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Project Topic: Effectiveness of Sales & Distribution System: Case of Honda Motorcycle Name of the Student: Likumri Changkiri Batch: 07-10 (Fall Winter) Sec F - 6 Mobile: +91 9891666894 Email: likum9@hotmail.com



The main objective of the project is to get the full knowledge of the products of the HERO HONDA and how they are using the distribution network as a key differentiating factor from its competitors. This is also to find the preferences of customer and there market knowledge and product information, information about the presence of the rivals of HERO HONDA and all the other options they have in the market. HERO HONDA are also looking to tap the market in rural sector, so they also taking into consideration the needs and wants of the people there.





The Hero Honda story began with a simple vision the vision of a mobile and an empowered India, powered by Hero Honda. This vision was driven by Hero Honda's commitment to customer, quality and excellence, and while doing so, maintain the highest standards of ethics and societal responsibilities. Twenty five years and 25 million two wheelers later, Hero Honda is closer to fulfilling this dream. This vision is the driving force behind everything that we do at Hero Honda. We understood that the fastest way to turn that dream into a reality is by remaining focused on that vision. There were many unknowns but we kept faith, and today, Hero Honda has been the largest two wheeler company in the world for eight consecutive years. Our growth has kept compounding. The company crossed the ten million unit milestone over a 19-year span. In the new millennium, Hero Honda has scaled this to 15 million units in just five years! In fact, during the year in review, Hero Honda sold more two wheelers than the second, third and fourth placed two-wheeler company put together. With Hero Honda, the domestic two wheeler market was able to show positive growth during the year in review. Without Hero Honda, the domestic market would have actually shrunk. Over the course of two and a half decades, and three successive joint venture agreements later, both partners have fine-tuned and perfected their roles as joint venture partners. What the two partners did was something quite basic. They simply stuck to their respective strengths. As one of the world's technology leaders in the automotive sector, Honda has been able to consistently provide technical know-how, design specifications and R&D innovations. This has led to the development of world class, value - for- money motorcycles and scooters for the Indian market. On its part, the Hero Group has taken on the singular and onerous responsibility of creating world-class manufacturing facilities with robust processes, building the supply chain, setting up an extensive distribution networks and providing insights into the mind of the Indian customer. Since both partners continue to focus on their respective strengths, they have been able to complement each other. In the process, Hero Honda is

recognized today as one of the most successful joint ventures in the world. It is therefore no surprise that there are more Hero Honda bikes on this country's roads than the total population. The company's meteoric growth in the two-wheeler market in India stems from an intrinsic ability to reach out and come closer to its customers, with every passing year. Hero Honda's bikes are sold and serviced through a network of over 3500 customer touch points, comprising a mix of dealers, service centres and stockists located across rural and urban India. Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana, and its third and most sophisticated plant at Haridwar has just completed a full year of operations. It is difficult to imagine that all this has happened in the span of just two and a half decades! The best is yet to come. During the year in review, Hero Honda powered its way in a market that, for all practical purposes, was feeling the full effects of the economic slowdown in India. With an economic recovery now clearly on the cards, Hero Honda is all set to ride into another summit. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly puts it, "We pioneered India's two wheeler industry, we've steered it through difficult times; now it is our responsibility to set the pace again.''


Hero Hondas mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities.

This mission is what drives Hero Honda to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders.


Hero Honda now the leader in the two wheeler industry. Leaders are not born, they evolve over time. It all started on the auspicious. Baisakhi Day the 13th of April 1984, when the Hero Honda Motor Company joined hands. On its journey to take on the No. 1 morale, Hero Honda created some prominent milestones.. This leadership has been achieved only because of its philosophy to

excel in all areas. In fact, passion to excel is a credo of the entire Hero Honda family and is a way of life in Hero Honda. The changing Scenario of increasing competition and the entry of new brands has made the credo even more relevant. It serves as a constant reminder to ensure excellence in providing service to the customer. They are providing outstanding customer service. It is in keeping with Hero Hondas own passionate commitment to provide ultimate customer satisfaction. Today, they consistently meet and exceed all requirement on quality, cost and delivery.


The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide. Hero is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles. It is a joint venture between India's Hero Group and Honda Motor Company; they are related to Jagdish Lal Munjal. During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. Now millions of Hero Honda two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together! Hero Honda has consistently

grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Hero Honda bikes currently roll out from two globally benchmarked manufacturing facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of churning out 3.9 million bikes per year. A third state of the art manufacturing facility at Haridwar in Uttarakhand has been commissioned from April 2008 to cope with sustained customer demand. Hero Honda's extensive sales and service network now spans over 3000 customer touch points. Hero Honda values its relationship with customers. Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India, increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come.

