Final Honda

8/8/2019 Final Honda

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DHAK DHAK GOHERO HONDA

SPLENDOR

MADE BY:

CHIRAG MAHESHWARI (24)

BHARAT KALRA (38)


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ABSTRACT

A Dream Turned into Reality. We must do something for the community from

whose land we generate our wealth.

This famous quote of Hero Hondas CMD, Mr.Brijmohan Lall Munjal set the

ball rolling for the Rural Development of the area around Dharuhera

(Haryana) in the year 1990 and 10 years later, the dream, the vision has

turned into reality.India is the second largest producer and manufacturer of two-wheelers in the

world. Indian two-wheeler industry has got spectacular growth in the last few

years. Indian two-wheeler industry had a small beginning in the early 50's. Indian

companies are among the largest two-wheeler manufacturers in the world. Hero

Honda and Bajaj Auto are two of the Indian companies that top the list of world

companies manufacturing two-wheelers.

The two-wheeler market was opened to foreign companies in the mid 1980s. The

openness of Indian market to foreign companies leads to the arrival of new models

of two-wheelers into India. This leaded to the strong growth of Indian automobile

industry.


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KEY PLAYERS IN TWO WHEELERS INDUSTRY

After facing its worst recession during the early 1990s, the two-wheeler industry

bounced back with a 25% increase in volume sales in February 1995. The scooters

are considered as family vehicles. There are many two-wheeler manufacturers inIndia. Major players in the 2-wheeler industry are Hero Honda Motors Ltd

(HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS).

The other key players in the two-wheeler industry are Kinetic Motor Company Ltd

(KMCL), Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India

Ltd (Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL) and

Honda Motorcycle & Scooter India (P) Ltd (HMSI).

Motorcycles in India:

Bikes comprise a major segment of Indian two wheeler industry.

Company : Bajaj Auto Ltd Company : HERO HONDA

* Bajaj Avenger* Bajaj CT 100

* Bajaj Platina

* Bajaj Discover DTSi

* Bajaj Pulsar DTSi

* Bajaj Wave

* Bajaj Wind 125

* Sonic DTSi

* Hero Honda Achiever

* Hero Honda CD Dawn* Hero Honda CD Deluxe

* Hero Honda Glamour

* Hero Honda Glamour-Fi

* Hero Honda Karizma

* Hero Honda Passion Plus

* Hero Honda Pleasure

* Hero Honda Super Splendor

* Hero Honda Splendor NXG

* Hero Honda CBZ Xtreme

Company : Kinetic MotorCompany

Company : TVSMOTOR

Company : Yamaha MotorIndia


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* Kinetic Aquila

* Kinetic Boss

* Kinetic Challenger

* Kinetic Comet

* Kinetic GF* Kinetic Stryker

* Kinetic Velocity

* TVS Apache

* TVS Centra

* TVS Fiero

* TVS Star* TVS Victor

* Yamaha CruxS

* Yamaha G5

* Yamaha Gladiator

* Yamaha RX15* Yamaha Fazer

INTRODUCTION

ABOUT THE COMPANY

1983 Joint Collaboration Agreement with

Honda Motor Co. Ltd. Japan signed

Shareholders Agreement signed

1984 Hero Honda Motors Ltd. incorporated

1985 First motorcycle "CD 100" rolled out1987 100,000th motorcycle produced

1989 New motorcycle model - "Sleek"

introduced

1991 New motorcycle model - "CD 100 SS"

introduced

500,000th motorcycle produced

1992 Raman Munjal Vidya Mandir

inaugurated - A School in the memoryof founder Managing Director, Mr.

Raman Kant Munjal

1994 New motorcycle model - "Splendor"

introduced

1,000,000th motorcycle produced


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1997 New motorcycle model - "Street"

introduced

Hero Honda's 2nd manufacturing plant

at Gurgaon inaugurated1998 2,000,000th motorcycle produced

1999 New motorcycle model - "CBZ"

introduced

Environment Management System of

Dharuhera Plant certified with ISO-

14001 by DNV Holland

Raman Munjal Memorial Hospital

inaugurated - A Hospital in the memoryof founder Managing Director, Mr.

