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Hero Motrcorp

In: Business and Management

Submitted By kumu777
Words 1941
Pages 8
Table of contents
Executive summary 2
Companies profile and History. 3
The company’s proposition. 3
Chronology in introducing products, and other landmarks 3
Plants for manufacturing: 4
Land marks 4
Choosing Brand 5
Main Competitors 6
SWOT analyze Hero Motor Corp 6
Macro Environment 9
Consumer Behaviour. 9
The buying decision behavior for buying 10
Marketing plan, strategy (BCG’s and SBUs 10
Pricing 11
Channels of distribution 11
Promotion Mix 12

Executive summary

Company background

Companies profile and History.
Hero MotoCorp Limited is the World's single largest two-wheeler motorcycle company. The com-pany has three manufacturing facilities in Dharuhera, Gurgaon at Haryana and Haridwar at Uttarak-hand. The company head quarter is based in New Delhi, India .It started manufacturing bicycles, in 1984 the company was incorporated in a joint venture with Honda and given the name Hero Honda Ltd. Honda was making the R&D work and Hero was manufacturing.
The company’s proposition.
In the 1980s, Hero Honda grabbed everyone's attention with its campaign 'Fill it - Shut it - Forget it'

Chronology in introducing products, and other landmarks

1985 : CD100
1989: Sleek
1991: CD 100 SS
1995 : Splendor
1999: Hero Honda CBZ first 150 cc in Indian market
2001: Passion and joy
2002: Dawn and Ambition
2003: CD Dawn, Splendor+ and Passion Plus, and Hero Honda Karizma, the industry's first 223cc motorcycle.
2004: Ambition 135 and CBZ
2005: Super Splendor, CD Deluxe, Glamour and Achiever
2006: company started making scooter 100cc gearless
2007: NXG, CD Deluxe, Splendor NXG, CD Deluxe, Passion Plus and Hunk, Commemorative Splendor
2008: Passion Pro (100 cubic capacity-4 Stroke), CBZ-Extreme (150 cubic capacity - 4 Stroke), Pleasure New Aesthetics, Splendor NXG (Self Start), CD Deluxe (Self Start), Glamour FI, Glamour (Carb) and HUNK Special Edition
2009-10: refreshed Glamour and Glamour FI. They introduced the New Hunk, Super Splendor and Splendor Pro
2010-2011 refreshed Glamour and Glamour FI. They introduced the New Hunk, Super Splendor and Splendor Pro
Plants for manufacturing:
1985 Dharuhera plant, 1997 Gurgaon in Haryana, 2007-2008 Haridwar in Uttarakhand.
Land marks 2008 to 2009: The Company increased the installed capacity of Motorized 2 wheelers up to 350CC engine by 200000 Nos. to 5400000 Nos. In 2010-2011 they breached the landmark 5 million figure cumulative sales in a single year.
2010-2011:
The Indian Promoter Group and Honda Motor Co Ltd, Japan (Honda) entered into a Share Transfer Agreement (the Agreement) on January 22, 2011. As per the terms of the Agreement, Honda had agreed to transfer its entire shareholding of 26% in the Company to the Indian Promoter Group, bringing an end to the joint venture between the two promoter groups of the company. The acquisi-tion was completed on March 22, 2011.
The company is now owned and controlled entirely by the Munjal Family headed by Brijmohan Lall Munjal which in fact was the family who started the bicycle production.
The stop of the joint venture has the effect that there only will be a R&D corporation between Hero and Honda up to the year 2014. From then R&D will be done by Hero Motocorp Ltd.
The main reason for breaking up was high PTC costs 2.7 % of its nets sale to went to Honda, and there was an agreement of not entering export. Below is shown the present owner ship Exhibit 1
Choosing Brand As we can see below Hero has bikes for all the segments except cruising or luxery, in this assign-ment we have chosen to focus on the brand Karizma R, even though Splendor is the biggest seller for Hero supplying 50% of turnover. Hero Honda did in 2007 release a new, improved and better version of its existing model Karizma from 2003, it is called Karizma R. The new Hero Honda Ka-rizma R is more efficient with its bigger fuel tank and better mileage of 45 kmpl in the city and around 51 on the highway, due to its revolutionary PGM Fi technology. Exhibit 2
Main Competitors

SWOT analyze Hero Motor Corp
What is the strength, weakness, opportunity’s and threats for Hero Motor Corp,
Strengths
Huge brand equity/reputation among customers
Research and development- joint venture with Japanese HONDA
Models/products in almost every bike segment
Healthy growth in profits. Se exhibit 5
Good in relations with customers and dealers.
Strong Resale Value.
International Technology with international collaboration. Advantage against foreign competitor who must pay heavy duty. High market share se exhibit 3
Weakness
Hero is very much dependent on Honda, and from 2015 no R&D from Honda !
Low cash reserves due to massive dividend payouts
No products in luxury bike segments
Depending on Honda not getting the last technology (HONDA keep for them selfe)
Not into the 125cc segment

Opportunities
Bikes Segment is still a fast growing sector
Get into the 125cc bike segment
Can now enter export more strongly before they were bound by contract with Honda not to enter.
Luxury bike segment like Harley Davidson unexplored, could increase revenue.
Variants and new editions like Karizma R, can be launched to increase the market share, and keep products in growth cycle.
Hero Honda is the most reliable bike manufacturer in India
Strong brand follower

