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 ABROLMRS. 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

4 3 0 0 09 6 2 0 0

5 3 0 6 0 0

7 6 1 2 1 0

1 0 2 9 5 5 5

1 4 2 5 1 9 5

1 6 7 7 5 3 7

0

2 0 0 0 0 0

4 0 0 0 0 0

6 0 0 0 0 0

8 0 0 0 0 0

1 0 0 0 0 0 0

1 2 0 0 0 0 0

1 4 0 0 0 0 0

1 6 0 0 0 0 0

1 8 0 0 0 0 0

1 9 8 5 - 8 61 9 8 9 - 9 01 9 9 8 - 9 91 9 9 9 - 0 02 0 0 0 - 0 12 0 0 1 - 0 22 0 0 2 - 0 3

MARKET SHARE

4 4 %

2 3 %

1 9 %

4 %1 0 %

H e r o H o n d aB a j a j T V S

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

Types of Brakes (Fr.) -

Drum Version (130 mm Dia.) Disc Version - Caliper Type

(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.

.

.

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

Manufactu

rer

Str

ok

e

Tr

ans

mis

sio

n

Eng

ine

cap

acit

y

Max

power

bhp@rp

m

Whe

el

base

(mm

)

Ge

ar

cle

ar

(m

m)

Fuel

(ltrs

)

Price

(Mu

mbai

)

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

DRUM

5-SP 5-SP 133 11@8000 1285 150 12.5 49,420

AMBITION

DISC

4 5-SP 133 11@8000 1285 150 12.5 52,421

AMBITION

DISC ES

4 5-SP 133 11@8000 1285 150 12.5 57,485

M a r k e t S h a r e

01 02 03 04 05 06 0

B a j a j A u t o H e r oH o n d a

K i n e t i c L M L M a j e s t i cA u t o

T V SM o t o r s

Y a m a h a

M a j o r P l a y e r s

Per

cen

tag

e

M a r k e t S h a r e 2 0 0 3 - 2 0 0 4M a r k e t S h a r e 2 0 0 4 - 2 0 0 5

Major players Market Share (in %age)

2004-2005 2006-2007Bajaj Auto 23.34 27.09Hero Honda 48.76 51.51Kinetic 1.25 0.8LML 3.86 1.43Majestic Auto 0.21 0.09TVS Motors 16.37 12.91Yamaha 5.56 4.29

-11-7

17.48

25.21

20.4

-15

-10

-5

0

5

10

15

20

25

30

1997-98 1998-99 1999-00 2000-01 2001-02

GROWTHOF THE

INDUSTRY

STEADY CLIMB

figures in Crore

2 6 . 5

6 4 1

5 0 . 4

7 8 3

7 6 . 7

1 , 1 5 6

1 2 1 . 4

1 , 5 5 3

1 9 2 . 1

2 , 2 7 0

2 5 0

3 , 1 7 0

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

3 0 0 0

3 5 0 0

1 9 9 5 - 9 61 9 9 6 - 9 71 9 9 7 - 9 81 9 9 8 - 1 9 9 91 9 9 9 - 0 02 0 0 0 - 0 1

P r o f i t A f t e r T a xT o t a l I n c o m 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?

Q2.) Please mention your income group ( per annum in thousand)

1 8 - 2 09 %

2 1 - 2 53 3 %

2 6 - 3 01 1 %

3 1 - 3 53 7 %

3 6 A b o v e1 0 %

Q2. Please mention your income group ( per annum in thousand)?

ROUP (PER ANNUM IN THOUSAND)

Q3.GENDER.F e m a l e

4 5 %M a l e5 5 %

7 5 - 1 0 01 7 %

1 0 0 - 1 2 55 7 %

1 2 5 - 1 5 01 1 %

1 5 0 - 1 7 51 1 %

1 7 5 a b o v e4 %

Q4. OCCUPATION.

6 7

1 7

6 5 5

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

O f f i c i a l sC l e r i c a lS t u d e n tF i r s tj o b b e r s

R e t i r e d

Q5. Three Motorcycle Companies that comes in your mind.

Things that you looked while purchasing a bike?

1 7

3 2

2 01 8

4

0

5

1 0

1 5

2 0

2 5

3 0

3 5

T V S L H H M L B A L E Y M L R E

Q6. What are the things that you look while purchasing a bike?

6 87 1

7 5

6 9

3 3 3 2

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

F u e le f f i c i e n c y

L o o k s L o wm a i n t e n a n c e

c o s t

R e l i a b i l i t y( l e s s

c h a n c e s o fb r e a k d o w n )

L e a s tp h y s i c a l

e f f e c t s

L o w p r i c e

Q7.How did you get to know about Hero Honda that you are having at present?

0

5

10

15

20

25

30

35

40

FAM ILY FRIENDS ADS. DEALERS

Q8. Which other bikes would you prefer to buy?

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

Y a m a h a L M L T V S B a j a j

Q9. Why do you prefer Hero Honda Splendor than other bike?

71

14

33

66

0

10

20

30

40

50

60

70

80

Maintenancecost

Looks Physical efforts Fuel economy

Q 10. what is the image of HERO HONDA in your mind?

35

32

13

4

16

0

5

10

15

20

25

30

35

economic durable smooth safe tough

MARKET SHARES (%)

MODEL 2002 2003

Premium/lifestyle category (Rs

50000 and above)

45.25 29.16

Commuter/Smart Category (Rs

40000-50000)

64.80 56.16

Economy category (Rs 30000-

40000)

21.71 32.95

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:

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:

Karizma

GlamourAchieverPleasure

Splender +Passion +CD dawn

CBZAmbition

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

HONDA

417014 46.01

BAJAJ

AUTO

219554 24.22

TVS SUZUKI 162081 17.88

OTHERS 107673 11.88

SWOT ANALYSIS OF HERO HONDA

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.

SWOT Analysis

InternalEnvironment(Strengths/Weakness Analysis)

External Environment

(Opportunity &Threat analysis)

BusinessMission

• 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

Expansion through Cooperation

Joint venture:

ExpansionStrategies

ExpansionStrategies

ThroughConcentration

ThroughConcentration

ThroughIntegrationThrough

Integration

ThroughDiversification

ThroughDiversification

MarketPenetrationMarket

Penetration

MarketDevelopment

MarketDevelopment

ProductDevelopment

ProductDevelopment

ThroughCooperationThrough

Cooperation

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

(as % of total)

Indigenous

(as % of total)

Raw Material &

Components17.90 82.1

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.

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 Super SplenderSplender

(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