marketing strategy of hero honda

Submitted in the partial fulfillment of requirement for the award of degree in Master of Business Administration (MBA) (2009-20011)

Supervised by Narender tanwar Faculty B.S.A.I.T.M FARIDABAD

Submitted By Rahul Gandhi 09/MBA/040

Submitted to Controller of Examination Maharishi Dayanand University, Rohtak

PREFACE

Marketing should not be looked upon in a vacuum or in isolation. It is an essence taking a view of the whole business organization and its ultimate objective concern for marketing

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must penetrate all areas of the enterprise. Market survey in today’s competitive world is a must for every organization. This project is a study of marketing strategy of Hero Honda. The rational behind this particular study is to find out the present market scenario of various brands & to find out the corporate need and perception. It was a pleasurable experience to conduct a research on behalf of Hero Honda pertaining to the study of the Automobile Sector. Conclusion and there by recommendation has been arrived at by proper and justified interpretation of the result derived from the above said analytical tools and techniques.

DECLARATION

I Rahul Gandhi, Class MBA –IV Semester of B.S.A.I.T.M Faridabad hereby declare that the project entitled “MARKETING STRATEGY” HERO HONDA PVT.

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LTD. is an original work and the same has not been submitted to any other institutions for the award of any other degree. The feasible suggestion has been duly incorporated in consultation with the supervisor.

Rahul Gandhi

ACKNOWLEDGEMENT I would like to thank Mr. Narender Tanwar assigning me a project to work on and for the help and guidance offered by them during my project work. Working with them was

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really a very good & learning experience. I would like to thank all other staff members of HRD Dept, without their help it would have very difficult for me to carry out any of my work successfully. My thanks to all the financial advisors of Hero Honda especially Mr. Ashish Kapoor (Regional Mkt. Manager) who helped me get over my hard times during my sales job, I can never forget his support and encouragement. I also thank to BSAITM, Faridabad who give me opportunity to work with Hero Honda. It increases my knowledge about markets in which future will be struggle. A company’s implant welfare facilities have been kept in the course curriculum of the management program, so that the candidates can get to know about the corporate world, industries. Also one gets a chance to visualize practically what has been taught theoretically. The welfare facilities in a reputed concern like Crew were itself a great learning experience

Rahul Gandhi

TABLE OF CONTENTS S.No.

PARTICULARS

Page No.

4

1

INTRODUCTION

2

ABOUT THE COMPANY

3 4 5

COMPANY PROFILE OBJECTIVES OF THE STUDY INTRODUCATION OF THE TOPIC

6

SWOT ANALYSIS

7

PORTOR ANALYSIS

8

FACTS N FINDING

9

RECOMANDATION

10

QUESTIONNAIRE

11

BIBLIOGRAPHY

5

OVERVIEW OF AUTOMOBILE SECTOR IN INDIA •

The Automobile sector is one of the fastest growing manufacturing sectors in India.

•

In the 90s the industry witnessed an average growth rate of above 20 percent.

6

•

Indian Automobile Industry is characterized by a very high percentage (75 per cent) of two wheeler production, ranking second only to Taiwan.

•

The world leaders in the sector are evincing keen interest in establishing manufacturing facilities for manufacturing and assembling components.

•

A politically stable and vibrant State, Andhra Pradesh is centrally located with the support of seaports, international airports, assured and reliable power supply, abundant water, broad base of auto component manufacturers, highly trained, skilled and disciplined manpower and is therefore, the preferred location for Automobile industries.

•

The interest of the state has been duly noted by Global Auto Majors, who have indicated their interest to consider Andhra Pradesh for establishing manufacturing facility.

•

The Government is also formulating an Auto Policy, which would give a proper direction to the growth of the sector.

•

There are more than 20 auto –component manufacturing companies in the State, manufacturing components such as grey-iron castings, precision aluminum castings, leaf springs, oils and lubricants, diesel fuel injection equipment, electronics and auto electronics and auto electrical, front axles, gears, forging, machined components, pressed metal components, pistons, cylinder liners, nozzles, delivery valves, starter motors, alternators, electronic regulators, high pressure die castings, clutch covers, fuel filters ,etc.

ABOUT THE COMPANY

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Hero Honda has a reputation of being the most fuel-efficient and the largest selling Indian motorcycle. Its commitment of providing the customer with excellence is self-evident. A rich background of producing high value products at a reasonable price led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer. It was this affinity in working cultures of Honda Motor Company of Japan and the Hero Group that resulted in the setting up of Hero Honda Motors Ltd. A relationship so harmonious that Hero Honda has managed to achieve indigenization of over 95 percent, a Honda record worldwide. Tactical promotions and excellent marketing helped Hero Honda establish itself as an intelligent purchase. Its unique features like fuel conservation, safety riding courses and mobile workshops helped the group reach in the interiors of the country. Finance services helped facilitate purchase, as did an efficient dealer network across the country. Well-entrenched in the domestic market, Hero Honda Motors Ltd. turned its attention overseas, and exports have been steadily on the rise.

Its main Models are o

Cbz

o

Splendor

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o

CD100

o

Cd100ss

o

Street smart

o

Passion

o

Karizma

o

CD dawn

o

Ambition 135

VISION OF THE COMPANY

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The Legend of Hero Honda

What started out as a Joint Venture between Hero Group, the world’s largest bicycle manufacturers and the Honda Motor Company of Japan, has today become the World’s single largest two wheeler Company. Coming into existence on January 19, 1984, Hero Motors Limited gave India nothing less than a revolution on two-wheels, made even more famous by the ‘Fill it – Shut it – Forget it ‘campaign. Driven by the trust of over 5 million customers, the Hero Honda product range today commands a market share of 48% making it a veritable giant in the industry. Add to that technological excellence, an expensive dealer network, and reliable after sales service, and you have one of the most customer-friendly companies. In the words of Mr. Brijmohan Lal Munjal, the Chairman and Managing Director, “We will continue to make every effort required for the development of the motorcycle industry, through new product development, technological innovation, investment in equipment and facilities and through efficient management”.

OBJECTIVE OF THE STUDY

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1. To study the market strategies followed by Hero Honda. 2. To find out the total market share of Hero Honda. 3. To find out the promotional tools used by Hero Honda. 4. To find out the customer preference towards the product of the company. 5. To study the impact of advertising by Hero Honda. 6. To provide useful information to the company about the product features of various competiting companies. 7. To study the features of different brands that gives a good idea of various products and services offered by the company. 8. To study the brands of Hero Honda & consumers perception about the product of hero Honda. 9. To understand the competitive environment in which the company is operating and is desired to meet customer need and satisfaction.

INDUSTRY SCENARIO

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In the present scenario of automobile industry the major companies are: Manufacturers

Products

% of market share 75% market share

HERO HONDA

Motorbikes

BAJAJ AUTO

Scooter+Motorbikes

25% market share

LML

Scooter+Motorbike

30% market share

Motorbikes

15% market share

Motorbikes

15% market share

Motorbikes

10% market share

TVS YAMAHA ENFIELD

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Hero Honda Glamour F1

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We are one of the major exporters of Hero Honda Glamour F1. It gives us a sense of pride to forward this gleaming machine to our clientele that is Hero Honda first fuel injection technology-driven motorcycle.