New Models The company has a large portfolio of brands, with the money-spinners being mainly Splendor Plus (the world's largest selling bike) and Passion. However, the company claims it was the launch of the 150cc CBZ and 225cc KARIZMA which established Hero Honda as an inspirational brand. "The launch of CBZ and KARIZMA got us into a different league altogether. Although the sales are just about 3,000 a month, it made us an overall bike company, Hero Honda would launch a new model of the KARIZMA by the end of current year, the Managing Director, Mr. brijmohan lal Munjal, said. Meanwhile, the company is yet to decide on the location of its proposed Fourth manufacturing unit. The feasibility study is on'', he said, adding that the new plant was likely to come up in the next 18 months. New launches are likely to help Hero Honda gain a market share in the coming quarters. Hero Honda Motors Ltd, has launched a new 100-cc four-stroke bike, CD deluxe and Dawn is likely to be phased out of the market once the new model sells ``10,000 plus'' units per month.

Sales Performance Hero Honda went against the grain and created a growth trajectory all of its own. Sales of the company grew by over 11 per cent in volume terms and in value terms; they grew by over 19 per cent.

Effectively, this helped the company end the year with a market share of around 60 per cent. This robust performance helped the company increase earnings margin 120 basis pointsa remarkable feat, considering that elsewhere in the world, the automobile industry went through its worst year in recent history. Hero Hondas performance in its silver jubilee year helped it retain its position as the worlds largest two wheeler company for the eighth year in a row. It also helped the company cross the 25 million unit markbecoming the first company in India to reach this milestone. Last year, two new models were launched, namely CBZ XTREME and HUNK to address super-style and economy segments. Passion pro has found its position firm amongst Indian models, only next to Splendor, the largest selling bike in the world in terms of sales performance. CBZ was re-launched as CBZ XTREME, in April 2007, with changes and value additions to cater to specific needs of the customers. Reportedly CBZ XTREME is doing well in its segments and has sold over 10,000 units in the initial months itself. Hero Honda has targeted a sale of over 3 million bikes for the year 2009-10. This effort is supplemented by a major launch this year, in October end; this bike will have some exclusive features and will be in the 200cc plus range. There are some ambitious programmes of launching a new range of bikes with technical support from Honda in the coming years. With a slew of such measures the capacity available at present locations can at best support two-million production target at the existing plants. The company, therefore, is looking at the possibility of setting up a third plant to meet the future demand and for which techno-economic study is in progress.

New Initiatives Customer and customer satisfaction is the purpose of our being an entity. To increasingly understand him and make him part of our ongoing business. Customer related initiative has been the increase of warranty period to three years since July 2008. This has attracted a great deal of customer attention. During the year the company has added nearly a hundred dealerships and SSPs. In terms of sheer numbers, the network has grown by 16% during the year 2008-09. We would endeavor to increase our reach to every corner of this country. Plans for the future In the previous year, the domestic two-wheeler industry entered a period of degrowth. However, this was arrested in 2008-09, largely on the back of Hero Honda's performance. After the blip of last year, the two-wheeler industry went back to a growth phase, largely driven by Hero Honda and exports. The industry clocked total volumes of 8.5 million during the year in review, a growth of 5 per cent compared to a fall of 5 per cent in the previous year. The pace of growth was lower in the domestic market, where the industry clocked sales of 7.43 million, a rise of only 2.60 per cent. This, however, was a significant improvement over previous year when the industry had shrunk by 8 per cent. Motorcycles continue to constitute the largest chunk of the two-wheeler industry, and during the year in review, accounted for four fifth of sales. Interestingly, for the second year in succession, scooters increased their share in the two-wheeler pie from 14 per cent to 16 per cent. This is clearly a trend reversal from the last 10 years, where the share of scooters in the two-wheeler pie had been shrinking. Changing lifestyles among women, and the introduction of feature-rich, high-quality scooters possibly has much to do with the revival in demand


2.3 MILESTONES OF HERO HONDA Year 2004 Event New motorcycle model - "Ambition 135" introduced Hero Honda became the World No. 1 Company for the third consecutive year. Crossed sales of over 2 million units in a single year, a global record. Splendor - World's largest selling motorcycle crossed the 5 million mark New motorcycle model - "CBZ*" introduced 2005 Hero Honda is the World No. 1 for the 4th year in a row New motorcycle model - "Super Splendor" introduced New motorcycle model - "CD Deluxe" introduced New motorcycle model - "Glamour" introduced New motorcycle model - "Achiever" introduced First Scooter model from Hero Honda - "Pleasure" introduced 2006 Hero Honda is the World No. 1 for the 5th year in a row 15 million production milestone achieved 2007 Hero Honda is the World No. 1 for the 6th year in a row New 'Splendor NXG' launched New 'CD Deluxe' launched New 'Passion Plus' launched New motorcycle model 'Hunk' launche 2008 Hero Honda Haridwar Plant inauguration New 'Pleasure' launched Splendor NXG lauched with power start feature New motorcycle model 'Passion Pro' launched New 'CBZ Xtreme' launcheh CD Deluxe lauched with power start feature New 'Glamour' launched New 'Glamour Fi' launched 2009 Hunk' (Limited Edition) launched Splendor completed 11 million production landmark New motorcycle model 'Karizma - ZMR' launched Silver jubilee celebrations







