PROJECT REPORT ON “Study on Consumer Buying Behaviour & Satisfaction Level for Hero MotoCorp” A PROJECT REPORT SUBMITTED IN THE PARTIALFULFILLMENT OF THE REQUIREMENT OF
BACHELOR OF BUSINESS ADMINISTRATION TO
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY By:
AKASHDEEP KUMAR ENROLLMENT No. 08190201712
Under the guidance of Ms.Astha Dhupar
SHRI GURU TEGH BAHADUR INSTITUTE OF MANAGEMENT & INFORMATION TECHNOLOGY (Affiliated to GGSIP University Delhi) (2012-2015) 9
DECLARATION I Akashdeep Kumar, hereby declare that the project work entitled STUDY ON CONSUMER BUYING BEHAVIOUR & SATISFACTION LEVEL FOR HERO MOTOCORP submitted to GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY is a record of an original work done by me under the guidance of Ms.AsthaDhupar, Faculty member, SHRI GURU TEGH BAHADUR INSTITUTE OF MANAGEMENT & INFORMATION TECHNOLOGY
--------------------------------(Signature of the scholar)
Name of scholar: Enrolment No. :
Place: Delhi Date:
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CERTIFICATE This is to certify that AKASHDEEP KUMAR, 08190201712, BBA (G) student of Shri Guru Tegh Bahadur Institute of Management and Information Technology has done project work onSTUDY ON CONSUMER BUYING BEHAVIOUR & SATISFACTION LEVEL FOR HERO MOTOCORP under the guidance of Mrs. ASTHA DHUPAR ……………………………….. Signature of Director Prof. (Dr.) P.L. Sethi ………………………………. Signature of Project Incharge Ms.Inderpreetkaur ………..……………………. Signature of Guide Ms.AsthaDhupar ………………………………. Signature of Scholar Name of scholar: Enrolment number: Place: Delhi
Date: 11
ACKNOWLEDMENT With profound sense of gratitude and regards, I expressed my sincere thanks to my guide and mentor Ms.ASTHA DHUPAR for her valuable guidance and the confidence she installed in me, that helped me in the successful completion of this project report. Without her help, this project would have been a distant affair. Herthrough understanding of the subject and the professional guidance is indeed of immense help to me. I am also thankful to the faculty member of our institute who cooperated with me and gave me their valuable time and wants to thank all the people who help me in collecting necessary information and making of the project. I am grateful to all of them for their time energy and wisdom.
.................................................... (Signature of guide) Name of scholar: Enrolment number:
Place: Delhi Date:
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Executive Summary The project which i choose is on Hero Motocorp which made large variety of products. It is not only the market leader in the two wheeler segment in India but also is the number one two wheeler company in the world by volumes. The company’s name is synonymous with fuel-efficient bikes and longevity. The company has a presence in all bike segments viz. economy (CD Deluxe, CD Dawn) executive (Super Splendor, Splendor+) and premium (Karizma, CBZ). Splendor is the most successful product of the company and accounts for almost 50% of the company’s turnover. The project covers the following topics:The introduction and the history of the company, strategic planning of this company like vision , mission statement and the customer driven marketing, strategies of company like ( market segmentation , targeting, positioning); The project also covers the four P’s of marketing (product, price, place and promotion strategies). It also covers about the positioning strategies like how company sets its positive position in the minds of the consumer’s .it also tells the target market of the products. Micro and Macro environment of this company also discussed. At the last my conclusion about the whole marketing process of the company’s product. I also give the reference of those websites which provide me relevant material. And there commendations about this project.
Objective of the Study
To know market position of Hero bike in the market. To know consumer behavior for purchase of two wheeler bike. To identify the factor which influences on consumer decision? 13
To classify which types of customers visiting of Dealers with reference to age, gender, income To know which medium play important role for purchasing bike. To study who is the decision make in purchasing bike?. To study whether customers are satisfied with staff and services or not? identifying possible areas of Improvement. To know the status of different offers. SCOPE OF STUDY The main scope of the study is restricted to New Delhi. This study has been made to find the level of satisfaction the customer has regarding the service provider by bike place at New Delhi
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TABLE OF CONTENTS CHAPTER NO.
1.
TITLE
PAGE NO.
Declaration Certificate Acknowledgement Executive Summary INRODUCTION OF THE INDUSTRY
9
1.1
NATURE OF COMPANY
9
1.2
TYPE AND QWNERSHIP
13
1.3
ORGANIZATION STRUCTURE
14
1.4
PRODUCTION LAYOUT
17
1.5
ORGANIZATION POLICIES
23
1.6
INDUSTRY OVERVIEW
26 26
2.
1.7 CURRENT ISSUES COMPANY OVERVIEW 2.1HERO
MOTOCORP
29 SPREAD
IN 29
INTERNATIONAL MARKETS 2.2 HEROHONDA FINALLY BECOME HERO 30 MOTOCORP 2.3 KEY COMPETITORS 2.4ENVIRONMENT SCANNING 2.5 Porters five forces model
31 33 38
2.6 MARKETING STRATEGIES
41
15
3 4 5
6 7 8
2.7 4 P’S product, place, price, promotion
44
2.8 STP (segmentation, targeting, positioning)
46
2.9DISTRIBUTION CHANNEL
50
2.9.1 Promotion strategies
54
2.9.2 REASON FOR EXPENSION
57
2.9.3 REASON FOR DIVERSIFICATION
59
2.9.4 REASON FOR CONTRACTION
61
2.9.5 Comment on Organization leadership
62
2.9.6 MARKET SHARE GROWTH RATE
64
2.9.7 SWOT ANALYSIS RESEARCH METHODOLOGY DATA ANALYSIS FINDINGS
64 66 68 88 88
5.1 FINDINGS CONCLUSION AND SUGGESTION
91
BIBLIOGRAPHY
92
ANNEXTURE 8.1 QUESTIONNAIRE
93
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Chapter -1 1.1
Introduction of the Industry
Nature of Hero motocorp
Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India. Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. The company is the largest two wheeler manufacturer in India. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at #108. In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new corporate identity. On 4 June 2012, Hero Motocorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda Motors. “Hero” is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group both owned 26% stake in the Company. In 2010, it was reported that Honda planned to sell its stake in the venture to the Munjal family. During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it – Shut it – Forget it' that emphasized the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. The technology in the bikes of Hero Honda for almost 26 years (1984–2010) has come from the Japanese counterpart Honda. These plants together are capable of churning out 3 17
million bikes per year. HeroMotoCorp has a large sales and service network with over 3,000 dealerships and service points across India. Hero Honda has a customer loyalty program since 2000, called the Hero Honda Passport Program. The company has a stated aim of achieving revenues of $10 billion and volumes of 10 million two-wheelers by 2016–17. This in conjunction with new countries where they can now market their two-wheelers following the disengagement from Honda. Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets, and they expected to launch sales in Nigeria by end-2011 or early-2012. In addition, to cope with the new demand over the coming half decade, the company is coming up with their fourth factory in Neemrana, Rajasthan while their fifth factory is planned to be set up in Gujarat. The Hero Motocorp was started in 1984 as Hero Honda Motors Ltd. 1956—Formation of HEROCYCLES in Ludhiana (majestic auto limited) 1975—Hero Cycles becomes largest bicycle manufacturer in India. 1983—Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed Shareholders Agreement signed 1984—Hero Honda Motors Ltd. incorporated 1985—Hero Honda motorcycle CD 100 launched. 1989—Hero Honda motorcycle Sleek launched. 1991—Hero Honda motorcycle CD 100 SS launched. 1994 – Hero Honda motorcycle Splendor launched. 1997—Hero Honda motorcycle Street launched. 1999 – Hero Honda motorcycle CBZ launched. 2001 – Hero Honda motorcycle Passion and Hero Honda Joy launched. 2002—Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition launched. 18
2003—Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor plus, Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Karizma launched. 2004—Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ* launched. 2005—Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD Deluxe, Hero Honda motorcycle Glamour, Hero Honda motorcycle Achiever and Hero Honda Scooter Pleasure. 2007—New Models of Hero Honda motorcycle Splendor NXG, New Models of Hero Honda motorcycle CD Deluxe, New Models of Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Hunk launched.
2008—New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme,
Glamour, Glamour Fi and Hero Honda motorcycle Passion Pro launched. 2009—New Models of Karizma: Karizma – ZMR and limited edition of Hero Honda motorcycle Hunk launched 2010—New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda motorcycle Hunk and New Hero Honda Motorcycle Super Splendor launched. 2011—New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZ Xtreme, Karizma launched. New licensing arrangement signed between Hero and Honda. In August Hero and Honda parted company, thus forming Hero MotoCorp and Honda moving out of the Hero Honda joint venture. In November, Hero launched its first ever Off Road Bike Named Hero "Impulse". 2012-New Models of Hero Motocorp Maestro the Masculine scooter and Ignitor the young generation bike are launched. In December 2010, the board of directors of the Hero Honda Group have decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in 19
JV Hero Honda. Under the joint venture Hero Group could not export to international markets (except Sri Lanka and Nepal) and the termination would mean that Hero Group can now export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their bikes. So there are concerns that the Hero Group might not be able to sustain the performance of the Joint Venture alone. The Japanese auto major will exit the joint venture through a series of off market transactions by giving the Munjal family—that held a 26% stake in the company— an additional 26%. Honda, which also has an independent fully owned twowheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday. The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olin’s. The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India. Hero MotoCorp can now export to Latin America, Africa and West Asia. Hero is free to use any vendor for its components instead of just Honda-approved vendors. During the fiscal year 2008–09, the company sold 3.7 million bikes, a growth of 12% over last year. In the same year, the company had a market share of 57% in the Indian market. Hero Honda sells more two wheelers than the second, third and fourth placed two-wheeler companies put together. Hero Honda's bike sells more than one million units per year.
Logo of Hero Honda, as the company was known till Aug. 2011
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The Brand Trust Report published by Trust Research Advisory has ranked Hero Honda in the 13th position among the brands in India.
1.2
TYPE AND OWNERSHIP
Type Traded as Industry Founded Founder(s) Headquarter s Area served Key people
Public company BSE: 500182 NSE: HEROMOTOCO BSE SENSEX Constituent Automotive 19 January 1984 BrijmohanLallMunjal New Delhi, India
India, Sri Lanka DeyaVaradhSens (Chairman) PawanMunjal (MD & CEO) Products Motorcycles, scooters, threewheeler vehicles Revenue 239.43 billion (US$3.8 billion) (2012) Net income 23.78 billion (US$380 million) (2012) Total assets 60.58 billion (US$960 million) (2012) Parent Hero Group Subsidiaries Erik Buell Racing (49.2%)
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1.3 Organization structure Vijay sethi, vice-president and CIO, Hero MotoCorp
Vijay Sethi, vice president and CIO, Hero motocorp Vice president and CIO HeroMotocorpVijay sethi is responsible for Information systems at Hero motocorp. Vijay sethi has more than 22 years of experience in the industry and consulting environment. Prior to his current role at hero MotoCorp, he worked at Ranbaxy and Tata Consultancy services in various IT leadership roles across global IT management and planning, and in the development, deployment, and maintenance of enterprise-wide applications and infrastructure projects. In the career, he has led a number of IT integration projects for global M&As. He is a member of various national firms including national IT and Its committee of CII, CII knowledge Council and on the co- chairman of the IT committee of SIAM. He is the board member and north India Region head of SAP India user group (INDUS). Widely respected as a leading IT thought in the country, Vijay is a regular speaker at various symposia across the globe on topics including IT strategy, information security, cloud computing, SAP, and supply chain. He has won several prestigious awards including global CIO-2011, CIO Hall of fame -2011, Champion CIO-2011, INDIA’s best CIOs – 2010 and India’s best IT manager -2009. He has also been the jury member for some of the leading IT and telecom awards in India.
