HONDA MOTOR CYCLE &

SCOOTER INDIA LIMITED

Submitted by (PTPGPM-July 2000):

ARVIND SHARMA : 08
B.P.RATH : 11
MADAN MOHAN ACHARYA : 17
VINAY KUMAR : 54

Management Development Institute

Gurgaon

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 Contents

Description Page

1. Introduction 03

2. Two wheeler Industry in India 04-06

3. Environmental Analysis 07-08

-Five force Analysis

-SWOT analysis

4. Honda’s Entry to Indian Market 08-09

5. Product Positioning 09-10

6. Segmentation & Competition 11

7. Brand Building at HMSIL 12

8. Brand Identity 13

9. Marketing Strategy 13

10. Problem Faced in Marketing Strategy 14

11 Perceptual mapping of Leading Brand 15

12 Brand Perception Mapping 16

13. Present Campaign 17

14. Growth Opportunity 17

15. Future strategy (Adv and promotional campaign) 18

16. Conclusion 19

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Introduction- Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI), a wholly owned
subsidiary of Honda Motor Company Ltd., Japan established in yr 1999 with initial
capital investment of Rs 300 cr. to initiate a change and make a difference in the
Indian 2-wheeler industry. Honda's dream for India is to not only manufacture 2-
wheelers of global quality, but also meet and exceed the expectations of Indian
customers with outstanding after sales support. Honda is the world's largest
manufacturer of 2-wheelers. Its symbol, the Wings, represents the company's
unwavering dedication in achieving goals that are unique and above all, conforming
to international norms. The factory is located at Manesar, Gurgaon, Haryana with a
present installed capacity of 2 lacs/ units per annum.

HMSI operates on a principle, which is followed worldwide by all Honda

companies. Maintaining a global viewpoint, HMSIL is dedicated to supplying
products of the highest quality, yet at a reasonable price for worldwide customer
satisfaction.
Honda's philosophy is based on the company's guiding principle and advocates 2
fundamental beliefs: “Respect for individual” and “Three joys”.

Respect for the Individual Honda recognizes and respects individual differences.
The respect for individual stems from the following three points:
• Initiative
• Equality
• Trust
It is the contribution from each individual in the company that has made our
company what it is today and that, which will take us into the future.

The Three Joys In line with Honda's Philosophy, HMSI conducts all its daily
activities in pursuit of the following joys:
The Joy of Buying
The Joy of Selling
The Joy of Manufacturing

In a span of two years, HMSI has launched two scooters. Honda Activa - scooter
that took the Indian market by storm, and Dio India's first motoscooter.

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Two-wheeler Industry in India.
The last four-five years have brought about a great change in the consumer
preferences for two-wheelers. The two-wheeler industry is perhaps the most happening
place in terms of new models launched, upgraded products and innovative marketing
techniques. Till 1990, the two wheeler Industry was mainly dominated by metal body
geared scooters and the number of producers were less than five. This oligopolistic market
structure has changed with the entry of lighter, 100 CC motorcycles. This has resulted a
shift in the consumer’s preference from scooters to Motorcycles. The two wheeler segment
in India can be classified in to three major segments-
1. Scooters
2. Motor cycles
3. Mopeds.
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.

60
54
50
47.2 47.5 46.8 46 47.6
43.9
40 41.5 41
39
37.2
33 33.2
30 29.5 30.4
27.6 26.7 27
25.2 25.8
23.7 23.6 23.1
20 21.3 20 19.2 19

10

0
FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY2000 FY2001

Scooter Motorcycle Moped

(Source: SIAM)

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 Thus the share of scooters and mopeds over the years has been falling steadily
and the share of motorcycles has been rising very rapidly. This has been due to the
change in the profile of two wheeler buyers. Earlier a two wheeler was a substitute for the
passenger car. But in the nineties it has become an object of pleasure and therefore this
shift towards motorcycle.
The two wheeler penetration in India is quiet low at about 220 motor vehicles per 1000
households. Thus there is a huge potential for growth in India. The trend in the two-wheeler
industry is denoted in the following table and we can clearly see a shift from scooters to
motorcycles.

