1. INTRODUCTION TO THE PROJECT The project is all about measuring the customer satisfaction in Hero motors. For the past few years every company is trying to satisfy its customers. The emphasis is on ways of retaining customers, then on attracting new customers. It is easy to attract new customers then to retain old customers. So, companies are trying to focus on this aspect of customer’s satisfaction. The sale of a product does not end with the sale transaction but it is the point at which the original marketing concept starts. The marketer has to see that whether the customer satisfied with that particular product/service or not. The post purchase behavior is important for a marketer. If there is any cognitive dissonance in the minds of the customers then Page 1 Garden City College of Science & Management Studies
123
Embed
Customer satisfaction on Hero Motocop Ltd after split with Honda
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1. INTRODUCTION TO THE PROJECT
The project is all about measuring the customer satisfaction in Hero motors. For the past
few years every company is trying to satisfy its customers. The emphasis is on ways of
retaining customers, then on attracting new customers. It is easy to attract new customers then
to retain old customers. So, companies are trying to focus on this aspect of customer’s
satisfaction.
The sale of a product does not end with the sale transaction but it is the point at which
the original marketing concept starts. The marketer has to see that whether the customer
satisfied with that particular product/service or not. The post purchase behavior is important for
a marketer. If there is any cognitive dissonance in the minds of the customers then that is
enough to lose a customer. Keeping this in mind the companies are giving more importance to
customer satisfaction.
This project work has been done to find out whether a customer is satisfied or
dissatisfied, also to measure the level of the customer satisfaction and provide this feedback to
the company. The first phase of the project involves the collection of information from the
customers for interpreting the characteristics based on which the customer feels satisfied or
dissatisfied. This information is collected by preparing a structured questionnaire. The
questionnaire consists of both open-ended and closed-ended questions. The questionnaire is
designed in such a way that a customer feels convenient to answer.
Page 1
Garden City College of Science & Management Studies
The collated information through the questionnaire is analyzed and presented in a
statistical form. The findings are listed and suggestions to solve problems faced have been
given in the suggestion part.
INTRODUCTION TO CUSTOMER SATISFACTION
Whether the buyer is satisfied after purchase depends on the offers performance
in relation to the buyer expectation. In general satisfaction are a person’s feelings of pleasure
or disappointment resulting from comparing a products perceived performance relation to
his/her expectations. If the performance falls short of expectation, the customer is dissatisfied.
If the performance matches the expectation customer is satisfied. If the performance exceeds
the expectation the customer is highly satisfied.
Customer satisfaction cannot be very difficult. After all you either satisfied with
the services you receive or you are not. If you don’t you are not. If it is that easy, then obtaining
people's opinion about how satisfied they are with relatively straight forward matter- or is it?
Customer satisfaction is a marketing tool and a definite value added benefit. It is often
perceived by customers as important as the primary product or service your organization offers.
It looks at what is involved from 3 different angles, the first is from the view of an organization
wishing to understand, and measures, how satisfied its customer are with the products and
services they receive from it. The second is from the perspective of a research agency that has
been asked to obtain feedback from customers and about their experiences when dealing with
companies. Finally it considers the issue from the perspective of consumers who participate in
surveys, including both business customers and members of general public
Page 2
Garden City College of Science & Management Studies
MEANING OF CUSTOMER SATISFICATION
Customer satisfaction is a business term, is a measure of how products and services
supplied by a company meet or surpass customer expectation. It is seen as a key performance
indicator within business and part of the four prospective of balanced score card.
In a competitive market place were businesses compete for customers, customer
satisfaction is seen as a key differentiator and increasingly has become a key element of
business strategy customer satisfaction drives successful private sector business.
High performing businesses have developed principles and strategies for achieving
customer satisfaction. This paper presents a framework or set of ideas for using customer
satisfaction principles and strategies to improve the quality responsiveness, and possibility of
public sector privately provided services in vulnerable communities
The framework suggested that resident who live in tough neighborhoods can be supported
through customer satisfaction strategies to become empowered individuals who informed
perspectives influence decisions about what, how, when, and where services are available to
them.