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Vijay Sethi has a Masters degree in industrial Engineering, MBA in Materials Management and a Bachelors degree in Mechanical Engineering. Hero MotoCorp, in the last year, had under gone such a large and public change (with its rebranding, if you were living under a rock), that it’s hard to believe it’s actually the company’s second ground-breaking transformation in recent memory. Yup, the second. The first and possibly more important one,(at least form a bean counter’s perspective)took place in 2008, a year when most other Indian companies had battened down their hatches and were to sail out the slowdown. That’s when Hero Motocorp decided to get ready for the sales explosion that it was sure would take place once the slowdown loosened its icy grip on the economy. “The slowdown wasn’t a permanent situation. I knew that, “says Vijay sethi VP and CIO at Hero MotoCorp. “What I was worried about was whether our current infrastructure would enable us to take up the challenges of heavy growth postrecession, “saysSethi. To do that, would need to create a single platform for all the Hero MotoCorp’s hundreds of dealers, a projects so complex it would make his first ERP project— the standard against which he measured all tough projects—pale in comparison. Steering into the skid Flashback. It’s the 31st of March 2008, and Sethi is about to walk into a budget meeting at the company’s headquarters in New Delhi. He remembers thinking ‘what next?’ To be honest, he wasn’t sure what to expect. Hero MotoCorp’s performance, although better than its rivals, had been middling: it had sold as many motorcycles as had in 2006-2007, while the industry had shrunk by 5 percent. That’s compared 23
to its average of 15 percent CAGS.
“Flat was the new growth during the
recession,” says sethi. “Many consultants advised us to cut capex and put a hold on new expansion and investment.” But Hero MotoCorp’s forward-looking management team would have none of this overly-cautious chatter. It had already decided that it wasn’t going to go with the flow—it was going to row against it. So, in April 2008, it unveiled third manufacturing unit at haridwar, today the largest two-wheeler manufacturing plant anywhere in the world. Creating more supply however, wasn’t going to get the demand. The company’s executives figured that one of the ways they could release Hero MotoCorp from the gravitational pull of this sales plateau was by understanding their customers better, faster, and by doing exactly what Hero MotoCorp’s sales engine, its dealers, had been asking them for sometime: Help them connect in a more predictable, less burdensome way with Hero MotoCorp. “We wanted to ensure our ability to track customer information, sales and service trends, defect analysis, etcetera, to enhance customer experience. Also, our dealership network had grown to a complex mammoth and we wanted to standardize it because it was only going to get more complex,” says sethi. Part of the problem was that Hero MotoCorp’s sales and marketing team interacted with all their dealers separately, leading to a slew of interdependencies. Manual inventory or sales updates, for example, meant a high probability of erratic inventory management at both Hero MotoCorp’s end and at the dealers.’ Also, without a common platform where product prices were updated on a real-time basis, keeping up with products and spare part prices was a pain. And that’s just two of the multiple processes between dealers and Hero MotoCorp.
24
Sethi believed he could eradicate this problem and Hero MotoCorp’s executives the insights they wanted if he could put all the company’s dealers on a single platform. “This was the time IT could be the business’ biggest enabler,” remember sethi. “We had to improve our customer experience and dealers experience to gain a stronger foothold against competition.” That was the intention of a project that was christened Hero connects: To make processes uniform across dealers, and introduce a direct, real-time, and predictable information channel between the company and its dealers..
1.4 PRODUCTION LAYOUT Manufacturing Hero MotoCorp 2-wheelers manufactured across three globally benchmarked manufacturing facilities. Two of these are based on Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and the latest manufacturing plant are based at Haridwar in the hill state of uttarakhand. Product range Hero MotoCorp offers wide range of two wheeler products that include motorcycles and scooters and has set the industry standard across the entire market segment. 1. HF Dawn
2. HF Deluxe
25
3. Pleasure
4. Splendor +
5. Splendor NXG 26
6. PassionxPRO
7. Passion Pro
8. Super Splendor 27
9. Splendor PRO
10. Glamour
11. Glamour PGM FI.
28
12. Achiever
13. CBZ Xtreme
14. Hunk 29
15. Karizma
16. KarizmaZMRma ZMR
17. Maestro
30
18. Impulse
19. Ignitor
1.5Organization policies Caring for ecology A company that believes in maintaining ecological standards along with business standards. 31
“We must do something for the community from whose land we generate our wealth.” -Chairman Dr.BrijmohanLallMunjal.. At Hero MotoCorp, our goal isn’t limited to business but encompasses the broader spectrum of serving humanity through social initiatives. Hero MotoCorp takes a stand as a socially responsible enterprise respectful of its environment. Hero MotoCorp has been strongly devoted not only to environmental conservation programs but also expresses the increasingly inseparable balance between economic concerns, environmental and social issues faced by business. A business must not grow at the expense of mankind but must serve humankind at large.
1.6 Quality policies Excellence in quality is the core value of Hero MotoCorp 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: Innovation in products, processes and services.. Continuous Improvement in our total quality management system. Teamwork and responsibility Environment policies We at Hero MotoCorp have been committed to demonstrate excellence in our environmental performance on a continuous basis, as an intrinsic element of our corporate philosophy to achieve this we commit ourselves to: Safety policies 32
Integrate environmental attributes and cleaner production in all our business processes and practices with specific consideration to substitution of hazardous chemicals and strengthening the greening of supply chain. Continuous product innovations to improve environmental compatibility. Comply with all applicable environmental legislation and legislation and also controlling our environmental discharges through the principles of “alara” (as low as reasonably achievable). Institutionalize resource conservation in the areas of oil, water, electrical energy, paints and chemical. Enhance environmental awareness of our employees and dealers / vendors, while promoting their involvement in ensuring sound environmental management. We believe that safe work practices lead to better business performance, motivated workforce and higher productivity. We shall create a safely culture in the organization by: Integrating safety and health matters in all our activities. Promoting safety and health awareness amongst employees, suppliers and contractors. Continuous improvements in safety performance through precautions besides participation and training of employees. Ensuring compliance with all applicable legislative requirements. Empowering employees to ensure safety in their respective work places.
1. 7INDUSTRY OVERVIEW India, the world’s second-fastest growing auto market, it in top-gear growth. The country is a hot destination for automobile manufacturers due to its robust 33
economic growth, favourable demographics, higher disposable income, changing lifestyle and positive industrial eco-system. India is expected to become the third biggest automaker in the world within next decade, according to Diane H Gulyas, president, DuPont Performance polymers. Owing to its vertical and horizontal integration with other key segment of the economy, the industry is said to be a major growth driver Competition pressures While the company has lined new product such as the 110cc passion x pro bike and 125cc motorcycle Ignitor for launch in FY13, it is likely to face increasing competition in the executive segment from Honda and TVS. While Honda will pull out all the stops to market its 110cc dream yoga, tvs is also expected to relaunch its popular bike, victor, in a new avatar. Bajaj, too, is expected to launch a bike in this segment.
1.8Current issues Labour unrest brews at Hero MotoCorp’s\Gurgaon unit Following a series of pay increment in the Gurgaon-Manesar automobile belt, a labour problem seems to be brewing over wage settlement teams at the Gurgaon unit of hero MotoCorp, promoted by the manuals. The immediate trigger could have been increment at the manesar factory of former partner Honda motorcycle and scooter India (HMSI) For the past 15days, workers at the hero factory have been wearing black armbands and abstaining from tea within the premises. A company spokesperson, commenting on the issue, said: “wage negotiations are on and talks are progressing amicably.”
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However, a representative of the employees’ union at hero’s gurgaon unit, elaborating on the wage talks, informed: “the management is offering only a marginal hike over that offered to workers at the Dharuhera unit, though cost of living in Gurgaon is much more expensive. We produce more two-wheeler than Honda’s manesar plant. Why should not be given a similar wage hike?” WAGE WARRIOR Recent increments in the automobile sector (wage hike over a three-year period) MARUTI SUZUKI GROSS SALARY: 50% increase to Rs 14,800 TRAVEL ALLOWANCE: of Rs 1,200 INTEREST-FREE PERSONAL LOANSS: Of up to Rs 20000 INSURANCE COVERAGE: Double to Rs 5,500 2800 permanent workers at Gurgaon and 700 at manesar to benefit Hyundai Motor WAGES: 45% increase to Rs 11,000-13,000 per month. AVERAGESALARY HIKE Of Rs 14,283 per month 2,007 permanent workers at Chennai factory to benefit Honda Motorcycle& scooter India SALARY INCREASE: Of50% to Rs 14,770
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ADDITION BENEFITS: Those in the form of diwali bonus, improved med claimpolicy, production bonus, attendance bonus and model and new model launce incentive added 1800 permanent workers at manesar to benefit
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CHAPTER-2 COMPANY OVERVIEW 2.1
HERO
MOTOCORP
SPREAD
IN
INTERNATIONAL
MARKETS Hero Motocorp, the wheeler manufacturer, is planning to spread its wings in the international market by designing and developing new future products according to the global markets by the end of this financial year. The munjals led firm has already scheduled the launch of hybrid scooter leap and is working on the other products to expand its footprint overseas, said the media report. “The leap is not only targeted at Indian customers but is for the global market. In fact, all future product developments plans will be fed by Indian as well as global requirement. That is why we do not term it ‘exports’ operation’ but call it over international business. Our idea is not to see what we have and what we can give but to address what the market requires. All future products will be based on this principal, Hero Motocorp, senior vice president (sales & marketing), Anil dua told media. Hero motocorp hasindentified 30 countries to establish its presence in the international market and has planned to enter 8-10 new markets in Africa and Latin America by the of the current fiscal year. Moreover, Hero is targeting at 10 percent of total revenues of USD 10 billion form its international business by the end of the decade and to meet upon the targets company would set up assembly plants in Kenya, Nigeria, Columbia and Bangladesh.