• CAGR growth of 10% between 98-99 to Q1 2002-03

• Motorcycle is the fastest growing category followed by ungeared scooter
• Motorcycle share in the two wheeler industry has increased from 35% in 1998-99 to
53% in 2002-03.
Category CAGR % (from 98-99 to Q1 2002-03)
Motorcycles 33%
Step thrus -25%
Ungeared scooter 18%
Geared scooter -22%
Mopeds -12%
Total two wheeler 10
(Source: SIAM)

Market Share Based on Category:

Scooter
20%

Motor cycle Moped

53% 14%

Step thru
Scoterettes 6%
7%

(Source: SIAM)
Scooters Market Share
Based on Demography:

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 Demographic distribution of scooter
sales

Eastern
11%
South India
16% North India
45%

Western India
28%

(Source: SIAM)

Based on Players:

TVS
17%
Maharastra Bajaj
7% 43%

LML
14%
Kinetic HMSIL
13% 6%

(Source: SIAM)
There are 6 players in scooter segment. Bajaj Auto, the leader in scooter market, has
largest sales and service network with 43% market share. There is stiff competition among
the six players for retaining market share.

Environmental Analysis-

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 HMSIL entered in India to give differentiated product in Indian market. Let us analysed the
five force model to access the environmental aspect.

Threat of potential new

entrants-

High
(Chinese Imports)
(Hero Honda will be
making Scooter)

Bargaining power of Bargaining power of

Supplier Competitiv Buyer

Low e rivalry
Low
Very High (Market is fragmented)

Threat of Substitute-

High
(Highly Competitive and
Changing market)

Considering the Five force analysis, it is found that bargaining power of buyer is low, threat
of substitute is high. Bargaining power of supplier is low. The most important is the
competitive rivalry is very high.

SWOT ANALYSIS
Strengths:
• Strong technology driven product, As 100 % subsidiary of Honda Motor Co, the
company in India is supported by high technical support.
• High Innovation
• Global competitiveness and string presence.
• Fuel efficient and sleek and stylish scooter for common people.
• State of art manufacturing facility at Gurgaon.

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Weaknesses:
• Dealership network and service network is not as widely distributed as competitor.
• Distribution channel is not widely as of competitor.
• Poor Rural presence in India.
• Product awareness is less.

Opportunities:
• Although the scooter market is declining in India, There is a much demand in new
generation scooters having sporty, stylish look, which will give a riding comfort with
economy and convenience for maintenance.
• Due to huge middle class income group, there is growth of scooter market if the proper
designed scooter as per customer is given.
Threats:
• There are strong players in the market like Bajaj Auto, TVS Suzuki, Kinetic Engg and
LML. This will lead to strong competition in the market.
• The scooter market is declining and there is much shift from scooter market to motor
cycle market. This may lead to carter for low volume market.
• Future competition is expected from Hero Honda Motors and HHML is planning to
lunch scooter in India by 2005.

Honda’s Entry into Indian Market-

Honda Activa- Honda Activa is the first scooter model of HMSI for the Indian
market. It has revitalised the Indian scooter market after its launch in the year 2001.
Honda Activa has set a new standard for the Indian scooter market. It has been
developed exclusively for the Indian market after closely examining the changing
lifestyles and needs of the consumers.

Honda Activa has been designed to cater to the people who believe:
• The conventional Indian scooter is too big and difficult to handle
• The scooterette is too small and similar to mopeds

DIO- Dio is India’s first motoscooter, a unique concept that blends the stylish and
aggressive form of a Motorcycle with the comfort and convenience of a scooter. A
trend that continues across the world today, DIO, a reflection of this concept is a
vehicle, which is youthful, energetic, sporty and innovative. It perfectly matches the

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aspirations of today’s youth and asserts their feeling of being young, and helps
them express their desires in their own unique way. Exactly what the trendsetters of
today want.

This wedge shaped scooter with the futuristic design incorporates the latest world
trends. DIO has been developed exclusively for youngsters with a desire to be at
the forefront of the latest trends. It is designed for the users who are progressive,
trendsetters and want to express themselves, through the products they use.

Dio caters to people who seek:

• Additional value keeping the basic needs
• Something different
• 2-Wheeler style reflection of self
• Performance matching the driving conditions

Dio, the first motoscooter in India by Honda, is equipped with a number of new
functions and mechanisms. It is designed to satisfy customer requirements through
its innovative design and highly topical status. This model will not only be marketed
in India but will also be exported to South & Central America, Europe, Africa &
Asian countries, using Honda’s global network.

