesn’t talk of speed or power at all — the focus is on the looks even while standing.

o The CBZ Extreme comes with the promise, “Thinking is such a waste of time”.

Types of Advertisements

Print advertisements:


Outdoor advertisements:

Celebrity advertisements:


Covert Advertisements

• Mujhe kuch kehana hai-cbz

• Gavaskar- border trophy-hero Honda bikes as man of the match.

Broadcast advertisements

• HERO HONDA RODIES

• HERO HONDA SAREGAMAPA


Public service advertisements

o “DESH KI DHADKAN”

Personal selling

• Wide price range.

• Each product with multiple optional features.

• Experience speaks.

• First six service free

• Once in a year free check up for hero Honda bikes from authorized company service station.

• Good resale value.

• Various schemes for government and military employees.


Sales Promotion

• Large product portfolio starting from 37k to 95k.

• Consistent launch of variants in the same models.

• Wide range of colors available in each category.

• Vast network of more than 2100 committed Dealers and Service outlets spread across the country Festive offers- Rs 1000 discount with free accidental insurance.

Sales Promotion

Pleasure promotional features

• 6 free services

• 2 years warranty

• 9 shades of color


• Dual tone

• Auto start

Direct Selling

competition heating up, would we see discounts coming Helpful staff 2100 authorized dealers. Concentrated on brand rather than offering discounts Hero Honda hasn't

been offering discounts since two years. Now with the back?

For us competition never cooled down. There have been launches by our competitors, some successful, some not. I don't see competition dying down, and we stay true to our strategy -- no discounting of products. A consumer's primary consideration is the brand, which is the biggest differentiator. They will not pay attention to smaller considerations like Rs 1,000 off or a better interest rate etc.

MoU with PNB in 2003. According to MoU, PNB will offer motorcycle financing for all Hero Honda

bikes at 11 per cent for a period of 1 year and 11.5 per cent for a period of five year. PNB will finance up to 90 per cent of the on-road price of Hero Honda bikes.

Hero Honda Motors Ltd has signed a memorandum of understanding (MoU) with Punjab National Bank (PNB) to offer consumer financing option for Hero Honda motorcycles for a period of up to five years.

Hero Honda chairman Brijmohan Lall said that the over a quarter of its sales of 18 million bikes in the fiscal 2002-03 were sold through consumer financing.

‘‘The percentage of nonperforming assets (NPA) on overall Hero Honda consumer financing is around 0.75 per cent. And considering a high re-sale value for a Hero Honda product, lenders have lesser risk to undertake,’’ Mr. Lall added.


The PNB tie-up is expected to give a fillip to consumer finance-driven sales in rural areas, where adequate financing is not available.

ACHIEVEMENTS

Hero Group ranks amongst the Top 10 Indian Business Houses comprising 20 companies, with an estimated turnover of US$ 3.2 billion during the fiscal year 2005-2006. The Group and its management have acquired a number of accolades and achievements over the years: Hero Group Management style has been acclaimed internationally by World Bank and BBC, Kushiro Group is discussed as a case study at London Business School, UK and INSEAD, France. World Bank has acclaimed Hero Cycles as a role model in vendor development based on a world-wide study.

The London Business School, UK, has done a case study on the Group as model of entrepreneurship. Boston Consulting Group has ranked Hero Group as one of the top ten Business Houses on Economic value, in India.

The Hero Group is recognized as a long term partner and an ideal employer:


Hero Group's partnership with Honda Motors, Japan is over 21 years old Hero Group's Partnership with Showa Manufacturing Corporation, Japan is over 19 years old.

Group Chairman, Mr. Brij Mohan Lall Munjal received the coveted "Ernst & Young Entrepreneur of the Year" award for 2001.

Hero Honda Motors was ranked 3rd amongst top Indian companies Review 2000 - Asia's leading companies award (2004) by Far Eastern Economic Review.

Hero Honda Motors is the World's largest manufacturer of two-wheelers with annual sales volume of over 3.0 million motorcycles.

Hero Honda Motors has been awarded the highest rating for Corporate Governance (2003) by CRISIL - India's Leading Ratings, Risk & Advisory Company and as the Best Governed Company in private sector(Dec 2004).