Technical Specifications Engine

Quantum Core

Displacement

124.7 cc

Maximum Power

6.72 KW (9 BHP) @ 7000 rpm

Maximum Speed

95 kmph

Gears

4 Gears

Frame

Tubular Double Cradle

Tyre Size (Front)

2.75 x 18 - 42 P / 4 PR

Tyre Size (Rear)

3.00 x 18 - 52 P / 6 PR

Headlight

35/35 W Halogen Bulb (Multi-Reflector)

Starting

Kick / Self

Brakes (Front)

Drum / Disc

Brakes (Rear)

Drum

No. of Variants

4

Hero Honda CBZ Xtreme The 4 Stroke, Single Cylinder, Air Cooled speed machine from Hero Honda is a cool one. We have all the five colors in Black, Silver, Blue, Green & Red available with us.

Technical Specification Type

Air Cooled, 4 Stroke Single Cylinder OHC

Displacement

149.2 c.c

Cylinder Arrangement

Single cylinder , Vertical Engine

Maximum Power

10.6 KW ( 14.4 Ps ) @ 8500 rpm

Maximum Torque

12.80 N-m @ 6500 rpm

Bore x Stroke

57.3 x 57.8 mm

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Compression Ratio

9.1 :1

Carburetor

C.V Type

Starting

Self Start / Kick Start

Idle speed

1400 rpm + 100

Ignition

AMI - Advanced Microprocessor Ignition System

Clutch

Multiplate wet

Gear box

5 Speed constant mesh

Type

Tubular , Diamond Type

Front

Disc Dia 240 mm Disc - Non Asbestoes type

Rear

Drum Internal expanding shoe type ( 130 mm ) - Non Asbestoes type

Rim Size

Front 18 x 1.85 , Alloy Wheels Rear 8 x 2.15 , Alloy Wheels

Tyre Size

Front 12.75 x 18 - 42 P Rear 100/90 x 18 - 56P ( With Tuff-up Tube)

Battery

12 V - 7 Ah ( Self )

Head Lamp

35W / 35W - Halogen Bulb ( Multi-Reflector Type )

Tail Lamp

12V / 0.5W ( LED LAMPS)

Stop Lamp

12V / 5 W ( LED LAMPS)

Fuel tank capacity

12.3 Ltrs ( Min )

Reserve

.5 Ltrs ( Usable reserve )

Length

2080 mm

Width

765 mm

Height

1145 mm

Wheelbase

1325 mm

Ground clearance

145 mm

Minimum turning radius

2.10 mtrs

Kerb weight

141 Kg (Kick) / 143 Kg (Self).

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Hero Honda Splendor We deal in one of the most successful bikes in Indian motorcycling history - Hero Honda Splendor. The bike is available in a number of shades and models

Technical Specification Engine

4 Stroke, Single Cylinder, Air Cooled

Cubic Capacity

97.2cc

Max. Power

7.5 BHP @ 8000rpm

Gear Box

4 Speed

Ignition

CDI

Front Brakes

130mm Drum

Rear Brakes

110mm Drum

Front Tyre

2.75 X 18

Rear Tyre

3.00 X 18

Wheelbase

1235mm

Ground Clearance

159mm

Dry Weight

116 Kg

Tank Capacity

12.8 Liters

Colours

Black, Silver, Blue & Red

Hero Honda CD Dawn The shock absorbing rear suspension, providing a smooth ride and coping up efficiently with sudden jerks due to the uneven road and bumps has made Hero Honda CD Dawn a popular bike.

Technical Specification

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Engine

4 Stroke, Single Cylinder, Air Cooled

Cubic Capacity

97.2cc

Max. Power

7.4 BHP @ 8000rpm

Gear Box

4 Speed

Ignition

CDI

Front Brakes

130mm Drum

Rear Brakes

110mm Drum

Front Tyre

2.75 X 18

Rear Tyre

3.00 X 18

Wheelbase

1230mm

Ground Clearance

160mm

Dry Weight

114 Kg

Tank Capacity

10.5 Liters

Hero Honda Passion

Technical Specification Engine

4 Stroke, Single Cylinder, Air Cooled

Displacement

97.2 cc

Maximum Power

7.5 ps at 8000 rpm

Ignition

Electronic CDI

Frame

Tubular Double Cradle

Head Light

Halogen Bulb 35 W / 35 W

Final Drive

Roller Chain

Battery

12 V - 2.5 Ah

Starting

Kick Starter

The Street 100 is Hero Motor's latest two-wheeler on offer in the step-through 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 17

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. Technical Specifications Engine : Four-stroke/petrol Transmission : Four-speed Engine Displacement : 97.2cc Tachometer : N/A Max Power : N/A Wheel base : 1,205mm Ground Clearance : 133mm Ignition : Electronic Dry Weight : 101kg Fuel tank Capacity : 11litres Battery : 12V F/R suspension : Telescopic R/R suspension : Swing arm and Hydraulic dampers Max Speed : N/A Front Tyre size : 2.25x17" Rear Tyre size : 2.50x17"

KARIZMA If you look at the 223c mill of the Karizma, you can make out the familiar streak that runs through the engines on the CBZ and the Ambition. No prizes on this count as to the reason but the 223cc Karizma engine represents - for the moment - the maximum capacity this modular design theme can be taken to. The crankcase is of virtually the same size though the covers do have some detail differences and the engine mounts are the same as in the other two bikes and completing the picture are the scaled-up barrel (with an additional fin) and head. 18

The single overhead cam motor features slightly undersquare cylinder dimensions with a 65.5mm bore and a 66.2mm stroke to give a 223cc swept volume. Hero Honda has designed in the latest convex-type combustion chamber (compression ratio being 9.0 : 1) for silent running and good power delivery while also giving it the latest Keihin VE 3EA constant vacuum type carburettor which also packs in the CCVI switch. The CCVI term stands for carb-controlled variable ignition timing which as it suggests actuates via throttle position - one of two ignition maps, for low and high speed operation. This was one area which disappointed appreciably in the CBZ wherein the engine sounded and felt harsh as one went past the middle range but here this detail has eliminated such The all aluminum alloy engine (with pressed-in steel liner) features an automatic cam chain tensioner, an air cut off valve (to prevent afterburning in the exhaust muffler) and like on the CBZ and Ambition, an air injection valve to keep tail pipe emissions in check. With all this and the extra cubic capacity, the Karizma engine develops 16.76bhp at 7000rpm and 18.35Nm of torque at 6000rpm. This is about 2bhp and 5Nm more than what the Pulsar 180 makes but the reasoning is that the engine had to be stress free and this fact holds true when out on the roads.

Transmission is via a five-speed gearbox which has had its final drive ratios revised from those in the CBZ. A stronger multi-plate clutch is used to take care of the enhanced power and torque figures. This time round Hero Honda has not faulted and equipped the engine within electric starter even though the kick starter to be actuated requires the front right footrest to be folded out of the way.

