A PROJECT REPORT ON HERO HONDA (MARKETING)

SUBMITTED TO: APAR INDIA INSTITUTE OF MANAGEMENT & TECHNOLOGY

SUBMITTED BY: ABC

APAR INDIA INSTITUTE OF MANAGEMENT & TECHNOLOGY, NEW DELHI

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Emblem University center address and code No.: Apar India Institute of Management & Technology, C-9/111, Sec. 8, Rohini, Delhi -85 Center Code: 1713

HERO HONDA (MARKETING)

By (ABC)

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR MASTER OF BUSINESS ADMINISTRATION OF SIKKIM MANIPAL UNIVERSITY, INDIA

SIKKIM-MANIPAL UNIVERSITY OF HEALTH, MEDICAL

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I hereby declare that the project report entitled

HERO HONDA (MARKETING)

Submitted in partial fulfillment of the requirements for the degree of MASTER OF BUSINESS ADMINISTRATION

To Sikkim-Manipal University, India, is my original work and not submitted for the award of any other degree, diploma, fellowship, or any other similar title or prizes

Place: Delhi Date: 10/01/XX (ABC) Regd. No. 123

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THE PROJECT REPORT OF (ABC)

HERO HONDA (MARKETING)

IS APPROVED AND IS ACCEPTABLE IN QUALITY AND FORM

Internal examiner (Name, qualification and designation)

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This is to certify that the project report entitled

HERO HONDA (MARKETING)

Submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration of Sikkim-Manipal University of Health, Medical and technological sciences

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Has worked under my supervision and guidance and that no part of this report has been submitted the award of any other degree, Diploma, Fellowship or other similar titles or prizes and that the has not been published in any journal or Magazine.

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TABLE OF CONTENTS
S. No. 1. 2. 3. 4. 5. a. b. c. 6 a. b. c. d. e. f. g. h. i. j. k. l. m. n. Topic Synopsis Project highlights Objectives Methodology Theoretical Overview (Promotional marketing communication strategies) Evaluation of promotion and marketing communication strategies on certain factors Colour Appeals FINDINGS International scenario Introduction to the Indian mobike industry Journey so far Introduction to hero group Introduction to hero Honda products Product profile of hero Honda Placement of hero Honda Pricing stratiges of Hero Honda Promotional strategies of Hero Honda Dealership expansion Sales promotion Customer target profiling Competitor analysis of Hero Honda Analysis of product category trends

o. p. 7. 8. 9 10. 11. 12. 13.

SWOT of Hero Honda PERT analysis of hero Honda Future of hero Honda Limitation Recommendation Conclusion Case studies Annexure Bibliography

ACKNOWLEDGEMENT

I would like to thank Mr. R.K. Jain (Chairman) for spending their valuable time in guiding motivating by giving suggestion and helping me throughout my work duration. I would also like to thank all the staff of Hero Honda who helped me to compile this report.

ABC

SYNOPSIS

First section of highlights talk about the core areas on which the emphasis in the project In objectives the objectives are talked about which were kept in mind before starting the research Then project deals with the methodology used for the completion of the project like tools used , field work done e.t.c. In theoretical overview we deal with different tools of communications used for advertising and communication and its relevance in

automobile industry and how various players are using them .Then we deal with the basic questions asked before advertising the product and essential components of an advertisement . Then we deal with the international scenario and national scenario of the automobile sectors and how automobile sector has grown over the years . Now we deal with the Hero group Its core values , mission statement ,major milestones and its achievements . The project proceeds to hero Honda product profile marketing and advertising strategies of the company with the and its

placement i.e. distribution network, pricing strategies Honda .

of hero

Then the project tries to understand how the change in tastes of customers is affecting the mobike industry . In the later part we deal worth the competitor analyses of the hero Honda with their strategies and product portfolio. Then we analyze the product category trends vis a vis advertisement and marketing promotions. Then we deal with the different models to analyze the Hero Honda group by SWOT And PERT methods At the end we give conclusion to the project involving the recommendations for the company followed by the copy of dealers of Hero Honda in New Delhi And a copy Of the Print And commercials

PROJECT HIGHLIGHTS
Every company wants itself to differentiate itself from its competitors and the only tool with which the company give itself and its product a different personality than its competitors to its target customers , shareholders and stakeholders is marketing. The project intends to evaluate the marketing and advertising strategies of Hero Honda Motors Ltd. I intend to analyze the trends in mobike industry, shift in consumer preferences and analyse what the future of marketing and advertising will be with respect to the

automobile industry specific to mobike industry . This project deals with what all is to be kept in mind while making a companys advertising and marketing campaigns and how these tools have been used to the best by Hero Honda group .Our focus is on how effectively the company has utilized these tools with respect to the competitors and find out the areas where the Hero Honda Motors Ltd can leverage its strengths and can build upon its weakness . In the project we

analyzed the product portfolio of Hero Honda Motors ltd and also of it competitors like Bajaj Auto LTD , TVS Motors , Yamaha Etc .this project makes an attempt to understand what the future of mobike industry will be especially with regard to Hero Honda motors Ltd and how it can use these two powerful tools to its maximum benefit . In

the project we have seen various Advertisements being used by Hero Honda And its advantages and disadvantages to the company .

OBJECTIVES

The main objectives of the project are 1) To understand the marketing and advertising strategies of Hero Honda Motors ltd 2) To analyze their strategies and its effect on the corporate profile of the company 3) To compare the strategies of Hero Honda Motors ltd competitors and to analyze its strengths . 4) To realize the role being played by advertising and promotion on the sales volume of the company 5) 5. To analyze the strength and weakness of marketing strategies of Hero Honda Motors ltd with its

6) To understand the future trends in advertising and marketing in automobile sector especially motor bikes segment. 7) To Analyse the Advertising And Marketing strategies of competitors .

METHODOLOGY
TYPES OF RESEARCH: Exploratory research: In well established fields of study, hypotheses usually are drawn from the ideas developed in previous research studies or are derived from theory. Hypotheses are tentative answers to questions that serve as guides for most of the research. Design of Exploratory Study 1) Study of Secondary Data: The quickest and the most economical way from researchers is to find possible hypothesis is to take the advantage of the work done earlier and thus utilize their efforts. (Refer Bibliography for the names of books, magazines and websites consulted). 2) In-depth Interviews: We used in-depth interviews because it attempts to influence respondents to talk freely about their subject of interest. No formal questionnaire was used in depth interviews. The interview was conducted with an outline co-relation between employee commitment and organizational performance in mind. Basic methods of collecting Primary Data:

1) Questionnaire Method: The questionnaire used by us for the purpose of data collection were of structured type( Non-disguised as well as Disguised) 2) Contact Method: In order to derive information from the intended organization, it was elementary for us to search for a link which could enable us to conduct a research in that organization. The personal contact of one of the group members in the aforesaid organization helped us in getting an appointment soon.

THEORITICAL OVER VIEW

PROMOTION AND MARKETING COMMUNICATION STRATEGIES

1. Tools of communication
For sake of convenience of understanding the marketing

communication adopted by all the three players into two wheelers automobile industry of bike segment consist of four major tools which are:a) Advertising b) Sales promotion c) Public relation d) Personal selling

Advertising

Sales promotion

Public relation

Personal selling

1. Ads in print /Tv/radio:Bajaj,Honda & TVS advertise their bikes in almost every channel of TV & in

Contest/game by the company:-Ex: Hero Honda announce awards for Excellence on Indian Television

Information to press:-These players use this tool effectively through News Papers & Business Magazines

Sales presentation in various trade fairs:-These players use the trade fairs for

various News papers & weekly & monthly magazines

like Business World, Business India etc.

the Personal selling Ex:Trade Fair Held at Pragati Maidan

2. Features: Inserts new/advance feature in bikes:-Ex;Hero Honda inserts the new features in Splendor & Bajaj in its Boxer-AT

Free /gift: -Ex: Free Pass Port Programme under taken by Hero Honda

Annual report:- All these Players publishes their annual report in various News Papers & Business Magazines

Organize test drive:-For their new launches they organizes free test drive. Ex:-Hero Honda organized free test drive for the Passion at various dealers in Delhi.

3. Brochure:-These have been released by all the players in the form of information broachers

Presentation in various exhibition:- As a part of Sales Promotion every company participates in it with their Model of bikes

Sponsorship of an event / programme:Ex:-Hero Honda Sponsored Test series between India & England as a Hero Honda Cup

Conversion with perspective buyer, when customers visit to dealer shop

4. Poster /

Low interest

Special of

leaflets :-Every Company publishes posters & leaflets for the advertisement of its new bike with their specifications

finance:- Up till now none any company use this tool for their sales promotion, but this till will prove to be one of the best tool of sales promotion.

community welfare work:Most of the companies adopted the concept of Green Technology for the pollution free environment. -----------------

5. Hoarding / bill boards:-All the companies put their hoardings & Bill boards at the road corners Ex:-Bill boards at PVR for the ads of Bajaj Caliber 6. Point of purchase advertising:-These types of advertising

Exchange scheme: Ex:-Exchange scheme offered by the TVS Suzuki for its Max _ 100

Government

------------------

-----------------

Demonstration of product:- These companies demonstrates their

Lobbing with government ---------------------------------

are generally done by new launches at the Sales persons at the dealers the popular & crowdie places as a part of sales promotion. Ex:-Demo of

Passion of Bajaj at PVR Anupam 7. Logo of company:-Ex.:Yamaha has now launches a new logo consisting of three overlapping tuning forks on a circular disc Warranty on a product :warranty on a new purchased bikes are offered to the customers as a sales promotions. ------------------------------

It is the phenomenon of giving a set of message to target customers through various hints, delivered through direct and indirect media, with the intention of creating a favorable response from the customer towards the companys product.

2. Promotional Hints:These tools can be of many forms through any of the four Ps i.e, product, placement, price or promotion. Following certain tools are adopted by all the three major player of two wheeler auto industry who are in bike segment. a) Product :- These come in the form of product features, brand name & companys name. Product feature:- Material of product, design, colour, feel of product, technology efficiency of the product, all these are hints from the manufacturer to the customer, with an expression view to influence customer to buy the product. Brand Name:- The kind of image formed in the mind of customers, as soon as they here, read/see the brand name ex. Splendor of Hero Honda will not be as good if it was offered to customer without revealing the fact that it is spender. Company Name:- In India generally customer believed that if the product is manufacture by a reputed company then it should be reasonably good some times companys name give some idea whether the product is likely to be good or bad.

b) Price :- It can be denote that a customer is getting value for his money, excellent quality, premium image etc., when a customer buys a bike of Bajaj or Hero Honda the price tag assures the customer of better quality. Ex. CBZ of Hero Honda. c) Placement :- Customer form an image about a product from the way it is distributed Ex. Shop located in Chandi Chowk & Santushti shopping Complex near Ashok Hotel gives customer some idea about the kind of the product. d) Promotion :- Adverting, sales promotion, public relation, publicity and personnel selling. These are the certain dimension used for promotion.

EVALUATION OF PROMOTION AND MARKETING COMMUNICATION STRATEGIES ON CERTAIN FACTORS AS FOLLOWS:This type of evaluation is done by the major two wheeler automobile companies in bike segment to meet there objective at lowest possible cost:S.N 1 Evaluation factor Objective Advertising To appeal to mass audience at reasonable cost, with an aim to inform & persuade Publicity & P.R. To reach masses with an independen tly spokes person (i.e., from a source other than company 2 Audience Mass customers message) Mass stakeholder s (customer employees shareholder 3 Message Uniform (same for all) s) Uniform for one category of 4 5 Cost Sponsor Low per audience Company audience No/low cost No sponsor Specific to each customer High per customer Company Depends on sales promotion scheme Company Generally same Small (one/few) Mass Personal selling To deal with one customer at a time, to answer questions, and to finalize the sale Sales promotion To stimulate a sale, and motivate individual to buy on impulse, to motivate then to immediately buy.

Flexibility in communicati on

Low (since message cant be changed to suit individual listener reader.

Low (for same reason)

Company very high (since each audience hears what he wants to)

Company low (since usually only one scheme is run for promotion)

Controller over : Content of message Placement (shere & when would it appear) Credibility (i.e. do customers believe it) Major example (say: A bikes) Very high None High Very high Very high None Very high Very high

Moderate

High

Moderate

Low

TV. ad for bikes

Newspaper article about this bikes company

Show room selling this bikes

A discount offer on this bike.