Customer satisfaction is the customer’s response to the evaluation of the perceived
discrepancy between prior expectation and the actual performance of the product as perceived
after its consumption.
DEFINITION
Page 3
Garden City College of Science & Management Studies
Cocotte, woodruff and Jenkins (1987) define customer satisfaction as "conceptualized as a
feeling developed from an evaluation of the experience."
HERE, the timing of satisfaction response is driving consumption.
BUT there is general agreement with kotler (2003) that "customer satisfaction is a
person's feeling of pleasure or disappointment resulting from comparing a products perceived
performance in relation to his or her expectation." In short customer satisfaction is "The
provision of goods or services which fulfill the customer expectation in terms of quality and
service, in relation to price paid."
IMPORTANCE OF CUSTOMER SATISFACTION
It costs at least 7 times more to source a new customer than it does to retain existing
one a 'satisfied' customer tells 5-7 people in a year whilst a 'dissatisfied' customer will tell 14-15
people.
Companies can boost profits anywhere from 25% to 125% by retaining a mere 5%
more of their exciting customers.
Totally satisfied customers were 6 times more likely to use that services and commend
it than ' satisfied' customers.
Customers who have a bad experience with you and do not complain are only 37%
likely to still do business with you.
Customers who have an opportunity to complain and the complaint is achieved are
95% likely to still do business with you.
Page 4
Garden City College of Science & Management Studies
FACTORS OF CUSTOMER SATISFACTION
1. Service of quality
2. reliability of service
3. knowledge of the staff
4. Being kept informed of progress
5. The way service kept its promises
6. The way the service handled any problem Friendliness of staff
7. How sympathetic staff were to your needs
8. Speed of enquiries
9. Number of time had to contact the service.
2. REVIEW OF LITERATURE
Planning for the future to achieve the long-term objective is integral to the
survival and growth of every business. Strategic planning today has to take into cognizance
the rapid changes in technology, increased competitiveness and the turbulent business
environment, also with the world becoming one big global village.
Page 5
Garden City College of Science & Management Studies
Strategy covers every aspect of business from business reengineering, new business
development, product development and brand positioning to advertisements promotional
campaigns, media and publicity. It is a game of innovation.
In fact, marketing people are involved in marketing 10 types of entities; goods,
services, experience, events, persons, places, properties, organizations, information and ideas.
Marketing management is the art and science of choosing target markets and getting, keeping
and growing customers through creating, delivering and communicating superior customer
value.
India is second largest manufacturer and producer of two-wheelers in the world. It
stands next to Japan and China in terms of the number of two wheelers produced and
domestic sales respectively.
Indian two-wheelers industry made small beginning in early 50’s when Automobile
products of India (API) started manufacturing scooter in India. Hero was established on 13 th of
April 1984. The Indian two wheelers Industry can be broadly classified as scooter, motorcycles
and mopeds/scooters. In last six years domestic two-wheelers has seen structural charges.
This can be seen from the change in composition of two wheeler sales, where the motorcycles
have gained market share from the scooter and moped or scooters segments.
The consumer is now faced with proliferation of brand models. Getting new customers as well
as retaining them is an important task of manufacturers. So service after sales is very
important. A satisfied customer brings in more name and goodwill to the company, which is
why customer satisfaction is given more importance in today’s competitive world. A study on
this aspect with Hero two-wheelers at Hero MotoCorp Ltd was made.
Page 6
Garden City College of Science & Management Studies
STATEMENT OF THE PROBLEM
This Project has been titled “A comprehensive study Post purchase buyer behavior and
satisfaction towards Hero Motors Bikes after the split with Honda."
To study the new market of Hero motors after the split with Honda, the consumer response to
the bike and needed improvement aria
The study would help to understand the consumer satisfaction to their expectation.
OBJECTIVES
This study was conducted keeping the following objectives in mind.