Hero Honda ranked Number One in the two-wheeler category on Environmental Performance by the Centre for Science and Environment.

Hero Cycles Limited is a Guinness Book Record holder since 1986 as the world's largest manufacturer of bicycles, with annual sales volume of 5 million bicycles in FY 2006.

Engineering Exports Promotion Council has awarded Hero Cycles with the Best Exporter Award for the last 28 years in succession.

PORTER’S FIVE FORCES OF COMPETITIVE POSITIONMarketing Strategy of Hero Honda Page 54


NEW MAARKET ENTRANTSENTRY EASE/ BARRIERSINCUMBENTS RESISTANCENEW ENTRANT STRATEGY

BUYER POWERBUYER CHOICEBUYERS SIZE/ NUMBERCHANGE COST / FREQUENCYPRODUCT/ SERVICE IMPORTANCE

SUPPLIER POWERBRAND REPUTATIONGEOGRAPHICAL COVERAGEPRODUCT / SERVICE LEVEL QUALITY

Training

The regular technical training programmers for dealers workshop staff to keep them updated and refreshed about the latest price technology, product technical details as well as service and repair procedures to handle customer’s motorcycle with utmost care as well as to provide them the service quality of highest order is a focus area at hero Honda. Hero Honda has six (06) training centers across the country. There are 05 zonal training centers of pune, Bangalore, Calcutta, Chennai and Delhi to take care of technical requirement of dealers in each zone as well as local technicians. There is a national training center at Dharuhera to take care of all advanced level technical programmers for our dealer’s staff and our in house service engineers. Hero Honda keeps an organizing dealers mechanics contest at zonal level and national level to develop competitive spirit among mechanics as well as in the process to update their skills product knowledge.


CAREER

Hero has continuously strived for synergy between technology, systems and human resources, to provide products and services that meet the quality, performance and price aspirations of its customers. While doing so, it has maintained the highest standards of ethics and social responsibility, has constantly innovated products and processes and developed teams that keep the momentum in order to take the Group to new heights.

In the forefront of the two-wheeler and auto-components industry in India, the Hero Group is driven by the vision of providing technologically advanced and affordable transport solutions. In doing so its employs and scouts for state-of-the-art technology and systems.

At Hero, new management strategies, techniques and manufacturing processes are constantly adapted. The work culture at the Hero Group revolves around building relationships - be it with workers, vendors or dealers. All those who come to work within the fold of the Hero Group are offered job security and growth opportunities, both personally and professionally.


GROWTH MODELS

The Hero Group has done business differently right from the start and that is what has helped us to achieve break-through in the competitive two-wheeler market. The Group's low key, but focused, style of management has earned the company plaudits amidst investors, employees, vendors and dealers, as also worldwide recognition.

The growth of the Group through the years has been influenced by a number of factors:

The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-in-time inventory. The Group boasts of superb operational efficiencies. Every assembly line worker operates two machines simultaneously to save time and improve productivity. The fact that most of the machines are either developed or fabricated in-house, has resulted in low inventory levels.

In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production in the unit and is functional even till date. The raw materials vendors bring in the goods get paid instantly and by the end of the day the finished product is rolled out of the factory. This is the Japanese style of production and in India; Hero is probably the only company to have mastered the art of the just-in-time inventory principle.


Implementing Changes

Management introduced new ideas coupled with improved terms of agreement for their joint venture

Two primary goals in mind. Continuing their success. MaintImplementing Changesaining their existing market share.


KEY POLICIES

Environment Policy

Integrate environmental attributes and cleaner production in all business processes

Substitution of hazardous chemicals where viable and strengthen the greening of supply chain.

Quality Policy

Quality at Hero is attained not just by modern plants and equipment and through

latest technology, but by enforcing a strict discipline. At the Group factories,

attaining quality standards is an everyday practice - a strictly pursued discipline. It

comes from an amalgamation of the latest technology with deep-rooted

experience derived from nearly four decades of hard labor. It is an attitude that

masters the challenge of growth and change - change in consumers' perceptions

about products and new aspirations arising from a new generation of buyers.

Constant technology up gradation ensures that the Group stays in the

global mainstream and maintains its competitive edge. With each of its foreign

collaborations, the Group goes onto strengthen its quality measures as per the

book. The Group also employs the services of independent experts from around

the world to assist in new design and production processes.