Highlights of Q3, FY'09-10

Total turnover (Net sales & Other Operating income) 3827.03 crores, growth of 32.82 per cent

Net profit after tax at Rs. 535.77 crores, growth of 78.34 per cent EBIDTA margin for the quarter 17.27 per cent Total sales for Q3 stands at 11,11,372 units, growth of 29.56 per cent Third consecutive quarter with more than a million units in sales

New Delhi, January 25, 2010: Hero Honda Motors Ltd (HHML), the world's largest two-wheeler manufacturer, today reported a profit after tax (PAT) of Rs.535.77 for the third quarter (Oct Dec09) of Financial Year (FY) 2009-10 - a growth of over 78.34% over the corresponding period in the last fiscal (Oct- Dec08). The company has recorded an EBIDTA margin of 17.27 per cent in the quarter. The EBIDTA margin in the previous quarter (Oct - Dec'08) was 14.47 per cent.


YTD FY 10 has been a remarkable year for Hero Honda with the company posting sales of over a million units and a PAT of over Rs. 500 crores in each of the quarters. With the third quarter of fiscal 2009, Hero Honda concludes the calendar year with record sales of over 4.4 million units, a growth of 22 per cent over the calendar year 2008 when the company had sold 3.6 million units. With this, Hero Honda has retained the coveted status of World No.1 two-wheeler manufacturer for the 9th consecutive year. Riding on a record sales of more than a million units (34, 13,594) of two-wheelers the third consecutive time that the company crossed the magic million mark in a quarter this year Hero Hondas total turnover (Net sales & Other Operating income) grew to Rs 11708.91 crore, a growth of 31.05 per cent over Rs 8934.36 crore recorded in the corresponding period last fiscal. The company has recorded an EBIDTA margin of 17.55 per cent in the nine months ending December 09. The EBIDTA margin in the corresponding previous period (April - Dec'08) was 13.44 per cent. The company continued with its commendable top line performance as sales volumes were up 25.31% per cent during last nine months, while the industry grew by 20.05% per cent during the same period.


The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide. During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of

commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage. Over 20 million Hero Honda two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together! Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle Splendor. This festive season, the company sold half a million two wheelers in a single montha feat unparalleled in global automotive history. Hero Honda bikes currently roll out from its three globally benchmarked manufacturing facilities. Two of these are based at Dharuhera and Gurgaon in Haryana and the third state of the art manufacturing facility was inaugurated at Haridwar, Uttrakhand in April this year. These plants together are capable of producing out 4.4 million units per year. Hero Honda's extensive sales and service network now spans over 3000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockiest and authorized representatives of dealers located across different geographies. Hero Honda values its relationship with customers. Its unique CRM initiative - Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India, increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come. As Brijmohan Lall Munjal, the Chairman, Hero


Honda Motors succinctly points out, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.'' 3.3 COMPETITORS OF HERO HONDA BAJAJ AUTO TVS MOTORS MAH SCOOTERS SCOOTERS INDIA LML KINETIC ENGG. MAJESTIC AUTO KINETIC MOTORS ATUL AUTO VCCL

4 Ps OF HERO HONDA 4Ps of Marketing

PRODUCTS Hero Honda, which has a technology tie-up with Japan's Honda Motors, was currently discussing the feasibility of manufacturing scooters for the Indian market, Mr. Munjal said. However, the company has a binding clause with Honda's scooter manufacturing The TCS study examines customer evaluations at three distinct ownership periods: 1 to 6 months, 7 to 18 months, and 25 to 36 months. This helps in understanding the differences in satisfaction during initial ownership, in-warranty and post-warranty ownership periods. Satisfaction ratings decline as the length of vehicle ownership increases. However, Hero Honda Splendor is among the few models to maintain consistency across the three ownership periods.


Product Range and New Models: The Company's product range includes "Splendor+" which is the largest selling motorcycle brand in the world with over 10 lacs vehicles sold in 2008-09. A cumulative over 40 million customers are the real foundation of the company's strength. The total shall soon cross the 7 million mark. Its volumes have been growing at a strong pace of 40% p.a. over the last five years. The Company launched a new 100 cc model "Passion pro" in June 2008. The motorcycle is focused on style and contemporary design, compared to the Company's earlier motorcycles that were focused on utility and/or style. "Passion pro" has received an excellent response from the market and has established itself well, with sales reaching a level of 29000 units in august 2008, within just three months of its launch.