2.2 HEROHONDA FINALLY BECOME HERO MOTOCORP 37
Here’s the much awaited news in the Indian 2 wheeler market. I started posting about third news in Bike Advice and here it now. Hero Honda has finally become hero motocorp. This much anticipated news is now implemented. The company is the largest two wheeler manufacture in India. The 2006 Forbes 200 most respected companies list had Hero Honda motors ranked at 108 which enabled the world to know about this great brand. Also, the brand trust report published by trust research advisory has ranked Hero Honda in the 13th position among the brands in India. Hero is the brand name used by the Munjal brothers flagship company Hero cycles Ltd. A joint venture between the Hero Group and Honda motor company was established in 1984 as the hero Honda motors limited at Dharuhera, India. Munjal family and Honda group both own 26% stake in the venture to the Munjal family. During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan ‘fill in – shut it –forget it’ that emphasized the motorcycle’s fuel efficiency helped the company grow at a double-digit pace since inception. The technology in the bikes of Hero Honda for almost 26 years (1984-2010) has come from the Japanese counterpart Honda. Hero Honda has three manufacturing facilities based aDharuhera, Gurgaon in Haryana and at haridwar inuttarakhand. These plants together are capable of churning out 3 million bikes per year. Hero Honda has a large sales and service network with over 3,000 dealerships and service point across India. Hero Honda has a customer loyalty program since 2000 called the hero Honda passport program. In December 2010, the board of directors of the hero Honda decided to terminate the joint venture between hero group of India and Honda of Japan in a pleased 38
manner. The hero group of India would buyout the 26% stake of the Honda in jvHonda. Under the joint venture hero group could not sell into international markets and the termination would mean that hero group can exploit global opportunities now. Since last 25 years the hero group relied on their Japanese partner Honda for R&D for new bike models. So there are concerns that the hero group might not be able to sustain the performance of the joint venture alone. When there were rumours that the company depends totally on its Japanese counterparts- Honda for all its R&D and that the company would face a tough time following the exit, the company proved the concept wrong with a series of upgraded (face lifted actually) bikes making the company to be in the limelight always. The company has bikes right from 100 cc to the 225 cc. The pleasure scooter is also a decent performing vehicle for the company.
2.3KEY COMPETITORS The street will be keenly monitoring the battle between Honda and Hero, given that the executive segment accounts for about two-thirds of overall motorcycle sales, and that Honda was until recently Hero’s partner(for 26 years), with equally good understanding of the Indian market. Hero currently dominates the executive segment, with 74 percent market share. Due to an estimated slowing in the sector, citi has cut volume forecasts for Hero and anticipates slight erosion in its market share, particularly in the executive segment. The battle in the segment, however, will be played out over along term, with Hero unlikely to yield much in the short term, believe experts. Says the head of research at a leading brokerage firm, “Though Hero Motocorp will shed some market share, the gains for competition in the short term will be marginal, as Hero still has enough brand pull and distribution reach. “As a
39
comparison, while Hero has a 4000 dealer network, Honda’s is just a fourth of this. This will be difficult to replicate any time soon. If the Honda bike is successful, it could generate sales volumes of 500000-750000 units annually. The increment market share Honda would capture within the commuter bike segment in fy14 would be six to nine percent, feelciti analysis. Scooters, export focus Hero is also looking to improve its share of the scooter market, currently 16 percent. Unlike motorcycle, this segment expected to clock another year of higher volume, with growth estimates pegged at a little over 15 percent. The company has recently launched a gearless scooter, the maestro. While analysts say it is too early to predict its impact on the segment (dominated by Honda’s active), Vijaysarthy T S and N Ravindranathan of spark capital say the launch is likely to impact sales of TVS’ Wego. Hero is also likely to test market its hybrid scooter, the Leap, later this year. The other area which could open substantial opportunities for hero is expert, current at two percent of its volumes. The company has an export target of a million units by 2016-17, from just over 100000 currently. Hero’s managing director and CEO, PawanMunjal, has already indicated exports would be a focus area and at the company was targeting opportunities in markets such as Africa and Latin/central America. To compete effectively, both in the premium end of the domestic market as well as exports, the company recently entered into a strategic tie-up with US-based Erik Buell Racing. Analysts say the move will help the company turn the heat on Bajaj Auto in the premium segment and offset some of the pressure in the executive segment.
Hero MotoCorp Ltd. Competition 40
Hero MotoCorp is putting forth an spic performance in the manufacture of twowheeled motor vehicles. Serving the Indian market, hero MotoCorp (formerly Hero Honda Motors Ltd).Sells more than 3 million bikes annually with offerings ranging from fuel-efficient scooters to powerful motorcycles. The company, considered the largest two-wheeler manufacturing company in the world, export to Africa, Asia, Eastern Europe, and Latin America. Hero MotoCorp started as a joint venture between hero Group (run by the Munjal family) andHonda, Motors. In mid-2011 Honda sold its 26% stake In Hero MotoCorp to hero Group. CEO PawanMunjal and the Munjal family own 52% of Hero MotoCorp. Top competitor for Hero MotoCorp Ltd. Get a clear understanding of a company competitive landscape. Competitors 1. Suzuki motor competitor. 2. Yamaha motor competitors. 3. Bajaj auto limited.
2.4 Environment scanning Pest analysis A PESTanalysis is used to identify the external forces affecting an organization. This is a simple analysis of an organization’s political, economical, social and technological environment. A Pest analysis incorporating legal and environment factors is called a PESTLE analysis. Social environment We would like our vendors to undertake the following action and demonstrate continual improvement in their environmental performance: 41
Establish the environmental footprint of their operations. Develop green management policies to promote conservation of natural resources. Institutionalize an effective compliances management tool within the business strategy. Monitor the pollution load (emission, effluents, wastes, hazardous/ nonhazardous/other types, etc.) released in the ambient environment. E generation from the processes. Improve environmental performances by adopting pollution prevention strategies. Set targets to reduce water, energy utilization and waste. Be a safe hero As a world leader in the two wheeler and a caring company, Hero MotoCorp has taken up the initiative to inculcate a sense of road safety and riding habits amongst its customers and public at large assisting individuals in making the right judgments on the road, and helping them choose the right riding gear that can have save your life! Safety riding education is made an integral part of the motorcycle delivery at the 4s dealership (sales, service, spares and safety). These dealership have a specially designed interface called the safety corner where advisors educate the customers on correct riding techniques and provide important and information related to health, safety, environment, road signs, first aid,etc.using specially designed audio visual communication.
POLITICAL ENVIRONMENT The first element of a PEST analysis is a study of political factor. Political factors influences organization in many ways. Political factors can create advantages and
42
opportunities for organization. Political factors include the following types of instrument: - Legislation such as the minimum wages or anti discrimination laws. - Voluntary codes and practices - Market regulations -Trade agreements, tariffs or restriction -Tax levies and tax breaks -Type of government regimeeg communist, democratic, dictatorship Non conformance with legislative obligation can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices.
ECONOMICAL ENVIRONMENT The second element of PEST analysis involves a study of economic factors. All businesses are affected by national economic factors. National and global interest rate and fiscal policy will be set around. Economic condition. The climate of the economy dictates how customers, suppliers and other organizational stakeholders such creditor behaves within society. An economy undergoing recession will be high unemployment, low spending power and low stakeholder confidence. Conversely a “booming” or growing economy will have low unemployment, high spending power and high stakeholder behaviour. Furthermore organization will need to review the impact economic condition... TECHNOLOGICAL ENVIRONMENT 43
Hero Motor Corp. announced US-based Erik Buell Racing (EBR) as a technology partner on Wednesday. Founder Erik Buell is renowned for his engineering skill in motorcycle racing. In 1983, he started a company making motorcycles in Wisconsin. Harley- Davidson eventually took over the unit, distributing the Buell Motorcycle company machines through its dealerships. But the global slump saw the Buell division being closed in 2009. Buell launched Erik Buell Racing (EBR) shortly after that. Pawanmunjal, Is the partnership confined to technology sharing or will there be equity involvement as well? PawanMunjal, CEO, Hero MotoCorp. We will come to that at a later stage. Right now it’s more about technology. Will EBR be your only technology partner? No, we will have multiple alliances. We will be looking at specific and niche experts in various areas and various plans. Will EBR also help with design? They will be working at our R&D (research and development) centre in close association without engineers. There will be a lot of synergies. On the design aspect, we will get back to you as and when there is progress. This is being done jointly. Their people will come and work with us in our R&D. our people are stationed there. They are working together. Training is happening at both ends. At our end, we are investing in R&D and people. It’s not something that happens overnight. It will take at least a couple of years for our own R&D to be fully equipped. Also, we are not starting from scratch. We have the basic infrastructure. We were doing a fair amount Green Vendor development program 44
The green vendor development program of Hero MotoCorp is the supply chain initiative drive taken to extend the corporate environment responsibility down the supply chain. It is based one-to- many mentoring program. As the production is increasing at hero motocorpfacilities, the manufacturing activities at the vender end are also increasing in the same proportion, thus giving rise to the environmental load. In an order to improve the vendor environmental performance hero motocorp has developed this exclusive vendor development program, which is a collaborative effort between the hero motocorp environmental group and the materials department, in order to influence the vendors to adopt pre-specified environmental requirements undertaken environment initiatives. Undertaken environment initiatives. We at Hero motocorp ltd. (HMCL) are continuously striving for synergy between environment and technologies, by providing products and services that meet the quality, performance and price aspirations of our customer. While doing so , we maintain the highest standards of ethics and societal responsibilities. At Hero Motocorp environmental protection and preservation is one of the core business values. As a responsible corporate citizen, we believe that we can improve environmental generation in our premises but also partner with vendors to ensure that they adopt similar environmental management strategies. Hero motocorp, expanding the horizons of its environmental practices, is launching a green vendor development program (GVDP) in collaboration with our business partners.
2.5 Porters five forces model Porter five forces analysis definition
Porter five forces analysis is a framework for industry analysis and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore 45
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 unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. The five forces model has three components that measure competition. External forces include: intensity of existing rivalry, threat of substitutes, and threat of new competitors. These forces are out of the control of the subject company, whereas, internal forces (bargaining power of suppliers and bargaining power of customers) are a direct result of the subject company’s decisions. The combination of these forces determines the level of competition that will affect the subject company. The Five Components of poster’s five forces model are listed below: Intensity of existing rivalry (external): This is usually the most important determination of competitive forces. It gauges the level of competition between rivals that compete directly on prices and quality. Examples include: low exit barriers and low storage costs. Threat of substitutes (external): The availability of substitute products increases the chances that a business will lose customers; thus, substitution risk lowers profitability. Examples include: limited number of substitutes and high cost of switching to substitutes. Threat of new competitors (external): new competitors are often drawn to an industry because of the opportunity to make profits. When new competitors enter markets, they become rivals to existing market participants, which tends to lower the profitability of all market participants. An increase in competition lowers profit with all else staying the same. Examples of the external component include: patents limiting new competition and industry requires economies of scale.