Marketing strategy and demand forecasting for HMSIL:

Mapping the internal strength to opportunity in the market HMSIL want to position the
product with highly qualitative product for the modern requirement for the scooter and
motoscooter. As per the strategy plan HMSIL will have 50% of scooter markets share by
2005 apart from exporting to different countries.

Vehicles

500000 450000

400000

300000 240000
200000 154000

100000 54600

0
2000-2001 2002-2003 2003-2004 2004-2005

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(Source: www.honda2wheelerindia.com)
Honda Positioning and marketing strategy
Considering the Indian Market where the scooter market is down sliding due to lack of innovation
and customer friendly product. HMSIL has the high quality and medium price strategy for the
Indian market so as to give a face-lift for the declining scooter industry.

Price
High Medium Low
Product Quality

1.Premium 2.High-value 3.Super-value

High Strategy Strategy strategy
4.Overchargin 5.Medium-Value 6.Good-Value
Medium g strategy Strategy strategy

7.Rip-off 8.False economy 9.Economy

Low strategy strategy strategy

The product is of high quality and will be charging less. Hence, high value strategy will be
considered.

Product positioning
HMSIL launched the scooter (Activa and Dio) for the following reasons.

Inconvenience and
discomfort with existing
Geared scooter
Large gap between,
scooterete and
existing scooter.
Honda positioning
Scooter with
convenience,
comfort, stylish and
reliability

Scooterette is too small

Segmentation for HMSIL-

Based on the customer profile, HMSIL is targeting the customer who requires comfortable
drive with easy handling and more reliability. Fact suggests that target customer is between
age group of 18 to 30 yr. including college going students, adults and woman. The target
customer base typically includes the complete range of family people except the older
people.

Competition- With declining scooter segment there is tough competition to keep the market
share up with all five players. Considering head to head competition with scooter segment
from Bajaj, TVS, Kinetic,LML, HMSIL should understand the competition in the market &
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marketing strategy of the competitor so as to make the market strategy better. The
following matrix shows the competitors target customer and advertisement that is targeted
towards the customer.
Co Model Target customer & Product Attributes
Bajaj Saffire Targeted for young students whose parents will not allow them
to own motorcycles at the same time require a safe and
comfort ride for their children. With its combination of looks,
performance, operating costs and reliability, it is positioned to
give youngsters a better excitement.
Kinetic Nova Targeted for younger generation of age group between 18-30
for easy and comfortable riding. Stylish look, performance,
easy in handling and operation is the key benefits to which
catering.
TVS Scooty Targeting to ladies, both students, housewives for easy in
handling.
LML Star Targeted for middle income group, which requires a scooter for
mobility for day to-day activities.
(Source www.bajajauto.com/,www.tvssuzuki.com/www.kineticindia.com)

Product line comparison w.r.t. competition

There is a head-on competition in scooter segment, each company lunching the new
product with more innovation and technology. The direct comparison of product with
features is explained below

.
HMSIL Kinetic Engg Bajaj TVS
Kinetic
DIO Marvel Saffaire(Bajaj) TVS (Scooty)
Engine
4-stroke, Single
Type cylinder 2-Stroke 4-Stroke 2-Stroke
Singe
air cooled,OHC cylinder Single Cylinder Singe cylinder
Displaceme
nt 102 cc 110cc 92.2 cc 59.6cc
7 Bhp @ 7000 7.7 Bhp @
Max. Power rpm 7000 rpm 5.9Bhp @ 7000 rpm 4.5 Bhp @ 5500 rpm
9-8 Kg-m @ 9-8 Kg-m @ 6.4 Kg-m @ 6000
Max. Torque 5500 rpm 5500 rpm rpm
Transmissio
n Automatic 3 Automatic 1Automatic
Ignition Self / Kick Self self self
Electricals
Battery 12V, 5Ah 12V,AC/DC 12V,AC/DC 12V,AC/DC
Headlamp 35W
Chassis
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Frame High rigidity Tubular Tubular Tubular
Dimensions 1760 x 710 x
(lxbxh) 1110 mm
Wheel Base 1235 mm 1262mm 1250 mm NA
Ground
Clearance 145 mm 103 mm 105 mm NA
Front Bottom Link Trailing Link Trailing Link Trailing Link
With hydraulic
damper
Unit swing with
Rear spring Mono shock Mono shock Dual telescopic
Tyre Size
Front 3.50 - 10, 4 PR 3.50 x 10" 3.50 x 10" 3.00 x 10"
Rear 3.50 - 10, 4 PR 3.50 x10" 3.50 x10" 3.00 x10"
Drum, 130 mm
Front dia Drum Drum Drum
Drum, 130 mm
Rear dia Drum Drum Drum
Fuel Tank
Capacity 6 litres 6 litres 6 litres 6 litres
Sleek and
Style stylish Sleek Sleek Sleek
(source: Product Brochures)