Pricing is an important component of marketing mix of the firm. Determining the prices of different products of a firm is very difficult task of the marketing manager. Price denotes money value of a product. If represent the amount of money for which a product can be exchange. In other words, prices represents the money which the buyer pays to the seller for a product price represent the exchange value of goods and services in terms of money. Price is all around. Price factor has very well been touched by the manufacturers. The pricing strategy of the company is very set. they price their product according to the cost of production and also by keeping an eye on the price of the competitors of that segment and demand of the product in the market. A pricing strategy that ensured an average manufacturer margin that game dealer an adequate return and created a reputation with consumers like a company selling a good quality product at a reasonable price. Industry focus themselves the low cost producer with good quality and aimed to maintain the price advantage in every market of two wheelers.

Hero Honda group ensures an easily affordable pricing through excellent transportation to common man. I fixes customer centric pricing that provide customer total satisfaction. Hero Hondas pricing objectives are: List price, Discount , Financing schemes, Credit terms , Maximize profits Hero Honda group ensures an easily affordable pricing through excellent transportation to common man. It fixes customer centric pricing that provides the customer with total satisfaction.

ADVERTISEMENT Advertisement, local events sponsorship and promotions and inviting a prominent personality for the inaugural or first like delivery function would contribute effectively in generating a wider local interest and attention. Hero Hondas latest DKD commercial its two brand starring its Ambassador and Indias heart throbs, Hritik Roshan and priyanka chopra, truly reflects the multi fact roles that todays new generation plays. The commercial reflecting the charisma and vibrancy of these two stars, takes Desh Ki Dhadkan to dazzling new heights. It is young, colorful and vibrant and represent the icons of contemporary times. And it will go a long way in strengthening the leadership status of the product by the mile. The new commercial is powerful film repeat with an impressive storyline. The effort to pack the story, drama and impact in just 60 seconds was phenomenal challenge itself. The idea was born itself. The idea was born out of the very essence of Hero and Stars. Keeping in mind would cause on the drama and impact it would cause on the audience. It is a commercial packed with action where todays heart throbs, Hritik roshan and Priyanka Chopra, are seen tackling new roles. The story being in a field adjoining a hill with Hritik and priyanka on Hero Honda bikes and Pleasure respectively.


Both Sameer and Aditya win lifetime opportunity act with Hritik and Priyanka, the two star heartthrobs of millions in India and all four will be seen in action in the new commercial DKD. Celebrity Endorsement: Hero Honda has roped in film actor Hrithik Roshan, Priyanka chopra, Mohammed Kaif, Harbhajan Singh, Zaheer Khan, Yuvraj Singh and Virender Sehwag as its brand ambassadors. Announcing the formation of the Hero Honda `Team Ambition', Mr. Pawan Munjal, said, "Indian Cricket and Hero Honda have both made the nation proud and helped the world recognize India's potential. The `Team Ambition' has many similarities in personality with Hero Honda, such as `splendor of performance', `passion to excel' and `ambition to win". In their role as brand ambassadors, the `Team Ambition' would soon star in Hero Honda's new commercials. As part of the association, Hero Honda will also find prominence on the bats to be used by Yuvraj Singh and Zaheer Khan in the forthcoming cricket events. Sourav Ganguly, who has been associated with Hero Honda since 2000, said, "Through Team Ambition, we are looking forward to communicate more directly with over 6 million Hero Honda customers in India and the millions more added every year." Says Mr. Anil Dua, Senior Vice-President, Marketing and Sales, Hero Honda, "Hero Honda has been promoting cricket for over a decade now. Starting with the memorable Hero Cup in 1993, we have adequately benefited through the promotion of this national fervor. Cricket is one sport which binds our entire nation and is, perhaps, the largest platform in the world, enabling companies to communicate with millions of consumers in the shortest possible time." The `Team Ambition' would also provide coaching and guidance to the budding talent in the country and support cricket projects undertaken by Hero Honda in India and abroad, a company release said. Hero Honda will keep up its promotional activities with emphasis on cricket and entertainment. The company claims that its Desh Ki Dhadkan campaign featuring

brand ambassadors priyanka chopra and Hrithik Roshan has received a very good response and helped build the company's image. Last year, the company spent around Rs 90 crore on advertising and marketing.