ENGINE: TRANSMISSION:

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Marketing is defined by the American Marketing Association (AMA) as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Marketing is a product or service selling related overall activities. [4] The term developed from an original meaning which referred literally to going to a market to buy or sell goods or services. Seen from a systems point of view, sales process engineering marketing is "a set of processes that are interconnected and interdependent with other functions,[5] whose methods can be improved using a variety of relatively new approaches." The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” A different concept is the value-based marketing which states the role of marketing to contribute to increasing shareholder value. In this context, marketing is defined as "the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage." Marketing practice tended to be seen as a creative industry in the past, which included advertising, distribution and selling. However, because the academic study of marketing makes extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience, the profession is now widely recognized as a science, allowing numerous universities to offer Master-of-Science (MSc) programmes. The overall process starts with marketing research and goes through market segmentation, business planning and execution, ending with pre- and post-sales promotional activities. It is also related to many of the creative arts. The marketing literature is also adept at Re-inventing itself and its vocabulary according to the times and the culture.

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Strategy, a word of military origin, refers to a plan of action designed to achieve a particular goal. In military usage strategy is distinct from tactics, which are concerned with the conduct of an engagement, while strategy is concerned with how different engagements are linked. How a battle is fought is a matter of tactics: the terms and conditions that it is fought on and whether it should be fought at all is a matter of strategy, which is part of the four levels of warfare: political goals or grand strategy, strategy, operations, and tactics. Building on the work of many thinkers on the subject, one can define strategy as "a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills – there have to be at least two sides to a conflict. These sides interact, and thus a Strategy will rarely be successful if it shows no adaptability. In game theory, a strategy refers to one of the options that a player can choose. That is, every player in a non-cooperative game has a set of possible strategies, and must choose one of the choices. A strategy must specify what action will happen in each contingent state of the game e.g. if the opponent does A, then take action B, whereas if the opponent does C, take action D. Strategies in game theory may be random (mixed) or deterministic (pure). That is, in some games, players choose mixed strategies. Pure strategies can be thought of as a special case of mixed strategies, in which only probabilities 0 or 1 are assigned to actions.

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Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable advantage. A marketing strategy should be centered on the key concept that customer satisfaction is the main goal. Marketing strategy is a method of focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the choice of target market segments, positioning, marketing mix, and allocation of resources. It is most effective when it is an integral component of overall firm strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena. Corporate strategies, corporate missions, and corporate goals. As the customer constitutes the source of a company's revenue, marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement. A marketing strategy can serve as the foundation of a marketing plan. A marketing plan contains a set of specific actions required to successfully implement a marketing strategy. For example: "Use a low cost product to attract consumers. Once our organization, via our low cost product, has established a relationship with consumers, our organization will sell additional, higher-margin products and services that enhance the consumer's interaction with the low-cost product or service." A strategy consists of a well thought out series of tactics to make a marketing plan more effective. Marketing strategies serve as the fundamental underpinning by marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. A marketing strategy often integrates an organization's marketing goals, policies, and action sequences (tactics) into a cohesive whole. Similarly, the various strands of the strategy , which might include advertising, channel marketing, internet marketing, promotion and public relations can be orchestrated. Many companies cascade a strategy throughout an organization, by creating strategy tactics that then become strategy goals for the next level or group. Each group is expected to take that strategy goal and develop a set of tactics to achieve that goal. This is why it is important to make each strategy goal measurable. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned.

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SWOT Analysis of HERO HONDA 24

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning has been the subject of much research. • • • •

Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses: are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development

Internal and external factors 25

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories: • •

Internal factors – The strengths and weaknesses internal to the organization. External factors – The opportunities and threats presented by the external environment to the organization. -

The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and sociocultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

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Strength 1. Huge brand equity/reputation among customers. 2. Models/products in almost every bike segment. 3. Healthy growth in profits. 4. Brilliant relations with customers and dealers. 5. Strong Resale Value. 6. Strong Research & Development. 7. Quality product for each category. 8. Dedicated Human Resource. 9. Awareness in the people. 10. Highly competitive features neology with international collaboration.

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Weakness 1. 2. 3. 4. 5. 6.

Hero is very much dependent on Honda. Low cash reserves due to massive dividend payouts. Very difficult to cop up if contract discontinues. Virtual absence in the highly lucrative bike segments Imports >31% of its spare parts requirements. Slow to react to market changes- Slow innovation- late entrants into the 125cc segment. 7. Too much dependence on few models. 8. Absence of digital speedometer except Karizma. 9. Absence of variants except Hunk.

Opportunities 1. 2. 3. 4. 5. 6. 7.

Bikes Segment is still a fast growing sector. HHML can still make it up by launching a strong model in 150cc segment. 125cc bike segment - This segment is yet to pick pace. Exports market is yet to be properly exploited. Cruiser bike segment is unexplored by HHML. Variants can be launched to increase the market share. Hero Honda is the most reliable bike manufacturer in India strong brand follower.

Threats 1. 2. 3. 4.

Hero Honda will need to have a bigger presence in the executive segment. It will be a great threat for Hero is the collaboration breaks up. All major bike makers in the world are lining up for India. Absence in 150cc could harm the growth plans of HHML as future lies in the 150cc and 125cc markets. 5. Low cash reserves. 6. Strong competition from Bajaj, Yamaha & TVS.

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Segmentation of Hero Honda 29

Geographical Segmentation Geographic Segmentation calls for division of the market into different geographical units such as nations, states, regions, countries, cities, or neighborhoods. In the South Asian context, geographic segmentation assumes importance due to variations in consumer preferences and purchase habits across different regions, across different countries, and across different states in these countries.

Demographic Segmentation In Demographic Segmentation, we divide the market into groups on the basis of variables such as age, family size, family life cycle, income, occupation, education, religion, race, generation, nationality and social class. One reason demographic variables are so popular with marketers in that they’re often associated with consumer needs and wants. Another is that they’re easy to measure. Even when we describe the target market in nondemographic terms (say, by personality type), we may need the link back to demographic characteristics in order to estimate the size of the market and the media we should use to reach it efficiently.

Psychographic Segmentation Psychographics is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided into different groups on High Resources High Innovation the basis of psychological/personality traits, lifestyle, or values. People within the same Primary demographic group can exhibit very different psychographic profiles. Values and Motivation lifestyles significantly affect product and brand choice of consumers. Religion has a significant influence on values and lifestyles. The strict norms that consumers follow with respect to food, habits or even dress codes are representative examples in this regard. Innovators Low Resources Low Innovation

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Ideals

Achievement Self-expression

Thinker s

Achieve rs

Experie nces

Believer s

Strivers

Makers

Survivors

The four groups with higher resources are:

1.

Innovators:

-

successful, sophisticated, active, “take- charge” people with high

self-esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services. 2.

Thinkers- mature, satisfied, and reflective people who are motivated by ideals

and who value order, knowledge and responsibility. They seed durability, functionality, and value in products. 3.

Achievers- successful, goal-oriented people who focus on career and family. they

favor premium products that demonstrate success to their peers 4.

Experiences- Young, enthusiastic, impulsive people who seek variety and

excitement. They spend a comparatively high proportion of income on fashion, entertainment and socializing.

The four groups with lower resources are:

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1. Believers- conservative, conventional, and traditional people with concrete beliefs. They prefer familiar products and are loyal to established brands. 2. Strivers- trendy and fun-loving people who are resource constrained. They favor stylish products that emulate the purchases of those with greater material wealth. 3. Makers- Practical, down-to-earth, self-sufficient people who like to work with the hands. They seek products with a practical or functional purpose. 4. Survivors- Elderly, passive people who are concerned about change. They are loyal to their favorite brands.