1. To study the factors which influence the purchase of Hero two-wheelers?
2. To know the customer level of awareness of Hero two-wheelers.
3. To know the various factors, which influence customers in purchasing, they’re two -
wheelers?
4. To find the after sales service offered by Hero MotoCorp Ltd.
5. To know the customer level of satisfaction of Hero two-wheelers with respect to Hero
MotoCorp Ltd.
6. To find the profile of Hero MotoCorp Ltd two-wheeler customers.
7. To understand two wheeler sector in India.
8. How the split with Honda has affected Hero motors.
SCOPE OF THE STUDY
Page 7
Garden City College of Science & Management Studies
This study helps the organizations to increase their service and product quality and
in turn increase the market share, top and bottom line of the company.
LIMITATIONS
I have observed the following limitations in the course of my study.
1. The areas which were selected were limited only to Bangalore i.e., the findings are regional
and do not represent the state or country.
2. Time constraints hampered the study.
3. Since the study involved in gathering information was from upper to higher-middle class
people, interaction with them became difficult.
4. There may be respondent’s bias.
5. Even though utmost care has been taken in conducting the survey, the findings may
sometimes differ from the population.
6. The study is conducted of academic nature
7. The split happened 1 year before, the study not giving the long run result of Hero Motors
Bikes
NEED FOR THE STUDY
Page 8
Garden City College of Science & Management Studies
Marketing starts with identifying the needs of customers and ends in satisfying those
wants. The goal of marketing is to attract new customers by promising superior value and to
keep current customers by delivering satisfaction based on their preferences retaining them.
Without customer, no market exists. As the customers are regarded as the superiors
in today’s market, the level of satisfaction and their preferences should be keenly studied.
The two-wheeler industry has been expanding rapidly. Gone are the days when
possessing a two-wheeler was seen as a luxury. Now days, it is viewed as a mere necessity.
Prior, sale of two-wheelers was mainly confined to urban areas but lately in rural areas
the bicycles are being replaced by power driven two-wheelers such as scooters, motorcycles.
Not only this, this industry has also customers ranging from all demographic segments.
It has been common sights that even school going children are driving two-wheelers. The
women customers are also increasing due to increase in women literacy and employment.
Getting a new customer is difficult, than retaining a current customer is a more difficult
one and not only that it is estimated that the cost of attracting a new customer is five times the
cost of retaining current customer. It requires a great deal of effort to induce satisfied customer
to switch away from their current preference. Thus, customer satisfaction is been given top
priority in today’s competitive world.
Therefore, keeping the above stated objective in mind, this study was conducted to ascertain
the customer’s satisfaction towards Hero two-wheelers in Hero MotoCorp Ltd. In view of this, a
detailed study of customer preferences, levels of satisfaction and their complaints and
suggestions was undertaken.
METHODOLOGY OF THE STUDY
Page 9
Garden City College of Science & Management Studies
The information required for this study obtained was basically through two sources.
Primary Data:
Primary Data has been gathered by a survey through a structured questionnaire.
The Data has been collected from 100 customers, through questionnaires, by using
simple random sampling. In addition interaction with the staff of Hero MotoCorp Ltd has also
given some information.
Secondary Data:
Secondary Data comprises of information obtained from annual reports, brochures,
manuals websites etc.
3. INDUSTRY PROFILE
The Indian two-wheeler contributes the largest volume 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. scooters and step-thru. The market primarily comprises five players in
the two-wheelers segment with the most of the companies having foreign collaboration with
well-known Japanese firms earlier. But most of the companies are now planning 100%
subsidiaries in India. and growth anticipated is higher than the 16 percent achieved in the past
10 years
The automobiles sector is divided into four segments-two wheelers(mopeds, scooters,
motorcycles, electric two-wheelers), passenger vehicles (passenger cars, utility vehicles, multi-
Page 10
Garden City College of Science & Management Studies
purpose vehicles), commercial vehicles (light and medium-heavy vehicles), and three wheelers
(passenger carriers and good carriers).