SALES PROMOTION A fundamental concern of any customer during the purchase of a double product is the quality and provision of efficient service. After all queries on product quality, performance, features and benefits have been satisfied, the customer invariably focuses on the service factor for the product as the end objectives is to ensure trouble free operation. In this respect servicing acquires paramount importance and Hero Hondas focus and emphasis on these key result area have been instrumental in establishing its superiority and technological edge in the market. The host of training programmes and relationship enchantment activity additionally backs the spates of servicing camp, organized throughout the country. The active support of servicing and co-operation rendered by the dealer in the form of logistics and infrastructure further aid in making such programmes highly meaningful and valuable. They are doing free check-up camps reinforce customer trust. Service advisors collecting information from a customer about his satisfaction level after the servicing of their bike. For the promotion of products the Hero Honda dealer rally. Hero Honda is organizing so many events in sports, cultural programmes, film -festivals etc for the promotion of the product eg. Hero Honda NKP salue Challenger Cricket Cup brings new talent to the force, MALTA Junior Tennis Tournament, Hero Honda socials Commitment rehabilitating children affected by violence, operational, Relief, donation for drought relief, Rota Trade Mela 2007, Road Show, Training programmers to enhance quality of service, free back up camps reinforce customers trust, ride safe programmes held for Delhi Traffic Police, Mobile Revolution in servicing etc. The powerful benefits of test rides, special promotions and communication drives to draw in the initial customers, preparation of accurate customer information forms to create a customers database, offer of finance facility and active steps to impart specific transiting at the dealers sales and services levels would be essential steps to achieving the brand and the company objectives. Mr. Uppal also touched upon the servicing policy for passion and cautioned the invitees to remain alert for substitution in Hero Honda brands among its customers.


PUBLICITY For the purpose of publicity Hero Honda is always organizing different events, etc. and they are always inviting celebrities from film, sports, media, politics, etc. There are some of event and parties are as follows:The Hero Honda stardust millennium Honours and BFJA awards for Bengali films. In a gesture that honors and salutes some of the finest talent in south Indian Cinema. Hero Honda also security sponsored the 20th Cinema Express Awards. The sponsorship of the womens World Cup in 1997 came next, then the ICC Cricket World Cup 2004. Hero Honda, the largest two-wheeler leader in Indian sponsored the 21st Cinema express Awards. Marketing Convention 2006. They are priyanka Chopra Miss World, Lara Dutta Miss Universe, Diya Mirza Miss Asia Pacific, Sourav Ganguly Indian Cricket Captain, Daler Mehndi, Mr. Harsha Bhogle the famous cricket commentator etc. Dandiya programme at Kota and Banswara. In this Ms Sunita Rao, the popular singer entertains at the festivals at the Dandiya Programme. Thrill and the excitement at the Hero Honda Master Golf tournament. In this tournament Kapil Dev, virendra sehwag, Pronoy Roy, Milkha Singh and so many celebrities were present. Galaxy of stars add to the glitter Surat rang 2008. Pinaz Masani, the famous gazhal singer, Kavita Krishnamurthy the famous play back Singer, Shibani Kashyap the pop singer are the main highlight of this programme. Hero Honda sponsors 26th Cinema Express Awards and the main celebrities of this programme are evergreen Hero Devanand, Film Makers Hero Honda sponsor Army ordnance Corp Motor Cycle Expedition. Joy of buying At Hero Honda, we believe in providing the best of service, as reflected in our corporate We Care philosophy. An extension of this is the passport programme, popularly known as suhana safar. This unique programme aims to build long-term relationship with customers.

5.1 CORPORATE SOCIAL RESPONSIBILITY: STAKEHOLDER TIES AT THE GRASSROOTS Hero Honda Motors takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream. An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community. The Foundation has adopted various villages located within vicinity of the Hero Honda factory at Dharuhera for integrated rural development. This includes:

Installation of deep bore hand pumps to provide clean drinking water. Constructing metalled roads and connecting these villages to the National Highway (NH -8). Renovating primary school buildings and providing hygienic water and toilet facilities. Ensuring a proper drainage system at each of these villages to prevent waterlogging. Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants.

5.2 DISTRIBUTION CHANNEL OF HERO HONDA HERO HONDA HAS direct contact with the dealers. There are no middlemen involved. The dealers directly sell to the customers. The channel is of 1st level which has only the dealers as the link between the customers and the company. Distribution Channel Manufacturer Dealer Customer


How Promptly The Work Done? The dealers keep in contact with the manufacturer or the head office or the regional office. As the order fax reach the manufacturer, as in Delhi it takes only one-nights

time of transit from the manufacturer to the dealer. The dealers in far off places like in Assam, South India and others, it takes a maximum of 7 days to reach the placed order due to the transit. Basically, the delay of delivery of the order is basically due to the transit time. The transit time in near places is not more than one night. How The Transit Done? The manufacturers have their own transportation facilities. The manufacturers have trucks which can load 18-25 units of bikes at a time, individually. When the units are dispatched from the factory, or manufacturing it, it is in its standard form and accessories like seat cover, handle cover, back-looking glass and others are not part of the standard unit of the two wheeler of Hero Honda. The transportation trucks straightway reach the warehouses of the dealers. In case the warehouse of the dealer is not there then the trucks straight away come to the dealers showroom where they usually have some place for storing the stock as in the case of Daryaganj dealer. The Daryaganj dealers stock is stored in the place just behind the showroom. For this particular dealer the transportation cost to bring the units from the warehouse to the showroom is saved and thus the distribution cost is saved. But there are dealers like in Green Park, this dealer does not have their ware house nearby to the showroom which means that this dealer has to keep their own transportation system to bring the units from the warehouse to the showroom which is not cost effective. The sub-dealers usually hire the trucks to get the units delivered to their outlets. Sometimes the dealers truck is used by the sub-dealers to carry the units to their outlets on goof faith. If the sub-dealer is the part of the same dealer then the transportation charge are less and if they hire it then the cost is high for the subdealers. What Does Customer Want? The customers of Hero Honda, according to the Asst. Manager (Sales) are very particular about the colors that Hero Honda offers in its wide variety of scooters. He said that the customers are very much aware of their purchase. Gone are the days when the sales people could influence the buyer to buy a particular product. Almost 90-93% of the customer, whoever comes to the showroom. Usually comes after he/she had made a decision. So, the work of the sales person is less. The rest 7-10%