46
Bargaining power of suppliers (internal): The more pressure suppliers can exert on a company, the more bargaining power they have over that company. Bargaining power generally increases profitability for the party that exerts it. Examples that affect bargaining power to suppliers include: volume is critical to suppliers and there are diverse distribution channels. Bargaining power of customers (internal): The more pressure customers can exert on a company, the more bargaining power they have over that company. Bargaining power generally increases profitability for the party that exerts it. Examples that affect bargaining power to customers include: limited buyer choice and large number of customers. How Does Porter’s Five Forces Analysis Improve? Wiki Wealth uses the five forces template to improve the qualitative analysis for each investment research report. Generally, the more competitive an industry, less profits are available to each participant. Therefore, investors should look for industries with low competition. The five forces analysis helps to model the characteristics that affect competition. Sum of the world’s knowledge to produce the highest quality research reports for over 6,000 stocks, ETFs, mutual funds, currencies, and commodities. To ensure quality, Wiki Wealth reviews all inputs……
HERO MOTOCORP FIVE FORCES ANALYSIS 1. Intensity of Existing rivalry Large industries allow multiple firms and produces to prosper without having to steal market share. When industries are growing revenue quickly, they are less likely to compete. 47
2. Bargaining power of suppliers High levels of competition among suppliers act to reduce prices to producers. This is positive. The more diverse distribution channels become the less bargaining power a single distributor will. When suppliers are reliant on high volumes, they have less bargaining power, because a producer can. 3. Threat of Substitute Unlimited number of substitute. Substitute products are inferior. 4. Bargaining power of customers When buyers are less sensitive to prices, prices can increase and buyers will still buy the product. When customers cherish particular products they end up paying more for that one product.
2.6 MARKETING STRATEGIES PRODUCTS OF A COMPANY Hero MotoCorp offers wide range of that include and scooters, and has set the industry standards across all the market segments.
48
PRODUCT
UNITS
NAME
INSTALLED CAPACITY
PRODUCTIVE QUANTITY
SALES QUANTITY
SALES VALUE (RS CRORES)
Motorized
N.A
0.00
0.00
6235205.00
23494
N.A
0.00
0.00
0.00
1529.9
N.A
0.00
0.00
0.00
108.80
N.A
0.00
0.00
0.00
53.480
N.A
0.00
0.00
0.00
48.700
N.A
0.00
0.00
0.00
17.960
Two Wheelers up to 350cc engine capacity Spares (Two Wheelers) Other Operating Income Other Services Duty drawback Scrap
PRODUCTS OF A COMPANY ALL bikes and scoter models of Hero in India
49
50
51
2.7
4 P’S product, place, price, promotion
Hero motocorp ltd. (formerly hero Honda motors ltd.) is the world’s largest manufacturer of two- wheelers, based in India. In 2001, the company achieved the coveted position of being the largest two – wheelers manufacturing company in India and also, the “world no. 1” two- wheeler company in terms of unit volume sales in a calendar year. Hero motocorp ltd. Continues to maintain this position till date. The story of hero Honda began with a simple vision- the vision of a mobile and an empowered India, powered by its bikes. Heromotocorp ltd., 52
company’s new identity, reflects its commitment towards providing world class mobility solutions with renewed focus on expanding company’s footprint in the global arena. Hero MotoCorp’s mission is to become a global enterprise fulfilling its customers’ needs and aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts its customers into its brand advocates. The company will provide an engaging environment for its people to perform to their true potential. It will continue its focus on value creation and enduring relationships with its partners. Hero MotoCorp’s key strategies are to build a robust product portfolio across categories, explore growth opportunities globally , continuously improve its operational efficiencies, aggressively expand its reach to customers, continue to invest in brand building activities and ensure customer and shareholder delight. PLACES Hero
motocorp
are
manufactured
across
three
globally
benchmarked
manufacturing facilities. Two of these are based at gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and the latest manufacturing plant are based at haridwar, in the hill state of uttarakhand. PROMOTION In the 1980’s the company pioneered the introduction of fuel- efficient, environment friendly four strokes in the country. It became the first to launch the Fuel
Injection
[FI]
technologyin;
with
the
launch
of
the
in June 2006. Its plants use world class equipment and processes and have become a benchmark in leanness and productivity.
53
Hero motocorp, in its endeavour to remain a pioneer in technology, will continue to innovate and develop cutting edge products and processes PRODUCTS Hero motocorp offers wide range of that includes motorcycle and scooters, and has set the industry standards across all the market segments. BRAND AND PRICES The new hero is rising and is poised to shine on the global arena. Company’s new identity “Hero MotoCorpLtd.”Is truly reflective of its vision to strengthen focus on mobility and technology and creating global footprint. Building and promoting new brand identity will be central to its initiatives, utilizing every opportunity and leveraging its strong presence across sports, entertainment and ground- level activation. 2010-11 PERFORMANCE Total unit sales of 54, 02,444 two- wheelers, growth of 17.44 per cent total net operating income of INR 19401.15 crores, growth of 22.32 per cent Net profit after tax at INR 1927.90 Crores total dividend of 5250% or INR 105 per share including Interim Dividend of INR 70 per share on face value of each share of INR 2 each EBITDA margin for the year 13.49 per cent EPS of INR 96.54
2.8 STP (segmentation, targeting, positioning) Segmentation Dua said Hero MotoCorp is trying to create a new segment in the market with the impulse. ‘We are not positioning Hero Impulse as a niche segment motorcycle. We are targeting all the typing 150-cc bikers who have desires to do off-road activities with their motorcycle”.
54
Initially, the company will target metros and tier-I in the first phase and then gradually reach out other smaller cities and towns for the new models, Duasaid .To promote the Hero Impulse the firm, which is one of the sponsors of the outgoing India-England cricket series, is giving away Hero Impulse motorcycle to a player who excels with both bat and ball in a match. ‘The idea is to bring out the dual purpose of the hero Impulse, he said, adding that the company would also conduct test ride in different cities. ‘We are not looking at this bike as a niche product, but trying to have an extensive market reach, ‘he added. Is hoping to compensate for falling motorcycle sale by pushing scooter sale. The company is aiming to take scooter sales from the current 7% to total sales to 12% over the next one year. So as Hero gets ready to take on former partner Honda in the scooter market, Ronojoybenerjee of CNBC-TV 18 says opinion is divided on the timing of this move. Increase competition and pressure on market share in the motor cycle segment could push India’s largest bike market to step up its focus on its scooter business. Hero Motorcycle wants to increase the share of scooter sales to about 12% of total from the current 7% at present. For this purpose, the company is now looking as increasing production of scooter and will also look at beefing up its current product offerings. The move does not come as surprise as the company’s sales in the second quarter of this fiscal recorded a 14% decline –the sharpest fall in 10 years – that dragged the company’s net profit for the quarter to Rs 441 crore --- lower by 27%. Anil Dua, senior vice president – marketing & sales, Hero Motor Corp, says that scooter is an important business for the company. We are increasing scooter production to 60,000 units per month from 40,000. We will increase our overall scooter sales to two-wheelers also to 12% from 7-8% now. The scooter market is likely to become 25% of the market we will keep growing this business. 55
With a plan to increase capacity to 10 million units with the addition of its manufacturing facilities in Gujarat and Rajasthan, Hero Motor corp. over all scooter shares could be well over one million unit mark in the next few year. Hero entered the scooter segment in2006 in market that former scooter specialist decided to exit. Since then of scooter sales to the overall two-wheeler business has increased twofold to nearly 20% for the financial year. while overall motorcycle sales has declined marginally the scooter segment led by Honda’s Activa and Hero’s pleasure and maestro has jumped over 20% nearly 60% of HMSI’s total sales from scooters today. YS Guleria, vice-president, sales &marketing, HMSI, says that we cannot comment on what competition is doing but we are ready for any challenge. We are ready for any kind of challenge. We are clear market leaders in automatic scooters. We have exciting product plans lined up hence we will not give away ground to other players in the market. Going the scooter way may not be the answer to Hero Motor Corp’s problems. Honda is the clear market leader and Hero will struggle to find its feet without a technology edge or a clear brand positioning. It may also prudent for Hero to open a new battle front at this time as it struggles to secure its leadership in the motorcycle market. TARGETING First call research has recommended hold rating on with a target price of Rs 1969in its march 11, 2013 research report. “Hero MotoCorp has merged with Hero Investment Pvt. Ltd to create incremental shareholder value of Hero Motor Corp Ltd. Hero Motocorp commenced construction of its fourth manufacturing plants and the global parts centre in 56
Neemrana in Rajasthan with an investment of about Rs. 550 crore. During the quarter, the robust growth of Net sales is increased by 2.59% to Rs. 61876.20 million. Hero MotoCorp has also soon going to announce the launch of Brand Hero in its new markets in Latin America and Africa. Hero Motocorp sold a record 5, 57,797 units of two wheelers in January this year. This is HMCL’s highest-ever sales for any single month. The company new facilities are expected to be operational towards the end of the financial year 2013-14, Net sales and pats of the company are expected to grow at a CAGR of 9% and 5% over 2011 to 2014E respectively. The company’s net profit decreased to Rs.4878.90 million against Rs.6130.30 million in the corresponding quarter ending previous year, a decrease of 20.41%. Revenue for the quarter rose by 2.59% to Rs. 61876.20 million from Rs60 million when compared with the prior year period. Reported earnings per share of the company stood at Rs 24.43, registering 20.41% decreased over previous year period. Profit before interest, depreciation and tax is Rs.8687.50 million as against Rs.10192.70 million in the corresponding period of the previous year. POSITIONING India’s largest two wheeler maker Hero MotoCorp today said it will soon start selling the first ‘Hero’ branded bike to be launched after the break-up of Hero Honda last year, impulse in the Indian market at Rs 66,800 (Ex-Showroom, Delhi), according to a BS report quoting PTI. The company is positioning the new 150-cc motorcycle as a dual purpose vehicle that can be used for both normal commuting as well as off-road adventure. It is using the ongoing India-England cricket series as a platform to promote the new product, said the report. “Hero Impulse is the first motorcycle from us which will be sold only under the Hero brand. We have already started dispatched and it will soon be available at 57
showrooms in metros and tier-I cities,” Hero MotoCorp Senior Vice-president (marketing and sales) AnilDuatoldtheagency. While announcing the new brand identity of the company in August this year in Landon, Hero MotoCorp had introduced Hero Impulse and a 110-cc scooter, Hero Maestro, to be sold under the hero brand, ‘As per our agreement with Honda, this bike is with the support of their technology and we are not selling it under the Hero Honda brand,’ motorcycle”.
