MINI PROJECT REPORT FOR MARKETING MANAGEMENT

BY

PARTHIBAN R

Reg No:0929123

(DEPARTMENT OF MANAGEMENT STUDIES)

MBA

SECTION B
INTRODUCTION OF HERO HONDA

"Hero", the brand name symbolizing the steely ambition of the

Munjals brothers, came into being in the year 1956.

From a modest manufacturer of bicycle components in the early 1940's to the world's largest
bicycle manufacturer today, the odyssey was fueled by one vision - to build long-lasting
relationships with everyone, including workers, dealers and vendors. This philosophy has paid
rich dividends through the years.

Hero, a name synonymous with two wheelers in India is today a multi-unit, multi-product,
geographically diversified Group of companies. Through fully integrated operations, the Munjals
roll their own steel, make critical components such as free wheels for their bicycles, and have the
foresight to simultaneously diversify into myriad ventures, like product designing, IT enabled
services, finance and insurance, just to name a few.

Like every success story, Hero's saga contains an element of spirit and enterprise; of
achievement through grit and determination, coupled with vision and meticulous planning.
Throughout its success trail, the Hero Group and its members have displayed unwavering
passion of setting higher standards for themselves and delivering simply the best to their
customers.

The Hero Group philosophy is: "To provide excellent transportation to the common man at
easily affordable prices and to provide total satisfaction in all its spheres of activity." Thus
apart from being customer-centric, the Hero Group also provides its employees with a fine
quality of life and its business associates with a total sense of belonging. "Engineering
Satisfaction" is the prime motive of the Hero Group and it has become a way of life and a part
of the work culture of the Group.

This is what drives the Group to seek newer vistas, adopt faster technology and create quality
driven products to the utmost satisfaction of customers, partners, dealers and vendors. Today the
Hero Group has a number of accolades and achievements to its credit … yet consumer
requirements and newer technologies provide fresh challenges every day, and at Hero the wheels
of progress continue to turn...
HERO HONDA VISION

We, at the Hero Group are continuously striving for synergy between technology, systems and
human resources to provide products and services that meet the quality, performance, and price
aspirations of the customers. While doing so, we maintain the highest standards of ethics and
societal responsibilities, constantly innovate products and processes, and develop teams that
keeps the momentum going to take the group to excellence in everything we do."

HERO HONDA MISSION

Hero Honda’s mission is to strive for synergy between technology, systems and human
resources, to produce products and services that meet the quality, performance and price
aspirations of its customers. At the same time maintain the highest standards of ethics and social
responsibilities.
This mission is what drives Hero Honda to new heights in excellence and helps the organization
forge a unique and mutually beneficial relationship with all its stake holders.

HERO HONDA MANDATE

Hero Honda is a world leader because of its excellent manpower, proven management, extensive
dealer network, efficient supply chain and world-class products with cutting edge technology
from Honda Motor Company, Japan. The teamwork and commitment are manifested in the
highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership
status.