The industry is one of the key drivers of economic growth of the nation. Since the globalization
of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic
route, Indian automobile sector has come a long way. Today, almost every global auto major
has set up facilities in the country.
The world standings for the Indian automobile sector, as per the Confederation of Indian
Industry, are as follows:
Largest three-wheeler market
Second largest tow-wheeler market
Tenth largest passenger car market
Fourth largest tractor market
Fifth largest commercial vehicle market
Fifth largest bus and truck segment
The sector has shown a sluggish growth of 12 percent in 2012. The trend is likely to stay with a 10
percent growth outlined for 2013 citing high ownership costs (fuel costs, cost of registration, excise duty,
road tax) and slow rural income growth. Solid but cautious growth is expected over the next few years.
However, from a long-term perspective, rising incomes, improved affordability and untapped markets
present promising opportunities for automobile manufactures in India. According to Macquarie equities
research, sale of passenger vehicles is expected to double in the next four years
Two Wheeler & its role in Indian Context:
Page 11
Garden City College of Science & Management Studies
As the cities grow & suburbs expand, transportation needs becoming more & more
acute, with mounting pressure on its public transportation for which two wheelers are ideal.
The two-wheeler Industry today has a significant role in the Indian economy, with an
annual turnover of Rs. 9000 crores and compounded average growth of 10%. In recent years,
it is of the few industrial sectors in the growth phase today considers personal transportation as
one of the basic needs.
The two-wheeler industry basically comprises mopeds, scooters, scooters and
motorcycles. Mopeds are basic entry-level products aimed at lower/middle income groups,
offering company. This category dominated by TVS SUZUKI, which has a market share of
50% today. The other major players in this segment include KINETIC ENGG., HERO MOTORS
and BAJAJ AUTO.
Scooters, which found largest segment in the industry (37 percent) is dominated by
BAJAJ AUTO. It is however facing stiff competition from LML, which offers better style and
technology to the Indian customers. However, dominance of this category has been declining
because of shift in the customer preferences.
Major part of the growth in the two-wheeler industry has come from motorcycle
especially, the Indo-Japanese 100cc motorcycles, which are considered, fuel efficient, reliable
and suited for rough roads.
Scooters also growing at a fast phase and are being increasingly perceived as a better
option providing convenience and motor style, by urban customers. In this category, TVS
Scooty holds a dominant market share.
Page 12
Garden City College of Science & Management Studies
With sales of over three million vehicles, India is the second largest two-wheeler
market in the world. Vehicle has become a necessity for day-to-day busy life, with the
accelerated industrial and business activity in a liberalized environment. However, given the
limited purchasing power and to high cost of cars, majority of the middle class vehicle users
prefer two wheelers.
With sales of over million vehicles, India is the second largest two-wheelers market in
the world. China is the market leader with around 51 percent of the Asia Market, India,
Thailand; Indonesia & Taiwan are the other key markets for two-wheelers with market share of
19 percent, 10 percent, 9 percent and 5 percent respectively.
In the last four to five years, the two-wheeler market has witnessed a market 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. 4-stroke motorcycles are now replacing all the
new models. Excise duty on motorcycles has been reduced from 32% to 24%, resulting in
price reduction, which has aided in propelling the demand for motorcycles. Fierce competition
has also forced players to cut prices of certain models.
Competition has intensified over the last couple of years altering the dynamics in the
motorcycle segment with various companies planning to cash in on this spurt in demand by
calling off their JVs like Suzuki Motors planning to break off with TVS. Recently, Honda
Corporation of Japan announced its intentions to set up a 100% subsidiary to manufacture
Page 13
Garden City College of Science & Management Studies
scooters and motorcycles. Other players in the two-wheeler industry include Bajaj Auto Ltd.,
Kinetic Motor Co.Ltd. LML and Escorts Yamaha. Low interest regime has helped in reducing
cost of loans, which will help in boosting sales of 2-wheelers, since 80% of the two-wheelers
are credit –stimulated.
