Summer Training Report On “MARKETING STRATEGIES OF HERO MOTO CORP.” IN
Bikers Automobiles Submitted In Partial Fulfilment Of the Requirement Of
BACHELOR OF BUSINESS ADMINISTRATION
Training Supervisor:
Submitted by:
Mr.Keshav Gupta
JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL Vasant Kunj, New Delhi-70
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Certificate From Institute This is to certify that as per best of my belief the project entitled “MARKETING STRATEGIES OF HERO MOTO CORP.” is the bonafide research work carried our by…. under the guidance of… , in partial fulfillment of the requirements for the summer training project of the Degree of Bachelor of Business Administration He / She have worked under my guidance. ….............................. Name: …. (Lecturer) Project Guide (Internal) Date:
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ACKNOWLEDGMENT At the very onset, I would sincerely like to thank of building up our confidence, which let to the fulfillment of our project. The completion of this project is due to the help of few individuals whom I cannot let go unhanded. I wish to express our deep gratitude especially to our guide without whose guidance, support and encouragement. I would have not been able to complete this report that delves cursorily on the aspects of Marketing Strategy of Hero Moto Corp Ltd It is needless to say that any piece of creative work require the involvement of a number of individuals, since it is beyond the scope of limitation to enlist each and every individuals associated with this work who extended their co-operation in sharing unbiased views and feedback which helped to collect concrete data. Hence, I would express our sincere gratitude to all those who played contributory role directly or indirectly towards accomplishment of our project.
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PREFACE If we want to go global in the world market then we must know the trend of the market, what features must be there in the product so that it should get popularity among the masses and also should know about competitor’s position in every field. The objective of survey is to know the strategy of Hero Moto Corp in the world market and we must know what should be the price range and what types of marketing should be done so that it gets familiar with every type of person. So needs and objectives of the market survey is very important to get a good market share , stand in the market and to survive the business in the present competitive world where there is a trend of cutthroat competition. Hero Moto Corp is a leading company in bikes sector. Knowing the comparative position of a brand vis-à-vis its competitor’s is an essential thing as well as product is essential for deciding appropriate marketing strategies for any company. It was then the project was undertaken in order to 1. What is the prospective customer’s market for Hero Moto Corp in the world 2. Know the choice of residents of other foreign countries 3. Know the brand image of Hero Moto Corp 4. Perceive the future sales of Hero Moto Corp products 5. Pricing in the view of prospective customer’s 6. Mode of purchasing the product
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EXECUTIVE SUMMARY Hero Moto Corp the Principal activities of the Company is manufacturing and marketing of motorcycles and spare parts. The Company is a joint venture between Hero Group, India. The Motorcycles of the Company features facilities such as four stroke technology, phenomenal fuel economy and low exhaust pollution levels. The major brands of the Company include Splendor, Joy and Passion. The two manufacturing facilities of the Company are located in Haryana. Motorcycles accounted for 95% of fiscal 2009 gross revenues and spare parts, 5%. Grows over 500% in five years For 2010-11, volume up by 38 per cent ; net profit soars by 88 per cent; total turnover up by 42 per cent Achieves a high 48 per cent motorcycle market share; and 33 per cent two-wheeler market share Announces 350 per cent final dividend and 250 per cent celebration dividend (over and above special interim dividend of 250%) Over the last five years, company's total turnover grows by a whopping 580 %; PAT by 919 % New Delhi, April13, 