Behavior Segmentation: In behavioral segmentation, marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Decision Roles: - People play five roles in a buying decision: Initiator, Influencer, Decider, Buyer and User. Recognition of the different buying roles and specification of the people who play these roles for specific products and services are vital for marketers. This is especially useful for designing the communication strategy. Behavioral Variables:

-

Many marketers believe behavioral variables-occasions,

benefits, user status, usage rate, buyer readiness stage, loyalty status, and attitude-are the best starting points for constructing market segments.

Market Targeting: Effective Segmentation Criteria 32

To be useful, market segments must rate favorably on five key criteria: 

Measurable, the size, purchasing power and characteristics of the segments can be measured.



Substantial, The segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth going after with a tailored marketing program. It would not pay, for example, for an automobile manufacture to develop cars for people who are less four feet tall.



Accessible, The segments can be effectively reached and served.



Differentiable, The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments.



Actionable, Effective programs can be formulated for attracting and serving the segments.

Evaluating and Selecting the Market Segment Single- Segment Concentration

M1

M2

M3

P1 P2 P3

Selective Specialization

M1

M2

M3

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P1 P2 P3

Product Specialization M1

M2

M3

P1 P2 P3

Market Specialization

M1

M2

M3 P1 P2 P3

Full Market Coverage

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M1

M2

M3

P1 P2 P3

Single Segment Concentration: - The farm equipment division of Mahindra & Mahindra concentrates on tractors, primarily targeted at agricultural markets. The Zodiac brand concentrates on formal shirts for executives and professionals. Especially hospitals focus on specific therapeutic areas such as cancer care, heart specialty, neonatal care and gynecology. Through concentrated marketing, the firm gains a strong knowledge of the segment’s needs and achieves a strong market presence. Furthermore, the firm enjoys operating economies through specializing its production, distribution and promotion. If it captures segment leadership, the firm can earn a high return on its investment. Selective specialization: - A firm selects a number of segments, each objectively attractive and appropriate. There may be little or no synergy among the segments, but each promises to be moneymaker. This multisegment strategy has the advantage of diversifying the firm’s risk. When Procter & Gamble launched crest Whitestrips, initial target segments included newly engaged women and brides to be as well as gay males. Product specialization: - The firm makes a certain product that it sells to several different market segments. A microscope manufacturer, for instance, sells to university, government, and commercial laboratories. The firm makes different microscopes for the different customer groups and builds a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology. Hero Honda used Product Specialization for target market of Hero Honda Splendor.

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Market specialization: - The firm concentrates on serving many needs of a particular customer group. For instance, a firm can sell an assortment of products only to university laboratories. The firm gains a strong reputation in serving this customer group and becomes a channel for additional products the customer group can use. The downside risk is that the customer group may suffer budget cuts or shrink in size. Full market coverage: - The firm attempts to serve all customer groups with all the products they might need. Only very large firms. Such as Microsoft (software market), General motors’ (vehicle market), and coca-cola (nonalcoholic beverage market), can undertake a full market coverage strategy. Large firms can cover a whole market in two broad ways: through undifferentiated marketing or differentiated marketing. Additional considerations Two other considerations in evaluating and selection segments are segment-by-segment invasion plans and ethical choice of market targets. Segment-by-segment invasion plans: - A company would be wise to enter on segment at a time. Competitors must not know to what segment(s) the firm will move into next. Segment-by-segment invasion plans are illustrated three firms, A, B, and C, have specialized in adapting computer systems to the needs of airlines, passenger transport, and goods transport companies. Company A meets all the computer needs of airlines. Ethical choice of market targets: - marketers must target segments carefully to avoid consumer backlash. Some consumers may resist being labeled. Singles may reject single. Serve food packaging because they don’t want to be reminded they are eating alone. Elderly consumers who don’t feed their age may not appreciate products that identify them as “old” market targeting also can generate public controversy.

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Positioning: Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market, the goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. A good brand positioning helps guide marketing strategy by clarifying the brand’ essence, what goals it helps the consumer achieves, and how it does so in a unique way. Everyone in the organization should under- stand the brand positioning and use it as context for making decisions.

Competitive Frame of Reference A starting point in defining a competitive frame of reference for a brand positioning is to determine category membership-the products or sets of products with which a brand competes and which function as close substitutes. Competitive analysis will consider a whole host of factors-including the resources, capabilities and likely intension of various other firms-in choosing those markets where consumers can be profitably served. SEGMENTATION, TARGETING & POSITIONING From the current segmentation, targeting & positioning and consumer surveys we found that our client has targeted the following segments: ♦ Congested areas of urban cities. ♦ Males/Females between the age group of 18-36 ♦ Middle class people , mostly officials & executives The client analysis from our questionnaire it was found that our client has targeted the right segment HHML & TVS is overlooking one feature in bike which is its low maintenance cost and reliability (i.e. less chances of breakdown) which is absent in its competitors. Therefore, in order to meet the sales target, two options are available with the client; one is to redesign the bike and second is to reposition the bike as “Bike with one time investment”. Since redesigning of bike may involve a big task and huge investment therefore we recommended repositioning the bike.

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Product:Core Product: The core product or benefit of Hero Honda Splendor is Traveling and saving the time by reach on desire place at right time. Basic Product: The basic product of Hero Honda splendor are Engine, Handle, Shockers, Wheels, Gear box and chain set etc. Expected Product: The expected products of Hero Honda splendor are: 1. It should be 5 gear boxes. 2. It should be 90 Kmpl mileages. 3. It should be 120 Km/hour Maximum speeds. 4. It should be disk brake or power brake. 5. It should be steel body. Augmented Product: The augmented products of Hero Honda Splendor are: 1. It provides monthly check up for decrease the pollution. 2. It provides fast service of the product.

Pricing Strategy: Penetration Pricing: The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV. Hero Honda Used penetration pricing strategy because that time Hero Honda use National Segment and low income persons so they used penetration strategy.

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Price Skimming: Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented. Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.

Promotion: Below the Line Promotion: -

‘Below The Line is a common technique used for touches and feel products. Those consumer items where the customer will rely on immediate information than previously researched items. Below The Line techniques ensure recall of the brand while at the same time highlighting the features of the product. Above The Line Promotion: Above the line (ATL) is an advertising technique using mass media to promote brands. Major above-the-line techniques include TV and radio advertising, print advertising and internet banner ads. This type of communication is conventional in nature and is considered impersonal to customers. The ATL strategy makes use of current traditional media: television, newspapers, magazines, radio, outdoor, and internet. Hero Honda used Above the Line Promotion because in the Above the Line promotion co. members used advertisement through Radio, T.V., Newspaper and Other media communications.

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Place: Geographical Placing: - Geographical placing of the product has divided into 4 markets and these are: 1. Local 2. National 3. Regional 4. International Hero Honda used National Market for sale the Hero Honda Splendor.