2.9DISTRIBUTION CHANNEL The host city for the 2012 Olympics was burning on the night of august 9. Landon was convulsed by the worst rioting in Britain in living memory. The memory paper was emblazoned with the silhouette of a woman jumping from a building in flames. Policemen moved through apocalyptic streets, hunting thugs and looter to the rise and fall of sirens. But in a surreal scene only Bollywood could have conjured up, a different kind of pyrotechnics was exploding on the Southbank of the Thames, in the massive Millennium Dome, now called the 02 Arena There, amidst fireworks, a laser show, prancing heroes and heroines, and the obligatory ode A.R. Rahman, the main item descended from rafters – Hero MotoCorp’s new logo three geometric chunks forming an isometric “H” – to the hoarse cheers of 1300 dealer, vendors and employees led by Pawan Kant Munjal. Less than eight months earlier, Munjal and his merry men were
there to
celebrate as divorce parties go, this one too, was a bit over the top, brimming with optimism about the future. But no one badmouthed the erstwhile spouse. Instead, Honda was fondly remembered. That may be because Hero got a true sweetheart deal; it got to keep the house, the car and the kids. The Munjalfamily, the Promoters of Hero, who held 26 percent, the same as Honda, got to buy out the 58
partner at a price significantly lower than the market price rumours put the confidential price at half the market value. Hero can launch products with Honda technology till June 2014 and can continue to sell them for as long as it wants. Hero Honda’s exports were confined to some minor abroad since Honda did not want a clash with its export from Japan; Hero MotoCorp can go anywhere. Not surprisingly, it was with palpable ebullience that pawan Kant Munjal, who was just30 years old when his father Brij Mohan Lall forget the venture with Honda in 1984, walked on to the 02 stage and said the company held the event in London to showcase “our new global ambitions as well as to highlight both our legacy and modernity, like London does”. That’s a long journey for a group that started with a small cycle repair shop in old Delhi’s Chandnichowk a year the Independence and later moved to Ludhiana to set up Hero Cycles. Until the tie-up with Honda, the munjals, who came from Pakistan in the aftermath of the dreaded partition, were known just for their Ludhiana-made cycle. Twenty-seven years later, the Munjals once again need to invoke the Ludhiana spirit – the town in Punjab is known to spawn entrepreneurs, including the country’s telecom czar Sunil Mitttal to face life after Honda. They have begun on a good note, but a good divorce settlement can ensure only short-term happiness; it does not guarantee the proverbial happily-ever-after. That is what Hero Honda shareholder family of 67,000 would be sweats over. A part of the 30-share sensitive index of the Bombay stock Exchange, the is one large cap which is actively traded and is among the top 25 stock by trading volume. As many of you might know, responsibilities get shared when you live as a couple. When you are single, there is always something that causes a headache. It could be the plumbing, the cooking, or the electrician may not turn up. And there is the fine print of the divorce; here is paying Honda Rs 2479 crore as license and exports fees. That is 14 percent of hero’s 2010/11 revenues. 59
Ravi Sud, Hero’s chief financial officer, says the figure will go down just 2.2 percent of 2013/14 revenues on a pro-rate basis. However, this is about more than just money. This shows how dependent Hero was - and is – on Honda for technology. Among Indian two wheeler companies, only Bajaj Auto, which morphed under Rajiv Bajaj from a scooter maker into a motorcycle company in the late 1990s, has done well on its own. It has had a technology tie-up – no equity partnership –with Kawasaki of Japan, but its biggest success of the recent years, the Pulsar, was developed in-house. Bajaj does not even share the badge with Kawasaki any more, though it sell some high-end motorcycles imported from Kawasaki under its premium ‘prebaking’ network. On the other hand, Kinetic, promoted by the Pune-based Firodia family, collapsed after Honda walked out of their scooter making joint venture. LML, promoted by Kanpur-based Deepak Singhania, is making a feeble comeback with electric scooters after its Vespas disappeared in the aftermath of its breakup with Italy’s Piaggio. TVS, which split with Suzuki, carries on and develops new products in house, but it has always been, despite the thrust provide by stepthrough, a distant third in the two-wheeler market- making little of chairman avowed ambition to
overtake
Venuesrinivasan’s
Bajaj.
While Hero has done “significant” work on stayling and design of its products for a few years now, Munjal admits that the company has little know-how of its own in the crucial engine and gearbox departments(see box: Cracking the Bajaj Code). Hero MotoCorp unveiled two new products in London, a scooter named Maestro and a motorcycle named impulse. The two with wear the Hero badge – no Honda there – but
have been developed in association with the Japanese
company. 60
Every village householdIn the financial year, four million motorcycles were sold outside the metros and big cities, giving 45 percent of the total sales to rural and semi urban areas. These are markets where it is not easy to outpace the company which made its bone in cycles. If this outlet does not get you, the next one will. Hero has more than 4500 touch point across the country, almost double then 2300 it had in early 2006, and expects to have 5000 by March next year, including over 800 full-fledged dealers (several dealers own the multiple outlets). Bajaj has 589 dealers, according to its latest annual report. “Small towns, villages… we are everywhere,” says Anil Duas, Senior vice President, Marketing and Sales, Hero MotoCorp. Add to this Hero’s focus on rural sales, which have increased from 45 percent of the total in 2007 to 47 percent, and you begin to understand why Hero Honda’s share of the motorcycle market stands at 56.5 percent, well ahead of Bajaj’s 25 percent and the below seven percent share of Honda’s fully owned subsidiary, Honda Motorcycles and Scooters India, or HMSI Rajiv Bajaj outside Bajaja^TMs Pune plant Cracking the Bajaj Cod Around the turn of the century, scooter lost their appeal. I soon become apparent that Honda’s fully owned subsidiary Honda Motor cycles and scooter India, would be the only; major votary of the stolid vehicle that had carried Indian families for decades. The other would, at best, look at scooter as supporting cast to the protagonist; the agilesturd .Motorcycle, whose utility on Indian terrain could not be hatched by scooters. Bajaj Auto, which had risen to the top on the back of its scooters- in the 1980s, it was common or buyer to wait for a decade to get a Bajaj – embraced motor cycles with the zeal of the new convert. Going the whole hog, the company, which was converted into an out-and-out motorcycle maker by Rajiv Bajaj, the elder of the two sons of Chairman Rahul Bajaj, also wanted to be self-reliant in technology. It invested heavily in research and development, not only in the simpler frame and aesthetic department but also in engines. 61
The result was the dual Twin spark, or DTS, engine which went into that boy racer’s dream, the Pulsar, which continues to dominate the 150cc segment. Which Hero and Honda have managed to chip away at its lead, Bajaj is still reaping the dividends of its R&D efforts. Can Hero match that? Managing director Pawan Kant Munjal says he has had a “large R&D team working mainly on the frame and looks of our products”, but he concedes that they are a bit thin on the “engine side of thing”. Hero’s success in the Indian market has been on the back of Honda’s reliable 100cc engine, which has surprised many its longevity. Barring a few tweaks, the same engine has been driving products for two decades. Until June 2014, Hero’s fortunes remain tied to Honda, as the Japanese company will continues to provide technology (read engine). New products after that will have to be developed without Honda. Munjal talks about a group of “Japanese people” with whom Hero will jointly develop products. This, while boosting inhouse R&D at the factory in Dharuhera, Haryana. “I am quite sure we can do this,” says Munjal.
2.9.1 Promotion strategies Not only do manufacturers have to develop innovative new products, they have to create high capacity channels and reduce channel conflict. The success of your product or service is riding on the quality of your channel strategy. 1. As tough as it is for marketing executive to make channel strategy changes, it’s even worse to jeopardize your success by running your business on cruise control. Frequent channel assessments should be conducted on a regular basis. The manager who understands and plans for changes will capture more market share. Whether the market is
62
slowly shifting or you are driving change, ask yourself the following question: 2. Coverage: Does your channel strategy give you access to each customer segment? To achieve success, you must be present at the point of sale. Do you have the ability to reach your target audience at each purchasing cross road and at the key buying time? Are your channels calling on the right customers? 3. Competency : Does your channel marketing strategy have the skill and capabilities to communicate and deliver your value proposition? Value represents the benefits the customer perceives versus the total cost the customer incurs. These costs include all adoption costs, risk and the purchase price the customer pays. You “win” more when customers perceive your offer as a greater value than the alternatives. 4. Your channel strategy must meet the need and the expectation of your customers. Do your customers want knowledgeable sales help? Does your channel have strong pre sales skill? What are their transaction capabilities? What about p to post-sales support? Your commitment to your customers extends beyond the purchase of your product. 5. Connection: Your channel marketing strategy must provide the customer relationship necessary to become a valued customer partner. The channel should introduce you to customers’ senior management, planning and R&D to expend knowledge of your customers’ needs. The affiliation between your channel and customers. Above all, your customer partner should not be ‘just another vender.” Your goal is to develop structural and social bonds with your target customers. What 63
role is your channel strategy playing to make this happen? Is it a help hindrance or not a factor at all? 6. Commitment: You can’t overestimate the importance of your relationship with your channel partner. Your success depends in their success. If your channels are congested with conflicting product lines, you’re not receiving the level of commitment you need to win the sale. Can you identify gaps in your relationship that could be repaired? A good relationship with your channel partner can accelerate the adoption of your product and dramatically reduce the resources needed to meet your market share objectives. 7. Each of these performance metrics impacts the market share your channel strategy can deliver. QDI can help you determine if your existing channels are capable of achieving your three to five year objective. Hero Motocorp Chairman BrijmohanLall formally announced on July 29, 2011 the end of relationship with Honda and soon after that the new logo and corporate identity, with the tagline “Hum Mein hai Hero” , was launched and communicated through different media. The first priority was given to the TV ads and print media. A 120s TVS and a full page print ad were the branding strategy planned and executed. Later radio channels and online social media were focused. The TVS had everything it needed (AR Magic, Indian Culture, True life story and patriotism –since ad was written as an anthem and was launched on independence day) to create the spirit of a hero.
Branding factors: 64
Charles Wright, managing director says, in an interview with afaqs, that it did take them 3-4 months in launched their logo. The red color indicated continuity & change and angular ‘H’ symbolized that Hero was no longer dependent. AnuragKashyap, the director too many eminent films like black Friday, Bombay Bombling etc…, was proposed to direct this ad so as to bring a natural life and story to it. The commercial was created with the motive of understanding that ‘everyone had a hero inside him/her’ rather than creating an ad with the motive as a manufacture. The TVC had everything it needed (AR Magic, Indian Culture, True life story and patriotism – since ad was written as a anthem and was launched on independence day) to create the spirit of a hero. Bollywood actors Ranbirkapoor and cricketer IrfanPathan are also brought in to endorse the brand. It is said HrithikRoshan will be also continuing with the brand.
2.9.2 REASON FOR EXPENSION Hero motocorp, the leading two wheeler manufacturer, is planning to spread its wings in the international market by designing and developing new future products according to the global markets by the end of this financial year. The munjals led firm has already scheduled the launch of hybrid scooter leap and is working on the other products to expand its footprint overseas, said the media report. “The leap is not only targeted at Indian Customers but is for the global market. In fact, all future product developments plans will be fed by Indian as well as global requirements. That is why we do not term it ‘exports’ operations but call it our international business. Our idea is not to see what we have and what we can give but to address what the market requires. All future products will be based on this principle, Hero motocorp, senior vice-president (sales & marketing), and Anil dua told media. Hero Motocorp has identified 30 countries to establish its presence in the 65
international market and has planned to enter 8-10 new markets in Africa and Latin America by the end of the current fiscal year. Moreover, hero is targeting at 10% of total revenues of USD 10 billion from its international business by the end of decade and to meet upon the targets the company would set up assembly plants in Kenya, Nigeria, Columbia, and Bangladesh. Hero motocorp, the countries largest two wheeler manufacturer, on Monday announced an investment of rs 2575 crore to set up, among other things, two more manufacturing units to the existing three factories. Those two new ones are to be in Gujarat and Rajasthan. Also, an integrated research and development centre is to be made operational by the middle of 201314. Hero has a total annual capacity of nine million two-wheelers and this move would put it well ahead of rivals Bajaj auto (capacity of 6.3 million by 2013-14) and its former ally, now rival, Honda, which is building two-wheeler capacity of four million units yearly and making an aggressive entry into the 100cc mobile market. The two new units of HERO would together add an additional capacity of two million units. BIG PLANS Unit
Investment (Rs crore)
4th two-wheeler factory in
Date of Commission
400
Q1 FY14
1100
Q2FY14
Rajasthan Another, the5th, in Gujarat R&D centre at Kukas, Rajasthan
400 66
Q2FY14
Capacity expansion at Dharuhera, gurgaon and
500
ONGOING
175
ONGOING
Haridwar plants Other investments
The Munjal-promoted company had bought out its joint venture partner of 26 years, Honda, in December 2010.it had agreed to take HMC’S 26 % stake in the JV, HERO HONDA, for RS. 3842 crore. It is also putting up RS 400 crore to set up its R & D centre, where the next bikes are to be conceived. Earlier, Hero Honda was dependent on the Japanese partner for new bikes as well as technology, and did not make any major investments in this area. “We have huge investment plans in various parts of the organization. We will be setting up our fourth plant at Neemrana in Rajasthan, which will come up first.’’ Said managing director and CEO Pawanmunjal.