MILESTONES OF HERO HONDA

Hero's success saga contains an element of spirit and enterprise; of achievement through grit and
determination, coupled with vision and meticulous planning.
1956 Hero Cycles Limited is established.
1961 Rock man Cycles Industries Limited established, which is
today the largest manufacturer of bicycle chains and hubs.
1963 It pioneered bicycle exports from India - a foray into the
international market.
1971 Highway Cycles was set up to meet the demands of Hero
Cycles. It is today the largest manufacturer of single speed
and multi-speed freewheels.
1975 Hero Cycles Limited became the largest manufacturer of
bicycles in India.
1978 Majestic Auto Limited was formed and the Hero Majestic
Moped was introduced.
1981 Munjal Castings established.
1984 Hero Honda Motors Limited established in joint venture
with Honda Motors of Japan, to manufacture motorcycles.
1985 Munjal Showa Limited established to manufacture shock
absorbers and struts and is today among the top two shock
absorber manufacturing companies in India.
1985 The 100 cc Hero Honda Motorcycle arrived and by 1988
was the No. 1 among all motorcycles in India.
1986 Hero Cycles Limited entered the Guinness Book of
Records as the largest bicycle manufacturer in the World.
1987 Hero Motors, a division of Majestic Auto Limited set up
in collaboration with Steyr Daimler Puch of Austria.
1987 Gujarat Cycles Limited, now known as Munjal Auto
Industries Limited was established to manufacture and
export state-of-the-art bicycles and allied products in its
fully automated plant at Waghodia.
1987 Sunbeam Auto Limited, earlier a unit of Highway Cycles
Limited, established as an ancillary to Hero Honda. It is
the largest die casting plant in India.
1988 Introduced "Hero Puch" from Hero Motors Limited. This
revolutionary machine immediately set new records of
petrol efficiency and usable power in 50 - 65 cc machines.
1990 Hero Cold Rolling Division established and is one of the
most modern steel cold rolling plants.
1991 Hero Honda receives National Productivity Council's
Award.
1991 Hero Honda receives the Economic Times - Harvard
Business School Association Award against 200
 contenders.
1992 Munjal Showa Limited receives National Safety Award.
1993 Hero Exports established as the International Trading
Division for Group and non-Group products.
1993 Hero Motors becomes Indias largest exporter of two
wheelers
1995 Hero Corporate Services Limited as the service segment
for the Hero Group Companies, ancillaries, suppliers,
dealers and other associates.
1996 - Hero Winner, a large-wheeled scooter was introduced by
Hero Motors Limited with a choice of 50 cc and 75 cc
engines.
1996 Munjal Showa Limited receives British Council's National
Safety Award.
1998 - Hero Briggs and Stratton Auto Private Limited was set
up to produce 4-stroke two-wheeler engines in various
cubic capacities.
1998 Munjal Auto Components established to manufacture gear
shafts and gear blanks for motorcycles.
2000 The Hero Group diversifies into IT and IT enabled
services through its service segment - Hero Corporate
Services Limited.
2000-2001 Hero Honda emerges as the market leader in motorcycles
with sales of over a million motorcycles and a strong
market share of 47%.
2001 Hero Global Design established to offer engineering
services in CAD/CAM/CAE related to New Product
Development, Design, Engineering and Manufacturing.
2002 Hero Cycles ties up with National Bicycle Industries, part
of Matsushita Group to manufacture high-end bicycles.
2002 Fastener World Established.
2002 Easy Bill Established to offer utility bill collection &
retail services.
2003 Tie up with Livebridge Inc., USA.
2004 Tie up with Bombardier - Rotax GmbH for scooter
engines.
2004 Tie up with Aprilia Scooters, Italy.
2004 Hero Honda continues as the World's largest manufacturer
 of two-wheelers with annual sales volume of 2.07 million
motorcycles and a market share of 48%.

2004
Retail Insurance business established.

HeroITES, a division of HeroCorporate Service Limited

2004
hived off as a division of new company Hero
Management Service Limited.

HeroITES strengthens its relationship with

2005
ACS,USA,USD 5.0 billion market cap and Fortune 500
company.

2006 Hero Honda enters the scooter segment, launches 100cc

"Pleasure"

2006 Hero Honda crosses a unit sales threshold of 3.0 million

motorcycles

Hero Group celebrates Golden Jubilee year since

2006
inception.It was commemorated by sales of over 15
million motorcycles & over 100 million bicycles.

ACHIEVEMENTS

Hero Group ranks amongst the Top 10 Indian Business Houses comprising 20 companies, with
an estimated turnover of US$ 3.2 billion during the fiscal year 2005-2006. The Group and its
management have acquired a number of accolades and achievements over the years: Hero Group
Management style has been acclaimed internationally by World Bank and BBC, Kushiro Group
is discussed as a case study at London Business School, UK and INSEAD, France. World Bank
has acclaimed Hero Cycles as a role model in vendor development based on a world-wide study.
The London Business School, UK, has done a case study on the Group as model of
entrepreneurship. Boston Consulting Group has ranked Hero Group as one of the top ten
Business Houses on Economic value, in India.

 The Hero Group is recognized as a long term partner and an ideal employer:

 Hero Group's partnership with Honda Motors, Japan is over 21 years old

 Hero Group's Partnership with Showa Manufacturing Corporation, Japan is over 19 years
old.
  Group Chairman, MrBrijmohanLallMunjal received the coveted "Ernst & Young
Entrepreneur of the Year" award for 2001.