Raman Kant Munja

2000 4,000,000th motorcycle produced

Environment Management System of

Gurgaon Plant certified ISO-14001 by

DNV Holland

Splendor declared 'World No. 1' -largest selling single two-wheeler

model

"Hero Honda Passport Programme" -

CRM Programme launched

2001 New motorcycle model - "Passion"

introduced

One million production in one single

year

New motorcycle model - "Joy"

introduced

5,000,000th motorcycle produced

2002 New motorcycle model - "Dawn"


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introduced

New motorcycle model - "Ambition"

introduced

Appointed Virender Sehwag,

Mohammad Kaif, Yuvraj Singh,

Harbhajan Singh and Zaheer Khan as

Brand Ambassadors

2003 Becomes the first Indian Company to

cross the cumulative 7 million sales

mark

Splendor has emerged as the World's

largest selling model for the thirdcalendar year in a row (2000, 2001,

2002)

New motorcycle model - "CD Dawn"

introduced

New motorcycle model - "Splendor +"

introduced

New motorcycle model - "Passion Plus"

introduced

New motorcycle model - "Karizma"

introduced

2004 New motorcycle model - "Ambition

135" introduced

Hero Honda became the World No. 1

Company for the third consecutive year.

Crossed sales of over 2 million units in a

single year, a global record.

Splendor - World's largest selling

motorcycle crossed the 5 million mark


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New motorcycle model - "CBZ*"

introduced

Joint Technical Agreement renewed

Total sales crossed a record of 10

million motorcycles

2005 Hero Honda is the World No. 1 for the

4th year in a row

New motorcycle model - "Super

Splendor" introduced

New motorcycle model - "CD Deluxe"introduced

New motorcycle model - "Glamour"

introduced

New motorcycle model - "Achiever"

introduced

First Scooter model from Hero Honda -"Pleasure" introduced


5th year in a row

15 million production milestone

achieved


6th year in a row

New 'Splendor NXG' launched

New 'CD Deluxe' launched

New 'Passion Plus' launched

New motorcycle model 'Hunk' launched


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achieved

2008

Hero Honda Haridwar Plantinauguration

New 'Pleasure' launched

Splendor NXG lauched with power

start feature

New motorcycle model 'Passion Pro'

launched

New 'CBZ Xtreme' launched


achieved

CD Deluxe launched with power start

feature

New 'Glamour' launched

New 'Glamour Fi' launched

2009 Hero Honda Good Life Program

launched

Hunk' (Limited Edition) launched

Splendor completed 11 million

production landmark

New motorcycle model 'Karizma -

ZMR' launched

Silver jubilee celebrations


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INDIAN RURAL MARKET AT A GLIMPSE

Large and Scattered market The rural market of India consists of

over 63 crores consumers from

5,70,000 villages

Major income from agriculture 60 % of the rural income is from

agriculture

Low standard of living Low literacy, low per capita income,

social backwardness, low savings, etc.

Traditional Outlook The rural consumer values old customs

and tradition. They do not preferchanges.

Diverse socio-economic backwardness Diverse socio-economic backwardness

is different in different parts of

the country.

Infrastructure Facilities Physical distribution becomes costly due

to inadequate Infrastructure facilities

like roads, warehouses,

communication system, financial

facilities

The rural bazaar is booming beyond everyones expectation. an estimated

induction of Rs 140 billion in the rural sector through the governments rural

development schemes in the Seventh Plan and about Rs 300 billion in the Eighth

Plan is also believed to have significantly contributed to the rapid growth in

demand. The high incomes combined with low cost of living in the villages have

meant more money to spend. And with the market providing those options, tastes

are also changing.


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PROBLEMS WITH RURAL MARKET

Underdeveloped People and

Underdeveloped Markets

The number of people below poverty

line has not decreased in any

appreciable manner. Vast majorities of

the rural people are tradition bound,

fatalistic and believe in old customs,

traditions, habits, taboos and practices.

Lack of Proper Physical

Communication Facilities

50% of the villages in the country do not

have all weather roads.

Media for Rural Communication Radio, television and cinemas are

potential medium for communication.Rural areas account for hardly 2000 to

3500 mobile theatres which are far less

then no. of villages.

Many Languages and Dialects Number of recognized languages is only

16, the dialects are estimated to be

around 850. The messages have to be

delivered in the local languages and

dialects.

Dispersed Market Scattered and impossible to ensure theavailability of a brand all over the

country. 7 Indian states account for 76%

of the countrys rural retail outlets, the

total number of which is placed at

around 3.7 million.