2011: Hero Moto Corp Co.., the newly crowned World No. 1 two wheeler companies, declared outstanding financial results for the year 2010-11. Profit after tax (PAT) is Rs. 462.93 crore, a growth of 88 per cent. The company's total turnover (sales plus other income, net of excise) grew to Rs. 4539.49 crore, a growth of 42 per cent. In a landmark run, the company achieved a 48 per cent market share in the motorcycle category during the year; and 33 per cent of the total two -wheeler market. The company recorded a cumulative sale of over 14.25 lacs motorcycles for the year 2010-11. The company's Spare Parts business also showed a remarkable increase of 39 per cent, taking the annual sales to Rs. 209 crore. Encouraged by the response the company has set a target of Rs. 250 crore for the current financial year. Hero Moto Corp's growth over the last five years has been truly outstanding, with both revenue and PAT showing significant jumps of over 5 times. While the revenue increased from Rs. 783 crore in 2008-09 to Rs. 4539 crore in 2010-11. PAT has increased from Rs. 50 crore in 2008-09 to Rs. 463 crore in 2010-11. The total sales has also increased from 2,68,931 motorcycles in 2010-11 to 14,25,302 motorcycles in 2010-11, with volume market share jumping from 27 per cent to 48 per cent in motorcycles; and 9% to 33% in two-wheelers.Mr. Brijmohan Lall, Chairman and Managing Director, Hero Moto Corp., commending the company's achievement said, "I thank all our stakeholders - our Hero Moto Corp family of employees, ancillaries,
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-vendors, dealers, other business associates, and most importantly, our customers. They have been instrumental in our achieving the World No.1 status. I would also like to make special mention of the excellent support provided all through by our joint venture partners Hero Moto Corp Company, and Hero Cycles Ltd. Our relationship with them has been wonderful and mutually satisfying. As we move forward, our collaborative approach will help us continue our lead." On the momentous occasion, Mr. Pawan Munjal, Director and CEO, Hero Moto Corp. Said, "The key reason for our success has been our continuous pursuit of pro-actively delivering value and delight to our customers. This is evident from the pioneering initiatives we undertook during 2011 - like the full two-year warranty on all Hero Moto Corp models, and the launch of the most comprehensive Customer Relationship Programme, 'The Hero Moto Corp Passport Programme'. Further, despite strong competition and pressures on the economy as a whole, the company has improved operating profits significantly, mainly because of cost rationalization, strong working capital management and manufacturing efficiencies."He added, "We are committed to continue our lead, by delivering even better value to the customers, in the year ahead. Accordingly, several new and exciting product launches are lined up for 2008-09, and in the future. The manufacturing facilities to support the customer demand would also be pro-actively set up, as has been done till now." Especially present on the occasion was Mr. K Suzuki, Senior Managing Director, Hero Moto Corp Company, Japan, who had flown in only that morning to attend the Press Conference and the World No. 1 celebrations. Clearly ecstatic he said, “I congratulate Hero Moto Corp for their wonderful and consistent achievements. Last year they achieved the distinction of being No. 1 Joint Venture of Hero Moto Corp Company worldwide; and this year achieved the unique status of World No. 1 two wheeler companies. Our relationship has always been strong and solid. We are proud of this achievement for the Hero Group, Hero Moto Corp Company, and the Indo-Japanese co-operation. We would continue to provide all the necessary support to Hero Moto Corp, for it to remain on the top".
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TABLE OF CONTENTS Sl.No.
Topic
Pages. No
1.
TITLE PAGE
i
2.
ACKNOWLEDGMENTS
ii
3.
PREFACE
iii
4.
EXECUTIVE SUMMARY
v
5.
TABLE OF CONTENTS
vi
6.
INTRODUCTION
1-11
7.
COMPANY PROFILE
12-21
8.
LITERATURE REVIEW
22-56
9.
RESULTS AND DISCUSSIONS
57-66
10.
CONCLUSIONS & RECOMMENDATIONS
67-70
11.
FUTURE PROSPECTS
71
12.
APPENDICES
72-74
13.
