17502853 Hero Honda in Rural Market

INTRODUCTION

Hero Honda Motors Limited, based in Delhi, India, is the world's third largest manufacturer of motorcycles after Honda and Yamaha. Hero Honda is a joint venture that began in 1984 between the Hero Group of India and Honda of Japan. It has been the world's biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year. During the fiscal year 2008-09, the company has sold 3.28 million bikes and the net profit of the company stood at Rs.1281.7 crore, up 32% from the previous fiscal year.

Hero Honda's Splendor is the world's largest selling motorcycle. Its 2 plants are in Dharuhera and Gurgaon, both in India. Third plant at Haridwar, Uttaranchal has also started production by April, 2008. It will have production facilities such as Lean Manufacturing concept, more flexible lines & stream line material flow, within & proximity (planning to set vendors in nearby locations constituting HHML Park) to achieve just-in-time manufacturing. It specializes in dual use motorcycles that are low powered but very fuel efficient.

COMPANY PROFILE

“Hero” is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles. It is a joint venture between India's Hero Group and Honda Motor Company; they are related to Jagdish Lal Munjal.

During the 1980s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage.

Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle: Splendor.

Hero Honda bikes currently roll out from two globally benchmarked manufacturing facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of churning out 3.9 million bikes per year. A third state-of-the-art manufacturing facility at Haridwar in Uttranchal will soon be commissioned to cope with sustained customer demand.

Hero Honda's extensive sales and service network now spans over 3,000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockists and authorized representatives of dealers across different areas.

Hero Honda values its relationship with customers. Its unique CRM initiative, Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors.

TWO WHEELERS IN INDIA

1. Hero Honda : Achiever - CBZ - Hunk - Karizma - Passion – Splendor

2. Bajaj : Avenger - Boxer - CT 100  - Discover - Eliminator - Legend  - Pulsar  - Pulsar 220 - Platina  - Wind  - XCDKristal  - Chetak  - Saffire  - Sunny  - Wave

3. TVS : Victor - Flame - Apache

4. Honda : Activa - Aviator  - Dio - Unicorn

5. Yamaha : Crux - Gladiator - Libero  - RX-135 - RX 100 - R15 · FZ16 - FZ-S

6. Others : Rajdoot 350 - Royal Enfield Bullet

HERO HONDA SPLENDOR

Hero Honda Splendor has come up with all possible features of any standard bikes. Apart from these features, this bike also has many advanced and customer friendly features. This bike is equipped with every safety and comfort features for the convenience of the biker.

There are found models in Hero Honda Splendor: Super Splendor Splendor + Splendor NXG

Super Splendor

This Bike comes with 125 cc new generation quantum core engine with an output of 9 bhp (6.7 kw). It’s relaxing seating arrangement with other comfort features like less strain while clutching and declutching, low noise and less vibration engine etc, makes it more market friendly bike.

For the convenience of the biker, there are few features included here are trip meter, peep hole, large utility box etc. Some safety features included here are pass switch and push cancel indicator switch, muffler with heat shield etc.

It is found in different colors:

Frost Blue Cloud Silver Mono Tone Black Dual Tone Black Blazing Red

 Splendor +

4 stroke single cylinder lair-cooled, OHC engine delivers power of 5.5 Kw (7.5PS) @ 8000 rpm . Running with the maximum mileage of 85 kmph, this bike is giving the optimum satisfaction for long journey. Its double cradle frame gives the steadiness in biking. Its wider 1230 mm wheelbase provides the proper base for safer riding.Lighting fitting included in it like multi reflector with halogen bulb makes the biking secured at every time.

It is found in different colors:

Candy Tahitian Blue Hi Performance Red Blue Blaze Metallic Cloud Silver Metallic Chilli Green Hi Granite Blue Tornado Grey Black with Blue Silver Stripe Black Calliper Yellow Black Old Stripe

Splendor NXG

Splendor NXG comes with a new engine and pioneering features and combines stylish looks with a high performance engine. It features trapezoidal multi -reflector headlamps which is powerful even at low speeds. This is achieved by powerful battery which powers the DC high beam in the headlamp and its strength is not dependent on the engine rpm. Circuitry for the low beam and pilot lamp has also been enhanced for low variation in intensity arising from changes in the engine rpm.

It features:

Splendor NXG is available in a range of five attractive colors and seven stripe combinations.