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Ratios Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio Payout ratios Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) Component ratios Material cost component (% earnings)

(Rs crore) Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 102.16 111.74 111.77 121.35 110.00 137.40 173.52 173.52 793.22 171.52

58.50 67.55 64.19 73.24 20.00 87.79 190.33 190.33 617.23 188.33

42.09 50.12 48.47 56.50 19.00 68.50 149.55 149.55 518.06 147.55

37.26 44.26 42.96 49.96 17.00 60.19 123.70 123.70 496.07 121.70

43.44 49.18 48.64 54.38 20.00 69.21 100.62 100.62 436.64 98.62

17.32 16.11 14.00 14.00 58.87 64.41 75.07

14.22 12.75 10.30 10.84 30.73 33.72 43.33

13.22 11.67 9.27 9.59 28.14 32.41 41.57

12.13 10.72 8.58 8.84 30.11 34.73 43.48

15.84 14.53 11.06 11.19 43.16 48.34 60.31

0.01 0.01 98.13 6.29

0.02 0.02 97.97 5.34

0.04 0.04 95.76 5.89

0.06 0.06 93.73 6.01

0.09 0.09 91.53 6.45

0.57 0.57 0.49 42.80

0.46 0.46 0.31 47.53

0.48 0.48 0.31 42.82

0.56 0.56 0.39 47.48

0.48 0.48 0.35 50.65

115.04 105.95 -25.86 -15.06

36.45 31.95 60.01 65.36

45.86 39.34 47.19 55.65

46.29 39.80 46.62 55.06

46.88 41.93 47.51 53.63

0.02 255.15 218.53

0.05 142.76 113.15

0.13 108.14 84.76

0.18 93.44 73.50

0.18 92.33 70.70

68.32

71.73

72.16

73.24

70.45

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Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%)

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 4.80 4.72 4.86 5.11 4.63 2.13 2.01 2.35 2.66 2.90 1.66 0.79 0.67 1.10 1.69 0.65 0.82 0.80 0.77 0.78 59.98 59.98 59.98 59.98 59.98

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What is Consumer Behavior? Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and

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economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the rediscovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalization, customization and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. Each method for vote counting is assumed as social function but if Arrow’s possibility theorem is used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonic, unanimity, homogeneity and weak and strong Pareto optimality. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer.

What is marketing analysis? A Market analysis is a documented investigation of a market that is used to inform a firm's planning activities particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.

Dimensions of market analysis David A. Aaker outlined the following dimensions of a market analysis Market size (current and future) 45

• • • • • •

Market growth rate Market profitability Industry cost structure Distribution channels Market trends Key success factors

The goal of a market analysis is to determine the attractiveness of a market, both now and in the future. Organizations evaluate the future attractiveness of a market by gaining an understanding of evolving opportunities and threats as they relate to that organization's own strengths and weaknesses. Organizations use the findings to guide the investment decisions they make to advance their success. The findings of a market analysis may motivate an organization to change various aspects of its investment strategy. Affected areas may include inventory levels, a work force expansion/contraction, facility expansion, purchases of capital equipment, and promotional activities Elements Market size The most common measure of market size is the sum of the revenues of its participants. The following are examples of information sources for determining market size: • • • •

Government data Trade association data Financial data from major players Customer surveys

Market trends Changes in the market are important because they often are the source of new opportunities and threats. Moreover, they have the potential to dramatically affect the market size. Examples include changes in economic, social, regulatory, legal, and political conditions and in available technology, price sensitivity, demand for variety, and level of emphasis on service and support.

Market growth rate A simple means of forecasting the market growth rate is to extrapolate historical data into the future. While this method may provide a first-order estimate, it does not predict important turning points. A better method is to study market trends and sales growth in complementary products. Such drivers serve as leading indicators that are more accurate than simply extrapolating historical data.

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Market segments Markets are not uniform. Therefore it is also important for investors to identify and evaluate the various segments that make up the total market. This analysis helps organizations determine which areas account for the greatest share of the market's growth and are more susceptible to change. This information, in turn, helps them pinpoint the most promising opportunities within the overall market and guides the choice of specific investments. Market profitability While different organizations in a market will have different levels of profitability, they are all similar to different market conditions. Michael Porter devised a useful framework for evaluating the attractiveness of an industry or market. This framework, known as Porter's five forces, identifies five factors that influence the market profitability: • • • • •

Buyer power Supplier power Barriers to entry Threat of substitute products Rivalry among firms in the industry cost structure

The cost structure is important for identifying key factors for success. To this end, Porter's value chain model is useful for determining where value is added and for isolating the costs. The cost structure also is helpful for formulating strategies to develop a competitive advantage. For example, in some environments the experience curve effect can be used to develop a cost advantage over competitors. Distribution channels Examining the following aspects of the distribution system may help with a market analysis: • • •

Existing distribution channels - can be described by how direct they are to the customer. Trends and emerging channels - new channels can offer the opportunity to develop a competitive advantage. Channel power structure - for example, in the case of a product having little brand equity, retailers have negotiating power over manufacturers and can capture more margins.

Success factors The key success factors are those elements that are necessary in order for the firm to achieve its marketing objectives. A few examples of such factors include: •

Access to essential unique resources 47

• • •

Ability to achieve economies of scale Access to distribution channels Technological progress

It is important to consider that key success factors may change over time, especially as the product progresses through its life cycle. Applications The literature defines several areas in which market analysis is important. These include: sales forecasting, market research, and marketing strategy. Not all managers will need to conduct a market analysis. Nevertheless, it is important for managers that use market analysis data to how analysts derive their conclusions and what techniques they use to do so. Consumer Markets: at less than 31 two- wheeler per 1,000 citizens in 2005, India is a poorly penetrated market for motorcycles- even afteraccunting for a relatively low per capita income of around US$,3100 per year on purchasing power parity (PPP) basis. Indonesia, whose PPP per capital income is just 15% grater than India‘s has 83 twowheelers per 1,000people. And Vietnam, despite having a 13% lower per capital income, has penetration of 122 two wheelers per 1000. Malaysia and Thailand are at 223 & 264 two wheelers per 1000.The fact is that with the Indian economy growing close to 8% CAGR in the last three years, three is enormous headroom fro increasing two wheelers penetration in the country. What this needs are the products at different price Points, sales and service set- ups across the length and breadth of the country, which are backed by attractive financing options to make two wheelers affordable to the vast majority of the population. Hero Honda motors have all three levers in places to drive this change and expand the market. Out view is that motor cycle demand in India will grow at around 15% per year over the coming years. It will there for be our endeavor to grow at a pace significantly higher that the market growth.

Two-wheelers: Overall industry sales of tow-wheelers increased by 15% from 6.57 million in 2005-06 to 7.57 million in 2006-07. As in the previous years, motorcycle continues to dominate the two-wheeler market. It grew at 18.8 %, from 5.2 million in 2005-06 to 6.2 million in 2006-07 consequently, the share of motorcycle in two-wheeler market further increase from 79% in 2005-06 to 82% in 2006-07. The industry sale of two-wheelers: Motorcycle while the motorcycle as a whole grew at 18.8% in 2007-08, Hero Honda motors sales of motorcycle increased 31.9%, which resulted in the company’s market share improving from 27.8% in 2005-06 to 30.8% in 2006-07.

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Research & Development: Technology leadership is the first step towards market leadership. Recognizing this, Hero Honda motors have over the years built a completely integrated R&D center at Japan. With staff strength of over 300 engineers, this world class center is equipped with state – of- the – art facilities encompassing engine and vehicle design and testing, analysis, component testing, electrical and electronics laboratory materials laboratory and trial manufacturing.