2.9.3 REASON FOR DIVERSIFICATION It’s been over a year since HERO MOTOCORP parted ways with Honda. As the World’s largest two-wheeler maker scripts its own story, its MD & CEO, Mr.PawanMunjal, tells Business Line how multiple technical alliances will help it rapidly cover the time it lost out in developing proprietary technology. With plans to look into new segments and spread beyond two-wheelers, this will be critical to its global plans and help meet a $10-billion turnover target over the next 5-6 years. Your first technical tie-up is with Erik Buell Racing (EBR). Where does it figure in your game plan? 67
Though EBR does high-end bikes and has technology for high-performance, racing bikes, this can be adapted for mid-segment bikes beyond 200cc. I feel they have lots of new ideas, I think I can talk to them about even 100cc engines over time. Some of our current bikes with EBR technology will be launched by the next fiscal. These will probably be a mix with Honda Technology as it’s too short a time to completely shift. We’re also working on completely new platforms with EBR, which would be launched by 2013-14. Ideally, how many tie-ups would you look at? We will not restrict ourselves to a single technology/arrangement, but have multiple tie-ups with experts. To my mind, 3-4(tie-ups) is a good number. With EBRwe’re finding everything forma certain segment of bikes, with somebody else (AVL, Ricardo) were working on only engine. For styling, we will hire experts, since our customer is global; we will have to become a multinational as well Were also working on own smaller engine in our R&D,with the support of technology partner, In the 100-125cc range. Will hero Moto venture beyond two-wheelers? There definitely is a vision to do that, but right now we’re focusing our energies on two-wheeler. There is a plan to diversify into other segments, maybe cars or commercial vehicles- thought that’s a more mid and long-term strategy. At an about 50 per cent discount, Hero stuck a strong bargain in buying out Honda’s stake
68
We believe we got a very good term of the valuation of the shares that we got back the transition arrangement and our signing of two new licenses The arrangement is that we have to make a certain amount of payment to Honda over three years. It‘s not royalty really but more a lump-sum payment that we agreed with them to retain the right to manufacture the models here. That will start happening soon. What gains do you think Honda walked away with? Both partner benefitted from the joint venture. Before we started around 1985, the Honda brand was relatively unknown. After that, Honda cars came in and then power products. Also, they gain end market experience. I would think supplies are very important. Going forward there would be synergies in various area, which if they desire and work out well for both companies and the suppliers there can be some arrangement.
2.9.4 REASON FOR CONTRACTION Investor faith in the country‘s largest motorcycle maker, has been shaken. Earlier in the month, a 1% contraction in December quarter’s sales volumes when compared with a year ago, coupled with a significant drop in market share to competition, had set the stage for lower expectation .But the20.4% year-on-year drop in net profit to rs.487.9 crore has quashed analysts’ hopes of a better outlook on grounds that a better winter agricultural harvest (rabbi crop) would lift demand from rural areas. It was a significant 17% below Bloomberg’s consensus estimates. The biggest jolt was a precipitous drop in operating margin to 12.6%-305 basis points (bps, or 3.05 percentage points) from a year back and 128 bps even compared with the preceding quarter. Cost pressures by way of higher raw material to sales expenses and a little over a RS. 100 crore jump in advertising expenses to 69
promote new models from its stable ate into income earned. The 3.6% increase in average realization per vehicle could do nothing to save profitability. Operating profit plunged, too, by 17.5% from the year-ago period to RS.778.7 crore, although it was marginally higher than the September quarter. The management, in its analysts’ conference call, reportedly attributed the fall in profits to new products with a higher raw material cost and ad-spending and conceded that profit margins are lower on some new launches. The change in product mix will only get reinforced going forward, which will, in turn, put to test the company’s ability to rev up profitability to higher levels. Although employee costs as a percentage of sales rose very marginally, this could rise in the future, as media reports suggest that wage negotiations are round the corner.
2.9.5 Comment on Organization leadership Hero motocorp union leaders plan hunger strike for higher wages NEW DELHI: situation can worsen at Hero motocorp’s troubled as workers seeking are, concidring to go the ‘Anna way’ with an within the factory premises if there demands are not met. Even as talks are being held to resolve the issue that has been hanging fire since august last year, resentment among the worker is growing and there is a sense that something “concrete “need to be done to make the management agree to demand, some of the worker briefed on the move told TOI, though wising anonymity “The management is just not ready to agree to our demands and this is not acceptable to us. Our patience wearing out and our union leaders will go on an indefinite hunger strike, just like activist, if the matter is not resolved soon, “the workers involved in the wage negotiation with the management-said.
70
The management of has, however, said it cannot be “coerced into decision governed by pressure tactics”. ‘Hero MotoCorp has always given top priority to the overall welfare and wellbeing of all our workers….And we will strive to react at a reasonable, sustainable and sensible settlement, “a company spokesperson had said earlier. The two sides have been negotiating a fresh wage settlement over the last six months, but so far it has not yielded any results. The workers are understood to be asking for an increment of between rs 15000 and rs. 18000 ( over a three year period), much higher than the RS.6500 increment given to workers at the bike major’s Dharuhera plant in2011. Gurgaon;s labour union leaders justify the demand for higher increment, saying that cost of living is higher in the city which is part of the national capital region(NCR). The workers said that they will now make it clear it to the management that they cannot be holding the talks in perpetuity, and a decision has to be taken soon. “This is the reason that the hunger strike is being contemplated’’, one of them said. Hero motocorp management, however, is not very keen to give a fatter increment to workers at gurgaon as it might spoil its wages settlement at Dharuhera and lead to similar demands from labour union leaders there. The workers at the gurgaon plant, who had reduced production temporarily to press for their demands, are still maintaining the output. However, union leaders have threatened that this may not continue for long if their demands are not met. “if they do not agree to the increment levels suggested by us, we will have to go on strike,” kanwalpreet Singh, president of hero motocorpgurgaon labour union, had told TOI recently. The Gurgaon plant has a daily average output of around 7000 units. It employs about 1200 permanent workers and about 4000 casual 71
2.9.6 MARKET SHARE GROWTH RATE Hero Motocorp’s shareholding pattern Description
percent of shares (%)
Promoters
52.21
Individuals
6.94
Institutions
5.94
FII
33.21
Govt.
0.00
Others
1.70
2.9.7 SWOT ANALYSIS STRENTH • Technical and financial collaboration with Honda. •Wide range of motor bike •Extensive research and development both in house development facility •interface with other independent engineering units. • Large and competitive workforce. • producing challenging product in market WEAKNESS • Slow to react to market changes • Late entrants into the 125cc segment OPPORTUNITY 72
• Boast up production to fully utilize the installed capacity. •To take the monopoly in motor vehicle category where the competition is much more increased. • Effectively meet the demand created by way of operation victor creating awareness among the rural consumers. THREATS •Strong competition from Indian as well as international brands. • Sever competition by light motor and heavy vehicle faced from the side BAJAJ. • Stiff competition with BAJAJ AUTO which has now increase market with active participation in both northern and southern market. • Change in Government fiscal policy toward import and customer duty. COMPETITORS Yamaha Bajaj auto TVS Suzuki Harley Davidson Royal Enfield Ducati
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CHAPTER-3 RESEARCH METHODOLOGY Researchmethodology is a way to systematically solve the research problem, as to how research is done scientifically. It consist of the different that generally adopted by researcher to study his research problem along with logic behind them. It is necessary for the researcher to develop certain tests The following are the methods adopted for the projects: The Research Design is made as per the requirements of the project For the secondary data collection, the information in the record of the company proved to be sufficient. For the primary datacollection, the researcher has preferred the survey method to the other methods. In the survey method, the researcher chose to undertaken field work. This is because there is perception that in the geographical area in which he was to conduct the survey, better and quicker data was possible to be collected only through direct field work. In the field work, instead of choosing any interviews or recorded Observation, the researcher chose to incorporate all the questions in from of a questionnaire.
Research Design The researcher after choosing the subject, company and the area to conduct his research decided establish the theme or the important factor upon which the entire project is to base. At the outset, the objectives of the project were identified. Thereupon, the conclusive research was undertaken upon consideration, the researcher project’s requirements. This method decided to embark upon a survey and the analysis andinterpretation of the findings of the surveys can only be done properly only if he chose the statistical design. 74
Data Collection:It was necessitated in order to obtain data relevant to the project. In order to collect the primary data, survey method was chosen. No observation techniques and the likes were resorted only questionnaire method was adopted. The sample size was chosen keeping in mind out only the time factor but also the area of coverage. The sample size was limited to 100 customers. The primary data was collected in the geographical limit of New Delhi. The questionnaire has been physically carried out by the researcher and filled up by the respondents. Sampling Method: Random sampling is also known as probability sampling. It is chosen such a way that each member of the universe has known chance of being selected. It is this condition- know chance-that enables statistical procedures to be used on the data to estimate sampling errors. The most frequently used probably samples are sample random samples, systematic samples, satisfied. Samples and cluster samples the researcher had chose Random sampling in the case of customer. The sample size was taken as 100 customers for the Survey. THE QUESTIONNAIRE DESIGN: The questionnaire has been prepared on the following lines The questionnaire includes the entire relevant question so as to provoke and elicit the data from the respondents in a brief manner. There are some open ended questions which are incorporated in the questionnaire. The reason behind this is to get the subjective data which if otherwise put in the form of a close ended form would not elicit the answer in a proper form. The questions were able to fully cover the themes concerned.
75
CHAPTER4:- DATA ANALYSIS TABLE NO.1 TABLES SHOWING RESPONDENTS PROFILE SEX MALE FEMALE TOTAL
NO. OF RESPONDENTS 86 14 100
PERCENTAGE 86 14 100
ANALYSIS: The above table shows that out of 100 respondents.86% ARE male and 14% of them are female. GRAPH NO.1 GRAPH SHOWING SEX PROFILE
TOTAL
FEMALE
PERCENTAGE NO. OF RESPONDENTS
MALE
0
20 40 60 80 100 120 140 160 180 200
INFERENCE:-THE ABOVE GRAPH SHOWS THAT LARGER PERCENTAGE OF RESPONDENTS ARE MALE.