Low Per Capita Income 33-35% of GDP is generated in the rural

areas and is shared by 74% of the

population.

Low Levels of Literacy Leads to problem of communication for

promotion purposes.Prevalence of spurious brands and

seasonal demand

a multitude of local variants, which are

cheaper, therefore, more desirable to

villagers

Different way of thinking Fairly simple thinking and usually has 2

or 3 brands to choose.


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STORY BEHIND THE WALL

GROWTH OF TWO WHEELER INDUSTRY IN RURAL MARKET

Two wheeler industry in India has shown a good jump. In the last 4-5 years, two

wheeler industry has shown average growth of 8.5%, having an overall segregation

among: motorbikes (8%), scooters (12%) and mopeds (10%); all thanks to a steady

revival in economic activity, low excise duties, low interest rates and relatively

higher disposable incomes that enabled the demand pull.

Major players: Hero Honda, Bajaj, TVS Motors, Honda Motorcycles & Scooters,Yamaha, Mahindra & Mahindra (new player) have captured the market

significantly in urban sectors and are foraying to go deep into the interiors of the

country.

With cars like Tata Nano being introduced for Rs 1.5 lakhs for Indian roads along

with various other schemes introduced by car companies to lure customers, 2

wheelers future lies in semi-urban and rural regions.

IMMENSE POTENTIAL IN RURAL INDIA

According to research, with an estimated market for 2 wheelers in FY 11 as Rs 535

billion in India and 92 million potential buyers, the rural market accounts for 40%

of the size which cannot be ignored.

Reduced debts by government, farm loan waivers, (MSP-Minimum Support Price),

low interest rates, more financial institutions offering credit, government agri-

credit programmes, schemes of NREGA(National Rural Employment Guarantee

Act) Mahatma Gandhi Rural Employment Scheme-all these factors have added

impetus to the purchasing power and disposable income of the local consumers in

these regions.


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DIFFERENCE BETWEEN RURAL AND URBAN CONSUMER

While buying a product Rural customer:

looks for maximum needs being satisfied in a product. Also the customer

should have 4 AsAwareness, Affordability, Availability and Acceptance.

These customers are in particular distinguished as buyers of Value for

Money.

Rural customers need a sturdy transport product which could be used for

multi-purposes- carry luggage, cross the undeveloped roads, go to mundi,milk carriage etc.

Unlike urban, the customer here is not educated so there is indispensable need to

educate them verbally. Further, there is great impact of reference sale or Word of

mouth publicity to increase sale.

The other exclusive marketing activities being carried out to make the product

more popular are participation in local melas, rural games, rural financing and

local mechanics to avoid bad publicity of the product.

WIDE SPREAD DISTRIBUTION NETWORK OF HERHONDA MOTORS

Hero Honda which has a consolidating position in the urban sector is not far

behind to take up rural vertical all the more seriously. The companys contribution

is a massive 58% of the total country's two wheeler sale, 42% of their total sales

business is from rural segment. These impressive sale figures are a result of many

rural initiatives with the vision Har Gaon Har Angan, (Every Village Every

Household), undertaken by Hero Honda.

No. of Villages Covered: Under the rural initiative, over 100,000 villages

have already been covered. All non-metro dealerships conduct Opinion

Leader Contact Programs (OLCP), Loan Melas and Exchange Camps on a

regular basis in up-country and rural markets.


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Service Har Jagah (SHJ) : Hero Honda dealerships across the country are

conducting Service Har Jagah (SHJ) camps in village locations, on the same

specified day of every month, thereby enabling customers to get their bikes

serviced in their own villages, rather than travelling several miles to nearby

towns and cities for the same.

HERO HONDA IN RURAL MARKET

REASON TO CHOOSE RURAL MARKET

To strengthen retail financing to support the initiative that could lead to

setting up of its own finance arm.

Looking at new growth areas to maintain sales momentum in a shrinking

market.

Plans to cover 100,000 of the600,000 villages in the country by the end of

this financial year under a campaign aimed Har Gaon, Har Aangan (every

village, every household).

Created a special rural vertical' to push growth started. Under this,

collecting a lot of data at rural touch point. Many of dealers are now meeting

Sarpanches, Headmasters, Aanganwadi workers and other opinion makers to

understand the rural consumer better.