 Hero Honda Motors was ranked 3rd amongst top Indian companies Review 2000 - Asia's
leading companies award (2004) by Far Eastern Economic Review.

 Hero Honda Motors is the World's largest manufacturer of two-wheelers with annual
sales volume of over 3.0 million motorcycles.

 Hero Honda Motors has been awarded the highest rating for Corporate Governance
(2003) by CRISIL - India's Leading Ratings, Risk & Advisory Company and as the Best
Governed Company in private sector(Dec 2004).

 Hero Honda ranked Number One in the two-wheeler category on Environmental

Performance by the Centre for Science and Environment.

 Hero Cycles Limited is a Guinness Book Record holder since 1986 as the world's largest
manufacturer of bicycles, with annual sales volume of 5 million bicycles in FY 2006.

 Engineering Exports Promotion Council has awarded Hero Cycles with the Best Exporter
Award for the last 28 years in succession.

CAREER

 Hero has continuously strived for synergy between technology, systems and human
resources, to provide products and services that meet the quality, performance and price
aspirations of its customers. While doing so, it has maintained the highest standards of
ethics and social responsibility, has constantly innovated products and processes and
developed teams that keep the momentum in order to take the Group to new heights.

 In the forefront of the two-wheeler and auto-components industry in India, the Hero
Group is driven by the vision of providing technologically advanced and affordable
transport solutions. In doing so its employs and scouts for state-of-the-art technology and
systems.

 At Hero, new management strategies, techniques and manufacturing processes are

constantly adapted. The work culture at the Hero Group revolves around building
relationships - be it with workers, vendors or dealers. All those who come to work within
the fold of the Hero Group are offered job security and growth opportunities, both
personally and professionally.
GROWTH MODELS

 The Hero Group has done business differently right from the start and that is what has
helped us to achieve break-through in the competitive two-wheeler market. The Group's
low key, but focused, style of management has earned the company plaudits amidst
investors, employees, vendors and dealers, as also worldwide recognition.

The growth of the Group through the years has been influenced by a number of factors:

 The Hero Group through the Hero Cycles Division was the first to introduce the concept
of just-in-time inventory. The Group boasts of superb operational efficiencies. Every
assembly line worker operates two machines simultaneously to save time and improve
productivity. The fact that most of the machines are either developed or fabricated in-
house, has resulted in low inventory levels.
 In Hero Cycles Limited, the just-in-time inventory principle has been working since the
beginning of production in the unit and is functional even till date. The raw material
vendors bring in the goods get paid instantly and by the end of the day the finished
product is rolled out of the factory. This is the Japanese style of production and in India,
Hero is probably the only company to have mastered the art of the just-in-time inventory
principle.

ANCILLARISATION:

An integral part of the Group strategy of doing business differently was providing support to
ancillary units. There are over 300 ancillary units today, whose production is dedicated to Hero's
requirements and also a large number of other vendors, which include some of the better known
companies in the automotive segment. The Munjals have gone much beyond the conventional
definition of ancillarisation, making it a point to extend technical and managerial support to these
ancillaries. These ancillary units are manned by friends, relatives, ex-employees or close
associates of the Munjals family since the Group patriarch, MrBrijmohanLall, "… never wanted
to march alone."

EMPLOYEEPOLICY:

Another Striking feature within the Hero Group is the commitment and dedication of its workers.
There is no organized labour union and family members of employees find ready employment
within Hero. The philosophy with regard to labour management is "Hero is growing, grow with
Hero." When it comes to workers' benefits, the Hero Group is known for providing facilities,
further ahead of the industry norms. Long before other companies did so, Hero was giving its
employees a uniform allowance, as well as House Rent Alowance (HRA) and Leave Travel
Allowance (LTA). Extra benefits took the form of medical check-ups, not just for workers, but
also for the immediate family members.
DEALER NETWORK:

The relationship of the Munjals with their dealers is unique in its closeness. The dealers are
considered a part of the Hero family. A nation-wide dealer network comprising of over 5,000
outlets, the Munjals have a formidable distribution system in place. Sales agents from Hero
travels to all the corners of the country, visiting dealers and send back daily postcards with
information on the stock position that day, turnover, fresh purchases, anticipated demand and
also competitor action in the region. The manufacturing units have a separate department to
handle dealer complaints and problems and the first response is always given in 24 hours.