New front fairing and a new visor New design fuel tank with knee recesses on either side and features a chrome fuel

tank lid. New body panels and sleek body graphics. New instrument panel - trip meter housed in speedometer, fuel gauge. Stylish tail lamp and die - cast alloy grab rail. 160mm of ground clearance.

Colors Candy blazing red Force Silver Vibrant blue Classy maroon Black

WHY COMPANY CHOOSE RURAL MARKET

Hero Honda has worked out a major expansion strategy for the rural markets and is planning to strengthen retail financing to support the initiative that could lead to setting up of its own finance arm. Pawan munjal, MD of Hero Honda, told TOI that rural market would be a special focus area for the company as it is looking at new growth areas to maintain sales momentum in a shrinking market. "We have created a special ‘rural vertical' to push growth and this would spearhead our expansion in the rural market,' Munjal said.

India's largest two wheeler company Hero Honda Motors is spreading its wings to capture the commuting bikers' imagination in rural India, after witnessing flat sales growth in 2007-08. The two wheeler market leader plans to cover 100,000 of the 600,000 villages in the country by the end of this financial year under a campaign named Har Gaon, Har Aangan (every village, every household).

Anil Dua, Senior Vice-President (Sales & Marketing), told DNA Money that "We realized that, while two-wheeler penetration in urban areas is 25 per cent, it is only 10 per cent in rural areas and so the latter segment needs to be tapped more extensively. Under the rural vertical, we started collecting a lot of data at rural touch points…….many of our dealers are now meeting sarpanches, headmasters, aanganwadi workers and other opinion makers to understand the rural consumer better". The rural initiative generated sales of 16,000 additional bikes in a single month.

PROMOTIONAL STRATEGIES

1. BRAND AMBASSADORS OF HERO HONDA:

Hrithik, Saurav Ganguly, brand ambassadors of Hero-Honda

Hero Honda, a leading manufacturer of motorcycles, has roped in film actor Hrithik Roshan and captain of Indian Cricket team Saurav Ganguly as its brand ambassadors for three years till 2003.

The latest commercial featuring Hrithik Roshan, Priyanka Chopra and six cricketers, is perhaps the longest ad, at three minutes.

They would endorse the company products, attend corporate and brand events and help promote its “We care” campaign comprising safely riding, environment and friendliness.

Hrihik and Gauguly said they were glad to be associated with Hero Honda. Honda has embarked upon an ambitious project to achieve sale of one million bikes this year with a market share of 47 per cent. The turnover would be in excess of Rs. 3000 crore.

In October alone, 11, 22,000 motorcycles have been sold. Compared to 66,063 units in the corresponding period. Last year, the increase in sales is a phenomenal 69 per cent. Cumulative sales jumped up by 41.58 per cent to 5.72 lacks units during April-October as against 4.04 lacks units in the same period last year.

PROMOTION POLICY:

Company gives advertisement in different media vehicles time to time. Like in TV. Magazines, newspaper, etc.

Hero Honda also organizes free service camps every year. Hero Honda also takes art in trade fair. Hero Honda with the help of ICICI Bank provides loan to the customers &

also provide easy monthly installment scheme to customers. Hero Honda gives huge commission to their dealers.

2. ADVERTISEMENT:

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The show is hosted by Aditya Narayan, who also hosted the previous competition Sa Re Ga Ma Pa Challenge 2007. This show features three new mentors, Aadesh Shrivastava, Shankar Mahadevan and Pritam, who join Himesh Reshammiya.The concept is similar to the previous show Sa Re Ga Ma Pa Challenge 2007 where the contest invited singers from all around the world. Auditions were held outside India & contestants were judged by various music artistes from the Indian Music industry. Only the top contestants from the auditions were selected to participate in the show.

Hero Honda is Rock Solid on its Top Position: An AdEx India Analysis

The boom in the Automobile industry has also benefited TV Channels in terms of advertising revenues from the Cars/Jeeps as well as the Two Wheelers category. Last time we delved into the advertisers/brands within the cars/jeeps category. First, let's see which advertisers topped TV advertising in 2002. Hero Honda Motors Ltd was the top advertiser then, accounting for a little over 25% (one fourth) of the share. TVS Motor Company came a close 2nd with its share just above the 25% mark and Bajaj Auto was ranked third with shares close to 17%.

3. PLAN HAR GAON HAR AANGAN:

Hero Honda was quick to realize that there was a huge opportunity waiting to be tapped. A rural vertical was set up under Dua sometime in 2007. Five hundred sales representatives were taken on board for the mission Har Gaon, Har Aangan (every village, every courtyard.)