REFERENCE & BIBLIOGRAPHY
75
vii
INTRODUCTION The Indian Two Wheeler Industry The Indian two wheeler sector contributes the largest volumes amongst all the segments in automobile Industry. Though the segment can be broadly categorized in to 3-sub segments viz; scooters, motorcycles and mopeds; some categories introduced in the market are a combination of two or more segments e.g. scooter and stepthru’s. The market primarily comprises five players in the two wheeler segment with most of the companies having foreign collaborations with well known Japanese firms earlier. But with most of the companies now planning 100% subsidiaries in India. In the last four to five years, the two-wheeler market has witnessed a market shift towards motor cycles at the expense of scooters. In the rural areas, consumers have come to prefer sturdier bikes to with stand the bad road conditions. In the process of the share of motor cycle segment has grown from 48% to 58%, the share of scooters declined drastically from 33% to 25%, while that of mopeds declined by 2% from 19% to 17% during the year 2009-10. All new vehicles are a now being replaced by 4 stock motorcycles. Reduced excise duties and fierce competition has led to a fall in prices of certain models. Hero, a name synonymous with two wheelers in India, began its journey around four decades ago. Starting as a manufacturer of by cycle components, hero has today grown into a multiunit, multi-product, geographically diversified group of companies. The hero group began with simple Philosophy: to provide excellent transportation to the common man, at a price he could easily afford. Even today the dream providing the total satisfaction is all its sphere of activity. To consumers, in excellent products at an affordable price; a thorough understanding the fast changing consumer understanding the fast changing consumer behaviour, new market segment and opportunities, and marketing mix sensitive changing customer needs from the core of Hero’s marketing strategy and philosophy. Hero Moto Corp. is one of the leading companies in the two wheeler Industry. At present, it is segment with around 47% the market share during financial yr. 2000-01. The company ahs emerged one of the most of successful players, much ahead of it competitors by it superior and reliable product quality complemented with excellent marketing techniques.
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Hero Moto Corp has been an early entrant in the 4-stroke segment of the two wheeler industry. With a right mix of product styling and pricing the company has graped the 4-stoke market as compared to Bajaj Auto and TVS. TVS Motors Ltd has been the largest manufacturer of mopeds which are prevalent as a low cost transportations and provide a tremendous potential is all parts of India. However the company is likely to face threat Bajaj Auto Ltd (BAL) which continued its price based competitions and Hero Moto Corp cycle and Scooter Ltd. a new entrants in the 2 wheeler market. Infact the company has achieved excelled the Industry growth rates by a huge margin. From April
to December 2008 while the motor cycle industry sales were upto
38.68% TVS motor’s sales surged by a whooping 73.6% sat more importantly it is the success of its model Victor. Baja Auto has continued with its impressive performance witnessing significant growth is the motor cycle and three wheeler segments. Based on the performance fill data one can expect the company to meet it excellence by FY09. Hero Moto Corp is the largest player is the motorcycle segment. Focused on contemporary design and style, the company has a compare leusine ranges bikes viz; CD-100 DX CD-100 SS Splendor Street Smart Steek CBZ Passion It splendor model is an urban centric with its fuel efficiency which accounts to over 60-70% of its sales. The passion launched in mid Jan. 2001 has a resending success contributing to 26% of its sales. TVS offers a wide ranges of two-wheelers motorcycles- Victor/Fiero/Max100/ max100R/Max DL. Scooterette- TVS scooty Moped- chap/XL/XL super/XL supper HD/sports. TVS plans to launch 4 new models in the coming 15 months. A 4-stroke version of India’s best selling scooterttes; TVS-scooty and 4-stroke version of the existing moped line will be launched this year. 2