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KEY POLICIES Hero Honda, our goal is not only to sell you a bike, but also to help you every step of the way in making your world a better place to live in. Besides its will to provide a highquality service to all of its customers, Hero Honda takes a stand as a socially responsible enterprise respectful of its environment and respectful of the important issues. Hero Honda has been strongly committed not only to environmental conservation programmers but also expresses the increasingly inseparable balance between the economic concerns and the environmental and social issues faced by a business. A business must not grow at the expense of mankind and man's future but rather must serve mankind.” We must do something for the community from whose land we generate our wealth." A famous quote from our Worthy Chairman Mr.Brijmohan Lall Munjal.

Environment Policy We at Hero Honda are committed to demonstrate excellence in our environmental performance on a continual basis, as an intrinsic element of our corporate philosophy. To achieve this we commit ourselves to: Integrate environmental attributes and cleaner production in all our business processes and practices with specific consideration to substitution of hazardous chemicals, where viable and strengthen the greening of supply chain. Continue product innovations to improve environmental compatibility. Institutionalise resource conservation, in particular, in the areas of oil, water, electrical energy, paints and chemicals.

Quality Policy Excellence in quality is the core value of Hero Honda's philosophy. We are committed at all levels to achieve high quality in whatever we do, particularly in our products and services which will meet and exceed customer’s growing aspirations through:

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• Innovation in products processes and services. • Continuous improvement in our total quality management systems. • Teamwork and responsibility

Safety Policy Hero Honda is committed to safety and health of its employees and other persons who may be affected by its operations. We believe that the safe work practices lead to better business performance, motivated workforce and higher productivity. We shall create a safety culture in the organization by: • Integrating safety and health matters in all our activities. • Ensuring compliance with all applicable legislative requirements. • Empowering employees to ensure safety in their respective work places. • Promoting safety and health awareness amongst employees, suppliers and Contractors. • Continuous improvements in safety performance through precautions besides participation and training of employee GLOBAL PRESENCE •

Internationally competitive R&D capabilities.

•

Proven technological know how

•

Cost and quality balance

•

Product in sync with market need

•

Warranty and trained support

Supply chain management Partners with globally trusted shipping lines. • Efficiently packed, factor stuffed cargo shipped in CBU, SKD or CKD modes • Specially designed export packing procedure fowled • Fully container (FCL) or less than container load (LCL) dealt with safety and security •

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Industry Concept of Competition

An industry is a group of firms that offer a product or class of products that are close substitutes for one another. Industries are classified according to number of sellers; degree of product differentiation; presence or absence of entry, mobility, and exit barriers; cost structure; degree of vertical integration; and degree of globalization. Number of sellers and degree of differentiation: 53

The starting point for describing an industry is to specify the number of sellers and whether the product is homogeneous or highly differentiated give rise to four industry structure types: 1. Pure monopoly only one firm provides a certain product or services in a certain country or area (a local water or cable company). An unregulated monopolist might charge a high price, do little or no advertising and offer minimal service. If partial substitutes are available and there is some danger of competition, the monopolist might invest in more service and technology. A regulated monopolist is required to charge a lower price and provide more service as a matter of public interest. 2. Oligopoly a small number of (usually) large firms produce products that range from highly differentiated to standard. Pure oligopoly consists of a few companies producing essentially the same commodity (oil, steel). Such companies would find it hard to charge anything more than the going price. If competitors match on price and services, the only way to gain a competitive advantage is through lower costs. Differentiated oligopoly consists of a few companies producing products (autos, cameras) partially differentiated along lines of quality, features, styling, or services. Each competitor may seek leadership in one of these major attributes, attract the customers favoring that attribute, and charge a price premium for that attribute. 3. Monopolistic competition many competitors are able to differentiate their offers in whole or in part (restaurants, beauty shops). Competitors focus on market segments where they can meet customer needs in a superior way and command a price premium. 4. Pure competition many competitors offer the same product and service (stock market, commodity market). Because there is no basis for differentiation, competitor’s process will be the same. No competitor will advertise unless advertising can create psychological differentiation (cigarettes, beer) in which case it would be more proper to describe the industry as monopolistically competitive. An industry competitive structure can change over time. For instance, the media industry has continued to consolidate, turning from monopolistic into a differentiated oligopoly.

Hero Honda Competitors The Pulsar 220 which is currently the fastest bike in India faces a stiff challenge from new models on speed & style. Just after 2 months release which created a quite a bit stirr among the bike enthusiasts across the country by giving them the fastest Indian, Bajaj’s Pulsar 220 DTSi can achieve a speed of 144 km an hour, almost 20 km more than its predecessor, and can accelerate from 0 to 60 km in four seconds. Bajaj maybe the brand for years in scooter making in India and true enough it has set a mark in motorcycle industry too but one should not forget that Yamaha and Honda have

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been the pioneers in motorcycle industry for quiet long it was their absence which gave bajaj time to stabilize but as they are back with some amazing concepts with user friendly price they already have raked bajaj's market share plus bajaj has been cashing too long on the pulsar model while all the models from Yamaha are distinctive and have a charisma of their own which brings on freshness to the stale Indian market. 150cc bike for over one lakh bucks? And huge sales among that? Yamaha has to seriously consider Indian market as a highest priority n should release much better looking bike than r15/fazer. It seems yamaha is treating Indian market as dump and hence these kind of bikes. The biking industry is in for a toss. Yamaha, the true blue biker's choice is sending everybody in for a spin. The new bred Yams are not just good looking, but also have the technology & hardware to go for.Bajaj picked up from where Yamaha left in terms of performance bikes in India. But with the return of turning forks with line up like R1, R15, FZ16, Fazer & FZS the competition is tougher than ever for Bajaj Pulsars. Also with the add on kits now available for the R15 & FZ16, the performance bar will be raised. If you see the history of Yamaha. Yamaha's all bikes after RX 100 were not very successful in Indian market. Once technology shifted from 2 strokes to 4 stroke Yamaha lose his sheen in the Indian Market. They have launched so many bikes after RX 100 but all of them were not very successful. Same story is with Hero Honda. Hero Honda is very successful with fuel economic bike but not with Power bikes. I think both of them will not give stiff competion to Bajaj. Bajaj has already made their reputation in Power bike. I can see Bajaj going down in the coming years with Yamaha especially entering this market very aggressively with performance based bikes where it is giving real tough competion out there but then people remember one thing that Yamaha has a history of giving a good race bikes all these years may be not in India but the concept is coming and who better than yamaha can deliver such kind of bikes, Yamaha stands for performance to the max and they surely are on a roll and will get to the top spot with new models to come from them the huge success of Pulsar.

Yes I think the race to being the fastest Indian is getting hotter as the day goes by, most of the bike companies are vying this spot like, Yamaha which has significantly sprung back like a phoenix for that matter and are giving stiff competition for everyone in the bike segment and even Karizma from Hero Honda is a great bike and gives great performance. The forte which Bajaj Pulsar was holding for a long time would surely pass on to others who are coming up with good versions in this category. According to me Yamaha is the one who will dethrone Bajaj from their top position in this segment. No I don't see this happening as Bajaj pulsar has time and again proved themselves in this 55

performance based biking for a long time in India, and also with that performance they also come up with a good mileage tag and this is where there are many takers for Bajaj pulsar, whereas Karizma and the Yamaha series doesn't give one a great mileage for that matter, so it would be very difficult to give competition for Bajaj Pulsar in this regard.