These representatives have been given work tasks and not sale targets - they need to meet potential customers and opinion leaders in villages. So far, Hero Honda has mounted three two-month long "waves" through these men. Each wave has resulted in additional sale of 15,000-16,000 motorcycles.

Farmers, Hero Honda knows, have money in their pockets twice a year when they harvest their crop - once around May and June and then around October and November. These "waves" are mounted just before the harvest so that Hero Honda is on their radar screen when they have cash in hand.

It also realised that one reason customers in these markets choose Hero Honda over others is the easy availability of spares and authorised mechanics. As a result, in the resale market, it commands a premium over rivals. This makes Hero Honda a preferred brand, claims Munjal.

Thus, the company decided to ramp up rapidly its touch points with customers - showrooms, service centres and so on. From 2,000 in 2006, the number has risen to 3,500 now. Munjal says the plan is to add at least 500 every year. Most of these will be service points.

"Customers can travel over long distances to buy a motorcycle but not for service. A customer can take his motorcycle for servicing four or five times a year," adds Dua. Many of these touch points can start as a service centre and over time become a sale centre.

4. CORPORATE SOCIAL RESPONSIBILITY:

 STAKEHOLDER TIES AT THE GRASSROOTS

Hero Honda Motors takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream.

An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community.

The Foundation has adopted various villages located within vicinity of the Hero Honda factory at Dharuhera for integrated rural development. This includes:

Installation of deep bore hand pumps to provide clean drinking water. Constructing metalled roads and connecting these villages to the National

Highway (NH -8). Renovating primary school buildings and providing hygienic water and

toilet facilities. Ensuring a proper drainage system at each of these villages to prevent water-

logging. Promoting non-conventional sources of energy by providing a 50 per cent

subsidy on biogas plants.

RAMAN MUNJAL VIDYA MANDIR

The Raman Munjal Vidya Mandir began with three classes (up to class II) and 55 students from nearby areas. It has now grown into a modern Senior Secondary, CBSE affiliated co-educational school with over 1200 students and 61 teachers. The school has a spacious playground, an ultra-modern laboratory, a well-equipped audio visual room, an activity room, a well-stocked library and a computer centre.

RAMAN MUNJAL MEMORIAL HOSPITAL

Multi-specialty hospital equipped with the latest diagnostic and surgical technology. The Raman Munjal Memorial Hospital provides healthcare to the rural pXopulation in and around Dharuhera, and also caters to accident and trauma victims driving along the Delhi-Jaipur highway.

Raman Munjal Sports Complex

The Raman Munjal Sports Complex has basketball courts, volleyball courts, and hockey and football grounds are used by the local villagers. In the near future, sports academies are planned for volley ball and basket ball, in collaboration with National Sports Authority of India.

Vocational Training Centre

In order to help local rural people, especially women, Hero Honda has set up a Vocational Training Centre. So far 26 batches comprising of nearly 625 women have been trained in tailoring, embroidery and knitting. The Company has helped women trained at this centre to set up a production unit to stitch uniforms for Hero Honda employees. Interestingly, most of the women are now self-employed.

Adult Literacy Mission

This Scheme was launched on 21st September, 1999, covering the nearby villages of Malpura, Kapriwas and Sidhrawali. The project started with a modest enrolment of 36 adults. Hero Honda is now in the process of imparting Adult Literacy Capsules to another 100 adults by getting village heads and other prominent villagers to motivate illiterate adults.

Marriages of underprivileged girls

Marriages are organized from time to time, particularly for girls from backward

classes, by the Foundation by providing financial help and other support to the

families.

Rural Health Care

Besides setting up a modern hospital, the Foundation also regularly provides doorstep health care services to the local community. Free health care and medical camps are now a regular feature in the Hero Group's community outreach program.

4- A’s OF HERO HONDA

1. Availability a) Hero Honda's 2 plants are in Dharuhera and Gurgaon, both in India.

Third plant at Haridwar, Uttaranchal has also started production by April, 2008.

b) Hero Honda's extensive sales and service network have spans over 3,000 customers touch points.

c) The number of touch points (dealerships plus sales and service outlets) is already 3,500 from 2002 and another 500 would be added every year.

2. Affordability a) Hero Honda offer cheapest motorcycles in India cost between Rs 30,000

and Rs 35,000. b) Hero Honda with the help of ICICI Bank provides loan to the customers

& also provide easy monthly installment scheme to customers.