KEY POLICIES

Safety Policy

Committed to safety and health of its employees and other persons.

Ensuring compliance with all applicable legislative requirements.

Promoting safety and health awareness amongst suppliers & contractors.

Continuous improvements in safety performance through precautions besides participation and training of employees.


ANCILLARISATION

An integral part of the Group strategy of doing business differently was providing support to ancillary units. There are over 300 ancillary units today, whose production is dedicated to Hero's requirements and also a large number of other vendors, which include some of the better known companies in the automotive segment. The Munjal have gone much beyond the conventional definition of a cillarisation, making it a point to extend technical and managerial support to these ancillaries. These ancillary units are manned by friends, relatives, ex-employees or close associates of the Munjal family since the Group patriarch, Mr. Brij Mohan Lall, "« never wanted to march alone."

EMPLOYEE POLICY


Another Striking feature within the Hero Group is the commitment and dedication of its workers. There is no organized labor union and family members of employees find ready employment within Hero. The philosophy with regard to labor management is "Hero is growing, grow with Hero." When it comes to workers' benefits, the Hero Group is known for providing facilities, further ahead of the industry norms. Long before other companies did so, Hero was giving its employees a uniform allowance, as well as House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Extra benefits took the form of medical check-ups, not just for workers, but also for the immediate family members.

DEALER NETWORK


The relationship of the Munjal with their dealers is unique in its closeness. The dealers are considered a part of the Hero family. A nation-wide dealer network comprising of over 5,000outlets, the Munjal have a formidable distribution system in place. Sales agents from Hero travels to all the corners of the country, visiting dealers and send back daily postcards with

Information on the stock position that day, turnover, fresh purchases, anticipated demand and also competitor action in the region. The manufacturing units have a separate department to handle dealer complaints and problems and the first response is always given in 24 hours.

FINANCIAL PLANNING

The Hero Group benefits from the Group Chairman's financial acumen and his grasp on technology, manufacturing and marketing. Group Company, Hero Cycles Limited has one of the highest labor productivity rates in the world. In Hero Honda Motors Limited, the focus is on financial and raw material management and a low employee turnover.

RESEARSH METHODOLOGY


The methodology used in conducting the research work on HERO HONDA with major emphasis on its sales and marketing strategies involve the following steps:

Why I have selected HERO HOND only?

I have selected hero Honda for my summer training because it is the company that is growing day by day. It has maximum market share with comparison to its competitors. And it is the company that gives highest sales and it is also the highest two- wheeler manufacturer.

Defining the problem and deciding research objectives:

Defining the objective is the most important part of any study process. Proper defining of the problem is a must for proceeding further with the research process. The type of study to be carried out, the questions to be raised, the sampling procedure to be followed, and the data to be collected, all depends on a correct understanding of the problem. Also, by clearly focusing on the real problem, the research job can be simplified and completed with the minimum cost, effort and data. Identified problem or the objectives of the research discussed in the report are:

Developing the research plan

In this a plan was developed about how to collect the require information i.e. whom to contact for gathering the relevant data. Data is the foundation of all research. It is the raw material with which a researcher functions.

Therefore, it requires great care to select the sources of data. Data, or facts, may be obtained from several sources. Data sources can either be primary or secondary.

Secondary data


The sources from which secondary data was collected:

Press releases of the company. Newsletters and In-house journals. Brochures and detailed descriptive leaflets Magazines like Business World,

Outlook, Auto India, etc. Websites such as www.herohonda.com, www.google.com. These were the

sources from which secondary data has been gathered. Most of the information presented in this report was extracted from the above data sources.

Primary data

Collection of primary data was conducted by visiting the people preparation of the report.

Research approach

It means the way by which the information was collected. Visiting the various places of Delhi, getting the questionnaire filled by different individuals.

Beside this, frequent visit to the showrooms of the company was of great help to conduct the analysis and research work.

Contact methods

Instrument or Data collected Forms: It is the method by which data is gathered. It could be done through various instruments like questionnaires, observations, getting information from the staff members of the agency, contacting to the motor mechanics was sufficient enough to conduct the study.