RURAL MARKETING

During the year, Hero Honda's ambitious rural connect program Har Gaon, Har

Aangan program rolled out across most states of the country.

It was also a year in which Hero Honda cascaded its unique rural connect program

Service Har Jagah. After successfully testing this grassroots rural connect

program in some states, Hero Honda went national in October 2009.


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At the moment, there is a network of more than 2,000 rural sales channel partners

working on the rural vertical through the Har Gaon Har Aangan and Its

extensions such as Service Har Jagahprogram.

There is a plan to substantially boost this number in the coming years by spreading

to villages that have a population of even less than 5,000,

Apart from meeting opinion leaders, the rural sales executives are also tasked with

organizing free checkup bike camps, loan melas, test ride camps, conducting Ride

Safe Programs to educate customers on "Safety" and "Maintenance" and

conducting other awareness camps on various value added features such as

Genuine Spare Parts, Good Life Program, Hero Honda Advantage and other

services offered by the Company.

The idea is not just to increase awareness about the two wheeler industry but alsoto increase buy-in for Hero Honda products.

To improve its rural presence, Hero Honda is relying heavily on information

technology and during the year, the Company made specific efforts to capture

details of sales in the rural market. It gave the marketing team a much better idea

of the customer mix and demand forecast and simultaneously, enhanced

coordination between the channel partners and HeroHonda.

The Company has placed brand displays in various DCM Hariyali Kisaan Bazaar

Centres, spanning across many states namely Uttar Pradesh, Uttaranchal, MadhyaPradesh, Haryana and Punjab. These premises were also used for conducting free

check up camps and education camps on Safety Riding skills, such camps were

also held in association with Monsanto, Godrej Aadhar, IFFCO and various other

fertilizer and seed companies in many parts of the country.


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PLAN HAR GAON HAR AANGAN

STRATEGY: Hero Honda has established mobile service centres to take care of

rural customers.

THE LESSON: Reinforce product quality through service indicators.

Hero Honda was quick to realize that there was a huge opportunity waiting to be

tapped. A rural vertical was set up 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 Hondais 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

preferred brand.

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.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. Many of

these touch points can start as a service centre and over time become a sale centre.


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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.

Folk Theater:

Folk theaters are mainly short and rhythmic in form. The simple tunes help in

informing and educating the people in informal and interesting manner. It has

been used as an effective medium for social protest against injustice,

exploitation and oppression.

Demonstration:

"Direct Contact" is a face to face relationship with people individually and withgroups such as the Panchayats and other village groups. Such contact helps in

arousing the villager's interest in their own problem and motivating them

towards self-development.


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Haats & Melas:

The countries oldest tradition holds the key to solving these problems. The

mobile supermarkets of rural India.

Facts & Figures:-

Over 47,000 haats and 25,000 melas are held annually.

The average daily sale at a Haat is about Rs.2.25 Lacs.

Annual sales at melas amount to Rs.3,500 crore.

Over half the shoppers at haats have shopping lists.

More than 10,000 melas draw visitors from all over India.

Nearly half the outlets at melas are for manufactured goods.

Haats is a better opportunity for promotion after brand building has been

done at Mela.

Wall Paintings:

Wall Paintings are an effective and economical medium for advertising in rural

areas. They are silent unlike traditional theatre .A speech or film comes to an end,

but wall painting stays as long as the weather allows it to.

Retailer normally welcomes paintings of their shops, walls, name boards. Since it

makes the shop look cleaner and better. Their shops look alluring and stand out


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among other outlets. Besides rural households shopkeepers and panchayats do not

except any payment, for their wall to be painted with product messages. To get one's

wall painted with the product messages is seemed as a status symbol. The greatest

advantage of the medium is the power of the picture completed with its local touch.The images used have a strong emotional association with the surrounding, a feat

impossible for even a moving visual medium like television which must use general

image to cater to greatest number of viewers.

Hero Honda, derives 60 per cent of its sales from the rural segment.

In order to promote its brand in the rural market, Hero Honda has recently

launched a marketing initiative in towns with a population of less than 50,000 in

Uttar Pradesh. The initiative would involve a mobile showroom and workshop,

through which people will be able to gather knowledge about the vehicles and also

buy them. The concentration will be mainly on promoting the company's two major

brands: Splendor and Joy.