have some doubts with regard to the purchase of Hero Honda. It is here, where the sales persons have to do some work in convincing the customers about the scooter. The sales person in this regard convey the customers about the mileage, strokes and also the parameters that the customers enquire. When Do They Sell More? Hero Honda scooters peak season selling state from the month of April, just after the budget and after the month of November the sells become slack. This is mainly due to the people think that the budget can reduce the prices and moreover the budget usually brings in a difference at Rs. 1000 - 1500. This is an important factor for increasing in sells. Usually in the month of November the manufacturer comes with re-modeling and also new launches. People wait till the month of April to see whether the prices are slashed or not. How Is The Price Determined According To The Change? Manufacturer, on the basis of the cost of production determines the price and the factors like tax and others. Usually the sales tax on the two wheelers is 8% but in Hero Honda it 4%. This is because Delhi Government has found out that the pollution from Hero Honda is very less due to the catalytic converter which every model of Hero Honda have. The government has identified that by using the catalytic converter Hero Honda is helping the environment which is a social cause. Hero Honda Bikes not only have market in India, but also in abroad. To maintain the differences in market of the different companies it takes the help of the local manufacturers or the dealers outside for the distribution of their scooters smoothly. How's The Relationship Between The Manufacturer And Dealers? Improvement of sells is the first and foremost concern of the trading people. He said that they are given the dealership to sell the products of Hero Honda and the relationship is better when the sales are more. On an average, sells around 5 to 6 scooters per day. The company representatives keeps in contact with the dealers over telephone and keeps a pressuring the sales managers of the dealers to improve the sales. The Dealer have 2 sales staff in the showroom and 7 more sales staff who moves around their sells territory on the call of the customers. The representatives of the company visit the dealers weekly or fortnightly. As per Mr. Ayub, the representatives of the company keeps on pressuring the dealers to increase the sales as

in the case of the aforesaid dealer. Earlier they use to sell around 5-6 scooters a day and now they are asked to sell around 8-10 scooters on an average per day. The company keeps a very good relationship with the dealers. As the launch of the new models the company calls on all the dealers for meeting. In these meetings the company executives discusses the strategies that the company will follow during the forthcoming months. The company accordingly asks the dealers to change their strategies. Things like the target of sales sells for the forthcoming year, what should be the attitude towards the market, the company's forecast and many such issues are discussed in these meetings. The company also meets with the dealers during the time of new launch. Here the company invites the dealers and also the sub dealers to train them about the new product that is going to be launched. The company gives the dealers and sub-dealers mechanics a training of around 15 to 20days. The most important fact about the dealers of Hero Honda is that they organize training programmes for the local mechanics who doesn't have any affiliation from any brand two-wheelers. These mechanics who are running their business in very small scale are invited to the training camps of the dealers at the launch of new models. The dealers improve the relationship at personal level with these local garage by giving them gifts. 5.3 4 As OF HERO HONDA 1. Availability a) Hero Honda's 2 plants are in Dharuhera and Gurgaon, both in India. Third plant at Haridwar, Uttaranchal has also started production by April, 2008. b) Hero Honda's extensive sales and service network have spans over 3,000 customers touch points. c) The number of touch points (dealerships plus sales and service outlets) is already 3,500 from 2002 and another 500 would be added every year. 2. Affordability a) Hero Honda offer cheapest motorcycles in India cost between Rs 30,000 and Rs 35,000. b) Hero Honda with the help of ICICI Bank provides loan to the customers & also provide easy monthly installment scheme to customers. 3. Awareness a) Hero Honda Motors Ltd was the top advertiser then, accounting for a little over 25% (one fourth) of the share. b) Five hundred sales representatives were taken on board for the mission Har Gaon, Har Aangan (every village, every courtyard.)

c) Company gives advertisement in different media vehicles time to time. Like in TV. Magazines, newspaper, etc. d) Hero Honda also organizes free service camps every year. e) Hero Honda also takes art in trade fair. 4. Acceptability a) Hero Honda has accepted by people because its strong brand image and product quality. b) Hero Honda is considered to be most fuel-efficient bike on Indian roads. c) Hero Honda bikes are purchased more by daily users who needs more average of bikes as well as look. d) People prefer Hero Honda because of its product varieties & stylish design etc.