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Porter five forces analysis Porter's Five Forces is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very 57

unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero. Three of Porter's five forces refer to competition from external sources. The remainder is internal threats. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average. Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. This five forces analysis is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.

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The five forces: The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will fall towards zero (perfect competition). •

• • • • • • • •

The existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily. Economies of product differences Brand equity Switching costs or sunk costs Capital requirements Access to distribution Customer loyalty to established brands Absolute cost Industry profitability; the more profitable the industry the more attractive it will be to new competitors

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The intensity of competitive rivalry For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. • • • • •

Sustainable competitive advantage through innovation Competition between online and offline companies; click-and-mortar -v- slags on a bridge. Level of advertising expense Powerful competitive strategy The visibility of proprietary items on the Web used by a company which can intensify competitive pressures on their rivals.

The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives: • • • • • • •

Buyer propensity to substitute Relative price performance of substitute Buyer switching costs Perceived level of product differentiation Number of substitute products available in the market Substandard product Quality depreciation

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. • • • • • • • • • • •

Buyer concentration to firm concentration ratio Degree of dependency upon existing channels of distribution Bargaining leverage, particularly in industries with high fixed costs Buyer volume Buyer switching costs relative to firm switching costs Buyer information availability Ability to backward integrate Availability of existing substitute products Buyer price sensitivity Differential advantage (uniqueness) of industry products RFM Analysis

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The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources. • • • • • • • •

Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Impact of inputs on cost or differentiation Presence of substitute inputs Strength of distribution channel Supplier concentration to firm concentration ratio Employee solidarity (e.g. labor unions) Supplier competition - ability to forward vertically integrate and cut out the buyer.

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Customer Value Analysis towards Hero Honda Companies succeed by providing superior customer value. And value is simply 'quality' whichever way the customer defines it - offered at the right price. While this strategic principle is simple, it is also very powerful. For survival and success, it is far more important to commit yourself to superior quality and customer value than to commit yourself to attaining financial goals. Superior customer value is the best leading indicator of market share and competitiveness (think Hero Honda). And market share and competitiveness in turn drive the achievement of long-term financial goals such as profitability; growth and shareholder value. The first step in achieving leadership in market-perceived quality and value is to understand what causes customers in your targeted market to make their decisions – to decide that one product offers better value than another. Understanding that is the central objective of customer value analysis. The factors that contribute to quality in the customer's mind need not be mysterious. Customers will gladly tell you what they are. A customer value analysis uses information from customers to show how customers make decisions in your marketplace. With this information, you have the means to know what to change to ensure that more of them will buy from you. Some companies focus on a few (sometimes, even just one) customers to deliver extraordinary value. Particularly when they are dealing with the world's premier corporations. For example, Abhishek Industries in Ludhiana, the flagship company of the Trident Group, has built an outstanding record for quality, consistency and on-time delivery with Wal-Mart. In turn, Wal-Mart has recognized Abhishek Industries as the International Supplier of the Year 2001. At the core of this recognition is customer-perceived quality/value. To drive a company wisely, we need a few clear, widely-accepted principles: •

Companies succeed by providing superior customer value.

•

Companies should track the customer value they provide through a method like customer value analysis.

•

Companies should use a method of business planning that allows for 'action learning', such as the war-room method of conducting business meetings.

•

Companies need a comprehensive strategic navigation system to provide data on both financial and customer value performance.

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RESEARCH METHODOLOGY The methodology used in conducting the research work on HERO HONDA with major emphasis on its sales and marketing strategies involve the following steps: Why I have selected HERO HONDA only? I have selected Hero Honda for my summer training because it is the company that is growing day by day. It has maximum market share with comparison to its competitors. And it is the company that gives highest sales and it is also the highest two-wheeler manufacturer. Defining the problem and deciding research objectives: Defining the objective is the most important part of any study process. Proper defining of the problem is a must for proceeding further with the research process. The type of study to be carried out, the questions to be raised, the sampling procedure to be followed, and the data to be collected, all depends on a correct understanding of the problem. Also, by clearly focusing on the real problem, the research job can be simplified and completed with the minimum cost, effort and data. Identified problem or the objectives of the research discussed in the report are: 1. Developing the research plan: In this a plan was developed about how to collect the require information i.e. whom to contact for gathering the relevant data. Data is the foundation of all research. It is the raw material with which a researcher functions. Therefore, it requires great care to select the sources of data. Data, or facts, may be obtained from several sources. Data sources can either be primary or secondary.

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A. Secondary data: The sources from which secondary data was collected: •

Press releases of the company.

•

Newsletters and In-house journals.

•

Brochures and detailed descriptive leaflets

•

Magazines like Business World, Outlook, Auto India, etc.

•

Websites such as www.herohonda.com, www.google.com. These were the sources from which secondary data has been gathered. Most of the information presented in this report was extracted from the above data sources.

B. Primary data: Collection of primary data was conducted by visiting the people

personally for

the preparation of the report. 2. Research approach: It means the way by which the information was collected. Visiting the various places of Delhi, getting the questionnaire filled by different individuals. Beside this, frequent visit to the showrooms of the company was of great help to conduct the analysis and research work. 3. Contact methods: Instrument or Data collected Forms: It is the method by which data is gathered. It could be done through various instruments like questionnaires, observations, getting information from the staff members of the agency, contacting to the motor mechanics was sufficient enough to conduct the study. 4. Collection of information: The primary information was collected by face-to-face and direct interviews with the peoples and the customers. They provide the relevant information regarding the profile of the company as compared to the other company in the Indian market. Most employees suggested visiting company’s web site, as it was not possible for them to spare time from their busy schedules.

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5. Analyzing the information: The data collected was carefully analyzed. The research and analysis of the information has been done on the basis of various sales and marketing strategies adopted by the company during its tenure.

6. Reporting and conclusions and recommendations: This is the most vital part of the work undertaken. After collection and analysis of data, it was recorded in the form as prescribed. The major part of the report is the findings. The finding also includes charts, tables and diagrams etc. The report also mentioned the limitations of the project undertaken. Then conclusion has been drawn out of the findings and various recommendations have been given at the end of the report. Certain tables on the basis of which the findings were made have been included in the appendices section followed by the bibliography.

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SCOPE OF THE STUDY

Hero Honda is spreading its wings and widening its business horizon to reach and serve customers at new centers in the year ahead. The company services are backed by a highly motivated and technology driven team to achieve customers need, product expertise and geographic reach. The study is oriented towards the concept of different brands offered by Hero Honda and its competitors to its customers. The company has endeavored to move fast in providing market solution, which maximize customer needs and convenience, using multiple delivery channels in composing the agency network, service centers, lower service cost and increased efficiency.

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LIMITATIONS OF THE STUDY

As said a basic research was conducted at the company to enable the company to assess how far the customers are satisfied with product and services of Hero Honda. During the course of the study the following limitations were observed:  The method will be unsuitable if the number of persons to be surveyed is very less as it will be difficult to draw logical conclusions regarding the satisfaction level of customers.  Interpretation of data may vary from individual depending on the individual understanding the product features and services of the company.  The method lacks flexibility. In case of inadequate or incomplete information the result may deviate.  It is very difficult to check the accuracy of the information provided.