Important tools of promotion & communication used by the major players of two wheelers automobile industry specially in bike segment as per the following stages:-

S. No.

Tools

Stage

1 2 3 4

Awareness Comprehension Conviction Ordering

Advertising Advertising & personal selling Personal selling Personal selling and sales promotion

Reordering

Sales promotion & personal selling

These tools are also varying in their cost effectiveness at different stages of buyers readiness.

Figure below shows the relative cost effectiveness for three tools

...as is the war

Two-Wheelers: Market Share of Product Categories (India) 2000-01

WHAT I AM ADVERTISING? It is an very important question about which the whole team should be very clear about. The ad team has to determine before hand what is there in the product or service that he is selling that appeals to the most senses of a prospect. The team is selling an interest proposition to the buyer and knows how it will satisfy his need or desire e.g. telling about sound effects for a music system, telling about vitamin E for a beauty cream e.t.c. it is very important for the ad company to understand the product attributes and to come out with the attribute which will catch the fancy of target customers.

TO WHOM I AM ADVERTISING ?
The ad team must be very clear about who the target market is; who are the prospects who are going to enjoy the product and service .do they belong to rich class or middle class. are they young or old? do they belong to rural or urban area? Who influences their buying decisions .in other words the team should know everything about target market . the more they know the more are the chances that it will be a success. Such a varied and vivid information is necessary

because consumers are unique and their needs and wants differ in accordance with income bracket-age sex-religion-area-level of

education and so on.

HOW CAN I CONVEY BEST THE ADVERTISING MESSAGE TO MY TARGET MARKET? After having full information about product and target market the team has to select the best way to get the message or appeal or theme to the market .the team has to decide on the format and language of the copy. The copy should be written in a language which is easily understands and interprets correctly particularly in a multi lingual country like us.

EXAMPLE:-1) The advertisement of close up which had smooch scene between models created an uproar from various sections of society after which it had to be taken back by the company. 2) The advertisement of phoenix shoes has to be taken back due to excessive exposure by the models. Thus its very important that ad company keeps in mind the culture also in mind while addressing to them.

WHERE AND HOW THE PRODUCT IS SOLD?

The team must know whether the used are direct or indirect or short or long .Wether the product has to be pulled through or pushed through the channels is of crucial importance .e.g. in case of shopping goods u have to push through the channel where as medicines and financial goods have to be pulled through channel.

WHEN THE PRODUCT IS PURCHASED AND SOLD?

Its of great importance. The advertiser has to understand whether the product is a low involvement product or high involvement product. Whether the product is purchased occasionally or regularly. They have to understand what is the life cycle of the product. Each product has its own time when its bought .the demand then differs from period to period occasions to occasions. EXAMPLE:-In case of hotels their major business period is from November to March and jewelers also do their 70% of business in this festive period only .

HOW THE PRODUCT IS PURCHASED AND SOLD?

The ads agency has to understand that whether the product is sold in high street market or low street market whether its sold on exclusively or in company owned showrooms .its of great relevance as normally the place is of great importance .You will not find CK perfumes in every shop and Rin you can find everywhere. There is a difference when a Mercedes is advertised and the way maruti is advertised.

WHAT LEGAL IMPLICATIONS ARE INVOLVED?

The team should understand the legal implications of what all being is stated in the ad message. Whatever is stated has the legal binding and commitment involved to it. Legal aspects to advertising is of great significances copywriter may unknowingly infringe any legalities during the course of its creative work. Therefore, its necessary for a copywriter that to have a general knowledge about laws and acts that affect his field so as to avoid the costly mistakes. Generally these laws have bearing on advertising practice and methods and processes and whatever restrictions are put are in the interests of general public.

EXAMPLE:-1) In all the tobacco advertisements statuary warning has to be given and it has to be clearly told . 2) People cant forget that advertisement of Thums Up in which Salman khan did bungee jumping and small kids got injured when trying to imitate the actions thus they had to introduce a statement saying that actions are performed by professionals .

ATTRIBUTES OF ADVERTISING MESSAGE

IT IS BRIEF:Brevity is the soul of wit. It should be brief yet effective. Most of the readers are interested in the shorter messages. Advertisements should never be longer than necessary. Being brief is not dropping words or chopping sentences. It is meticulous work of eliminating and

substituting the words without jeopardizing the wonderful meaning No one can forget the speech of Abraham Lincoln of hardly 300 words that became the worlds best words. Brevity cuts to the core. No one can forget the advertisements of Pepsi which are brief and yet very effective and nothing official about it yehi hai right choice baby.

IT IS CLEAR :A clear copy is one which is easily and quickly to read and grasped by the readers. it is unambiguous and self explanatory. Many times a manufacturer are forced to pack the identical products in different colored packages as colour plays a vital role. e.g. at time of diwali we find packaging of lots of goods in saffron colour as its considered auspicious. another example is close up packagi8ng is in three colours namely blue ,green, red which are quite catchy .

IT IS APT :An ad is apt which matches to the needs and counts of the prospects. it is the correlation that exists between the product features and the desires of prospects that determines the power of copy. writing an apt copy is the art of putting the words that create that strong need to posses the product .it is really a delicate task .the copy writer has to share the problems and hopes of prospects by pulling himself in the position of the prospects. it involves the continuous study of human nature. emotion or feeling is an very important feature in good advertising .

IT IS PERSONAL:A personal copy is centered on the prospects. it presents something of interest to the prospect. An advertisement should be written from prospect to the product than other way around. a copy or message is remembered if it has a touch of individuality.

IT IS HONEST :Credibility and believability of a message is decided by the extent of its honesty. Any benefit highlighted in the massage should be their in

realty. One of the ways of wining the hearts of good many customers is to talk about shortcomings indirectly. By honesty we mean commercial honesty and not judicial honesty.

IT IS CONFIRMING: Every advertisement should confirm to the standards riles and regulations acceptable to the advertising media and the laws of land. No advertisement is accepted on TV and radio of alcoholic products. The drug act makes it necessary to give details of drug, date of mfg., price and the warning necessary on the drug.

SLOGANS A slogan is any word or group of words used regularly by the advertiser to impress the readers about the basic idea about his product or service .it is brief general and unchanging that widens the horizons of publicity. it sings the qualities of product. it is a sales argument for a product or service in a few words. it is a

capsule of fundamental sakes point to attract the prospects .it is the cry of the sales battle to try an impression on others. There is a difference between headline and slogans as all slogans can be good headlines but all headlines cannot be good slogans. It is an original catch phrase that associates selling ideas with the product or service.

REASONS FOR SLOGAN

It replaces headline It is already noted that all slogans can be headlines but all headlines cant be slogans. Slogan headlines can be best used as reminders. like headline they summarize the matter the gist is reduced to a word a phrase or a sentence at the most .

It communicates faster: - slogan is a quick communication device. It has power of presenting the idea rapidly and concisely .it had a great reminder value. It is the one that can be remembered longer it is it is so because it is snappy catchy and piercing. Advertising message changes but not the slogan. Speaks about companies personality: slogan is given at the end of the advertisement and clearly projects the every nature of the company its philosophy, its objectives, its efforts and its contributions. A slogan depicts the status of a company. it pinpoints as to what the company can be relied upon

ATTRIBUTES OF SLOGANS
Its shorter: small is beautiful fully applies to the slogan experts believe that a good slogan is less than seven words. Slogans of Pepsi like yehi hai right choice baby ,yeh dil maange more are the best examples of small and sweet slogans.

Its original a true slogan is original

.it contains an idea not being

used by the others. Copycatting has no place in slogan designing. A slogan has to be different. Only pepsi has been able to use copycat

ideas in very informative ways like nothing official about it campaign in a dramatic way.

Its recallable: a good slogan is recallable or cued. it has this reflex power because it contains uncommon thought ,flash of idea . Its speaks of product: an effective slogan includes the product quality or the brand name of the product or the name of the producer. it is so because they are interrelated terms in which the prospect is interested .e.g if its godrej its safe is a very good example of it .

It is multimedia a good slogan is one, which is capable of being used in different media of advertising. Each advertiser has to depend on a nice blend of media of advertising to get the best results for the rupee he spends on the advertising time and space .the slogan designed must be capable of being used without change in print, broadcast and display media. this condition is normally fulfilled.

COLOUR
INTRODUCTION
There is a fine line between making a customer see red and tickling them pink and often enough its drawn in shades of gray. It shows the relevance of using colours in an advertising message. Have we ever analyzed why in ads of condoms there are soothing colours are used like blue pink e.t.c. And why in advertisements of cold drinks colours like deep red deep blue are used. Their must bee reasoning behind it. What we dont know is that lots of brains are used in deciding in a colour. A lasting colour impression accounts for a major part of the acceptance or rejection of an brand. The colour consultants have charted out the entire range of emotional reaction associated with colours.Colour is an essential and leading contributor to a successful brand identity logo is a tangible representation of what accompany stands for .the

importance of logo can be evaluated form a fact that Oglivy and Mather which is in a process of developing a logo for a major telecom major is trying to choose between bright purple that suggests an aggressive and dynamic stance for the company or aquamarine blue that signals a friendlier position for the brand .Can any one imagine coke ads without colour red or and message of Pepsi without a

background of blue. The colour orange echoes the philophosphy of being fresh simple and straightforward and incase of colour Barista colour orange is an indication of the joy of coffee with an element of warmth. While colour may not be an asset that cane leveraged and measured but it should be given its due share of importance .one thing is of sure if used whit due diligence it can help in making a message remember for a longer time.

APPEALS

Appeal can be defined as the element used by the company to raise the interest of the consumer towards the advertisement. Appeals are of different types.It is basically a relationship between stimulus and stimuli. There are different types of appeals which are exploited by

the advertisers but they are clubbed mainly into two types

PRODUCT ORIENTED APPEAL:- In this type of appeal the whole focus of the advertisement is on product .the whole message talks abut product wether its a new invention or a competitor analysis .it can be again classified into following categories :-

Physical features oriented :- In this type of appeal the whole focus is on the product and on its features. The features are used as a tool to differentiate the product from its competitors and features are also used to attract the attention of the customer toward the advertisement

Function oriented appeals:- As the word is self explanatory the emphasis is on the the functional utility of the product , functional

benefits the product provides and the uniqueness of that functional benefit

Brand to brand comparision: In this type of appeal a brand tries to compare with its competitors and the superiority of the clints product is highlighted and the interest iss focused on it .. it is an indirect way of telling the custoner to prefer your product over the competition

CONSUMER ORIENTED:Attitude oriented: In this the emphasis is on the attitude than on the product. Mostly this type is used for a product which is emotional in nature . the biggest success stories of these appeals being used by a corporate is Pepsi which highlights the attitude of youthfulness, energy & fun. Another good example of this appeal is used by the Louis Philippe which highlights the the appeal excellence or jhonny walker.

Class oriented: in this type of appeal is used to attract the attention of particular class and the best examples are of hotels which try to impress the upper class to come and try their hotels

Lifestyle oriented: in this the lifestyle of people is exploited by the company and the best example is of Mercedes ( Pls. refer to Mercedes advt. at the end )

EMOTIONAL APPEALS

Evoking pleasant sensation : in this the advertiser tries to arise pleasant sensation by use of words or by pictures to attract the attention of the target customers .this is highlighted now a days by using a glamorous model in the ad or a public figure .e.g. Mercedes advertisement.

Evoking sense of luxury :In this type of appeal the company tries to attract the attention by highlighting the a sense of luxury and the best example is of jhonny walker advertisement Humour appeal : in this the attention is got by playing humour card on the customer this is more likely used in TVC as compared to print campaigns and the common example is of latest advertisement campaign of Onida Black.

Fear appeal. Its very rarely used but the biggest successful campaign which was used using this appeal is of onidas advertisement saying Owners Pride Neighbors Envy which was a great success.