3. Awareness a) Hero Honda Motors Ltd was the top advertiser then, accounting for a

little over 25% (one fourth) of the share.b) Five hundred sales representatives were taken on board for the

mission Har Gaon, Har Aangan (every village, every courtyard.)c) Company gives advertisement in different media vehicles time to

time. Like in TV. Magazines, newspaper, etc.d) Hero Honda also organizes free service camps every year.e) Hero Honda also takes art in trade fair.

4. Acceptability a) Hero Honda has accepted by people because its strong brand image and

product quality.b) Hero Honda is considered to be most fuel-efficient bike on Indian roads.c) Hero Honda bikes are purchased more by daily users who needs more

average of bikes as well as look.d) People prefer Hero Honda because of its product varieties & stylish

design etc.

MARKET SHARE

Hero Honda Motors Ltd on 14- July- 2009 reported a forecast-beating 7.1 per cent rise in net profit. Helped by falling commodity prices, a cut in excise duties and sales in rural areas.

Hero Honda's closest rival, Bajaj Auto Ltd, second week of July, 2009 reported a 23 per cent drop in net profit for its fiscal third quarter as a lack of financing and high interest rates crimped demand.

Hero Honda was not as affected, as 60 per cent of its revenues come from rural markets, where purchase are less reliant on loan financing than in urban areas and where its 100 cc bikes are popular, Munjal said.

Company

Apr-Jun2008-09

Apr-Jun2009-10

Growth

%)

Market

Share (%)

Rural Market share

Urban Market share

Hero Honda

877,089 1,094,996

24.84 51.26 10% 25%

Bajaj Auto

391,100 331,731 -15.18 15.53

TVS Motors

292,530 315,785 7.94 14.78

Honda 226,068 284,890 26.01 13.33Total Market

1,865,767

2,135,869

14.48 -

SALES IN RURAL MARKET

Hero Honda is a joint venture between Honda Corporation, Japan and the Mumjal family with both parties owning 26% each. Hero Honda has made its strong presence in the rural India and so it is able to withstand against the market competition. Selling of deluxe models of the bikes and a decline in raw – material prices has brought an improvement in the EBITDA margin level, in the financial year 2008. The dealership network of Hero Honda is strong and it also has a good penetration effect in the rural areas. The company has manufactured 46,000 units in Haridwar plant and its daily production has reached between 1000 to 1200 units on a daily basis.

Recently, Hero Honda reported an impressive July sales at 281317. The PAT growth was driven by low tax provision at 22.2% versus estimated 29.5%. The EBITDA is at Rs. 3.4B (verses estimation of Rs. 4.2B), which is due to lower realization growth and higher other expenditure. There are few banks which are likely to reduce auto loan interest rate at 1 to 2%. In the coming month, Hero Honda is expected to do better sales volumes on account of better monsoon and growth in the rural area.

CONSUMER SEGMENT

Target segment

Transportation need Translates to Product features

Product choice

Men/ Family

To carry load -carrying family, delivering goods etc

Strong, sturdy and powerful

Motorcycle/ Honda Activa

Women To move around with ease and comfort, not to depend on others for commuting need –scooter is an agent of liberation

Great mileage, easy to maneuver and safe to ride

ScootyPep / Hero Honda pleasure

WHY PEOPLE PREFER HERO HONDA

REASON OF CUSTOMERS PREFRENCE

BAJAJ HERO HONDA

COMPETITORS

BAJAJ AUTO

Two-wheeler major Bajaj Auto is set to fight back falling sales with a renewed focus on bigger engine bikes backed by six new launches in 2009.

The company will kick off with a new product, which will directly target rival Hero Honda’s best-selling Splendor/Passion range, the 135 cc XCD priced at Rs 45,000 and due for debut on January 21.

Followed by this, the company also plans two more new rollouts in value-segment (125-135 cc engine size) in April and July and three premium models (150 cc and above) later this year.

Speaking to ET, Bajaj Auto managing director Rajiv Bajaj said: “We want to pursue our strategy of being a motorcycle specialist and our focus is on motorcycles in the 125 cc and above engine size, which has 35% share in the domestic two-wheeler market. Currently, we own 50% of the market for 125 cc and above engine size. We want to grow both our product range as well as our marketshare in that segment. We do it through our DTSi engine technology, and for us, that’s the core differentiator.”

Apart from a head-to-head pricing with its rival brand, the XCD 135 cc DTSi will come with a number of features than the premium stable mate Pulsar. That includes a 5-speed gearbox, a 10.5 hp output and 65/70 km per litre mileage. It will sport a digital cockpit, nitrox rear suspension, low-friction front suspension, twin pilot headlamps and LED tail lamps.