COMPARISON OF HERO HONDA PRODUCTS CBZ-X-TREME While CBZ was introduced the market for 150c segment war not quite well developed. It was a niche market with a number of unsatisfied and unrecognized customer who aspired for more power, life style and speed. So it can be concluded that the product the strategy was diversification. The customers were to be taught about their unrealized needs. For that the company had to use informative as well as aspirational advertisement To make the customers understand that the bike was for the upper class market, it was priced a premium also. KARIZMA In the case of karizma, the market for 200+ segment was Non existing. The company introduced the bike as a new product. For the company it was the first bike in the highly demanded 200+cc segment. Here the company has adopted the product development strategy. The company has priced this product with respect to future competetion.


Splendor+ came to the scenario as a more efficient bike catering to the needs of the 100cc segment, which at that time was served by many others. The analysis reveals that the company has adopted Market penetration as its strategy.


For that, advertising mainly focusing on its superior quality, were then released. Fuel efficiency coupled with zero maintenance was projected as a key differentiator.


6.1 MARKET SHARE Hero Honda Motors Ltd on 14- July- 2009 reported a forecast-beating 7.1 per cent rise in net profit. Helped by falling commodity prices, a cut in excise duties and sales in rural areas. Hero Honda's closest rival, Bajaj Auto Ltd, second week of July, 2009 reported a 23 per cent drop in net profit for its fiscal third quarter as a lack of financing and high interest rates crimped demand. Hero Honda was not as affected, as 60 per cent of its revenues come from rural markets, where purchase are less reliant on loan financing than in urban areas and where its 100 cc bikes are popular, Munjal said.


Apr-Jun 2008-09 877,089 391,100 292,530 226,068 1,865,767

Apr-Jun 2009-10 1,094,996 331,731 315,785 284,890 2,135,869

Growth %) 24.84 -15.18 7.94 26.01 14.48

Hero Honda Bajaj Auto TVS Motors Honda Total Market

Market Share (%) 51.26 15.53 14.78 13.33 -

Rural Market share 10%

Urban Market share 25%


6.2 WHY HERO HONDA IS SUCCESSFUL BRAND Hero Honda has managed to put in spectacular performance going from strength despite increase in competition; the company's sales have witnessed an uptrend, registering an average growth of 42% in the three years under review. Hero Honda has managed to achieve this because its strong brand image and proven product quality underpinned the performance growth in recent years. Apart from the strong brand "splendor" the company's performance across the spectrum of the motorcycle market helped it exploit the growing demand for 4-stroke motorcycle. At the lower end the company has CD 100 SS at middle level splendor, passion and Dawn the CBZ Extreme/ Karizma range is targeted at premium segment. Some years back Hero Honda are getting stiff competition because of Bajaj, TVS and Yamaha have a presence in 125cc bikes segments where Hero Honda has not any presence in this segment. Now this gap is filling up by Hero Honda's new Splendor NXG, Glamour. But still there is a gap between 150cc to 225cc segment, which is most preferable segment by youth today. With newer and better models are coming up customer has better and bigger choices to choose from. It is the competition on various aspects such as price, design technology, after sales services and even purchases offers, which provides to both buyer and seller. Even many dealers are in view that today Hero Honda and Bajaj, thrives on competition. Right now it seems that the real war is between Hero Honda and Bajaj auto. But one cannot discount the fact that there are other players, who are gaining strength day by day. There was a time when Bajaj ruled the Indian Two Wheeler Industry with their scooters in the form of Chetak and the likes. They had a minor presence in the motorcycle market with some models from the Kawasaki range. Hero Honda was a minor player in that market with their 4-stroke bikes, which were totally dominated by Yamaha with their RX-100. Situation changed dramatically when the pollution norms meant, two wheelers had to go 4-stroke and petrol started to get expensive. Hero Honda started emerging as the dominating force with their extremely efficient engines. People started looking towards motorcycles instead of scooters and the day arrived when Hero Honda became the largest two-wheeler manufacturer in the world with Splendor breaking all records. Hero Honda kept playing their cards with modest decorative upgrades to their range of bikes though competition forced them to launch newer models in the form of Ambition, CBZ, and Karisma. However, the entry-level bikes in the form of Hero

Honda Splendor and Hero Honda Passion were not upgraded to face the competition from Bajaj or TVS. The bike still retains extremely high confidence level from the users and sells like hot cakes. Entry of Heros partner in the Hero Honda in form of Honda changed all that. They announced their entry with an extremely successful bike Unicorn which after months of its launch still has waiting periods of many weeks. More interesting models are come in the market regularly. They also are competing with Bajaj heads on with their extremely popular models in the scooters market (Activa and Dio). This has forced Hero Honda to think again Honda can emerge as a dominating force in the market with its extremely high quality standards and technical expertise. And the results are coming in front of us. They have announced their arrival in the scooters market for the first time with a model planned for launch. Moreover, they have released a much-needed upgrade model of their bestselling Splendor. Super Splendor is a 125cc bike, which is being manufactured at the company state-ofthe-art plant in Gurgaon, Haryana. They have priced this model at a modest Rs 42,500. This should help Hero Honda retain their market share in the executive segment considering the brand value of Splendor. They are also considering setting up a third plant to increase their production capacity, which already stands at an impressive figure of 2.4 lakh units.