INTERNATIONAL SCENARIO
A two-wheeler is used as a personal/family vehicle or a goods carrier in the developing countries, whereas it is confined to sports/racing (heavy motorcycles) or short distance shopping (mopeds) in developed countries. The world two-wheeler market is dominated by Japan. Japanese manufacturers account for around 65% of the total two-wheeler production in the world. However, production within Japan has been declining due to lower domestic demand and shift in manufacturing base outside the country. Japan is also the world's largest exporter of two-wheelers in the world controlling around 75% of the world trade. Its major markets are China, USA and Europe. In terms of player positions, Honda Motors Corporation, Yamaha Motors and Suzuki Motors Corporation share the top three slots in the world two-wheeler market. The table below shows the production and sales figures of

motorcycles and scooters in Japan during the past decade More than 50% of the production in Japan is exported out of the country. This scenario contrasts directly with the Indian scenario. In India, only about 2% of the production in FY99 were exported

The Asian continent is the largest user of two-wheelers in the world. This is due to poor road infrastructure and low per capita income, restrictive policy on car industry. The technology for two-wheelers is not as well developed as for car industry. This is due to oligopoly between top five players in the segment, compared to thirty manufacturers in the car industry

INTRODUCTION TO THE INDIAN MOBIKE INDUSTRY

The Indian two-wheeler industry is dominated by three players, Bajaj, Hero Honda and TVS Suzuki, who account for 80 percent of the total two-wheeler market. The other players including Kinetic Engineering, LML and others account for the remaining 20 percent of the market. The industry can be divided into three broad segments: Scooters, motorcycles and mopeds. In the scooters segment Bajaj is the market leader, Hero Honda is the market leader in the motorcycles segment and in the segment of mopeds, TVS controls the major chunk of the market.

Most Indian players in the two-wheeler industry had been into some kind of strategic alliance, technical collaboration or joint venture with foreign players, mainly Japanese firms. Hero-Honda, is a joint venture between the Munjal-promoted Hero Group and Honda Motor Co. of Japan; TVS-Suzuki was an alliance with TVS and Suzuki Motors (till September 2001); Bajaj-Kawasaki a joint venture between Bajaj Motors and Kawasaki; and Yamaha-Escorts, a joint venture between Escorts and Yamaha Motor Corp. (till June 2001).

Indian automobile market, be it the two-wheeler segment, the threewheeler segment or the car segment, is yet to come to a stage where all the models are developed indigenously. For years now, Indian companies have been dependent on their foreign joint venture partners or collaborators to provide them with the technical know-how. This trend too is in for a change. Leading the pack in this arena is Bajaj, which has been successful at designing models in-house. Bajaj's Saffire and Spirit, have been able to bag the scooter of the year award for 2001 and 2000 respectively. In fact, its Spirit was adjudged the "Indigenous product design of the year" for the year 2000. The recently launched Pulsar from the Bajaj stable is yet another homegrown product, albeit in tandem with Japanese design house, Tokyo R&D. Bajaj has been laying increased emphasis on its R&D so as to be able to launch new products to tap the markets at all possible price points. Other companies too are adapting the strategy of designing and developing products indigenously. TVS's Victor is yet another development in this direction and this indigenously built model has been a success in the markets.

JOURNEY SO FAR
Indian companies had relied heavily on their foreign counterparts for technical support, design of the model etc., while they provided the distribution and branding in the Indian market. Now that the Indian market for motorcycles is fairly developed and consumers are well aware, most of these foreign manufacturers are planning to enter the market on their own. The inadequacy of the public transportation system, the upwardly mobile middle class, which has the disposable income and the intent to own a two-wheeler and the sheer size of the Indian market is proving to be an attractive factor to many multinational companies. India's two-wheeler industry is the second largest market in the world after China. Honda Motors, whose tie-up with Hero-Honda is going to expire soon, has already entered the fray with Honda-Activa. Others are also queuing up. Yamaha Corporation, which was operating in India through a joint venture with Escorts Group, had decided to call it quits in mid-2001 by buying off Escorts' 50 percent share in the joint venture. Yamaha now plans to tap the Indian market on its own with models such as RX-135, RXZ, YBX125, YD125, and ACE. Its name has become fairly

established while the joint venture had been in operation for two decades. On its own now, Yamaha has started implementing its

ambitious plans for the Indian market and has embarked on a challenge 21 project, a time-bound initiative that is aimed at reorienting and revitalizing the entire Indian operations in order to achieve a competitive edge. Yamaha has set for itself the target of capturing 21 percent of India's motorcycle market by 2003. India is one of the few countries where Yamaha, the world's second largest motorcycle manufacturer operates a fully-owned subsidiary.

INTRODUCTION TO HERO GROUP

MISSION STATEMENT
IN PURSUIT OF EXCELLENCE We, at Hero Honda, are continuously striving for synergy between technology, systems, and human resources to provide products and services that meet the quality, performance, and price aspirations of our customers. While doing so, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keep the momentum going to take the company to excellence in the new millennium".

WE CARE FOR ENVIRONMENT A philosophy closest to Hero Honda is that which pertains to the environment, which is why the company goes that extra step to ensure that each one of the high technology 4-stroke Hero Honda motorcycles meet the most demanding of pollution norms at every level. This is a policy that the company has followed since the very beginning. We Care For Community Hero Honda is a company with a difference. Constantly involved in social activities, spreading. Awareness about the community and

environment, the company has taken a giant step in the fields of Health care; Education; Engineering; Environment and many more

HERO HONDA

"Hero", the brand name symbolizing the steely ambition of the Munjal brothers, came into being in the year 1956. From a modest manufacturer of bicycle components in the early 1940's to the world's largest bicycle manufacturer today, the odyssey was fueled by one vision - to build long-lasting relationships with everyone, including workers, dealers and vendors. This philosophy has paid rich dividends through the years. Hero, a name synonymous with two wheelers in India is today a multiunit, multi-product, geographically diversified Group of companies. Through fully integrated operations, the Munjals roll their own steel, make critical components such as free wheels for their bicycles, and have the foresight to simultaneously diversify into myriad ventures, like product designing, IT enabled services, finance and insurance, just to name a few. Like every success story, Hero's saga contains an element of spirit and enterprise; of achievement through grit and determination, coupled with vision and meticulous planning. Throughout its success trail, the Hero Group and its members have displayed unwavering passion of

setting higher standards for themselves and delivering simply the best to their customers. The Hero Group philosophy is: "To provide excellent transportation to the common man at easily affordable prices and to provide total satisfaction in all its spheres of activity." Thus apart from being customer-centric, the Hero Group also provides its employees with a fine quality of life and its business associates with a total sense of belonging. "Engineering Satisfaction" is the prime motive of the Hero Group and it has become a way of life and a part of the work culture of the Group. This is what drives the Group to seek newer vistas, adopt faster technology and create quality driven products to the utmost satisfaction of customers, partners, dealers and vendors. Today the Hero Group has a number of accolades and achievements to its credit yet consumer requirements and newer technologies provide fresh challenges every day, and at Hero the wheels of progress continue to turn.

MILESTONES

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

1956 1961

Hero Cycles Limited is established. Rockman Cycles Industries Limited established, which is today the largest manufacturer of bicycle chains and hubs.

1963

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

1971

Highway Cycles was set up to meet the demands of Hero Cycles. It is today the largest manufacturer of single speed and multi-speed freewheels.

1975:

Hero Cycles Limited became the largest manufacturer of bicycles in India.

1978:

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

1981: 1984:

Munjal Castings established. Hero Honda Motors Limited established in joint venture with

Honda Motors of Japan, to manufacture motorcycles. 1985: Munjal Showa Limited established to manufacture shock absorbers and struts and is today among the top two shock absorber manufacturing companies in India.

The 100 cc Hero Honda Motorcycle arrived and by 1988 was the No. 1 among all motorcycles in India. 1986: Hero Cycles Limited entered the Guinness Book of Records as the largest bicycle manufacturer in the World. 1987: Hero Motors, a division of Majestic Auto Limited set up in collaboration with Steyr Daimler Puch of Austria.

Gujarat Cycles Limited, now known as Munjal Auto Industries Limited was established to manufacture and export state-ofthe-art bicycles and allied products in its fully automated plant at Waghodia. Sunbeam Auto Limited, earlier a unit of Highway Cycles Limited, established as an ancillary to Hero Honda. It is the largest die casting plant in India. 1988 Introduced "Hero Puch" from Hero Motors Limited. This revolutionary machine immediately set new records of petrol efficiency and usable power in 50 - 65 cc machines. 1990 Hero Cold Rolling Division established and is one of the most

modern steel cold rolling plants. 1991 Hero Honda receives National Productivity Council's Award. Hero Honda receives the Economic Times - Harvard Business School Association Award against 200 contenders.

HERO GROUP ACHIEVEMENTS

Hero Group ranks amongst the Top Indian Business Houses comprising of 18 profit-making companies, with an estimated turnover of USD1.36 billion during the fiscal year 2000-01. The Group and its management have acquired a number of accolades and achievements over the years:

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

A survey by leading business newspaper - Economic Times - declared Hero Honda as "the most trusted automobile brand in India."

Hero Honda was ranked number 4rth in India (up from Number 9 in 2000) by Review 2000 - an annual survey of Asia's leading companies conducted by Far Eastern Economic Review. Hero Group Management style has been acclaimed internationally by leading institutions like INSEAD (France).

World Bank has acclaimed Hero Cycles as a role model in vendor development based on a world-wide study.

The London Business School, UK, has done a study on the Group as model of entrepreneurship.

Boston Consulting Group has ranked Hero Group as one of the top ten Business Houses on Economic value, in India.

ABN Amro has rated the Hero Honda stock as one of the most valuable and one of the most under-rated.

Engineering Exports Promotion Council has awarded Hero Cycles with the Best Exporter Award for the last 28 years in succession. HSBC-Merril Lynch has estimated Hero Group would be among the top value creators in 2001-04.

Hero Cycles Limited is a Guinness Book Record holder since 1986 as the world's largest manufacturer of bicycles.

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

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

Hero Group's partnership with Honda is over 16 years old. Hero Cycles Limited has not lost a single man-day of production since 1956

INTRODUCTION TO HERO HONDA PRODUCTS

Hero Honda is the largest player in the motorcycle segment. Its Focus is on manufacturing mobikes which are contemporary in design and style and as well as eco friendly to environment . Hero Honda Motors ltd was the first company to concentrate manufacturing fuel effieient bikes instead of powerful bikes. The company has a comprehensive range of bikes in its stable 1. CD-100DX 2. CD-100SS 3. Splendor 4. Street Smart 5. Sleek 6. CBZ , 7. Passion . However Street failed to evoke market fancy while sporty CBZ dropped down the popularity chart in early 90s. Hence the company continues to rely on urban centric Splendor ; its primary revenue spinner with the USP of fuel efficiency, which accounts for over

60-70%of its sales. The " Passion " launched in mid -Jan 2001has had a resounding success contributing to 26% of total volumes and has not cannibalized the volumes of Splendor . With the sale of over 1mn motorcycles in 2000-01 , the company has also become the largest volume seller among all Honda Companies and ventures in the world . The company has now shifted its focus towards launch of new products. HHML launched a 100cc motorcycle Joy in

FY2001delivering 65 to 70 km per litre in city driving conditions . The company hopes to achieve a sales of 8,000 to 10,000 units of Joy per month. The company is also planning to launch motorcycles in 200cc 300 cc category and is looking at the possibility of introducing a " luxury motorcycle " in the same category. HHML has planned an additional capacity of 1.5mln units pa at Dharuhera plant by investing Rs3bn ($65mn) to meet the huge and increasing demand for motorcycles.

The Honda Motor Corporation of Japan has set the annual sales target of 1.75 mln 2-wheelers (25% of worldwide target) for 2003 in India, to be contributed to the extent of 1.5 mln by HHML and the balance by its wholly owned subsidiary Honda Motorcycles & Scooters India Pvt. Ltd. HMSI launched Activa the 4 stroke automatic medium-sized , 102-cc scooter in July 2001 and is looking at volumes of about 50,000

from its first product. It also plans to launch another scooter next year are also in the offing in order to increase the sales volumes to 1 lakh units.

MARKETING STRATEGIES OF HERO HONDA MOTORS

By everyone. The farmer in Punjab. The fisherman in Kerala. The trader in Mumbai. And the worker in Bengal. Imagine having a place in their hearts. Imagine echoing their heartbeats. Imagine being part of the great Indian fabric. Thats the great Indian dream. Of every company.

And it is what Hero Honda is trying to accomplish through its advertisement and marketing initiatives for the entire range of Hero Honda motorcycles and the latest campaign broadcasted onn all premier channels desh ki dhadkan is a step in that direction. Says Navroze D. Dhondy, CEO, Percept Advertising, which made the 60second television commercial, "We wanted to say that Hero Honda was more than a bike. It was a friend, something that has been part of your life, something that has shared your best moments."