 Since all the products and services are not widely used by all the customers it is difficult to draw realistic conclusions based on the survey.

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FACTS & FIGURES Sale of Hero Honda in Rural area and Urban area In the survey of rural as well as urban area it is found that in rural area the sale of Hero Honda is less but in urban area it gives very exiting result. This may be because of the conditions of roads there. Area

% of Respondents

Urban Area

72

Rural Area

28

FAMILY INCOME OF RESPONDENTS The income distribution of the families of respondents shows that the bike, which was considered earlier to be out of range for middle class families is now becoming very fast an article for them. Family income (Rs.)

% of Responses

5000-10000

10

10000-15000

46

15000-20000

36

Above 20000

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FACTOR PROMPT TO BUY HERO HONDA It should be stated that the performance is the most important factor followed by look. The possible combination and corresponding number of respondents are shown in the table below. Features

% of respondents

Performance

18

Look

11

Availability

5

Price

1 69

Maintenance

4

Brand image

5

After sale service

6

HOW THE RESPONDENT DID CAME TO KNOW ABOUT THE BIKE? The best media of advertisement (according to which the respondents came to know about the bike) is the ads on television. Friends & magazine are the other sources. Only 2 % of them came to know through hoardings. Medium of Advertisement

% of Respondents

Television

46

Magazine

36

Friends

14

Hoardings

02

Others

02

PURCHASE OF BIKE Almost 94 % of the respondents say that they have purchased the bike by cash. Only 6% of the respondents say that they have purchased their bike through bank loans.

Purchase Type

% of Respondents

Cash Purchase

94

Hire Purchase

06

70

DECISION INFLUENCED BY Maximum no. of the Respondents have taken decision to buy the bike on their own. After that their friends and parents influenced them.

Influencer

% of Respondents

Parents

16

Self

54

Friends

18

Relatives

08

Others

04

RATING OF BIKES 42% of the respondents have rated as the best bike they have used, but it is facing a stiff competition from Pulsar & Fierro. Bikes

% rating by Respondents

Splendor

38

Passion

08

Ambition

06

Pulsar

28

Fierro

14

Others

06

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Findings: The Indian two wheeler industry today offers more than 70 models to a buyer. And manufacturers are launching new models every day…… More than 20 models were launched in the last year. Top this up with a variety of promises ranging from free gifts and financial schemes to the attractive looking models and jingles in the advertisement. In this whirlwind of speed and confusion maze, choosing the right pair of wheels can be a trying experience for the common man. In such a situation, the buyer has to first narrow down his search to a given category of two wheeler. A lady doctor may decide to look only at gearless scooters while a collegian with a rich father may only look at premium bikes. What next……? Which bike should I buy? A bike with more power…… better looks…… more reliability…… errrr! Lesser problems per vehicle for a given model could be a good enough reason to go for the model…..? Yes! But, within my selected category of premium bikes… So which premium bike has lesser problems? Do new launches have more problems than older ones? Naa…! Does PPM score depend on who manufactured the vehicle…? See for yourself!

Manufacturer-wise Problems per 100 vehicles (PP100V) scores in Survey

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Sr.No.

Vehicle

PP100V

1

Honda

146

2

LML

165

3

Hero Honda 176

4

Kinetic

183

5

TVS

196

6

Bajaj

196

7

Yamaha

223

Executive bikes scored less problems than economy bikes…however simpler machines like scooters have the fewest problems This year we classified motorcycles by the market as premium, executive and economy…... Amongst the bikes, we found the number of problems were lowest in executive bikes and highest in economy bikes…. Executive bikes (179 PP100V), then premium bikes (209 PP100V) and last were economy bike (230 PP100V).

ENGINE Trouble. Splendor the largest selling executive bike from Hero Honda has reported the lowest number of problems with ENGINE (37 PP100V) closely followed by the newly launched geared scooter Eterno (38 PP100V) from Honda.

Simplicity is the beauty

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TRANSMISSION WOES: Gearless scooters/scooterettes have lowest number of TRANSMISSION problems. Complains who fulfilled the promised performance and how much…? S No.

Manufacturer

% models above category average

1

Honda

100

2

LML

100

3

Hero Honda

67

4

Bajaj Auto

43

5

TVS

33

6

Yamaha

33

7

Kinetic

25

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RECOMMENDATION It is clear from the report that the Hero Honda Motors is facing cutthroat competition; hence the company’s manager has to be fast and smart so as to understand the customers needs. They have to come up with various new techniques or schemes to be able to cater to different categories of people. Customers are becoming more wise day by day and they are now willing to know all the in and out of the things happening around them. This has led to increased customer awareness. We can analyze that if the brand is reputed that doesn’t win the customers delight unless it’s provided same value-added features or else we can say competitive advantage. •

For gaining a competitive advantage it has to continuously compare the product and services with the competitors and find the weak area of the rivals for gaining competitive advantage.

•

Surveys revealed that awareness of Hero Honda Motors is low among its target segment for creativity awareness. The company has to take some keen step for promotional activity.

•

The company should regularly send the sales person who has good communication skill to the customers so that they should be aware about the product and services in market and know the quality of the services offered by the company.

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QUESTIONNAIRE FOR THE SURVEY OF MOTORBIKES. 1. Name __________________________________________________ 2. Address

_____________________________________________ _____________________________________________

3. Phone No. Mobile No.

___________________ ___________________

4. Age

18 – 22 years [ ] 28 – 32 years [ ]

23 – 27 years [ ] above 32 years[ ]

5. Do you have any bike in your house? Yes

[ ]

No

[ ]

6. If No, Do you have any plan to buy it in next 6 months? Yes

7.

[ ]

No

[ ]

If Yes, Name and Company of the Bike. ________________________________________________________.

8. Which Bike does you like most? ________________________________________________________.

9. Rank the Motorbike manufacturing company. 1. 2. 3. 4.

Hero Honda Yamaha Bajaj L.M.L.

[ [ [ [

] ] ] ]

10. Do you remember any advertisement of Hero Honda? ________________________________________________________.

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11. What should the price range in your opinion? Splendor +

___________________

Sufficient

[ ]

CD dawn

___________________

Sufficient

[ ]

Passion +

___________________

Sufficient

[ ]

CBZ

___________________

Sufficient

[ ]

Karizma

___________________

Sufficient

[ ]

12. Any new facilities or any improvement that you want. ________________________________________________________ _________________________________________________________________ _______________________________________________. 14. Give remark to your old Bike Company. Good [ ] Excellent [ ] Don’t have a Bike

Very Good Out standing

[ ] [ ]

Very Good Out standing

[ ] [ ]

[ ]

15 Give remark to Hero Honda. Good [ ] Excellent [ ] Don’t have a Bike

[ ]

Thanks

Surveyed by: ……………………… Checked by: ………………………

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BIBLIOGRAPHY BOOKS:  Name of the book Author

:- Marketing research : - Dr. C.B.Mamoria

 Name of the book Author

:- Marketing research : - Mr. Kothari.

MAGAZINES, JOURNALS AND NEWSPAPERS:  Journals published by Hero Honda, Annual Report

INTERNET:    

www.herohonda.com www.google.com www.scribd.com www.slideshare.com

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