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TABLE NO. 2 TABLE SHOWING AGE GROUP OF RESPONDENTS AGE RESPONDENTS 15-25 25-35 35-45 45-55 55 AND ABOVE TOTAL
OF NO. OF RESPONDENTS PERCENTAGE 32 36 18 13 1 100
32 36 18 13 1 100
ANALYSIS:the above table shows that out of 100 Respondents, 32,(32%) were from age Group of 15-25, 36, (36%) were from age group of 25-35, 18, (18%) were from the age group of 35-45, 13,(13%) were from the age group of 45-55, 1, (1%) is from the age group of 55,(55%) & ABOVE.
GRAPH NO. 2 GRAPH SHOWING AGE GROUP OF RESPONDENTS
77
NO. OF RESPONDENTS 15-25 25-35 35-45 45-55 55 AND ABOVE TOTAL
INFERENCE:-From the above chart it has been found that most of respondents are from the age group of 15-25 & 25-35. TABLE NO.3 SHOWING THE OCCUPATION OF RESPONDENTS OCCUPATION
OF NO. OF RESONDENTS
PERCENTAGE
RESPONDENTS PROFESSIONAL 34 34 BUSSINESS 37 37 OTHERS 29 29 TOTAL 100 100 ANALYSIS: AMONG THE 100 RESPONDENTS MAJORITY OF THEM FALL UNDER
THE
CATEGORY OF
BUSSINESS
37%,
FOLLOWED
PROFESSIONAL 34% AND OTHERS 29%.
GRAPH NO. 3 GRAPH SHOWING THE OCCUPATION OF RESPONDENTS
78
BY
120 100 80 NO. OF RESONDENTS PERCENTAGE
60 40 20 0 PROFESSIONAL
BUSSINESS
OTHERS
TOTAL
INFERENCE: MOST OF THE BUYERS ARE BUSSINESSMAN FOLLOWED BY PROFESSIONAL AND THEN OTHERS. TABLE NO. 4 TABLE SHOWING THE INCOME OF THE RESPONDENTS INCOME RESPONDENTS BELOW 50000 50001-75000 75001-100000 ABOVE 100000 TOTAL
OF NO. OF RESPONDENTS PERCENTAGE 24 30 20 26 100
24 30 20 26 100
ANALYSIS: The above table shows that out of 100 Respondents 24% respondents are from the Income group below 50,000, 30% from the Income group 50,001-75,000, 20% from the Income group 75,001- 1, 00, 00 0, and 26% from the Income group 1, 00,000Above 79
GRAPH NO. 4 GRAPH SHOWING THE INCOME OF RESPONDENTS 120 100 80 60 40
NO. OF RESPONDENTS PERCENTAGE
20 0 W LO BE
0 50
00 5
0 00
1-
0 75
00 7
0 50
1 1-
0 00
00 1 VE O AB
0 00
00
L TA TO
INFERENCE: FROM THE ABOVE GRAPH IT HAS BEEN FOUND THAT ALMOSTOF ALL INCOME GROUP PEOPLE ARE BUYERS.
TABLE NO. 5 TABLE SHOWING MEDIA SELECTION TO KNOW ABOUT THE HERO VEHICLE MEDIA ADVERTISEMENT FRIENDS MECHANIC SALESMAN TOTAL
NO. OF RESPONDENTS 52 38 2 8 100
80
PERCENTAGE 52 38 2 8 100
ANALYSIS: The above table shows that out of 100 respondents, 52% of them got influenced from Advertisement media, 38% or they are from Friends, 8% from company sales Man, and 2% from Mechanics. GRAPH NO. 5 GRAPH SHOWING MEDIA SELECTION TO KNOW ABOUT THE HERO VEHICLE 120 100 80 60 40
NO. OF RESPONDENTS PERCENTAGE
20 0 T EN M SE TI R VE AD
DS EN I FR
C NI A H EC M
AN M S LE SA
L TA TO
INFERENCE:THE ABOVE GRAPH SHOWS THAT MOST OF THE RESPONDENTS ARE INFLUENCED FROM ADVERTISEMENT. TABLE NO. 6 TABLE SHOWING FACTORS INFLUENCED TO BUY HERO HONDA VEHICLE FACTOR MILEAGE PRICE ROAD CONDITION TOTAL
NO. OF RESPONDENTS 26 10 64 100
81
PERCENTAGE 26 10 64 100
ANALYSIS:The above table showsthat out of 100 respondents 26% respondents are influenced from mileage, 10% from price, and 64% of them are influenced from Road condition. GRAPH NO.6 GRAPH SHOWING WHY RESPONDENTS (FACTOR INFLUENCED) BUY HERO VEHICLE 120 100 80 NO. OF RESPONDENTS PERCENTAGE
60 40 20 0 MILEAGE
INFERENCE:
PRICE ROAD CONDITION TOTAL
ABOVE
GRAPH
SHOWS
THAT
MOST
OF
RESPONDENTS ARE INFLUENCED BY ROAD CONDITION FACTOR. TABLE NO.7 TABLE SHOWING KIND OF VEHICLE OWN BY RESPONDENTS KINDS OF VEHICLE WITHOUT GEAR WITH GEAR TOTAL
NO. OF RESPONDENTS 88 12 100
82
PERCENTAGE 88 12 100
THE
ANALYSIS:The above table shows that out of 100 Respondents, 88% of respondents are having with out gear vehicle, 12% of respondents are having with gear vehicle GRAPH NO.7 GRAPH SHOWING KIND OF VEHICLE OWN BY RESPONDENTS 120 100 80 NO. OF RESPONDENTS PERCENTAGE
60 40 20 0 WITHOUT GEAR
WITH GEAR
TOTAL
INFERENCE: THE ABOVE GRAPH SHOWS THAT MOST OF THE RESPONDENTS USING WITHOUT GEAR VEHICLES WHICH WILL SUIT FOR CITY. TABLE NO. 8 TABLE
SHOWING
BRAND
OF VEHICLES
CHOSEN
BY THE
RESPONDENTS BRAND OF VEHICLES NO. SPLENDER+ PASSION + HF DAWN HF DELUXE CBZ
OF PERCENTAGE
RESPONDENTS 32 25 18 15 3 83
32 25 18 15 3
GLAMOUR KARIZMA ACHIEVER HUNK ANALYSIS: The above
2 2 2 1 table shows that out of
2 2 2 1 100 Respondents, 32%
respondents are having Splendor +, 5% of them are having Passion plus, 18% of then are having CD- Dawn, 15% of them are Having CD-Deluxe, 3% of them are having CBZ, 2% of them are having Glamour, 2% of them are having Karizma, 2% of them are having Achiver, 1% of them are having Hunk.
GRAPH NO.8 GRAPH
SHOWING
BRAND
OF
VEHICLE
CHOOSEN
BY
THE
OF
THE
RESPONDENTS 35 30 25 20 15
NO. OF RESPONDENTS PERCENTAGE
10 5 0 + + E N ER ON AW LUX D I E D N S D LE PAS HF HF SP
INFERENCE:-
Z A R R K CB OU I ZM EVE UN I H AM KAR ACH GL
ABOVE
GRAPH
SHOWS
RESPONDENTS ARE HAVING “SPLENDOR+” 84
THAT
MOST
TABLE NO.9 TABLE SHOWING SATISFACTION LEVEL OF MILEAGE GIVEN BY THE VEHICLE MILEAGE
OF NO.
OF PERCENTAGE
VEHICLE RESPONDENTS SATISFIED 56 56 HIGHLY SATISFIED 14 14 NOT SATISFIED 27 27 NOT REPLY 3 3 TOTAL 100 100 ANALYSIS: The above table shows that out of 100 Respondents, 56% of them are satisfied with mileage, 14% of them are highly satisfied, 27% of them are Not satisfied, and 3% of them are Not reply with the mileage of the vehicle. GRAPH NO.9 GRAPH SHOWING SATISFACTION LEVEL OF MILEAGE GIVEN BY THE VEHICLE 120 100 80 60 40
NO. OF RESPONDENTS PERCENTAGE
20 0 ED FI IT S SA
Y HL G HI
ED FI IT S SA
T NO
ED FI IT S SA
INFERENCE:ABOVE
LY EP R T NO
GRAPH
L TA O T
SHOWS
THAT
MOST
OF
THE
RESPONDENTS ARE SATISFIED BY THE MILEAGE GIVEN BY THE VEHICLE. 85
TABLE NO.10 TABLE
SHOWING
SATISFACTION
LEVEL
OF
PRICE
OFTHE
VEHICLE. PRICE
OF
THE NO.
VEHICLE SATISFIED HIGHLY SATISFIED NOT SATISFIED NOY REPLY TOTAL ANALYSIS:
OF PERCENTAGE
RESPONDENTS 76 6 17 1 100
76 6 17 1 100
The above table shows that out of 100 Respondents, 76% of them are satisfied with price of the vehicle, 6% of them are highly satisfied, 17% of them are Not satisfied, and 1% of them are Not reply with the price of the vehicle. GRAPH NO.10 GRAPH SHOWING SATISFACTION LEVEL OF PRICE OF THE VEHICLE 120 100 80 60 40 20 0
IC PR
EO
LE IC H E EV H FT
ED ED FI FI IT S IT S A A YS TS L O N GH HI
ED FI IT S SA
LY EP R Y NO
86
L TA TO
INFERENCE:-
ABOVE
GRAPH
SHOWS
THAT
MOST
OF
THE
RESPONDENTS ARE SATISFIED WITH THE PRICE OF THE VEHICLE
TABLE NO.11 TABLE SHOWING SATISFACTION LEVEL OF REPLACEMENT OF SPARE PARTS IN SERVICE CENTER REPLACEMENT
OF NO.
OF PERCENTAGE
SPARES RESPONDENTS SATISFIED 82 82 HIGHLY SATISFIED 4 4 NOT SATISFIED 12 12 NOT REPLY 2 2 TOTAL 100 100 ANALYSIS: The above table shows that out of 100 Respondents, 82% of them are satisfied With Replacement of spare parts, 4% of them are Highly satisfied, 12% of them are Not satisfied, And 2% of them e Not reply with Replacement of spare part GRAPH NO.11 GRAPH SHOWING SATISFACTION LEVEL OF REPLACEMENT OF SPARE PARTS IN SERVICE CENTER.
87
100 90 80 70 60 50 40 30 20 10 0
NO. OF RESPONDENTS PERCENTAGE
ED ED ED FI FI FI S S S I TI TI AT SA SA YS T L NO GH HI
INFERENCE:
LY EP R T NO
ABOVE
L TA TO
GRAPH
SHOWS
THAT
MOST
OF
THE
RESPONDENTS ARE SATISFIED WITH THE REPLACEMENT OF SPARE PARTS.
TABLE NO.12 TABLE
SHOWING
SATISFACTION
LEVEL
OF
RESPONDENTS
TOWARDS DEALERS INSTRUCTION DEALER
NO.