Brand Building of Honda In India-

Considering the ladder diagram we may find that HMSIL is preferring to have
product attribute and hence this will give rise to customer benefit. However
emotional benefit is not considered for the brand. The brand is relatively new
and emotional benefit is not attached with at this stage in India.

EMOTIONAL BENEFIT

Honda is considering
Product attribute and
Customer benefit to
CUSTOMER BENEFIT develop brand in India

PRODUCT ATTRIBUTE OF ACTIVA AND

DIO

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 (Brand Building at HMSIL)

Reliability

Scooter with
Service high Aesthetics
Quality performance/
convenience
& easy
driving

High
Quality

(Brand Identity of HMSIL)

The core identity of the brand is a scooter with high performance,
convenience in riding & easy driving. The extended identity is because of
reliability , esthetics and high quality product.
The marketing strategy clearly focuses on developing brand in a steady phased
manner. The over all marketing programme from the time of launch focuses
on
Price Place
1. High Value strategy 1. Geographical coverage
2. Price to match customer 2. Major focus on developed cities
expectation based on benefit and towns.

Promotion Product-
1. Better customer service 1. Differentiated product
2. Better serving of vehicle 2. Better feature
3. Effective and better distribution 3. Easy in Handling
channel 4. Riding comfort
4. Trade promotions 5. High performance
Effective communication through 6. High qualitative product
Advertisements 7. High reliability

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The marketing plan is mainly focused on giving better product with a better
service quality. Here the brand association with the product is based on
attribute benefit to the customer and better service.

Problem faced

With the above mentioned marketing programme HMSIL started marketing in

India. The major problem the was-

Developing Dealership in all areas- As per Company strategy, mainly all

major towns are being focused is urban area was focused. However in Indian
Market the player like Bajaj is having a strong network of dealer and service
network. The development of service network for HMSIL was limited to urban
sector in first phase. This has given to dis-satisfaction of the people who
wanted to buy the product in semi urban area or other areas.

Building Awareness- As HMSIL is new to the market building awareness was

a main challenge. The brand is although well perceived outside India, However
to communicate the brand upto the local customer the company faced a bigger
challenge.

Customer waiting time- The product Activa and Dio gave competitive
advantage over the available brands in India. The demand was more and
company was not able to step up the product facility. This leads to customer
dis-satisfaction and in some extent there is switching of the brand from
Honda to other competitor.

Market Research- Questionnaire were asked to with random sample to get

the data of product awareness and result collected are summuraised in
perceptual grid.

Perceptual Map of the leading brands:

Product Awareness

Bajaj
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 Honda
Kinetic
LML
TVS

Product Quality
Product Benefit

Service Provided
By mapping different product as per above one find that people perceive that,
the product awareness is not very high although people perceive that product
quality and product benefit is better than the competitor. Hence HMSIL should
focus on improving the product awareness by improving communication.

Mapping of competitors product Vs Dio

DIO
SCOOT
Y
Driving
Pleasure &
Easy in Kineti
Handling SAFFIR
c
E
LML
Chetak

Product performance

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Brand Perception- Coming to brand perception, let us put it in grip form so that we may
understand the various factors responsible for brand perception-

price
10
8
aw areness 6 looks

4
2
0
serviec level performance

studyness easy in handling

Image Perception Study across all competitor models Marketing research was carried out
by through questionnaire to understand what attributes make the product differentiated and
what attributes. Benefits for which customer purchase the scooter. This activity was
carried out for all competitive products so as to know the differentiated attribute,
which has to be communicated to customer.