The bike will roll out from Bajaj’s Waluj plant and will also be produced at Pantnagar from February.Bajaj Auto has been badly affected by the defaults that dried up financing in the two-wheeler market. It’s motorcycle sales declined 8% to 1,534,149 units during April-December from 1,660,182 units for the same period last year. In December alone, it’s sales skid 33%.

“In the entry-level segment, we witness a major sales growth with our Platina model,” said Mr Bajaj. “Due to defaults, finance dried up and our numbers fell to about 40,000 units per month from 75,000 units,” he added.

In 2006 and 2007, the entry-level segment, where cheap and cheerful 100 cc motorcycles rule, suddenly expanded when financiers got aggressive and offered bikes at Rs 2,000 down payment. “It was bad business and it’s over and no one will go back to that

structure,” said Mr Bajaj. For Bajaj, that leaves the problem of a shortfall of 30,000-40,000 motorcycles a month.

Mr Bajaj is using Bajaj Auto Finance (BAF), the in-house financing company, to get over the entry-level sales spike. “However, NBFCs typically have higher cost of finance. So we’re countering that with 1-2 years of extended free warranty cover,” Mr Bajaj said. Already BAF has financed 25,000 bikes in December despite its 3% higher interest rate. “When compared to other banks, that is a good performance,” said Mr Bajaj.

Two years ago, Bajaj Auto had announced that it would not look at the entry-level segment because there’s no money there. “We are not abandoning 100 cc bikes,” said Mr Bajaj. “All we are saying is that we would want to address the mid/value-segment that is now ruled by our competitor’s Splendor/Passion range, with 125 cc and above products.”

COMPARISON BETWEEN HERO HONDA AND BAJAJ AUTO

There was a time when Bajaj Auto and Hero Honda were neck-and-neck race in the two-wheeler market. In April 2009, Hero Honda’s sales were up 29.5 per cent (as compared to April 2008) to 370,575 two-wheelers while Bajaj Auto’s sales slid 24 per cent. The gap between the two companies increased to over 200,000 in the said month.

However, not so long ago, Bajaj Auto was giving sleepless nights to Hero Honda. In September 2006, it had come close to displacing Hero Honda from the top slot. Hero Honda’s rule as the leader of the Indian motorcycle market, second only to China in size, it looked would soon be history, writes Bhupesh Bhandari writes in Business Standard’s The Strategist....

Left with no choice, it took a decision that changed its face forever. “We said we will focus on market share rather than profits,” recollects Hero Honda Managing Director and CEO Pawan Munjal.

Result? From a producer of fuel-efficient motorcycles, Hero Honda has morphed into a marketing-led organisation. Advertising campaigns, product refreshes and brand health — walk blindfolded into the Hero Honda office in a crowded south Delhi market and the language spoken there could lead you to mistake it for an FMCG company.

“Every two-wheeler company is focused at the product-end of the story. But all products are similar,” says brand consultant Harish Bijoor. “Hero Honda is the first to go beyond that. It shows in its domination of cricket, selection of youth and style icons, and association with shows like MTV Roadies which improves involvement with the hinterland.”

In those days, all motorcycles and their advertisements looked similar. The diagnosis was that the company’s differentiation in terms of propositioning to customers was weak. That was the first gap that needed to be plugged.

The second step involved discarding the earlier method of product categorization on the basis of engine size. This took the company to unchartered waters of consumer profiling — what is his lifestyle and attitude, what is it that he holds dear in life and so on. As a result, Hero Honda now comes out with new motorcycles, variants and refreshes keeping the customer profile of each segment in mind.

This shows in the commercials. Thus, the advertisement for the Karizma (premium segment) comes with the punch line, “Always game.” The ad for the premium segment Hunk doesn’t talk of speed or power at all — the focus is on the looks even while standing. The CBZ Extreme comes with the promise, “Thinking is such a waste of time.”

“Both the Hunk and CBZ Extreme are 150 cc bikes but talk to different customers,” says Hero Honda Vice-president (sales and marketing) Anil Dua, who joined Hero Honda around September 2006 from Hindustan Unilever. “We have created very sharp positions for all our brands. You can’t substitute one model for another in any advertisement.”

This is important. Hero Honda has a large portfolio of products (13 motorcycles and one scooter), so it has to create distinct position for each so as to avoid customer-confusion and cannibalization of products.