So who's the target? Everybody. The models in the advertisement range from children to old people. The message? Everybody needs a Hero Honda. In the shape of a CD100, or a CBZ, or a Splendor, or a Street. "Desh ki Dhadkan" is the catch line. "Dhak, Dhak," the message. "We echo the heart beat of every Indian," the claim. "We

were looking for something new. We wanted to tell the viewer that we were way above the rest," says Atul Sobti, senior vice-president, marketing, Hero Honda.

Did somebody say new?

The India theme was plugged by Bajaj Auto with its Buland Bharat ki Buland Tasvir. Then there was Apollo Tyres, Reynolds, Bharti

Telecom A route numerous companies have treaded time and time again.

"This is a campaign by the right company at the right time. We waited till we were actually the heartbeat of India," says Sobti. "That's why we went in for an umbrella kind of advertising," adds J. Narayan, advertising manager, Hero Honda. "We wanted to communicate two things. Our market leadership and the joy of ownership. We wanted to reach our audience at a very emotional level."

Market research carried out all over the country for three months gave the creative team at Percept the idea for the ad. "Everybody kept talking about how Hero Honda motorcycles were part of their lives," says Dhondy.

That was also the message that the company wanted to communicate. A slew of product launches had glutted the market, and Hero Honda, the market leader in the motorcycle segment with a 47 per cent share, wanted to get out of the trap of product oriented or range-oriented marketing. This was the brief that was given to Percept advertising. And Percept says that the advertisement was the first and only presentation it had to make.

The advertising is in tune with Hero Honda's ambition for the Indian market. Worldwide, Honda's Splendor is the largest selling 100-cc bike. It is a success that the company hopes to repeat in India as it strives to attain leadership of the two-wheeler segment where it currently has a 26 per cent market share.

PRODUCT PROFILE OF HERO HONDA

Hero Honda Splendor

The most successful model of Hero Honda Motors ltd which has caught the fancy of Indian customers . its sale accounts for 40 % of the product profile. The reason for itrs success is the unbeatable mileage offered by the bike even though it is bit costelier than the other models offered by the competitors .

A combination of style and economy makes the Splendor is a bike worth investing in. The latest from the Hero Honda factory offers both performance and looks. It has good looks, excellent handling

characteristics and a smooth drive over any type of terrain, thanks to the changes in the suspension at front and near as well as the new frame design. All these features contribute to the Splendor being one of the best selling four stroke-two-wheelers in India. It also meets all the current pollution standards. A healthier beat, springy ride and overall low maintenance has aided in the record-breaking sales of this bike.

Hero Honda Street 100

The Street 100 is Hero Motor's latest two-wheeler on offer in the stepthrough category. The Hero Honda Street 100 is equipped with unique features like city-clutch, which is designed specially for city driving. It has rotary gears, which allow the rider to flip directly from the fourth gear to neutral once the bike has come to a halt, a must for the present stop-and-go traffic. A self-starter button comes as an option. The Street can be purchased with a variety of seat layouts and has options like a water pump, spray can, larger luggage tray, etc. Its major competitor is the much cheaper K4 from Kinetic. Major plus points that justify the higher price are the centrifugal clutch and the rotary gears. However, the liberal use of plastics negates much of the feel good factor and has hindered sales to a large extent.

Hero Honda CBZ

The Hero Honda CBZ (pronounced CeeBeeZee) is the latest offering from Hero Honda for the Indian market. With a 156cc engine, the company claims that the bike has a top speed of 100kph within 5.6 seconds. Though the bike has the largest displacement engine, its top speed doesnt match up to many of its competitors. In all other respects, it is a bit too early to decide whether the CBZ will sell in the same numbers as the Splendor. Though the initial market response has been good, only time will be the final arbiter. It was the first attempt by the company to target youth who would love to drive a bikes whch have sleek looks and don`t mind shelling out few extra bucks for it . Initially it was accepted by the customers very well but due to high maintenance costs its not a hot seller for the company .

Hero Honda CD 100 SS

CD100SS is designed for those who live life in the fast lane, rough and tough, for those who would love to take a bike on the stumbling village roads. It shares almost all components with the CD100, except for the additional reinforcement. With larger, reinforced shock absorbers, wider tyres, heavier body weight and engine guard, the Hero Honda CD 100 SS weights slightly more, resulting in some cut down in the fuel economy it offers. Minor problems of the CD100 have been rectified in the SS model. If you wish to ride into the hinterland, this is the bike for you.It is a modified version of cd 100.

CD 100

Launched in May 1985 ,it is the legendary " Fill it Shut it Forget it" motorcycle. It was India's first 100cc, 4-stroke motorcycle. Its simple design and fuel efficient engine is accepted in both rural as well as urban areas. IT was the first successful model of hero group of motor cycles and it caught the fancy of the customers by the tag line " Fill it Shut it Forget it" . was one of the first models of mobike launched by hero group aith technical tie up with Honda , japan

Hero Honda passion was launched in 2000 in order to create excitemnent in the market . IT was an attempt by HHML to modify the splendor inlooks .. the base engine was same as of splendor . It was promoted my tagline BORN IN STUDIO thus highlighting the sleek looks of passion . it was a hit among the young crowd and was very well received in urban markets of India.

PLACEMENT OF HERO HONDA

A thorough understanding of the fast-changing consumer behaviour, new market segments and product opportunities along with sensitivity to changing customer needs, form the core of Hero's marketing strategy and philosophy.

At Hero we essentially have a completely customer-driven approach. A nation-wide dealer network comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise holders for motorcycles, ensures convenient access to the Group's products across the country.

With a deep sense of belonging to the Hero fraternity, the Group's dealer network has catalysed growth and acted as a strong bridge between the customers and the Group.

Conventionally, very few Indian bicycle manufacturers were interested in exports. However, the Hero Group's foray into the overseas markets pioneered Indian exports in the bicycle segment as early as

1963. It was a move prompted primarily by the need to be attuned to the global marketplace.

While initial exports were restricted to Africa and the Middle East, today more than 50 percent of the Group's bicycle exports meet the demands of sophisticated markets in Europe and America. This is primarily because of appropriate product development and excellent quality that Hero offers. The Group has undertaken a steady upgradation of technologies and there has been diversifications and setting up of newer establishments to meet stringent international standards.

At the core of it all is a customer-centric scheme of policies and production and the bottom line is to "Add Value while Engineering Satisfaction."

PRICING STRATEGIES OF HERO HONDA

Well hero Honda has bikes at different price point but there is one common thing that is they are priced at a premium of INR 2000- 3000 from the competitors and it seems their strategy is working fine with the target customers as it is the largest seller of bikes in the Indian market with a market share of 48 % .Customers are redy to shell out the extra money because they believe and its fact that the fuel efficiency of the bikes is much better than its competitors . the different price points for Hero Honda Motors Limited are : NAME PRICE

Dawn ------------------- 32,000 Splendor --------------- 41,000 Passion ---------------- 44,000 Cbz--------------------- 52,000-60,000

Thus we find that HHML has bikes for every one for entry level customers they have dawn which is a no frill attached product whose emphasis is on mileage with performance .And for customers who like to have bike which is good at performance and with descent looks they have Splendor which is their fastest selling bike and account for half of the total sales. Customers who are looking for style with performance can go for Passion which is a huge success among the urban class as it is priced little bit higher than splendor and the looks of the bike are astounding . For customers who want style and power they have CBZ which is targeted towards the premium segment and it was a runaway success initially but is not a hot seller now due to some problems . Hero Honda is planning to introduce few more models in years time in order to make their portfolio of products more versatile . They are trying to introduce new models and they are trying to

introduce models at the premium segment as it has high margins and the company feels that its the segment which is will grow in the near future as the income of people will increase styles .HHML also intend to introduce with the change of life models which are

few

economical in nature as they this segment provides the

volumes to

the company .Hero Honda still wants to charge a price of premium as its brand enjoys a high level of respectability and reliability among the target customers as their products have already proved their mettle in

the market and enjoy high level of brand equity among the target customers . Hero Honda has an advantage of large no of dealers and also economies of scale which help them to absorb the costs to a great extent . FUTURE

Hero Honda Is planning to launch bikes at a super Premium range i.e. 80,000 INR just in order to show the technical expertise of the company infront of its customers . With competitors already in this segment Like Bajaj Eliminator we can except A cruiser bikes from them in this segment . In addition, the firm is also in the process of assessing the feasibility of introducing high-powered models from the Honda stables as fully-built imported bikes. This is the first time after the major debacle of BMW's 645cc bike that the Hero group is now planning a foray into the lifestyle bike segment. BMW, in alliance with Hero Motors, had introduced the premium bike at Rs 4.5 lakh. But an embarrassingly low demand saw the firm trimming its tag to Rs 1.8 lakh. In addition, the firm is also planning to launch a new volume bike, to be produced with an engine capacity between 100cc and 156cc, by September 2002, Munjal said while unveiling its new basic 100cc bike Dawn. Priced at Rs 37,855 (ex- showroom Delhi), Dawn would replace its existing 100cc motorcycle Joy, which was launched

last year. The firm has also phased out its 100cc bike Sleek citing low volumes.

PROMOTIONAL STRATEGIES OF HERO HONDA

Hero rides safe Hero Honda Motors Ltd's `Ride Safe and Good Rider' campaign is aimed at communicating the philosophy of delivering safe products and promoting good driving for the overall safety of the Hero Honda customer. Created by McCann Erickson, the ad--Hero Honda cares for your safety--invited all Hero Honda owners to attend the Ride Safe programme on October 27, 1999 at Delhi's India Gate lawns. This was the first phase of the programme, where three instructors from Japan demonstrated techniques of right driving. In the second phase, Hero Honda will communicate the launch of the 4S concept (sales, service, spare parts and safety) at Hero Honda dealerships.The focus of the third phase will be to promote the launch of the Hero Honda Safety Riding Promotion School, which will have riding simulators and safety riding tracks HeroHonda will take the riding programme-- where trained personnel will give riding tips to bike owners-- to over 100 dealerships across 90 towns.

SPORTS & ENTERTAINMENT

In sports promotions, Hero Honda will stickto cricket (following title sponsorship of the World Cup last year, it has signed a three-year contract for Hero-Honda-Salve Challenger Trophy) andgolf (it will continue with Hero-Honda Masters Golf).

Moreover, after a successful association with movies-- last year it signedPyar Mein Kabhi Kabhi starring Dino M and Twinkle-- Hero Honda is in theprocess of identifying title sponsorships of youth-centric movies.

Says Sobti, In terms of media exposure, we are looking at sports, moviesand news. Niche channels are also worth putting your money on.'' For theCBZ, this year it is planning to run commercials in youth channels like MTV;Discovery and Star Movies.

The

Target:

Services

will

be

major

differentiator,''

says

Sobti.``The campaigns will highlight the high level of services and automatedfacilities at our dealerships.'' Hero Honda is expecting a 30-

35 per centgrowth in spare parts revenue, which accounted for Rs 100 crore in 1999-2000.In the new fiscal, Hero Honda is aiming to take the sales of Splendor from40,000 a month to 50,000 a month; CBZ from 4,500 a month to 5,000; and a10-15 per cent growth in CD and CD-SS brands up from 25,000 a month now. There-launched step-thru Street Smart is expected to account for around25,000-30,000 in the first year.

DEALERSHIP EXPANSION

Hero Honda will add 25 more dealers and 50service stations to build a network of 575 dealership-cum-service points(including 400

dealerships) across the country. The level of investment in an automated Hero Honda service station isexpected to be around Rs 10 lakh, apart from land and building. No dealerhas any problem in expanding business,'' says Sobti. We've tied up withCitibank and Centurion to provide bill discounting through our dealers.''Consumer Finance: In order to focus on organised consumer financing, HeroHonda tied up with Tata Finance a week ago. This is Hero Honda's secondtie-up following Centurion, which is accounting for around 3,000 bikes a month through 100 dealerships. We've got a good internal rate (based on IRM), which is standard acrossthe country,'' says Sobti. ``These finance companies bring refreshinglycustomer-friendly focus to our organisation.'' With Tata Finance, Hero-Honda's reach will be extended to over 150dealerships. Also, Tata Finance is expected to add 2,000 bikes a month. Presently, consume financing, including non-organised financing, contributes

around 20,000 Hero Honda bikes a month. Gauging Consumer: Hero Honda is chalking out a customer relationship programme, which is expected to be established in the next three years. We're discussing with Result McCann,'' says Sobti. The programme will initially attempt at building relationships with Hero Honda's top three to five lakh owners, out of its customer base of three million.