FINANCIAL PLANNING:

The Hero Group benefits from the Group Chairman's financial acumen and his grasp on
technology, manufacturing and marketing. Group Company, Hero Cycles Limited has one of the
highest labour productivity rates in the world. In Hero Honda Motors Limited, the focus is on
financial and raw material management and a low employee turnover.

CONSOLIDATED FAMILY BUSINESS:

The Hero Group is a strong family run business - there is no other Group that has so successfully
managed to stay together for nearly 50 years. The system is to bring in any new family member,
coming of age, within the fold of the existing business or set him up in a new business. The third
generation is already actively involved in existing as well as the new initiatives within the Group.
The Group's future is being consolidated with the same zeal by the second and the third
generations of the family, aided by workers who typify the hardy spirit of the Punjab.

DIVERSIFICATION:

Throughout the years of mammoth growth, the Group Chairman, MrLall has actively looked at
diversification. A significant level of backward integration in its manufacturing activities has
been substantial in the Group's growth and led to the establishment of the Hero Cycles Cold
Rolling Division, Munjal and Sunbeam Castings, Munjal Auto Components and Munjal Showa
Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic Auto
Limited, where the first indigenously designed moped, Hero Majestic, went into commercial
production in 1978. Then came Hero Motors which introduced Hero Puch, in collaboration with
global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in
1984 to manufacture 1000 cc motorcycles.

The Munjals also took a foray into other segments like exports, financial services, information
technology, which includes customer response services and software development. Further
expansion is expected in the areas of Insurance and Telecommunication.
MARKETING STRATEGY

 A thorough understanding of the fast-changing consumer behavior, new market segments

and product opportunities along with sensitivity to changing customer needs, form the
core of Hero's marketing strategy and philosophy. At Hero we essentially have a
completely customer-driven approach. A nation-wide dealer network comprising of over
3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise holders for motorcycles,
ensures convenient access to the Group's products across the country. With a deep sense
of belonging to the Hero fraternity, the Group's dealer network has catalyzed growth and
acted as a strong bridge between the customers and the Group.

 Conventionally, very few Indian bicycle manufacturers were interested in exports.

However, the Hero Group's foray into the overseas markets pioneered Indian exports in
the bicycle segment as early as 1963. It was a move prompted primarily by the need to be
attuned to the global marketplace. While initial exports were restricted to Africa and the
Middle East, today more than 50 percent of the Group's bicycle exports meet the
demands of sophisticated markets in Europe and America. This is primarily because of
appropriate product development and excellent quality that Hero offers.

Let’s compare scooters from all major manufacturers from once king of scooter market Bajaj to
Japanese Suzuki’s and Hondas.

 The Group has undertaken a steady up gradation of technologies and there has been
diversifications and setting up of newer establishments to meet stringent international
standards.
  At the core of it all is a customer-centric scheme of policies and production ... and the
bottom line is to "Add Value while Engineering Satisfaction."
 Market segmentation, product differentiation and product positioning vs other
competitors
 Scooter market is automotive market in India with 57 lakh units sold this quarter. This
segment mainly concentrates on ladies and urban market where people like stress-free
riding.
 Scooters in India are not powerhouses as is in European Markets, where engine capacity
exceeds 1000cc. few of the early scooters like Kinetic Honda which slowly eroded
Bajaj’s market share had self start as killer feature.
 These days even 100cc bikes have self starters and its no more marketable features.
Manufacturers these days are looking to sell their products with features like front
fueling, cell phone charger, under seat storage, etc.

SPECIFICATION:

Hero TVS TVS

Honda Honda Suzuki Kinetic Bajaj
Model Honda Scooty Scooty
Activa Aviator Access Flyte Kristal
Pleasure Pep+ Streak
Engine
102 102 102 124 124.6 95 87.8 90
Capacity (cc)
Max Power 7 @ 8.58 @ 7.2 @5 @
7 @ 7000 7 @ 7000 8 5 @ 6500
(bhp @ rpm) 7000 7000 7500 6500
Max Torque7.85 @7.85 @7.85 @9.80 @ 7.66 @5.80 @5.80 @
9.00
(Nm @ rpm) 5000 5500 5500 5000 5500 4000 4000
Max Torque7.85 @7.85 @7.85 @9.80 @ 7.66 @5.80 @5.80 @
9.00
(Nm @ rpm) 5000 5500 5500 5000 5500 4000 4000
Self &Self &Self &Self &Self &Self &Self &
Ignition Self
Kick Kick Kick Kick Kick Kick Kick
Bottom
Bottom
link
link
spring Telescopi Leading
Front spring Telescopi Telescopi
loaded c with oillink coNA NA
Suspension loaded c c
hydrauli damping axial
hydraulic
c
damper
damper
Unit
Unit
Swing spring Trailing
spring
arm withwith Arm
with Unit
Rear spring spring Swing- single
spring Swing- NA NA
Suspension loaded loaded Arm shock
loaded Arm
hydraulic hydrauli absorber
hydraulic
damper c with SNS
damper
damper
 Length (mm) 1750 1765 1802 1780 1790 NA NA NA
Width (mm) 705 715 707 650 670 NA NA NA
Height (mm) 1100 1130 1162 1125 1100 NA NA NA
Wheelbase
1240 1235 1256 1250 1260 NA 1230 1230
(mm)
Ground
125 145 145 160 135 NA 135 135
Clearance (mm)
Kerb Weight
104 NA 102.3 109 105 NA 95 95
(kg)
3.5×10, 3.5×10, 90/90-12 3.5×10, 3.0×10, 3.0×10 3.0×10,
Front Tyre 90/100-10
4PR/51J 4PR 54J 4PR 4PR , 4PR 4PR
3.5×10, 3.5×10, 3.5×10, 3.5×10, 3.0×10, 3.0×10 3.0×10,
Rear Tyre 90/100-10
4PR/51J 4PR 4PR 4PR 4PR , 4PR 4PR
Internal Drum Mech.
Front BrakeExpandin Drum (130) orDrum Drum Expandin Drum Drum
(Dia mm) g Shoe(130) Disc (130) (130) g Shoe(110) (110)
(130) (190) (110)
Internal Mech.
Rear Brake (DiaExpandin Drum Drum Drum Drum Expandin Drum Drum
mm) g Shoe(130) (130) (130) (130) g Shoe(110) (110)
(130) (110)
Fuel Tank
5 6 6 6.4 5 NA 5 5
Capacity (lt)
Headlamp 35W 35W 35W 35W 35W 35W 35W 35W
12V –12V –12V –12V –12V –12V –12V –12V –
Battery
5Ah 5Ah 5Ah 5Ah 9Ah 5Ah 5Ah 5Ah

It’s clear from specifications TVS Scooty is the lightest and least powerful and Suzuki Access is
the most powerful, all others fall in between this spectrum.

Now let’s look into features which are ground breaking and deal breaking.
FEATURES:

Hero TVS
Bajaj TVS
Honda Honda Honda Suzuki Kinetic Scoot
Model Krista Scooty
Pleasur Activa Aviator Access Flyte y
l Streak
e Pep+
Multireflector Headlamp Yes Yes Yes Yes Yes Yes NA NA
Puncture Resistant (Tuff
Yes Yes Yes No No No No No
up) tube
Storage Capacity 15 lt 15 lt 20 lt 20 lt 22 lt 22 lt 12 lt 12 lt
No (but
seat need
Front Fueling system No No No No Yes Yes No
not be
opened)
Central Control/Lock No No No No Yes Yes No No
Mobile Charging No No No No Yes No No Yes
Disc Brake option No No Yes No No No No No
 Front Telescopic
No No Yes Yes Yes No No No
suspension

Distribution Strategy used to serve the Customer and Promotional Mix:

Focus on rural markets: Unlike peers, Hero Honda is actively focused on building its presence
in rural markets. In December 2007, it launched a pan-India program called ‘HaarGaon,
HaarAangan’ (every village, every house). As the program achieves critical mass, it will help the
company to build a sustainable competitive advantage. Although it is difficult to segregate
between urban and rural demand as the rural buyer also buys from urban dealers, the rural
market contributes about 45% of Hero Honda’s domestic sales (based on company estimates).