The two-wheeler industry is passing through a critical but interesting phase. For many
years, it was growing continuously but the turning point came in 1996=97 when it started
slowing down. The impact was really (MI) felt in the next year when the overall growth was
hardly two percent. This was also possible only because the motorcycle segment showed a
healthy growth of 15 percent. The scooter segment went down by 3 percent and mopeds by 6
percent.
Another highlight is that the motorcycle sales have surpassed the scooter sales for the
first time in 1998-99. Until then, motorcycle sales were always trailing behind.
The net result is that motorcycles now account for 41 percent of the two-wheeler
market, while scooters account for 36 percent. Mopeds have been able to hold their own at
about 21 percent.
GROWTH OF MOTORCYCLES
It is therefore not surprising that every major player is trying to get into the Motorcycle
market to have a piece of the cake.
Hero MotoCorp Ltd is indisputable the leader with 38 percent share followed by Bajaj
with 27 percent (includes M-80), TVS at 19 percent and Escorts at 13 percent. Now LML and
Page 14
Garden City College of Science & Management Studies
Kinetic have announced their plans to manufacture motorcycles, which are likely to come in the
market by next year. The battle is expected to be fierce but the consumer will be the greater
beneficiary.
The growth in motorcycles is slowly losing its hold. It is considered a family vehicle but
perhaps there is competition from the second hand car markets where prices have fallen down
rapidly. A1992 Maruti 800 is now available for just 70,000.
The scooter manufactures have to watch this phenomenon and bring our many new
product variants in the right price slots to sustain their shares in the market. The moped market
has been steady with an average growth of 3 percent. It is dominated by TVS which holds 48
percent market share followed by Kinetic and Majestic Auto at 23 percent and 18 percent
respectively.
In each segment, there is a wide gap between the first two contenders, which makes
their products positioning and marketing strategies most interesting. The two wheelers market
seems to be maturing. There are the usual their conventional segment of scooters, mopeds
and motorcycles. Two new segments are being created.
NEW SEGMENTS
A Step is through segment like Kinetic K4-100, Honda Street, Bajaj M-80, which is
quite close to the motorcycle segment. The other segment is scooterettes or mini scooters in
which vehicles such as Kinetic SX/Style, TVS Scooty, Hero Winner, Bajaaj Sunny/Sprite/Safire
and LML trendy can be considered. These are vehicles under 75 cc and largely targeted at the
youth market such as college students, young boys and girls and new couples. They get the
Page 15
Garden City College of Science & Management Studies
advantage of lower excise duty at 16 percent as compared to 24 percent applicable over 75 cc.
The trend is towards push button start vehicles.
Among the majors in the two-wheeler industry, first quarter figure for the current year of some
players has been encouraging. The company sold 313,303 units last month as compared to
325,360 units in the same month last year. With this, BAL has recorded as 87 percent growth in
the motorcycle segment in the first quarter with sales of 130,577 units (93,631 units in the
corresponding period last year) BAL estimates market share of the first quarter-Geared
scooters 75.9%, unguarded scooters- 16.5%, Step-thrus-72.3% and motorcycle-20.5%.
In the scooters segment, sales of Bajaj Sunny and Bajaj Spirit increased by 170
percent to 7,876 units. First quarter sales registered an impressive 78 percent growth with
sales of 19,562 (10,995 units). The overall sales grew by 9.3 percent in the quarter when the
company sold 3.24 lakh vehicles.
BAL however reported a decline in sales of scooters by 15.6 percent in the first
quarter. The company hopes to increase the share of motorcycle in its product basket from 18
percent last year to 30 percent by 2003-04.
Hero MotoCorp Ltd enjoys tremendous brand equity in the motorcycle segment.
Kinetic Motors, another important player, managed to grow in 1999-2000, when the
scooters segments a whole slipped by around 5 percent. TVS Suzuki, a motor two-wheeler
market, has reported a growth of 13 percent in the first quarter period and sold 2.19 lakh units.
Sales of motorcycles and scooters were up by 18 percent and that of mopeds by 8 percent
over the same period last year.