SALES PROMOTIONS

Hero Honda regularly has promotions running for its dealers as well as customers in order to ensure that there is a interest among the target customers abut the company and its products. Normally Company participates in road shows, Sponsors college festivals , promotes eco friendly initiatives ,Have festive Season offers , and sometimes price discounts to attract the attention of the people . These promotions are targeted mainly on youngsters as they are the primary buyers of bikes. The company launches financial schemes as Zero % finance schemes in collaboration with different banks so that customers can pick bikes in easy installments . The effect of these promotions can be understood from the fact that 35 % of bikes are sold through this medium.

CUSTOMERS (TARGET PROFILING)

Hero Honda motors have profiled their customers as follows

AGE 18-24------------- Passion, CBZ 24-30------------- Splendor , Street 30+ ------------- Dawn, Splendor ,Passion

INCOME GROUPS

LESS THAN 8,000------ DAWN 8,000--15,000 ------ Splendor , Passion ,Street

Above 15000--------------CBZ SEC A----- CBZ SEC B ----- SPLENDOR , PASSION ,STREET SEC C &D ----- DAWN

CHANGING PREFERENCES OF CONSUMERS

There has been a great change in the customer preferences from the erstwhile all pervasive scooters to the sleek motorcycles and other high-powered trendy motorbikes. Numbers speak much more about the loss in volumes of scooter sales. The shift has occurred in a short span of time, in fact so short that many players in the industry are yet to fully acknowledge the shift. They are yet to mold their product portfolios to take advantage of this shift. As recently as 1994, scooter sales accounted for 48 percent of the total two-wheeler volumes. By 2001, however, their share in the two-wheeler sales fell to less than 25 percent by 2001. The tables turned in favor of motorcycles, which accounted for 57 percent of the total two-wheeler volumes for the 2001 fiscal rising from a dismal 28 percent in 1994 and this trend of increased sales of motorcycles continued. The production and sale of motorcycles has been continuing at a pace of 20 percent and 25 percent respectively during the first half of the current fiscal year.

One of the factors that contributed to the steep decline of scooter sales in 2001 is the sales tax rationalization in the budget of 2001, which resulted in a sharp fall in the sales of geared scooters in 2001. This raised duties on geared scooters in western region of the country,

which accounts for a substantial portion of the industry's volumes. In addition to that stringent environmental norms forced companies to install catalytic converters, thus adding up to the costs of the scooters and making them more unattractive. The trends of sales in twowheeler industry as a whole are on the decline. From a growth rate of more than 20 percent during the fiscal of 1995, the industry has come down to a zero percent growth rate by the fiscal year 2001. The scooters and the mopeds segments have been on the decline for some time now. But the robust growth in the motorcycle segment has been the only saving grace in the two-wheeler industry.

The period between 1994-2001 has been characterized by the software boom, private industry emerging as a substantial

employment provider and coming of age of the generation that had started to feel comfortable and adopt western culture from the satellite television. The young earning men today increasingly prefer

motorcycles to scooters unlike the generation of their fathers where a geared scooter was "the two-wheeler". The shift is not limited to urban consumers. Even in the rural market, consumers prefer motorcycles for their sturdiness and ability to sustain bad road conditions. The stricter environment norms such as the euro emission

norms are forcing companies to install catalytic converters in the existing vehicles or go in for four-stroke engines to reduce pollution. This has added up to the costs of scooters while most motorcycles are in tandem with these new norms.

Adding to the woes of geared scooters, a number of ungeared scooters are flooding the market. Vehicles in this segment such as TVS Scooty, Bajaj Sunny, and Kinetic Honda have found an instant market with the elderly population, women and teenagers, who find these vehicles more comfortable with fewer hassles as compared to the geared scooters. The sales of these ungeared scooters have also been on the rise, registering a growth rate of around eight percent in the last financial year.

In addition, the segment of buyers who would have gone for mopeds five years earlier are today showing interest towards the ungeared scooters, adding up to the volumes of these vehicles. The obvious reason is that the pricing of both these segments of vehicles is so close that the borders are fast getting wiped away in the minds of consumers. One who is going in for a moped would not hesitate to

spend a thousand or two more to get a scooterette offering better features.

COMPETITOR ANALYSIS OF HERO HONDA

TVS MOTORCYCLES TVS-Suzuki became the first Indian company to introduce 100 cc IndoJapanese motorcycles in collaboration with Suzuki Motor Company. Having amicably parted ways TVS Motor Company continues to manufacture highly reliable motorcycles and scooterettes. The Samurai and the Max100R use the same 100cc, 7.8 BHP engine. This trouble free, fuel efficient unit plays a major role in making these machines the 'No Problem' motorcycles they are. The Suzuki Fiero's microprocessor controlled digital ignition, 147cc engine produces outstanding acceleration, develops 12 BHP and offers the amazing reliability that is a hallmark of the TVS range. An electric start option is also available. Alongside the economy two wheeler range, it has constantly worked on innovating the motorcycle segment as well. The Suzuki Samurai was launched for the time conscious urban commuter.

The Max 100 R was engineered for those who demanded strength and ruggedness. The Suzuki Shogun was for those who wanted raw power. And today, TVS Suzuki continues to keep one step ahead of its time by creating India's first 5 speed, 140 cc motorcycle - The Suzuki Shaolin. The TVS Scooty, a 60 cc Scooterette, is yet another example of the company pioneering a new category and emerging as market leaders in it.

As for other wins, 'Team TVS' has conquered every major race and rally in the country from the road to the racetrack, with each of the TVS bikes being a winner. And each time the 'Team TVS' has won on the track or off it, our customers have secured a better product for their personal transportation.

BRAND PORTFOLIO OF TVS

Suzuki Samurai Suzuki Suzuki Suzuki Suzuki Suzuki Max

Mobikes

Shogun Shaolin fiero TVS XL Super TVS Spectra

Max 100 100R TVS Super Champ TVS Scooty

Mopeds TVS 50XL Scooters and scooterettes

TVS VICTOR The TVS Victor offers amongst the best value for money in the Indian two-wheeler industry. Its 110cc engine, 4 stroke engine develops 8.1 BHP and, thanks to its digital ignition, can be optimised for power or fuel economy depending on your riding style. Its multi-reflector headlamps provides better illumination for safer riding while its long broad seat offers great comfort both for the pillion and the rider.

It is one of India's top ten companies in terms of market capitalization and among the top five in terms of annual turnover.

Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported scooters and three wheelers from Italy and sold them in India. It then obtained a production license in 1959 and struck a technical collaboration with Piaggio of Italy in 1960.

Scooter production commenced in 1961. Three wheeler production followed in 1962. Its collaboration with Piaggio expired in 1971 and since then the Company's scooters and three wheelers are sold under the "Bajaj" brand name.

Under the "Horizontal transfer of technology" policy, Maharashtra Scooters Ltd., a Company with 24% equity participation by the Company and 27% participation from Maharashtra State Government's Western Maharashtra Development Corp. was formed in 1975.

Production facilities are located at Satara, in Maharashtra State. This helped augment production capacities. The unit continues to assemble scooters from CKDs supplied by the Company. These scooters are marketed through the Company's distribution network and under the Company's brand name.

The Company's second plant was set up in 1984 at Aurangabad, in Maharashtra State. In this plant, scooter production commenced in 1986; three wheeler production commenced in 1987; and scooterettes and motorcycle facilities were commissioned in 1990 & 1991

respectively.

From 1961 when the annual production was about 4000 units, today the Company has become a market leader with annual production in excess of 1.35 million units and with product offerings in all segments (mopeds & scooterettes, scooters, motorcycles, three wheelers.

PRODUCT OF BAJAJ

Bajaj Kawasaki Caliber

Bajaj Auto's Caliber competes head-on with Hero Hondas Splendor. Super styling and adaptation of the four-stroke norm into a package that has become highly popular has impacted the sales of its chief competitor. Its three-piece instrument cluster comprises a

speedometer, tachometer and fuel gauge. The fuel tank, seat and rearlight nacelle combine to form a stylish profile. The company has ensured that looks are not the only selling point. It has the Boxers engine, which is rugged and reliable. It is a tough choice between the Caliber and the Splendor.

Kawasaki Bajaj 4s Champion

It is India's first four-stroke motorcycle to have a Radical Aluminium Combustion Engine (R.A.C.E.), which is fitted vertically on the tubular chassis. There is less wear and tear on the engine since the engine block and the piston are made up of aluminium alloys. Furthermore, the clearance between the piston and the cyclinder liner can be kept very close, thus avoiding damage both to the piston and the cylinder liner. The company offers a 12-month free maintenance, which covers all costs of maintenance (except tyre, tube and spark plug). The 4S can cover a distance of 650 kph and more without a refill.

Bajaj Kawasaki Boxer

Apart from its engine, the Boxer shares a host of other features with the Kawasaki 4S Champion. It has a slightly more rural styling, sturdier build and stiffer ride. These come in addition to an overbored engine, that ensure its acceptability in the hinter-land. It has the same five-step shock absorbers to be adjusted as per the riders riding style. The Boxer is priced quite low when compared ot the 4S. One of the striking features of the Boxer is the split seat that makes it comfortable for both rider and pillion. The price and economy of the Boxer ensure that it is pitted favourably against the Hero Honda CD100 SS, that other rural hotshot.

Kawasaki Bajaj 125 RTZ

The RTZ was launched as a direct competitor to the Yamaha RXG 135. Cheap price and better handling made the RTZ come out trumps against the Yamaha RXG 135. Furthermore, the RXG had to overcome the cult status the Yamaha RX 100 had established. Thus, the RXG had to compete with two competitors instead of one. Till date, the RTZ has the best handling capabilities. In spite of a cheaper price tag, lower maintenance and lower-cost spare parts, the RTZ has been only a moderate success.

KINETIC MOTORS

Kinetic Engineering Ltd., founded in the year 1970, is the leading manufacturer and exporter of 2-wheelers. Born of the vision of the late Shri H. K. Firodia, Kinetic Engineering Ltd., it has produced useful, heart - winning products for over two decades. KEL manufactures a wide range of Mopeds, Scooters and Motorcycles that are very popular in the country and are well recognized for their fuel economy, quality and reliability.

KEL has 3 manufacturing plants at Ahmednagar Pitampur (Indore) an Goregaon (Pune) with the capacity to manufacture 4 lakh vehicles per year. Their well endowed technologically advanced manufacturing set up have enabled them to reach high quality standards. The company also exports these vehicles to countries like USA, Canada, Sweden, Latin America, Denmark and the Middle East

The company has always been conscious of quality and customer oriented production. A strong service network set up across India backs Kinetic Engineering Ltd. Kinetic Engineering are also the promoters of Kinetic Honda Motor Ltd., a joint venture with the internationally known Honda Motor Company of Japan. The Kinetic Honda - 100cc bike is a very popular choice among two wheeler motorists in the country

PROFILE An agreement has recently been reached between Yamaha Motor Co., Ltd. (YMC) and its joint venture partner in India, Escorts Limited (Chairman and Managing Director: Mr. Rajan Nanda. Location: Faridabad, suburbs of New Delhi) under which YMC will acquire all of the 26% of the stock presently held by Escorts Limited in the two companies' motorcycle manufacturing and marketing joint venture, Yamaha Motor Escorts Ltd. (YMEL). The aims of this move to make Yamaha Motor Escorts a 100% YMC subsidiary are to increase the overall speed of managerial and business decisions, to improve product development capabilities and production efficiency, while also strengthening the marketing

organization. Plans call for the change in the company's name and other Ever procedures since the to be completed of the by the end of June.

establishment

first

technical

assistance

agreement between the two companies in 1985, YMC and Escorts Limited have built a cooperative relationship dedicated to the manufacture and sales of Yamaha brand motorcycles in an

environment of growing motorcycle demand in the Indian market. In November of 1995, the two companies established the joint venture company Escorts Yamaha Motor Limited, based on a 50-50 capital investment. In June of 2000, that investment ratio was changed to 74% for YMC and 26% for Escorts Limited and YMC assumed managerial control of the company with the name being changed to YMEL and undertook numerous measures to build the company's motorcycle manufacturing and marketing operations.