Collection of information


The primary information was collected by face-to-face and direct interviews with the peoples and the customers. They provide the relevant information regarding the profile of the company as compared to the other company in the Indian market. Most employees suggested visiting company’s web site, as it was not possible for them to spare time from their busy schedules.

The secondary sources of information were various web sites of the companies, Newspapers & magazines such as the times of India, The Hindustan Times, Business world, Auto India, etc.

FAMILY INCOME OF RESPONDENTS


The income distribution of the families of respondents shows that

the bike, which was considered earlier to be out of range for middle

class families is now becoming very fast an article for them.

Family income (Rs.) % of Responses

5000-10000 10

10000-15000 46

15000-20000 36

Above 20000 08

10

5

10

15

20

25

30

35

40

45

Series1Series2

Series1Series2


PERSONS WHO KNOW TO DRIVE BIKE

Almost every person know how to drive a Bike (In my Survey)

Response % of respondents

Driving known 96Driving not know 04

10

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Chart Title

FACTOR PROMPT TO BUY HERO HONDAMarketing Strategy of Hero Honda Page 69

It should be stated that the performance is the most important factor followed by look. The possible combination and corresponding number of respondents are shown in the table below.

Features % of respondents

Performance 18Look 11Availability 5Price 1Maintenance 4Brand image 5After sale service 6

PERFO

RMANCELO

OK

AVAILABILIT

YPRICE

MAINTENANCE

BRAND IMAGE

AFTER

SALE

SERVICE

0

2

4

6

8

10

12

14

16

18

20

Series1Series2


HOW DID THE RESPONDENT CAME TO

KNOW ABOUT THE BIKE? The best media of advertisement (according to which the respondents came to know about the bike) is the ads on television. Friends & magazine are the other sources. Only 2 % of them came to know through hoardings.

Medium of Advertisement % of RespondentsTelevision 46Magazine 36Friends 14Hoardings 02Others 02

TELEVISIONMAGAZINEFRIENDSHOARDINGSOTHER


PURCHASE OF BIKE

Almost 94 % of the respondents say that they have purchased the bike by cash. Only 6% of the respondents say that they have purchased their bike through bank loans.

Purchase Type % of Respondents

Cash Purchase 94Hire Purchase 06

1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


DECISION INFLUENCED BY

Maximum no. of the Respondents have taken decision to buy the bike on their own. After that their friends and parents influenced them.

Influencer % of RespondentsParents 16Self 54Friends 18Relatives 08Others 04

PARENTS SELF FRIENDS RELATIVES OTHERS0

10

20

30

40

50

60

Series1


Analyzing the information

The data collected was carefully analyzed. The research and analysis of the information has been done on the basis of various sales and marketing strategies adopted by the company during its tenure.


LIMITATIONS

1. Research work was carried out in Agra only the finding may not be applicable

to the other parts of the country because of social and cultural differences.

2. The sample was collected using connivance-sampling techniques. As such

result may not give an exact representation of the population.

3. Shortage of time is also reason for incomprehensiveness.

4. The views of the people are biased therefore it doesn’t reflect true picture.


SCOPE OF THE STUDY

Hero Honda is spreading its wings and widening its business horizon to reach and serve customers at new centers in the year ahead. The company services are backed by a highly motivated and technology driven team to achieve customers need, product expertise and geographic reach.

The study is oriented towards the concept of different brands offered by Hero Honda and its competitors to its customers. The company has endeavored to move fast in providing market solution, which maximize customer needs and convenience, using multiple delivery channels in composing the agency network, service centers, lower service cost and increased efficiency.


Reporting and conclusions and recommendations

This is the most vital part of the work undertaken. After collection and analysis of data, it was recorded in the form as prescribed. The major part of the report is the findings. The finding also includes charts, tables and diagrams etc. The report also mentioned the limitations of the project undertaken. Then conclusion has been drawn out of the findings and various recommendations have been given at the end of the report. Certain tables on the basis of which the findings were made have been included in the appendices section followed by the bibliography.


BIBLIOGRAPHY

BOOKS & Author:

Marketing research Dr. C.B. Mamoria Marketing research Mr. Kothari.

MAGAZINES, JOURNALS AND NEWSPAPERS:

Journals published by Hero Honda, Annual Report Auto India, Business World

INTERNET:

www.herohonda.com


Documents

Marketing Strategy of Hero Honda