Page 16
Garden City College of Science & Management Studies
The current year therefore promises to be a testing time for the two-wheeler industry.
Industry pundits feel that an overall growth rate of 5 percent should be possible as against 9
percent projected earlier. The sales volume therefore is expected to be around 3.8 million in
2000-2001.
DRAMATIC CHANGES:
HeroMotoCorp is now world’s largest manufacturer of two-wheelers. The company has
benefited from the demand shift to motorcycles, as it focuses solely on this product segment
(although has a product called Pleasure in Scooter segment). With fuel efficiency and riding
comfort as the main selling points, HMC has been able to address a wide market and post
robust sales growth even after its separation from the Japanese major Honda.
The coming years will see increasing competition due to the parity in products
and price. The only differentiators will be technology, quality, product range and service.
Imaginative marketing will emphasize relationship building, customer satisfaction and
relationship. All is exploring new techniques such as direct marketing and institutional sales.
Some of them are taking the vehicle actually to the customer’s doorstep. Now the customer is
the king.
HISTORICAL DEVELOPMENT OF TWO WHEELER INDUSTRY
India is the second largest manufacturer and producer of two-wheelers in the world. It
stands next to Japan and China in terms of the number of two-wheelers produced and
domestic sales respectively. This distinction was achieved due to variety of reasons as if
respective policy followed by the Government of India towards the passenger car industry,
rising demand for personal transport, inefficiency in the public transportation system etc.,
Page 17
Garden City College of Science & Management Studies
In Indian two-wheeler, industry made a small beginning in the early 50s when
Automobile Products of India (API) started manufacturing scooters in the country. Until 1958,
API and Enfield were the sole producers.
In 1948, Bajaj Auto began trading in imported Vespa scooters and three wheelers.
Finally, in 1980, it setup a shop to manufacture them in technical collaboration with Piaggio of
Italy. The agreement expired in 1971.
In the initial stages, API it was later overtaken by Bajaj Auto dominating the scooter
segment. Although various Government and Private enterprises entered the fray for scooters,
the only new player that has lasted until today is LML.
Under the regulated regime, foreign companies were not allowed to operate in India. It
was a complete seller market with the waiting period for getting a scooter from Bajaj Auto being
as high as 12 years.
The motorcycles segment was no different, with only three manufacturers via Enfield,
Ideal Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were
two-stroke bikes. Enfield 350cc bikes and Escorts 175cc bike initially dominated the motorcycle
segment.
The two-wheeler market was opened to foreign competition in the mid 80’s. And
then the market leaders-E5corts and Enfield- were caught unaware by the onslaught of the 100
cc bikes of the four IndoJapanese joint ventures. With the availability of fuel-efficiency low
power bikes, demand swelled resulting in Hero Honda — the only producer of four-stroke bikes
(100cc category), gaining a top slot.
The first Japanese motorcycles were introduced in the early eighties. TYS Suzuki and
Page 18
Garden City College of Science & Management Studies
Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively.
These two players initially started with assembly of CKD kits, and later on progressed to
indigenous manufacturing. In the 90’s the major growth for motorcycle segment was brought in
by Japanese motorcycles, which grew at a rate Of nearly 25% CAGR in the last five years.
The industry had a smooth ride in the 50’s, 60’s and70’s when the government prohibited new
entries and strictly controlled capacity expansion. The industry saw a sudden growth in the
80’s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mm
vehicles in 1990.
The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in
providing ease of use to the scooter owners. This helped in inducing youngsters and working
women towards buying scooters, who were earlier inclined towards moped purchases. In line
with this, the scooter segment has consistently lost its part of the market share in the
two~whee1er market.
In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a
decline of 15% in 1991 and 8% in1992, resulting in the production loss of 0.4mn vehicles.
Barring Hero Honda, all the major producers suffered from recession in FY93 and FY94. Hero
Honda showed a marginal decline in 1992.