In addition to YMC acquiring Escorts' 26% of YMEL stock, the company's name will be changed to Yamaha Motor India Private Limited (YMI) and concerted efforts will be made to heighten its competitiveness in the Indian market and promote the spread of the Yamaha brand with target themes of developing products with greater appeal and a distribution network that can respond more quickly to user needs. Furthermore, YMC will work to develop YMI as an exporter of business type motorcycles to neighboring countries and other markets such as Africa and Latin America, and also as a production base that can assume a variety of roles in Yamaha's global manufacturing network. Presently, India's annual motorcycle demand has grown to exceed 3.8 million units, which makes it the second largest market in the world, with steady growth is anticipated for the future. Now that YMI has

become a 100% YMC subsidiary, the introduction of several new models is planned, and it is our goal to increase annual production to 350,000 units in the fiscal year 2001 and to 550,000 units by the fiscal year 2003.

STRATEGY OF YAMAHA IN INDIA

The world's second largest manufacturer of motorcycles is also planning to restructure its sales channels, product development department and its human resources policies at the Indian subsidiary.

While the name change is yet to be implemented (awaiting approvals), the company is planning to completely align the Indian company's operations with Yamaha's worldwide operations. Along with the rechristening, the Yamaha Motor India has also initiated a `Challenge 21' project to restructure its businesses in the country.

According to the company, the project is a time-bound initiative that will reorient and revitalise the entire operations and provide

sustainable competitive advantage. Yamaha Motor India is hoping to corner a market share of 21 per cent by the year 2003 after the restructuring is fully in place.

As part of its revival plans, Yamaha is also proposing to launch at least one new model every year for the next four years. The company is readying itself for a new product launch next month. Company

officials, however, were tight-lipped about the details regarding the new bike.

The company is also expected to gradually increase its manufacturing capacity from the present three lakhs units per annum at its two plants near the capital to about 5.5 lakh units per annum by the year 2003.

While the initial emphasis is expected to be on motorcycles, Yamaha is not ruling out the possibility of getting into the scooter and scooterette segments.

Announcing the new name and the restructuring plans of the company, Mr Masahiko Shibuya, the new Managing Director of Yamaha Motor India said the company's realignment plans have been necessitated due to the growing importance of the Indian two-wheeler industry and the increasing expectations of the consumers here. Mr Shibuya said the restructuring programme is expected to speed up product development, quality and design. The plans include improving product quality and reduction of costs. The sales channel reorientation is also expected to help the company add new distributors and infuse a customer-oriented policy amongst the existing channel partners. Pays Rs 70 cr to buy out Escorts equity

Yamaha Motor Company has paid Rs 70 crore to buy out the 26 per cent equity held by the Escorts Group in the erstwhile joint venture. The Japanese major has also paid Rs 50 crore for preferential shares held by the group.

In addition, the Escorts Group will continue to receive royalty from Yamaha for every Rajdoot bike manufactured by the Indian subsidiary. Yamaha plans to continue manufacturing the Rajdoot, an old

workhorse of the Escorts group.

The royalty is paid to the Escorts group after an agreement to the effect had been reached between the group and Yamaha in 1996, when the joint venture was finalised. A royalty of US $6.50 for every Rajdoot bike sold will continue to be paid to Escorts, company officials said. The agreement entered into between the parties is valid till the year 2006, after which the Rajdoot brand is expected to be transferred to Yamaha.Yamaha Motor India is also expected to offer a voluntary retirement scheme (VRS) to its employees. The scheme is expected to lead a reduction in manpower by another 200 employees, company officials said.

The company is targeting to break-even this year, with sales of three lakh vehicles.

YAMAHA YBX The latest offering from the Yamaha stable is the 125cc, single cylinder, four-stroke motorcycle - the Yamaha YBX. This bike combines traditional fuel efficiency with power and performance. The allaluminium engine is highly compact with a chain-driven single overhead camshaft, actuating two valves. The result is a powerful and tough engine, rigorously tested in Japan and India.

Yamaha may have missed out on the visual appeal of the bike, given its large base and tallish stance. The most distinguishable aspect perhaps is the larger fin area with the exhaust port on the right hand side.

Performance is the niche that Yamaha will target in the four-stroke engine segment with the YBX. The bike is expected to spark motorcycle enthusiasts as the RX100 did in the Eighties. The YBX gives a good 60 kpl in everyday riding conditions, and test conditions have proven that this figure can go up to 75 kpl. And the YBX can pull, and

motor hard and strong in any gear. Not to mention the crisp power response to the throttle as well the sheer linear delivery once the revs increase. Mechanical noise is minimal in the YBX and the exhaust note is typically rorty.

Yamaha YBX has not made its mark in terms of the chassis and suspension design. While the Yamaha RX100 has a double-cradle frame, the YBX has only a single down tube frame, letting go of the former's high dynamic ability and safety. The YBX is also a lighter Yamaha bike and weighs 100kg (dry). It carries tyres of the same size as the RX100. Good performance with little effort, deft handling despite a poor frame and excellent turn-in and braking ability are the highlights of the YBX. Yamaha has placed function over form as the YBX lacks any innovation in its appearance. However, the entire handlebar, seat and footpeg relationship has been well defined. You may have to readjust the handlebar to get the best riding position.

A 35/35W bulb is fitted in the large rectangular headlamp. The electrical system is well designed and controls are ergonomically placed. This includes a push type pass beam switch, which is highly convenient, and user friendly, ensuring safety while overtaking. And

for the first time on an Indian bike, self-cancelling turn signal indicator switches have been incorporated.

About 88 per cent of the YBX is made locally. Apart from the Ucal Mikuni carburettor, critical components such as the piston and piston rings, the primary gears and the shift mechanism, are imported. The YBX is priced at Rs 44,000 and comes in a choice of three colours black gold, metallic blue and cocktail maroon.

AN ANALYSIS OF PRODUCT CATEGORY TRENDS

It's as if no one told them about the slump in the economy. Two wheeler manufacturers have, for the past year, been riding high on the back of healthy sales growth. What's more, the money earned seems to be going into advertising on television, which seems to be the preferred choice of the two-wheeler industry. Lets have a detailed look

The sales growth for Q1 2002 (Jan - Mar) over Q1 2001 of various two-wheeler manufacturers varied from 40% for Hero Honda to - 40% for LML. TVS, which launched a slew of new products this season, saw its sales going up by 30%. The money earned through higher sales seems to be going into advertising.

In the same period, there was a growth of 12% in the total GRPs accumulated by two wheeler companies across all channels as can be seen from the chart below.

TG: 25-44/Males/All markets/C&S/Sec ABC The top advertisers in the two-wheeler category have also seen a shift in TV advertising spends from 2001 to 2002. Last years heavy

spenders, Hero Honda, Kinetic and Yamaha have actually cut down on their spends, while the others like Bajaj, LML and TVS in particular, have gone ahead to increase their ad spends. TVS seems to be following a well-calibrated strategy this year and also signed up Sachin Tendulkar as its brand ambassador. If initial signs are an indicator, then their ad activity is well set to go up in the coming months as well.

TG: 25-44/Males/All markets/C&S/Sec ABC TVS saw a growth of more than 300% in its GRPs. Hero Honda on the other hand has slowed down with GRP accumulation coming down by almost 1000 points for Q1 2002, as compared with Q1 2002.

TG: 25-44/Males/All markets/C&S/Sec ABC Now a look at the preferred media vehicles of the two-wheeler category- Aaj Tak, HBO, ESPN, Zee TV and Star Sports saw an increase in the ad spends by the category. One aspect to be noticed is that, whereas there was very little use of niche channels but the ad spends on these channels saw an increase when compared with 2001. DD Sports, a favorite channel for the category, saw a decline in the ad spends (assuming the cost per rating point has remained the same for the two period.) Quite similar was the case with mass channels like Star Plus and Sony. Zee however, saw a good growth in the category's ad spends.

TG: 25-44/Males/All markets/C&S/Sec ABC A comparison of the first quarters of both 2001 and 2002 above, gives some interesting insights about the two-wheeler category. TVS is an interesting case. In 2001, TVS spent heavily on Star Plus and not as much on Sony. 2002 however saw a shift in its strategy. TVS used a combination of mass channels like Star Plus, Sony, Zee and Aaj Tak and niche channels like HBO. Bajaj on the other hand, has stuck to mass channels. However, in the case of Bajaj, there was a shift from Sony to Star Plus.

TG: 25-44/Males/All markets/C&S/Sec ABC Cricket, with its unique ability to reach male audiences, has been a favorite with the category. Hero Honda has been the biggest rider on cricket in 2002. What's interesting to note is that Hero Honda had actually pushed the trend of utilizing cricket for two-wheeler

companies. LML, which did not spend on cricket at all in 2001, spent heavily on it in 2002. But TVS unlike the others continues to remain cricket shy. Unlike the other categories which seem to be going through a difficult period, it seems to be a different story altogether for the two-wheeler industry. An increase in sales, a subsequent increase in advertising spends and not to forget a shift in advertising strategies; the two-

wheeler category has seen it all. And the same seems to be on the cards in the future as well with the category experiencing a growth on the back of new models and better technology.

SWOT OF HERO HONDA

Hero Honda motors ltd is highest selling mobike company in India and is the largest two wheeler manufacturer in the world .As the case is every company has it strengths and weaknesses and and Hero Honda Is no Exception :-

STRENGTHS 1. Market Leader in terms of sales and turnover 2. Successful Technical Tie up with Honda and a very healthy relationship with them 3. a wide network of dealers across the nation 4. A wide network of authorized service stations at different parts of the country 5. a wide veriety of product portfolio 6. very strong brand image of making fuel efficient and reliable bikes 7. High product and brand recall among the customers infact hero Honda is the first choice among the majority customers .

WEAKNESS
Major weakness of hero Honda are
Not a strong player in the rural market Tie up with Honda expiring in 2 yrs very few models at the lineup stage R& d of hero Honda is weak Not a great player in entry level bikes which is dominated by bajaj Not a Strong Player in the Premium Market Only 2 models which are successful Splendor and passion Not a very strong marketing deptt . Only one campaign was a hit fil it shut it and forget it Its a non player in scooter market which is huge even though that industry is going through a rough pace

OPPORTUNITIES
1) Its a growing market thus company has high growth potential in future 2) Premiium segment is still not fully exploited with right product HHML can do wonders 3) Neighboring countries markets are not exploited fully 4) Need to tap African and European market .

THREATS
1) Entry of new players 2) Honda entering in the bike market will pose a considerable threat 3) Competitors becoming aggressive with new product launches and high marketing pitch 4) Aggressive Yamaha posses another threat 5) NO tie up with any other company can lead to losses .

PERT ANALYSIS OF AUTOMOBILE INDUSTRY

POLITICAL ANALYSIS

Traditional GOVERNMENT OF INDIA has considered the automobile industry as a luxury segment. But realizing the growing importance of two-wheelers with the increasing necessity of personal

transportation for the middle class in eighties, priority was given to the sector by favorable foreign policy. This brought about technology revolution to the two-wheelers as Japanese majors entered in technical and financial participation with Indian majors.

GOI has a moderate intervention in the operations of two and threewheeler industry. Excise duty structure, emission control, safety of rider, etc are all policy decisions.

The excise duty on two-wheelers, which previously ranged between 10 to 30%, according to the engine capacity was rationalised in 1991-92 budget to only two-categories viz 15% upto 75cc and 25% above 75cc. This mainly affected manufacturers of 100cc category in the

early nineties. Since then the excise duty structure for two-wheelers has been left unchanged till 1999.

In the 1999-2000 budget, as a result of rationalization of duty structure the excise duty up to 75cc vehicles was increased to 16% while for those above 75cc decreased to 24%. As a result, scooter prices were reduced by Rs200-400 per vehicle.

The components used for manufacturing two-wheelers are charged an excise duty of 15%. The industry has been asking GOI to reduce this excise duty to 10%.

Two and three-wheelers sector was the first to be de-controlled from the clutches of government regulations. This has resulted in the entry of world majors and subsequent in technology and equity participation with Indian players. This has lead to technology revolution for the twowheelers in 1980's.

The regulation of safety of the rider is controlled by state government notifications, these vary in different states. For example helmets

are compulsory for two-wheeler riders in New Delhi and some other states. The same is optional in Maharashtra and Karnataka.

The price of the two-wheelers varies across the country due to variation in registration charges, state taxes and octrai levied by states.

Automobile emissions are the major pollutants in the environment. To control pollution from automobiles the GOI stipulates emission norms applicable from time to time. The details about emission norms is given in annexure 1

The GOI controls availability and price of petrol, the fuel for twowheelers. But with the dismantling of Administered Price Mechanism (APM), the cross subsidy provided by high petrol prices is expected to come down leading to reduction in petrol prices in the country. This will reduce the running cost per km for two-wheelers and have positive impact on demand.