Threats
Hero Honda should have a bigger presence in the executive segment, since this segment is increasing in India, other competitors entering will improve their company Brand.
All major bike makers want to enter India’s big market.
Low cash reserves (current ratio low)
Strong competition from Bajaj, Yamaha & TVS

Exhibit 4 Exhibit 5 Indian two wheeler Industri, (2012, Februar). Icra Rating Feature

Macro Environment
Consumer Behaviour.
Consumer behavior according to (Kotler, 2011), there are 4 factors influencing consumer behavior. To be able to target a segment you need to identify which factors are likely to influence consumer behavior when choosing between brands.
• Culture factors
• Social factors
• Personal factors
• Psychology factors
For buying the particular brand “Karizma” the most important factors are:
• Culture: social class, which social class consumer belongs to has influence on the consumer behavior. The product Karizma R is in the premium price range so it might be to expensive product to buy even for middle class, even though payment schemes is possible.
• Social: Reference group: Do consumer strive to be a part of a particular reference group and are buying a product like Karizma R in tune with that, who is endorsing the product in commercials (Hero is sponsors for an IPL team). Many young potential consumers strive for a life like a cricket player.
• Personal : The role and status of consumer can decide if he wants to purchase a Karizma if the product is to low in status he might not Purchase. What is the consumers economic sta-tus, which life cycle is he at. In this case consumer is expected to be in a before marriage stage in lifecycle, marriage often mean that car is more of a solution than Bike at least at the upper class
• Psychology: Attitudes and beliefs, The brand Hero is more important than the brand Kariz-ma, because attitudes and beliefs are created over a long period so if the reputation of Hero is so high in India that a belief has settled at consumer, that Hero always makes quality. The old proposition 'Fill it - Shut it - Forget it' can influence potential buyer’s beliefs and atti-tude, and become a factor when deciding to purchase. At what level the buyer is in Maslow pyramid of need will also play a role since people at the lowers levels will not be motivated for buying a bike belonging to a premium segment. A bike from economy segment will be more likely.

Exhibit 3 Maslow’s pyramid of needs
The buying decision behavior. This type of product can be considered to imply complex buying behavior, since there is relatively high difference between the brands and because of the significant amount of money for buying will imply high involvement. The customer will go through a learning process with trials, reading about the features mileage and so forth. The typical buyer decision process will be, felt need and demand, seeking information, evaluate to or more options, and then purchase. If there is a need for a bike the buyer will seek information about different brands maybe first on the web then from friends, then he will go to the different outlets for bikes and maybe try them out, next step would be to choose a few models and compare and then lastly purchase the bike.

Marketing plan, strategy (BCG’s and SBUs

Pricing
The two wheeler market in India is basically an oligopoly dominated by Hero, Bajaj and tvs. This means according to (Cotler, 2011) that there is high alertness regarding competitors prices and seg-ments. They will most likely follow if one of them introduces new models in the segments shown in exhibit 2. Even though we previously said that buying Karizma R is regarded as complex buying behavior, the differences between competing products is not so high that raising prices will be pos-sible. Therefore the price elasticity ratio of demand for the product will properly be more than one suggesting price elacticity . This could be one of the reasons for why Hero has released new version of Karizma in order to be able to raise prices, and they have raised prices from rs. 45000,- to rs.65000,- the feature improvements costs might not be equal to price rise one could suspect . Of course this information is not available for us, but since all of the main companies, se exhibit 6 and, are doing well economically we must believe that the prices have stabilized on a high level for all of them. This will properly diminish the likelihood for price “war”. The missing competition because of import duty on japanese products helps to keep the revenues at a high level. Exhibit 6 Indian two wheeler Industri, (2012, Februar). Icra Rating Feature

Channels of distribution Hero Honda has built its distribution network of 550 dealers and 3,500 service centres. More than 2,000 rural channel partners work on the rural vertical through the ‘Har Gaon Har Aangan’ in Eng-lish Every Village, Every Household program. Over the past four years, its distribution network has grown nearly 2x compared to peers.
The distribution network is fairly spread across the rural and semi‐urban areas, leading to a strong growth of 23.6% in sales volumes in FY10. The rural sector contributes ~44% to Hero Honda’s total sales volumes. The customer supply channel is either with one link to end customer or two. To be able to support their rural strategy they have appointed rural contact people who can do the sale via Authorized dealer in Metro city. In smaller cities they have Outlets controlled by the authorized dealers. Karizma brand are most likely not sold in rural India due through its high price.

Exhibit 7 supply channel.

Promotion Mix

References

Company profile.[n.d.] retrieved february 2013 from infoline market companies hero Motorcorp Ltd http://www.indiainfoline.com/Markets/Company/Background/Company-Profile/Hero-MotoCorp-Ltd/500182
Hero without Honda: Will brand 'Hero Honda' survive after Honda's exit .[n.d.] retrieved february 2013 http://www.moneylife.in/article/hero-without-honda-will-brand-hero-honda-survive-after-hondas-exit/12364.htm http://images.maxabout.com/hero-honda-karizma-r Kotler,P., Armstrong, G., Agnihotri, P., Haque, E.(2011), Marketing A South Asian Perspective. Published by Dorling Kindersley (india) Ltd.
Indian two wheeler Industri, (2012, Februar). Icra Rating Feature http://www.nseindia.com/content/corporate/eq_rrl_HEROHONDA.pdf Sinha, (2012). Supply Chain Management, by Tata Mcgraw Hill Education Pvt.

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