The reasons for recession in the sector were the incessant rise in fuel price, high input
costs and reduced purchasing power due to significant rise in general price level and credit
crunch in consumer financing. Factors as if increased production in 1992, due to new entrants
coupled with the recession in the industry resulted in either company reporting losses or fail in
profits.India is one of the very few countries manufacturing three wheelers in the world. It is the
world’s largest manufacturer and seller of three wheelers. Bajaj Auto commands a monopoly in
Page 19
Garden City College of Science & Management Studies
the domestic market with a market share of above 80%; Bajaj Tempo, Greaves Ltd and
Scooters in India share the rest.
The total number of registered two-wheelers and three-wheelers on road in India, as
on March 1998 was 27.9nm and 1 .7nin respectively. The two-wheeler population has almost
doubled in 1996 from a base of 12.6mn in 1990.
PENETRATION OF TWO-WHEELERS:
On a base of around 28mn vehicles on Indian roads and around 175mn households,
there were only 160 motorized two-wheelers per thousand households in FY98. This compares
poorly with countries like Thailand where it is around 600 per thousand households. Also with a
household size of 5.5 persons and more than one wage earner in about 60% of the
households, the potential for a second vehicle demand is also good.
The number of households in the low-income group has fallen since FY86 and has
been more pronounced in the post-reform period. On the other hand, the number of
households in the middle, upper middle and high-income groups that form the consumer base
for twowheelers, have increased. Their share of the total number of households has increased
from 10.6% in FY88 to 20.5% inFY96. This rising income profile however, has, been more
pronounced in the urban areas as average annual growth in industry surpassed that of
agriculture in the period FY93 to FY96.
Page 20
Garden City College of Science & Management Studies
4. COMPANY PROFILE
Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of
two - wheelers, based in India.
In 2001, the company achieved the coveted position of being the largest two-wheeler
manufacturing company in India and also, the 'World No.1' two-wheeler company in terms of
unit volume sales in a calendar year. Hero MotoCorp Ltd. continues to maintain this position till
date.
Page 21
Garden City College of Science & Management Studies
HeroMotoCorp is now world’s largest manufacturer of two-wheelers. The company has
benefited from the demand shift to motorcycles, as it focuses solely on this product segment
(although has a product called Pleasure in Scooter segment). With fuel efficiency and riding
comfort as the main selling points, HMC has been able to address a wide market and post
robust sales growth even after its separation from the Japanese major Honda.
VISION
The story began with a simple vision – the vision of a mobile and an empowered India,
powered by its bikes. Hero MotoCorp Ltd., company’s new identity, reflects its commitment
towards providing world class mobility solutions with renewed focus on expanding company’s
footprint in the global arena.
MISSION
Hero MotoCorp's mission is to become a global enterprise fulfilling its customers' needs and
aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts
its customers into its brand advocates. The company will provide an engaging environment for
its people to perform to their true potential. It will continue its focus on value creation and
enduring relationships with its partners.
STRATEGY
Hero MotoCorp's key strategies are to build a robust product portfolio across categories,
explore growth opportunities globally, continuously improve its operational efficiency,
aggressively expand its reach to customers, continue to invest in brand building activities and
ensure customer and shareholder delight.
Page 22
Garden City College of Science & Management Studies
MANUFACTURING
Hero MotoCorp two wheelers are manufactured across three globally benchmarked
manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located
in the state of Haryana in northern India. The third and the latest manufacturing plant are based
at Haridwar, in the hill state of Uttrakhand.
TECHNOLOGY
In the 1980's the Company pioneered the introduction of fuel-efficient, environment friendly
four-stroke motorcycles in the country. It became the first company to launch the Fuel Injection
(FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006.
Its plants use world class equipment and processes and have become a benchmark in
leanness and productivity.
Hero MotoCorp, in its endeavor to remain a pioneer in technology, will continue to innovate and
develop cutting edge products and processes
DISTRIBUTION
The Company's growth in the two wheeler market in India is the result of an intrinsic ability to
increase reach in new geographies and growth markets. Hero MotoCorp's extensive sales and
service network now spans over to 5000 customer touch points. These comprise a mix of
authorized dealerships, service & spare parts outlets and dealer-appointed outlets across the
country.