The availability of unleaded petrol across the country will be a crucial factor, as catalytic converters (used to confirm Y2K norms) work satisfactorily only under unleaded petrol. Therefore GOI, which controls distribution of petroleum products in the country, has to take speedy measure, so as to enhance the availability of unleaded petrol across the country by April 2000.

Government

policy

impact

on

petrol

prices:

Petrol

prices

determine the running cost of two/three wheelers expressed in Rupees per kilometer. Petrol prices are the highest in India as GOI subsidises kerosene and diesel. But with the recent change in GOI policy to reduce the subsidy, the prices of petrol will remain constant at the current prices. This will have a positive effect on Purchases on two/three wheelers. The all these policies have a great effect on all the Two-wheeler players including BAJAJ, HERO-HONDA &TVs-SUZUKI. AS due to the alteration in exim policy Hero-Honda is now going for

increasing its export share, which is just 4% of total sale. Similarly all the companies have force to go for vehicles with EURO-norms.

ECONOMICAL ANALYSIS

Automobile industry is the indicator of the technological health of the country . It also reflects economical status of a country. Greater the no. of automobile , higher will be the country on the economical ladder

Indias economic slide during past 12 months has affected the sale of many products . Though the economy has not actually crashed, its uncertainties have definitely affected the buyers mood. Almost every middle and upper income household has lost money in the stock market, unit trust, rupee development and property values. So much so that even those who have money will want to save rather than to spend.

In the circumstances it is surprising after the smash of september11 and the ten-day shraads, that September auto sales were as strong that sept auto sales were as strong as they were. During the first five months of this fiscal, bike sales grew by 25% MUVs increased by 5% but scooters slumped 5%, moped sales slumped 35%, heavy

commercial vehicle went up by 2% while light commercial vehicles slumped 17% . Overall a disappointing but not a distrust scenario.

India planners

need to consider that

the

auto

industrys one

segment that is capable of very rapid growth unlike traditional areas like agriculture, minerals, chemicals , energy, textiles , gems etc .

while all sectors need to be encouraged , the auto sector is not only capable of very rapid growth but also of good exports and huge employment. In the past, auto industry suffered from the stigma of being considered elitist and was subjected to crippling restrictions and taxation that still hold it back. There is 40% MODVAT on the components and 35%

customers duty on imported kits. After production there 245 to 32% excise duty plus 12% local sales tax some other local taxex. So every time you buy a car, bike or truck, you give one to government in taxes. The impact on employment is also little understand.

There is huge additional employment in those who supply fuel, lubricants, accessories, music system and private auto services. So every direct job may generate 60 70 indirect job.

Every direct or indirect salaries job also generates huge territory employment to the providers of food, clothing, shelter, health,

education entertainment, recreation, construction etc. accounts of 10% of Indias auto industry, the cumulative impact is huge.

The entire auto industry is today directly worth around. 60,000 crore but its impact the suppliers of steel, rubber, components, fuel,

lubricants, service and accessories is many times more. Indian two-wheeler manufacturers have everything going for them in this battle. They have a large, mature market which offers them tremendous volumes. All of them have built up huge capacities which offer scale economies. They have technology support from some of the leading names in the world such as Honda, Yamaha, Suzuki and Kawasaki. Present scenario relating to motorcycle, sales are likely to get affected in the first half of 2001-2002. The prime reason for decline in sales is the showing down of rural economy in the southern parts of India. However it is expected that the fourth quarter of 2001-2002 The question, which is exercising many a mind, pertains to the state of our readiness for the new scheme of things. An important concern is the problem of overcapacity in the automobile industry, which is stated to be about 3 times than that required. Also, there are too many economy is likely to revive by the

manufacturers. Take for example, the market in China. With a market of 2mn vehicles (except two wheelers), there are only three players. In contrast, India with a market of less than 1mn vehicles has around 24 manufacturers. The result lack of economies of scale to withstand international competition. The advantage of low labor costs is mitigated by lack of adequate volumes and low productivity. This could result in a shakeout in the industry. As taxation is the biggest brake on the auto industry, the government must consider cutting the

cumulative taxation. If India cut the total taxes on auto by half , there would be a huge immediate boost in sales and production. If this sacrifice by the governments can generate may times greater value in jobs and economic activity, this time of crisis is the ideal time to use autos as a vehicle to kick start the entire economy.

SOCIAL ANALYSIS
The main social factor that associated with automobile industry is the environmental concerns and HEALTH HAZARDS, (including the welfare of workes etc, )in form of various diseases due to auto pollution. . Some of the issues of pollution related to automobile are discussed below.

Environmental concerns
What is Automobile pollution? Internal combustion engines(of which two wheeler comprises of )

need a mixture of air and fuel to burn and produce energy to move the vehicle. It is these burnt gases, which come out of the exhaust, have the potentional to cause pollution. In petrol engines the gases comprise of a mixture of unburned hydrocarbons (HC), carbon monoxide (co), oxide of nitrogen (Nox) It is a combination of these gases that which result in automobile pollution when they are in excess quantity. Within a certain range they are acceptable but when the engine is not tuned properly or vehicle uses obsolete technology or the quality of fuel is not good then all these result in higher level of emission of all the gases.If the air fuel is not good then all these result in higher level of emission of all the gases.I f the air fuel mixture ratio is not correct then it increase the chances of pollution as it leads to inefficient. Also it lead to reduced power and fuel wastage, which in turn means less efficient

performance of engine of along with fuel economy.

FUTURE OF HERO HONDA

The company offers a good outlook in a long term perspective. It is expected to emerge as the top corporate in creating value for shareholders by 2003-04 if it manages to sustain the volume growth rate in the near future. HHML has been included in the BSE Sensex from Jan 2002 replacing M&M, which is a reflection of its stranglehold on the domestic automobile market. HHML is set to follow a phased distribution and product strategy .The company being buoyed by the success of its OM Project that has paid off by clocking sales of 1 mln bikes last fiscal ; has initiated a new programme Joy of Leadership for fiscal 2001-02 and will be complemented by customer relationship initiative called Hero Honda Passport with a tagline of " Suhana Safar " across all its dealerships and service stations in the country . The scheme will allow the customers to avail of a host of privileges , benefits and exclusive rewards . It is promoted proactively through conventional media . The company has decided to tap the upcountry and semi-urban markets and about 30 35% of the rural base with a distinct product positioning. The company is aggressively cutting costs and are indigenising most of its manufacturing activities . In the future there will be continued pressure on profitability and sustaining the market share will be a daunting task.

Towards this end the company has to be consistent in launching successful new products at regular intervals. It also remains to be seen if it can prevent an erosion in market share to new competitors such as Bajaj and TVS Suzuki. While the parent has set up a 100% subsidiary in the country, HMSI will manufacture only scooters till 2004, while HHML will continue to manufacture only motorcycles till the year 2004, after which the both the companies will be free to foray into any 2-wheeler segment. HHML has technical collaboration with Japanese partner Honda Motors till 2005, and with the launch of new products the outgo in terms of promotional and collaborator expenses will also rise thereby initially affecting the profit margins. The company pays a royalty of Rs200 per motorcycle for product range upto Splendor and also for the incremental technology introduced. For other models the incremental royalty payments range from 3 % to 5 % and are valid for a specific period.

LIMITATIONS

Even though we tried our best to get the information as factual as possible but still there are few limitations to this project 1) Its tough to find data on HERO HONDA MOTORS LIMITED as company was not ready to share data with us . 2) Time was a constraint . 3) HERO HONDA MOTORS LIMITED were apprehensive in divulging the details about company and its marketing strategies thus we treid to get the data from advertisement agency articles and net. 4) With the tie up between hero motors and Honda motors

supposed to end by 2204 thus we were not able to fond the future strategies interm of product profile and their marketing strategies. 5) The focus of study is local in nature as mobility was a problem .

RECOMMENDATIONS
We recommend following suggestions on the basis of our study : 1. Increase the marketing budget 2. Improvement of dealer services as their standards are not uniform 3. Tie up with an international companies for future product launches 4. Launching of a bike in a premium segment as we feel it is where the future lies 5. Money to be spend on customer centric promotions 6. Need to focus on individual brands than umbrella branding 7. We suggest company to target youth between 16 to 25 yrs .

CONCLUSION
The two-wheelers market has had a perceptible shift from a buyers market to a sellers market with a variety of choices. Players will have to compete on various fronts viz pricing, technology, product design, productivity, after sale service, marketing and distribution. In the short term, market shares of individual manufacturers are going to be sensitive to capacity, product acceptance, pricing and competitive pressures from other manufacturers All the three segments, motorcycles, scooters and mopeds have witnessed capacity additions in the last one-year and it will continue in the upcoming period as and when Honda opens a local subsidiary. Over this period, only the motorcycle segment is expected witness higher demand vis--vis supply, while the scooters and mopeds supply will outstrip demand. As incomes grow and people feel the need to own a private means of transport, sales of two-wheelers will rise. Penetration is expected to increase to approximately to more than25% by 2005. The motorcycle segment will continue to lead the demand for twowheelers in the coming years. Motorcycle sales is expected to increase by 20%yoy as compared to 1% growth in the scooter market and 3% by moped sales respectively for the next two-years

The four-stroke scooters will add new dimension to the two-wheeler segment in the coming future. Perhaps, the moped segment will be the worst affected due to Y2K emission norms applicable from April 2000 as not many of the present models confirm to the norms The three-wheeler segment will witness 10%yoy growth for the next two years. In spite of entry of Piaggio, Italy into the three-wheeler segment in the country, Bajaj Auto will continue to dominate the segment. In this segment, we would see players shifting from diesel to cleaner fuels like CNG in line with norms set out by various state governments.

In the last six years, the domestic two-wheeler industry has seen structural changes. This can be seen from the change in composition of two-wheeler sales, where the motorcycles have consistently gained market share from the scooter and moped segments to corner a share of 41% of total two-wheeler sales. This trend is expected to continue in the next two years till the four-stroke scooters make their presence felt in the segment

CASE STUDY
Ensured success The story of motorcycles in India is a good case study of how fortunes change overnight. Motorcycles in India were hardly popular and Hero Honda was the only player, which had carved a niche for motorcycles. Its market was small and limited while scooters ruled the roost but today, it is one of the biggest success stories. Its established presence in the motorcycle segment had stood it in good stead in this phase of boom in motorcycle sales. The fact that no other player commanded the brand name which Hero Honda enjoyed in motorcycle segment also added up to its success. In addition most other players such as Bajaj, TVS, LML etc., took time to assimilate the change in customer preferences and come up with models to buck the trend. Meanwhile Hero-Honda's designs were ready on the platter. Its R&D had been able to come up with models such as CBZ, Passion etc., in the premium segment to capture the hot demand. Riding high on the expectations of consumers, Hero Honda has successfully crossed over the one million units mark in motorcycle sales. Its popular model Splendor is the largest selling motorcycle in the world. To give a boost to its youthful image the company has chosen Saurav Ganguly and Hrithik Roshan as brand ambassadors. The company has

also embarked on in-film advertising in a forthcoming Hindi movie. In order to expand its reach to rural areas, the company has recently launched a marketing initiative in towns with a population of less than 50,000 in Uttar Pradesh. As a part of this initiative, it started a mobile workshop and showroom, through which people will be able to gather knowledge about the companies' vehicles and can also buy them. These mobile marketing efforts are focused on Splendor and Joy.

Wooing the market The story of Bajaj scooters is just the opposite. The undisputable leader in the scooters segment was found wanting when it came to motorcycles. Its products in the motorcycle segment were few and far between and it did not and does not enjoy a brand name in the motorcycle segment, till a year ago. Ambitious products such as Eliminator are yet to be accepted by the market. But of late the company seems to have awakened to the changes in the market. It has repositioned its focus on motorcycles and is planning to increase the production of motorcycles by around 60 percent from its current levels of 60,000 units per month. The company is fast trying to establish itself as a major player in all the price points in the motorcycle market. At the entry level, it has its "Boxer" series of

bikes, in the executive segment it offers, "Caliber", "Caliber Croma" and "Aspire".