Model Aesthetics Performance Riding Comfort Price

Safire ***** **** **** ****
Nova *** ***** *** ****
Dio **** ***** ***** ***
Star ** *** ** ***
Scooty *** *** *** ***
Chetak ** *** ** ***
(Sample size of 30 was taken and scaling was done based on 5-excellent and1- very low)
Based on the study about image of the product the three parameter, looks, performance
and riding comfort should be considered to increase the product awareness in the country.

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Present Campaign- The present campaign is not so much focused on improving
communication as we have found in the survey. The advertisement,
dealer promotion and consumer promotions are not aggressive .The
campaign and effort is limited to trade promotion and development of
network. The campaign is not focused on targeted customers and
recognition and recall about the product is very low.

Growth opportunity and new plan- The growth opportunity is very high and the company
should focus on new strategy of improving in the following areas-

1. Increase Communication to increase the product awareness and hence brand

awareness with full advertisement campaign.
2. Better product availability- On time product availability will give rise to more
customer service and less customer dis-satisfaction.
3. Developing dealers and distribution channel in semi urban areas- Developing the
dealer and service network in semi urban areas may be required to access to rural
customers.
The communication can be increased by improving advertisement and promotions. The
objective of the advertisement will be to achieve high level of product awareness, product
knowledge and brand image. Which, in turn, will attract new customers towards the
product.

Message strategy for HMSIL should consider-

Performance,
Customers Assessment Riding comfort
of unique feature Convenience
Aesthetic

Target MKT for HMSIL

Age group 18-30
Competitors Target Mkt College going student
vs HMSIL Target Mkt Working man/women
Full Family range (Except old) )People

Comparison with Target Media for AD campaign-

competitors AD Print media
campaign with HMSIL 17 TV media
AD campaign strategy Hoardings & Posters
Message strategy for HMSIL will be- benefits to be conveyed in terms of product
performance, riding comfort and convenience with product positioning.
Based on qualitative and quantitative analysis we propose to give following
advertisement to support the brand growth -
Media Class -
• Television, Newspaper, Magazine, Direct Mail Hoardings and posters.
Media Vehicles-
• Television - Star News, AajTak, ESPN Sun TV & Zee News
• Newspaper- Times of India, HT, Telegraph, Hindu, Punjab Kesari
• Magazine-. Sportstar, Auto India, India Today, Femina
• Direct Mailing- To HMSIL product owners & those who visit dealership
• Hoardings & Poster-Delhi,Mumbai, Chennai, Calcutta, Bangalore- Major cross section
& College locations.
Reach- The target audience for HMSIL is age from 18-30 yr and including family
members. This consists of area wise, Considering the geographical scooter market share
we find Maximum customer is in north followed by west , then south and east. So media
plan to be designed considering maximum reach of the above.

Promotional activities- The following promotional activities are to be carried out along-
with new advertisement campaign of the product.
Description Type of promotion Reason

-Attractive Finance - Easy finance scheme -In order to improve sales and show
scheme presence differential interest rate % to
be partly shared by HMSIL ( @ 4 %
to be shared)
-Arranging college -Cultural function -HMSIL may go for sponsorship of
events sponsorship in various cultural programme in major colleges
colleges in metro cities to attract the college
boys and girls.
Promotional -Free air ticket to GOA, -Lucky draw winner from HMSIL
activities (Twice) customer to be chosen and send to
GOA for free tickets.
Free Helmet, Handy Bag etc - Free bag aimed for college going
(For one month) students will be given to have
association with HMSIL

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Conclusion-

HMSIL product Activa and Dio is set in Indian road to give a better convenience and
easy ride scooter in India. Honda as brand is very high outside the country ,However as
per our analysis we have seen that due to product awareness, reaching to customer ,the
brand is not very popular in India. For improving the brand image which can be achieved
by more association with customers and providing better service and product . The
marketing strategy of HMSIL should focus on increasing product awareness by more
advertisements, promotional campaigns, better service, better availability of the product
and giving emotional benefit to the customer.

Earlier Two wheeler industry is focusing on product attributes, However with the present
competition and closeness with customer the focus of HMSILshould be to give emotional
benefit by better customer satisfaction, product availability, and better awareness.

The advertisement plan alongwith promotional campaign should increase the awareness
through product knowledge and brand awareness.

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