Supply chain management
Page 23
Garden City College of Science & Management Studies
As the Company prepares to produce a wider range of products, efforts are being taken to align
the supply chain and prime up its supplier base. During the year, the Company kick-started the
process of migrating its existing brands to the new brand. The exercise is expected to be
completed during 2012-13.
During the year, the Company also commenced the process of working with its vendors to
develop new parts. The Company’s Supply Chain Management function is built on three
planks:
Cost
Quality
Sustainability
Tracking inventory cost effectively and efficiently is known to be a key source of competitive
advantage in the automobile industry. Hence, it comes as no surprise that cost leadership is
the Company’s prime focus area. Continual pressure on margins forced the Company and its
supply chain partners to find innovative and alternate ways to combat inflation. Considerable
attention was given to managing component inventory in the system, with double-digit growth in
inventory turnover. To align HR processes with the supply chain, top two HR consulting firms in
India are working with supply chain partners. The exercise is aimed at improving robustness of
people processes and resulting in a direct impact on quality, cost, productivity, delivery and
reliability. The move will enable supply chain partners move to the next orbit of operational
excellence. The Company initiated more than 30 quality improvement projects with supply
chain partners to provide better quality products to customers.
BRAND
Page 24
Garden City College of Science & Management Studies
The new Hero is rising and is poised to shine on the global arena. Company's new identity
"Hero MotoCorp Ltd." is truly reflective of its vision to strengthen focus on mobility and
technology and creating global footprint. Building and promoting new brand identity will be
central to all its initiatives, utilizing every opportunity and leveraging its strong presence across
sports, entertainment and ground- level activation.
Directors
Founder Director and Chairman : Dr. Brijmohan Lall Munjal
Managing Director and CEO : Mr. Pawan Munjal .
Board of Directors
Name of the person Nature of the Office
Mr. Sunil Kant Munjal Non Executive Director
Mr. Suman Kant Munjal Director
Mr. Paul Edgerley Non Executive Director
Mr. Pradeep Dinodia Director
Gen. (Retd.) V. P. Malik Director
Mr. Analjit Singh Director
Dr. Pritam Singh Director
Mr. M. Damodaran Director
Mr. Ravinath Director
Dr. Anand C.Burman Director
Dr. Brijmohan Lall Munjal
Page 25
Garden City College of Science & Management Studies
Mr. Munjal is the founder Director and Chairman of the Company and the
$3.2 billion Hero Group. He is the Past President of Confederation of Indian Industry (CII),
Society of Indian Automobile Manufacturers (SIAM) and was a Member of the Board of the
Country's Central Bank (Reserve Bank of India). In recognition of his contribution to
industry, Mr. Munjal was conferred the Padma Bhushan Award by the Union Government
Corporate Governance
At Hero MotoCorp, it is the firm’s belief that the essence of Corporate Governance lies in the
phrase ''Your Company''. It is ''Your'' Company because it belongs to you - the shareholders.
The Chairman and Directors are ''Your'' fiduciaries and trustees. Their objective is to take the
business forward in such a way that it maximizes ''Your'' long-term value.
This Company is committed to benchmarking itself with global standards for providing good
Corporate Governance. It has put in place an effective Corporate Governance System which
ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with.
The Board has also evolved and adopted a Code of Conduct based on the principles of Good
Corporate Governance and best management practices being followed globally.
Headquarter and Branches
Corporate & Registered Office
Hero MotoCorp Ltd.
Page 26
Garden City College of Science & Management Studies
34, Community Centre, Basant Lok, Vasant Vihar, New Delhi - 110057, India.
Tel: +91-11-26142451, 26144121
Fax: +91-11-26143321, 26143198
Zonal Offices
East Zone
Hero MotoCorp Ltd
3F, Neelamber Building, 28B, Shakespeare Sarani, Third Floor, Kolkata - 700017, India.