To cater to the premium segment the company has "Pulsar". And "Eliminator", the only cruiser bike in India, tops the product portfolio of Bajaj. In fact, this positioning has boosted its sales of motorcycles from 3,14,641 to 4,60,868 units for the three quarters ending in November 2001. With a jump of 85 percent in the sales of its motorcycles, Bajaj has become the second largest manufacturer of motorcycles. Bajaj has intensified its efforts to position itself as a strong player in the growing motorcycle segment. The result is that Bajaj's motorcycle sales are constantly on the increase and are more than offsetting the loss in the geared scooter segment. The biggest challenge for Bajaj would be to reposition itself in the minds of consumers from a company trusted for its scooters to an all-round producer and seller of all kinds of two-wheelers, precisely what the company is now doing, with its "Hamara Bajaj" campaign. If Bajaj's strategies pay off, Hero-Honda would suddenly be fighting for market share against a formidable competitor. In the section of ungeared scooters too, Bajaj is coming up with a number of new models that would take it a long way to increase its market share with Sunny, Rave etc.

Differing destinies TVS-Suzuki, the tie-up between TVS Group and Suzuki is a major player in the Indian two-wheeler market. The company has changed its name from TVS Suzuki to TVS Motor company following the break up with Suzuki Motors in September 2001. In spite of the break up the company's motorcycle sales have registered a 40 percent growth till December 2001. The company's "Scooty" is the No. 1 selling scooterette brand in India with its excellent design and commands a market share of 36 percent. The market leader is the vehicle of first preference with youth, women and students. TVS also has an established presence in the moped segment with its TVS Champ line of vehicles. In the motorcycles segment too, the company has steadily carved a niche for itself. The popular brands from the TVS stable are Suzuki Samurai, Max 100 R, and Suzuki Shogun. The Suzuki Shaolin is India's first 5 speed, 140 cc motorcycle which had kept TVS Suzuki one step ahead of the market demands. The company has recently launched "TVS Victor", which has been an instant hit in the market. Victor has been consistently generating sales of more than 30,000 since its launch.

Another major player in the motorcycles sector is Kinetic Group, with its Kinetic Engineering Ltd and Kinetic Motors. Kinetic Motors was started as a joint venture with Honda Motor of Japan in 1994 and was transformed into a technical collaboration by 1998. Kinetic Motors is the largest manufacturer of gearless scooters in India. The company is also a leading exporter of scooters worldwide. The company has also won the "exports award for excellence" nine years in a row. Starting from humble beginnings with Luna in 1970 the company today is a strong player in the ungeared scooters segment with its highly popular "Kinetic Honda". The company is also making its way into the motorcycle segment with products such as "Kinetic Challenger" and Kinetic GF. The other products from Kinetic include Kinetic Style, Kinetic Marvel etc. As recently as January this year, Kinetic has launched a new scooter with the brand name, Kinetic Nova. The company is also planning to position Kinetic Nova as "International Fashion Statement".

The Indian two-wheeler market has become highly competitive with each and every player trying to tempt the customers towards its products. In the endless game for supremacy, the beneficiary would be the customer, who has a wider choice of vehicles, lesser price to pay and is carried in luxury. The market today is predominantly a buyers market where customer is the king.

ANNEXURE
1 DEALERS LIST Dealers List in Delhi

Name Address

Himgiri Automobiles Pvt. Ltd. A-74, MAIN ROAD, KANTI NAGAR KRISHNA NAGAR NEW DELHI 110051

Phone

011-2461483, 011-2224633, 011-2210941

Off Day Name Address

Saturday Pashupati Motors 81, ADCHINI,MAIN MEHRAULI ROAD, AUROBINDO MARG, NEW DELHI 110 017

Phone

011-6853220, 011-6521572,

011-6962255, 011-6853223 Off Day Name Address Open all days Khanna Automobiles B-6/16, SHOPPING CENTRE SAFDARJUNG ENCLAVE NEW DELHI Phone 011-6108226, 011-6108227, 011-6166312 Off Day Name Address Open all days Auto Needs (India) Pvt. Ltd. E-1/4, PANDAV NAGAR OPP. MOTHER DIARY PLANT PATPARGANJ, DELHI 110092 Phone 011-2443475, 011-2217704, 011-2217702 Off Day Name Address Open all days Ess Aay Agencies Pvt. Ltd. T-2336, FAIZ RD, KAROL BAGH NEW DELHI

110 005. Phone 011-5743331, 011-5772309, 011-5814724 Off Day Name Open all days Upper India Trading Co. (Delhi) Pvt. Ltd.

Address

1/1663, LOTHIAN ROAD KASHMERE GATE DELHI 110 006

Phone

011-2969849, 011-2960617, 011-3970460

Off Day Name Address

Open all days Oswal motros Pvt. Ltd. A-20, G.T.KARNAL ROAD NR. AZADPUR CHOWK, DELHI 110 033

Phone

011-7437247, 011-7419488, 011-7419488

Off Day Name Address

Sunday

Khanna Automobiles WZ-1,GANESH NAGAR MARKET, NR TILAK NAGAR, MAIN NAJAFGARH ROAD, NEW DELHI

Phone

011-5436696, 011-5147460

Off Day Name Address

Open all days Shiv Ganga Automobiles A-18, SHAKTI COOP HOUSE BUILDING SOCIETY PASCHIM VIHAR NEW DELHI 110 063

Phone Off Day

011-5271310, 011-5270530 Open all days

SWOT Analysis: HERO-HONDA

STRENGTH
Technological support from Honda Motors, Japan. The company has a deeply penetrated dealer network (640 including service station) The company provides good after sales service through its well-established dealer network. The company enjoys a huge market share and well established brands like Splendor, CD100, CBZ, etc. (Splendor is worlds largest selling motorcycle)

WEAKNESS
Hero Honda depends on Honda for new products and this is a big weakness considering it from the post 2005 point of view. The reason being that the technological tie-up between Hero Honda and Honda Motors of Japan will cease to exist. Exports has never grown beyond 4% The company doesn't have a product catering to Rs. 25,000 - Rs. 30,000 segment. The company imports about 31% of its spares requirements. This makes the company vulnerable to the import policies of the government. It also exposes THREATS The technical collaboration with Honda is valid only till 2005 and this is a serious threat as they have been dependant on Honda for technology. Also Honda has set up its 100% subsidiary in India, which shall start producing motorcycles from 2004. This will further increase the competition. Threats from Chinese companies which are going to launce Hi-Tech and Low cost products The company has plans to foray into the scooter segment, which can also be a major threat for the future prospects of the company.

OPPERTUNITY The motorcycle segment is growing at the rate of 33%, which provides a great opportunity for the company to cash on. Also it is experiencing a shift in the customer preference from 4-stroke mobikes to 2-stroke mobikes. This again provides an excellent opportunity to Hero Honda to leverage its market share and market leadership for sustained profitability. Weak competition in 125 cc & 200(+) cc segment

TVC STORYBOARD - Hero Honda

A young schoolboy stands in front of a Hero Honda showroom, his heartbeat increasing as he sees the bikes on display.

In another part of the country, two friends experience a similar high as they visit the hilly terrain on their Hero Honda bike.

A couple in Mumbai's drive-in cinema enjoy a Govinda-starrer perched on their CBZ.

Soldiers display their battle prowess under the watchful eye of their instructor.

Youthful exuberance is equally matched by...

...elderly josh and wisdom.

A Prabhu Deva clone is just as passionate about his Hero Honda...

...as some budding Sanskrit scholars, whose hearts beat in unison.

A newly wed bride shyly covers her face with her pallu as her husband focuses her on the rear view mirror.

But this Bangla lady is not so shy as she pretends to be angry with her boyfriend pursuing her as she travels in a tram.

The Lucknavi nazakat is hard to leave behind even when one is travelling on a bike...

...as is the warmth and camara derie of rural Punjab, where love blossoms.

Meanwhile, the Bangla gentleman's perseverance pays off as his lady love shares the pillion seat.

And in Delhi, the seat of power, policemen get greater mobility on their custom-made Hero Honda bikes to serve the people better.

Now coming back to the boy in front of the showroom, well he gets to ride on the pillion seat, thanks to a jovial showroom attendant.

Several images flit across the screen which show different people on Hero Honda bikes. VO and super: "Hero Honda, desh ki dhadkan."

TVC STORYBOARD - Hero Honda

Super: 'Hero Honda presents DKD-2. For the hero in you.' Saurav Ganguly challenges Hrithik Roshan, "Hai dum?" As he nods in response, they...

...ride down on their Hero Honda bikes to a cricket stadium. The fans go delirious at the sight of the Indian captain. But there is more to come.

Hrithik unmasks himself and looks askance at Saurav as he hands him a bat. "Come on!" he is encouraged and decides to gives it a shot.

Hrithik nervously approaches the pitch and takes up his position. Saurav charges in and delivers the ball. The actor swings and misses.

Just then, a kid interrupts the match and gives him a baseball bat. He accepts it gratefully...

...and this time his bat smacks the ball hard over the top. The crowd roars in response...

...as the ball whizzes into the pavilion and one of spectators catches it. Saurav applauds heartily and the duo sets off...

...once again. Saurav proposes an exchange of their bikes and so he rides the CBZ and Hrithik revs up the Passion.

Their joy ride ends on a stage and they glide in interrupting the performance.

There are excited shrieks from the mob as Hrithik takes the centre stage and gives a performance.

He gestures to his pal who shrinks from the idea. "Come on!" cheers the actor. Saurav gives in...

...spiritedly and shakes a leg with the dancers. Hrithik puts his hands together for the Indian captain...

...and they both give a grand finale. Jingle: "Are yehi to hai desh ki dhadkan."

Both are seen atop their bikes as the super reads, 'Hero Honda. Desh ki dhadkan.'

NEW CAMPAIGNS - Hero Honda CBZ

Headline: Fully loaded. Subhead: Bodycopy: Tripmeter. With each ride the fun begins afresh. The tachometer measures the rpm, but sorry not your heartbeat. TPFC 0 to 60 in 5 sec. 60 to 0 in 3 sec. flat. With disc brakes. In biker's paradise there's always a fifth gear. 12.8ps. Feel the rush of adrenalin. 156.8cc. Now try going unnoticed. Wide rear tyres. Now kick dirt in their face. Heat Proctection. Burn the roads, not her legs. Super suspension. Feel the excitement, not the road. Baseline: Motorcycling unplugged AGENCY: HTA

NEW CAMPAIGNS - Hero Honda

Headline: The pride and glory of being Indian. Subhead: And the world's largest two-wheeler company. Bodycopy: A global feat! The result of an energised initiative at Hero Honda. Yes. Our Project OM (One Million) is not only a resound success; it's made us the World No. 1. Our sincere thanks to all our extended family - especially our customers - who've helped make this happen. Baseline: Leading the way AGENCY: Percept

NEW CAMPAIGNS - Hero Honda

Headline: Shape-of-the-art bike

Subhead: Bodycopy: The all-new Passion. Your expression of style. Pursue your dreams on it!

7.5 Ps at 8000 rpm Contoured Fuel Tank Streamlined Side Cowl Trapezoidal Multi Reflector Headlight and stylish Tail Light Safety Side Reflector Broad Rear Tyre Baseline: When Style Matters AGENCY: Percept

NEW CAMPAIGNS - Hero Honda

Headline: Look good. Feel great. Subhead: Bodycopy: The all-new Passion. Your expression of style. Pursue your dreams on it!

7.5 Ps at 8000 rpm Contoured Fuel Tank Streamlined Side Cowl Trapezoidal Multi Reflector Headlight and stylish Tail Light Safety Side Reflector Broad Rear Tyre

Baseline: When Style Matters AGENCY: Percept

NEW CAMPAIGNS - Hero Honda Headline: Look good. Feel great. Subhead: Bodycopy: The all-new Passion. Your expression of style. Pursue your dreams on it!

7.5 Ps at 8000 rpm Contoured Fuel Tank Streamlined Side Cowl Trapezoidal Multi Reflector Headlight and stylish Tail Light Safety Side Reflector Broad Rear Tyre

Baseline: When Style Matters AGENCY: Percept

BIBLOGRAPHY

1. 2. 3. 4. 5. 6. 7. 8. 9.

MARKETING MANAGEMENT BY PHILIP KOTLER ADVERTISING MANAGEMENT BY DAVIS ADVERTISING MANAGEMENT BY GUPTA, MC GRAWHILL BRAND MANAGEMENT BY Ramakrishna www.herogroup.com www.bajajauto.com www.herohonda.com www.tvsauto.com www.hindustantimes.com

10. www.buisnessstandard.com 11. CII Auto Industry report 2001-2002 12. Ernst & Young Newsletter