With these initiatives, Hero Honda is targeting sales of 1.3 million two-wheelers this

fiscal. The festival season has also showed an improvement in sales for Hero Hondadespite the current downtrend. A factor driving sales could be the company's

offering of a two-year warranty (for which it claims to spend approximately Rs 10-

15 crore annually) and its hugely successful consumer loyalty programme.

Hero Honda, makes practically nothing at its plant. The only operation done at

its Dharuhera works other than the assembly of motorcycles is engine

assembly.

Hero Honda has an enormous advantage as in it has a product for each of the

market segments. The CD 100 is the basic no-frills model with fuel efficiency andreliability as USP; the CD 100 SS is the upgraded durable model positioned

in the rural market; Sleek the glamorous bike for the urban youth and the

Splendor is the premium product with better features and targeted at the urban

market.


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Analysts believe that the biggest advantage Hero Honda enjoys is its brand

image as a fuel-efficient bike. The company expects to leverage on the strong brand

image when its earliest customers start looking for replacements.

A recent research report says that on the back of large volumes, Hero Honda hasdeveloped strong vendors like Munjal Showa, Hi-Tech Gears, International

Instruments and others from whom it sources more than 80 per cent of its

components. This has also helped the company to lower its import content.

Hero Honda, makes practically nothing at its plant. The only operation done at

its Dharuhera works other than the assembly of motorcycles is engine

assembly.


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FUTURE PLANS OF HERO HONDA FOR RURAL INDIA

Hero Honda Motors is accelerating efforts to tap rural markets as it gears up to sell

a whopping five million units in 2010-11. Already, four out of 10 Hero Honda

bikes sell in rural markets and in the next three years, one out of every two (50%)

will be selling in the hinterland.

No wonder then that the countrys largest two-wheeler maker has decided to begin

a door-to-door service facility for rural customers.

Called Service Har Jagah, this network will be based on specially customised

bikes which are fitted with necessary equipment to provide service on wheels inthe interiors. Hero Honda managing director Pawan Munjal said 600 fresh rural

support executives are being recruited for this purpose and this programme will

support the companys successful Har Gaon Har Aangan drive where village

elders, sarpanchs, headmasters and aanganwadi workers were contacted to enhance

bike sales.

More than 7,500 villages will be covered every month under the rural service

initiative on a regular basis and will attend to over 70,000 customers. So far, 1,100

customised bikes for servicing remote areas have been introduced.

Munjal said that though the two-wheeler market has shown good volume growtheven during the recent months of global slowdown, penetration levels leave a lot of

scope for further growth.

Even today rural penetration for motorcycles is just 7% and in the urban areas

between 21% and 25%. This gives us immense opportunity for growth.

The number of touch points (dealerships plus sales and service outlets) are already

up by 50% to 3,000 and another 500 would be added by March.

A majority among the new touch points would be coming up in the hinterland, tier-

II and tier-III towns and suburbs of larger towns, indicating a subtle yet extensive

shift in the companys strategy towards addressing newer two-wheeler consumer.

Munjal said that some years back, Hero Honda had customised some CD 100 bikes

to suit rural road conditions but now that the road infrastructure is improving there

is no longer any need to deliver any specialised products for the rural markets.


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To a question on capacity expansion, Munjal said that Hero Hondas three

manufacturing facilities (two in Haryana and one in Uttaranchal) are being used

almost fully now so there was the need for setting up another manufacturing plant.

Our teams have begun assessment forsetting up the fourth greenfield facilityat

present, we look at optimum capacity addition of 2,000 units per daywe didshow interest in setting up a facility in Rajasthan even before the Uttaranchal plant

was set up, but possession of land posed a challenge. We still dont have the land,

Munjal said.

Plans Nano bike

Hero Honda Motors has already begun tapping suppliers for developing a low-cost

motorcycle. Managing director Pawan Munjal says that the joint venture partners

have begun research on this project which, if implemented, would generate large

volumes and come at a breakthrough price.

It must be a win-win for all stakeholders, the company, suppliers and buyers. We

will take a call on this project in the next 10-12 months.

Dispatch

To streamline its supply chain, especially at the front end. Hero Honda introduced

a finished goods dispatch automation (FNGD) system. This system has enabled

real-time inventory management with the use of barcodes to identify and track

motorcycles and scooters. This level of minute tracking is expected to facilitate

cost effective and scientific dispatch and encourage lean production.

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Final Honda

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