Favorable demographics – lower penetration, higher income: The rural market is

Underpenetrated and offers huge opportunity for 2-wheeler players. As per NSSO 2005
Data, household penetration of 2-wheelers in rural areas is 8% as against 23% in urban
Areas. This coupled with increasing income (driven by increase in farm income, farm loan
Waiver, etc) and improving infrastructure augurs well for 2-wheeler demand in rural areas.
Further, growth in relevant population (16-45 years) is estimated to be higher in rural areas
at about 7% as against 5% in urban areas over FY05-10.

100cc bike apt for rural market: Lower cost of ownership and lower operating cost
Are the keys for success in rural markets? Hence, the economy segment bike (100cc) with
A lower price point is most suitable for rural markets. We believe Hero Honda, with its
80% market share in up to 125cc motorcycles is well placed to benefit from this.

Strong distribution network in rural market: Given the vast spread of rural market,
Having a strong distribution network is imperative for deeper penetration into the hinterland.
As a part of its rural strategy ‘HaarGaon, HaarAangan’, it is initially covering 18,000 of
The targeted 23,360 villages with a population of over 5,000 and has appointed 500 specially
trained rural sales executives at the dealership level. The company has already approached
More than 1,00,000 opinion leaders in these villages through rural executives.

Improvement in product mix and market share: While Hero Honda continues to
Dominate the up to 125cc segment with 80% market share, it has gained market share
Even in the above 125cc segment by 400bp to 11.7% in the last two years. It has been able
To gain market share in above 125cc segment driven by launch of new products over the
Last two years. As a result, contribution of the economy segment has reduced from 97% in
FY07 to 94% in FY09. Further, in the above 125cc segment, it now has more products
than the incumbent market leaders.

THE SECRET BEHIND HERO HONDA'S SUCCESS

On the first of every month, two-wheeler companies disclose their sale figures for the previous
month. May 1 was no different.   Hero Honda, the country's largest and most valuable two-
wheeler company, said it logged sales of 370,575 two-wheelers in April, up 29.5 per cent from
April 2008. Its closest rival, Bajaj Auto, said sales fell 24 per cent to 169,119 during the month.
The gap between the two rivals had expanded to over 200,000. Not so long ago, Bajaj Auto was
giving sleepless nights to Hero Honda. In September 2006, it had come close to displacing Hero
Honda from the top slot. Hero Honda's rule as the leader of the Indian motorcycle market,
second only to China in size, it looked would soon be history. The partnership with Honda of
Japan (it provides technology and owns 26 per cent of Hero Honda) meant exports couldn't
make up for loss of domestic market share. (Hero Honda's exports are restricted to markets
where Honda doesn't have a presence - Nepal, Bangladesh, Colombia and so on). There
was palpable tension in the company. Left with no choice, it took a decision that changed its face
forever. "We said we will focus on market share rather than profits," recollects Hero Honda
Managing Director and CEO PawanMunjal.

I WILL USE THE STRATEGY TO INTRODUCE THE NEW PRODUCT IF I AM A

MANAGER OF THE HERO HONDA COMPANY.

1. A product that nobody can get elsewhere.

2. Closer or more convenient access to a desired product
3. Better service.
4. Better price.
5. Better value.

o Differentiation strategy may be related to a product or service or to any marketing

activity. But here the emphasis is on product Differentiation.

o Product differentiation: It involves “developing and promoting an awareness of

difference between the advertiser’s product and other products”.

o Differentiated strategies include targeting, positioning and Segmentation.

o Positioning is all about a customers’ perception about the brand as being different from
other brands of specific dimensions including Product attributes.

o This specialty can be associated with design, brand image, technology, Features, dealers,
network, or customer service.

REFERENCES:

Wikipedia-

1. "Board of Directors". Hero Honda. http://www.herohonda.com/co_board_directors.htm.

Retrieved 2009-10-15.
ab
2. Share Manthan : http://www.sharemanthan.in/index.php/indian-companies/49-
auto/2150-hero-honda
3. "Every Village, Every Home", Forbes 183 (12): 80, June 2008, ISSN 0015-6914
4. Forbes, none. "World's most reputed companies (pg.3, rank101 to 150)".
http://www.forbes.com/business/2006/11/20/leadership-companies-reputation-lead-
managing-cx_hc_1120rep_list_3.html. Retrieved 2007-07-08.