WHY HERO HONDA IS A WINNER Building a wide product range across segments Differentiated brand building campaigns Focus on driving sales in rural India Launching new models



A) STRENGTH:a) Achievement: Retained the coveted position of World No 1 Two-wheeler Company for the seventh consecutive year. b) High Sales Growth: Hero Honda experienced great growth throughout its early days. The Munjal family started a modest business of bicycle components. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of nine different models of motorcycles available. c) Fuel economy: Over all fuel consumption by its products is less in compare to other brands product. They have so far been able to give better mileage output. Because of this Hero Honda splendor has magical sales record. d) Quality policy: Total quality management is the chore philosophy of the company and it is thus always focussed on product innovation and performance. B) Weakness: a) Less promotion: The promotions and ads of Hero Honda are very less as compared to its competitors. b) High maintenance: Some of the products of hero Honda like Karizma require high maintenance. c) Lack of recycling scrap: It expected that by 2020 scrap generated by end of life vehicles in India would be about 2.5 million tonnes and 40% of it will come from two wheeler.But hero honda is not capable enough to recycle the scrap generated and may impose environmental threat. d) Labor relations: In Hero Group there is no organized labor union and family members of employees find ready employment within Hero. The philosophy with regard to labor management is "Hero is growing, grow with Hero."

C) Opportunities:


a) High GDP & increasing income level of consumer: Supported by strong demand impulses, especially in the manufacturing and service sector, Indias gross domestic product grew at 8.9 per cent. This is the fourth successive year in which the countrys growth has exceeded 8 per cent growth, and India is now in a select club of 12 countries with a trillion dollar plus economy. b) Good will of the company: If the company utilizes the good will they have gained so far from their customers, they can increase the sales performance by economizing the cost and few technical renovation of the product. With new launch they can be benefited at present market scenario like Karizma, Hunk has huge attraction towards the younger generation because of its style, sporty look, and high accelerating power and is stable at its feet even at high speeds. D) Threats: a) Finance assistance: Easy availability of finance is the main cause of sales growth and any restriction will hamper its growth prospects. b) Inflation: If inflation increases cost of raw material used in production will go high and selling price may go high that may decrease demand of the two wheeler. c) Technical renovation aspect: Competitor bike like pulsar and apache are threat to Hero Honda product like Karizma and Hunk in respect to fuel economy. So if they dont short out in the new launches and give something extra in its engineering performance it may affect in demand of this company product.


RECOMMENDATIONS After the complete analysis of entire assignment we put forward a set of recommendations which are as follows: Since the client has targeted the right segments, but the reason for the low sales of Hero Honda Cbz is high price. Moreover the client has positioned the bike as city ride made easy fuel efficient bike as a result of which if comes in direct competition with. TVS Victor and Bajaj Boxber. But HHML is overlooking one feature in bike. Which is its low maintenance, and reliability (i.e. less chances of breakdown), which are 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. In order to increase the market share, customers promotional activities should be encouraged through advertisements to attract the male & female segment. Hero Honda, if it starts functioning independently, has to innovate and develop their own technology to support their growth aspirations. The dissatisfied customers should be dealt with appropriately should be satisfied so that they do not break the relationship with company.


"We are confident that we will continue getting technology from Honda." Honda, for its part, has also made similar statements. However, industry analysts do have doubts. Says an industry analyst, "Honda's track record in India does lead to some apprehensions.


An analysis of Honda's past tie-ups in India would prove so. For instance, Honda exited the joint venture with Kinetic by selling its stake to the promoters and launched a replica of Kinetic Honda's ungeared scooter; its 60:40 ventures with SIEL for cars progressively became a 99:1 partnership and its venture with the Shriram group for gensets ended when it bought out Shriram's stake. This does throw up some questions with regards to the path ahead for Hero Honda." These examples prove that Honda has always wanted to have its own entity, says another analyst. Most of the customers of Hero Honda belong to congested areas. They mostly belong to middle class and are mostly officials/ executives. Thus, we conclude client has targeted the right segment. From the findings we conclude that a customers while purchasing a bike, customers takes into consideration mainly fuel efficiency, good looks, low maintenance cost and reliability. The main competitors of Hero Honda are Bajaj Auto, Yamaha and TVS. The consumer preference basically depends upon wider network and better services. Customers are influenced more to buy a product by advertisements rather than dealer friends or family recommendations.




www.herohonda .com

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