WHY IT IS SUCCESSFUL BRAND

Hero Honda has managed to put in spectacular performance going from strength despite increase in competition; the company's sales have witnessed an uptrend, registering an average growth of 42% in the three years under review.

Hero Honda has managed to achieve this because its strong brand image and proven product quality underpinned the performance growth in recent years. Apart from the strong brand "splendor" the company's performance across the spectrum of the motorcycle market helped it exploit the growing demand for 4-stroke motorcycle.

At the lower end the company has CD 100 SS at middle level splendor, passion and Dawn the CBZ Extreme/ Karizma range is targeted at premium segment.

Some years back Hero Honda are getting stiff competition because of Bajaj, TVS and Yamaha have a presence in 125cc bikes segments where Hero Honda has not any presence in this segment. Now this gap is filling up by Hero Honda's new Splendor NXG, Glamour. But still there is a gap between 150cc to 225cc segment which is most preferable segment by youth today.

With newer and better models are coming up customer has better and bigger choices to choose from.

It is the competition on various aspects such as price, design technology, after sales services and even purchases offers, which provides to both buyer and seller.

Even many dealers are in view that today Hero Honda and Bajaj, thrives on competition.

Right now it seems that the real war is between Hero Honda and Bajaj auto. But one cannot discount the fact that there are other players, who are gaining strength day by day.

There was a time when Bajaj ruled the Indian Two Wheeler Industry with their scooters in the form of Chetak and the likes. They had a minor presence in the motorcycle market with some models from the Kawasaki range. Hero Honda was a minor player in that market with their 4-stroke bikes, which were totally dominated by Yamaha with their RX-100.

Situation changed dramatically when the pollution norms meant, two wheelers had to go 4-stroke and petrol started to get expensive. Hero Honda started emerging as the dominating force with their extremely efficient engines. People started looking towards motorcycles instead of scooters and the day arrived when Hero Honda became the largest two-wheeler manufacturer in the world with Splendor breaking all records.

Hero Honda kept playing their cards with modest decorative upgrades to their range of bikes though competition forced them to launch newer models in the form of Ambition, CBZ, and Karisma. However, the entry-level bikes in the form of Hero Honda Splendor and Hero Honda Passion were not upgraded to face the competition from Bajaj or TVS. The bike still retains extremely high confidence level from the users and sells like hot cakes.

Entry of Hero’s partner in the Hero Honda in form of Honda changed all that. They announced their entry with an extremely successful bike Unicorn which after months of its launch still has waiting periods of many weeks. More interesting models are come in the market regularly. They also are competing with Bajaj heads on with their extremely popular models in the scooters market (Activa and Dio).

This has forced Hero Honda to think again… Honda can emerge as a dominating force in the market with its extremely high quality standards and technical expertise. And the results are coming in front of us. They have announced their arrival in the scooters market for the first time with a model planned for launch. Moreover, they have released a much-needed upgrade model of their best selling Splendor.

Super Splendor is a 125cc bike, which is being manufactured at the company state-of-the-art plant in Gurgaon, Haryana. They have priced this model at a modest Rs 42,500. This should help Hero Honda retain their market share in the executive segment considering the brand value of Splendor.

They are also considering setting up a third plant to increase their production capacity, which already stands at an impressive figure of 2.4 lakh units.

WHY HERO HONDA IS A WINNER

Building a wide product range across segments Differentiated brand building campaigns Focus on driving sales in rural India Launching new models

WEAKNESSES

Low presence in premium segment.

Less developed in house capabilities

Weak on self product development Association with Honda put

Restriction on export

STRENGTH

Good image among the consumer. High operational efficiency Access to superior models of

Honda Good distribution network Highest market share

OPPORTUNITIES

Increasing demand Increase in per capita income Economic reforms Low cost of performance.

THREAT

Entry of bigger players. Tough competition from Bajaj. Tighter emission norms. Introduction of Tata Nano.

SWOT ANALYSES ON HERO HONDA

CONCLUSION

1. Most of the Hero Honda Bikes are purchased by young generation 18 to 30

because they prefer stylish looks and rest of the models of Hero Honda are

purchased more by daily users who needs more average of bikes than looks.

2. Hero Honda is considered to be most fuel-efficient bike on Indian roads.

3. Service & Spare parts are available throughout India in local markets also.

4. While buying a motorcycle, economy is the main consideration in form of

maintenance cost, fuel efficiency.

5. Hero Honda started growing in rural market rapidly with its add campaign

and promotion strategies in rural market.