OF PERCENTAGE
INSTRUCTIONS SATISFIED HIGHLY SATISFIED
RESPONDENTS 90 3
90 3 88
5 5 NOT SATISFIED 2 2 NOT REPLY 100 100 TOTAL ANALYSIS:The Above Shows That out of 100 Respondents, 90% of them are
satisfied with the instruction given by the dealer 3% of them are Highly satisfied, 5% of them are Not satisfied, and 2% of them are Not reply with Instruction given by the Dealer.
GRAPH NO.12 GRAPH SHOWING SATISFACTION LEVEL OF RESPONDENTS TOWARDS DEALERS INSRUCTIONS
89
100 90 80 70 60 50 40 30 20 10 0
NO. OF RESPONDENTS PERCENTAGE
LY EP R T NO
ED ED ED FI FI FI S S S TI TI TI SA SA SA Y T L NO GH HI
L TA TO
INFERENCE:-ABOVE GRAPH SHOWS THAT MOST OF THE CUSTOMERS ARE SATISFIED WITH DEALERS INSTRUCTIONS. TABLE NO.13 TABLE SHOWING RECOMMENDATION OF HERO VEHICLES TO OTHERS BY RESPONDENTS RECOMMENDATION
NO.
OF PERCENTAGE
RESPONDENTS YES 90 90 NO 10 10 TOTAL 100 100 ANALYSIS: The above table shows that out of 100 Respondents, 90% of them are recommending Hero vehicles to others, 10% of them are not recommending Hero vehicles.
90
GRAPH NO.13 GRAPH SHOWING RECOMMENDATION OF HERO VEHICLE TO OTHERS
NO. OF RESPONDENTS
YES NO TOTAL
INFERENCE:-
ABOVE
GRAPH
SHOWS
THAT
MOST
OF
THE
RESPONDENTS ARE RECOMMENDED HERO MOTOCORP
TABLE NO.14 RESPONDENTS
AWARNESS
TOWARDS
COMPANIES 91
VARIOUS
AUTOBIKES
AUTOBIKE
RESPONDENTS
PERCENTAGE
COMPANY HERO BAJAJ HONDA YAMAHA TVS SUZUKI FREEDOM OTHERS Sources: Primary Data
95 75 60 25 50 45 18 12
95 75 60 25 50 45 18 12
INTERPRETATION: The above table represents therespondent’s awareness towards various autobikes companies.( 95 5%) of the respondents are aware of the Hero , (75%) of the respondents are aware of e Bajaj motors, 60 (60%) of the respondents are aware of the Honda, 25 (25%) of the respondents are aware of the Yamaha, 50 (50%) of the respondents are aware of the SUZUKI, Freedom autobikes is known by 18 (18%) of the respondents, 12 (12%) of the respondents know various others autobikes.
GRAPH NO. 14 GRAPH SHOWING AWARENESS OF VARIOUS AUTOBIKES COMPANIES
92
100 90 80 70 60 50 40
RESPONDENTS PERCENTAGE
30 20 10 0 RO HE
J JA BA
A A ND AH O M H YA
S TV
I S ER UK OM Z H D SU EE OT FR
TABLE NO.15 AUTOBIKES COMPANY OPTED BY THE RESPONDENTS AUTOBIKE
RESPONDENTS
COMPANY 93
PERCENTAGE
HERO BAJAJ HONDA YAMAHA TVS SUZUKI FREEDOM OTHERS
70 60 45 22 40 35 15 18
70 60 45 22 40 35 15 18
Sources: Primary Data INTERPRETATION: The Above Table represents theauto bikes opted by the respondents. 70 (70%) of the respondents have choose the Hero motor Ltd., 60 (60%) of the respondents have chosen e Bajaj motors, 45 (45%) of the respondents have chosen the Honda, 22 (22%) of the respondents have chosen the Yamaha, 40 (40%) of the respondents have chosen the TVS,( 35 5%) of the respondents have chosen the SUZUKI, 15 (15%) of the respondents have chosen e Freedom, 18 (18%) of the respondents have chosen the Others companies.
GRAPH NO.15 AUTOBIKES COMPANY OPTED BY RESPONDENTS
94
80 70 60 50 40 RESPONDENTS PERCENTAGE
30 20 10 0 RO HE
J JA BA
A A AH ND O M H YA
S TV
I S ER UK OM Z H D SU EE OT FR
95
Chapter 5 FINDING 5.1 FINDING Hero MotoCorp, India’s biggest two -wheeler maker, posted a better-than – anticipated 19.3% increase in the quarterly net profit motored by record sales, and stated it is executive of preserving the tempo in spite of concerns over growing inflation and fuel rates. The company’s net profit surged to Rs602 crore during the three months period mendedSeptember 30 as against Rs 506 crore a year ago. The Delhi –based company sold around 15.44 lakh two wheeler in the julyseptember period, an increase of 20% over a year ago. The festive period, which starts a month and a half beforediwali, promoted sales of splendour and passion to a record for the third consecutive quarterly period. Hero motocorp MD and CEO Pawan, Munjal stated, “Our performance improved despite rising food inflation and fuel prices, which are the two major areas of concern for the industry and might adversely impact consumer sending in the coming months.” This out performance, as Hero MotoCorp relocated it self in its new avatar accompanying confuse times after the JV break-up, seems to have actuated a rally in the stock during the past few months. The stock has gradually outperforThe flip side is that the up and down in the scrip does not leave much room for more admiration, as the existing market rate of Rs 1,985 discounts financial 2012 and 2013 incomes by around 17 and 13 times, respectively. 96
The interested investors can hold the stock for medium and long term targets. At present, the stock of the company is ruling with an EPS of 103.86%. The current P/E ratio is19.11. Hero MotoCorp has registered highest ever quarterly sales and turnover. Something really good is expected from this company. I would say that it’s a long term story and will be interesting to see this stock jumping
even
in
lacklustremarket. I am sure that it will touch 52-week high pretty soon. They rule two-wheeler market in India. Technically expert from Emkay Global Finance Services, Krishna Kumar Karwa has said that they are positive on the stock. They expect Bajaj auto to perform well also. VK Sharma of HDFC securities has given a hold call for Hero MotoCorp. He added, the stock is looking good due to good Q2 result. It may go up by 2-3%in near term. Hero MotoCorp net profit falls 20% to Rs 488 cr inQ3HeroMotoCorp (HMCL) on Thursday reported net profit of Rs488 crore for the third quarter ended December 31,2012,down 20 per cent from Rs 613 crore in the corresponding period last year. However, the company’s turnover (net sales and other operating income) went up by2.5per cent to Rs 6,188 crore for the October-December compared with Rs 6,036crore in the same period of 2011.
97
“The last two quarters have been challenging for the Indian auto industry on account of the delayed mansoons,rising fuel prices and subdued sentiments. However, we have had good growth this festive season,”PawanMunjal, Managing Director and Chief Executive Officer, HMCL, said.The profits have gone up even after the company reportedly paid about Rs180 crore to erstwhile Japanese partner Honda as royalty in the quarter. Royalties are expected to go up with the Yen appreciating around 20 per cent in the period. Hero MotoCorp plans to launch three new models in the next few months – the 110cc passion X pro, an 110cc masculine scooter, Maestro, and 125cc bike, Ignitor. It is also enhancing its research and development capabilities, where it is currently developing this hybrid technology supplies for collaboration to developed new models. Hero MotoCorp shares ended at rs 1,900.75 per share on the BSE, up 2.35 per cent on Thursday.
CHAPTER-6 CONCLUSION AND SUGGESTION CONCLUSION 98
CUSTOMERS are preferred to Hero MOTOCORP vehicles because those vehicles from Hero are suitable for all age group and Income group. From this study what I come to is almost all the customers are satisfied with services provided by Hero Auto bikes. The way the dealers respond to the customers is exemplary. Because of the dealer’s commitment and quality Services they stand in number good position.
SUGGESTION This chapter gives clear position and offers suggestion for forecasting the future plans and further action. These suggestions are made taking into consideration various aspect of product, price, promotion and distribution to over come the deficiencies. Hero should upgrade vehicles periodically. Frequent market survey should be conduct to be informed about the customer choice and demand. The company should be concentrate on the up gradation in knowledge of its staff and train them in all necessary skills required to serve the customers better there by retaining them. The dealer should be customer oriented rather than sales oriented and thus strive to focus on relationship marketing.
Customer feed back is crucial important and feedback forms can be regularly taken through which Hero will find valuable suggestion from its customers as to how they can improve their product and services.
CHAPTER-7 BIBILIOGRAPHY BIBILIOGRAPHY
99
WEB-SITES: WWW.google.com www.wikipedia.com www.heromotocorp.com TEXT – BOOKS: MARKETING MANAGEMENT BY PHILIP KOTLER. BUSINESS STATISTICS: S. P. GUPTA HERO AUTOBIKES: DIRECTOR, MANAGER AND EMPLOYEES
CHAPTER-8 ANNEXTURE 8.1 QUESTIONNAIRE A study of customer preference regarding hero motocorp in India. 100
I. PERSONAL DATA 1. NAME. : 2. Age: 3. Education: A) Schooling B Intermediate C) Degree/Diploma D) Others 4. Occupation: A) Profession B) Business C) Others 5. Annual Income: A) Below Rs. 50000 B) Rs. 50001-75000 C) 75001-100000 D) Above Rss.100000 II.BUYING BEHAVIOUR: 1. What kind of vehicle you owe _________________________ 2. How did you hear about hero vehicle _____________ A) Advertisement B) Friends C) Mechanics D) Company Salesman 3. How long you are using Hero vehicles? _____________ 4. What factor influenced you the most in buying Hero Honda vehicle? A) Mileage B) Price C) Road condition 5. How long you have relationship with dealers? ______________ III. SATISFACTION ABOUT THE DEALER 1. Dealer Instructions: A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply 2. The replacement of spare parts: (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply 3 Dealer is customer friendly: (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply 101
4. Promptness of delivery (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply IV. SATISFACTION ABOUT THE VEHICLES 1. Price of vehicles: (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply 2. Mileage given by the vehicle: (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply 3. Road grip of the vehicle: (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply 4. Durability of the vehicle: (A) Satisfied (B) Highly satisfied (C) Not satisfied (D) Not Reply V. POST PURCHASE BEHAVIOUR 1. Do you recommend Hero vehicle to others? A) Yes B) No 2. Will you continue to buy Hero vehicle in future? A) Yes B) No 3. Did you ever have problem with the dealer? A) Yes B) No 4 If yes, how did the dealer respond to you? A) Promptly B) Belatedly C) Never respondent 5 Did you have any compliant with the vehicle? A) Yes B) No
6 How was the compliant solved? A) Replacement B)BY service C) By refund of money IV. RANK ORDER 102
Rank order for brands:a. Honda____________________ b. kinetic__________________ c. Hero motocorp_________________ d. TVS________________________ e. Suzuki Rank order for preferring Hero Motocorp vehicle: a. Better road grip___ __ __ b. Extra mileage_____________________ c. Price consumption__________ d. service____________________________ e. If others please mention below------------
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