Bajaj Auto Ltd: Offer product a service to the customers so as to satisfy their needs. It’s having 4-stroke single cylinder natural air cool the displacement of engine is 111.6 CC having the engine power it 7-7 bhp at 7000 spm. The bike is having a hydrometric disc brake in front wheel. “Flash” is an added future in the bike. In 1993 BAL manufactured 12 different model 5-5 scooter model, 3-motorcycle model, moped model, 3-three wheeler model. But in the recent year Bajaj developed various model in the motorcycle segment which providing good riding conditions is urban road as well as rater roads. Scootercub/super/super FE/chetak/stride/Msl Priya. Moped- Bajaj Sunny. Motorcycle- M-80/kawasaki RTZ/Kawasaki45 by 1993 and latest model are. Eliminator/Pulsor –180/Pulsor 150/Boxer/Caliber Crowa/Caliber Sales performance of the player: Hero Moto Corp repeated a y-o-y growth of 6.3% is its motorcycle sales for the month of Jan 2006 at 1,45,708 units. Export during the month have surged almost 64% y-o-y. On a month –on-month basis the sales growth has been even higher up 16.5%. MOTORCYCLE APRIL TO DEC 2010 APRIL TO DEC 2009 % CHANGE INDUSTRY SALE 2897842 2089637 38.68 INDUSTRY SALE 1281342 1026102 24.85 MARKET SHARE 44.21 49.11 Bajaj Auto: Bajaj auto has reported y-o-y growth of 19.8% in motorcycle sales for Jan 2006 at 75059 units. On a month-on-month basis the growth is 8.8%. Export performance continues to be impressive with 10,089 two and three wheelers exported in Jan 2006, a growth of 98.6% y-o-y. Two wheeler sales for the current year are up 6.8%. The growth is driven sharply in the motor cycle sales upto 37% in two wheeler segment, the share of motor cycle has jumped from 52.8% to 67.8% during the current year. this sharp growth in the motor cycle can be attributed to the positive response received by its need products and the encouraging performance of select existing model. SALES (UNITS)
JAN 10
JAN 09
% CHANGE
APR-JAN 10
APR-JAN 09
% CHANGE
SCOOTERS (GEARED)
20211
30233
-33.15
235829
348700
-32.37
SCOOTER- UNGEARED
4349
4333
0.37
56072
57686
2.80
STEPTHRU’S
4563
5810
-21.46
47636
59576
-20.04
MOTORCYCLE
75059
62640
19.83
717397
523508
37.04
3
TOTAL 2-WHEELER
104182
103016
1.13
1056934
989470
6.82
THREE WHEELERS
17426
14405
20.97
163359
132864
22.95
TOTAL
121608
117421
3.57
1220293
1122334
8.73
India is the second largest manufacturer and producer of two wheelers in the world. It stands next only to Japan and China in terms of the number of two-wheelers produced and domestic sales respectively. This distinction was achieved due to variety of reasons like restrictive policy followed by the Government of India towards the passenger car industry, rising demand for personal transport, inefficiency in the public transportation system etc. The Indian two-wheeler industry made a small beginning in the early 50s when Automobile Products of India (API) started manufacturing scooters in the country. Until 1958, API and Enfield were the sole producers. In 1948, Bajaj Auto began trading in imported Vespa Scooters and three-wheelers. Finally, in 1960, it set up a shop to manufacture them in technical collaboration with Piaggio of Italy. The agreement expired in 1971. In the initial stages, the scooter segment was dominated by API, it was later overtaken by Bajaj Auto. Although various government and private enterprises entered the fray for scooters, the only new player that has lasted till today is LML. Under the regulated regime, foreign companies were not allowed to operate in India. It was a complete seller market with the waiting period for getting a scooter from Bajaj Auto being as high as 12 years. The Motorcycles segment was no different, with only three manufacturers viz Enfield, ideal Jawa and Escorts. While Enfield bullet was a four stroke bike, Jawa and the Rajdoot were two-stroke bikes. The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts 175cc bike. The two wheeler market was opened to foreign competition in the mid-80s. And the then market leaders- Escorts and Enfield were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With the availability of fuel efficient low power bikes, demand swelled, resulting in Hero Moto Corp then the only producer of four stroke bikes (100cc category), gaining a top slot. The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero Moto Corp brought in the first two-stroke and four –stroke engine motorcycles respectively. These two players initially started with assembly of CKD kits, and later on progressed to indigenous manufacturing. In the 90s the major growth for 4
motorcycle segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25% CAGR in the last five years. The Industry had a smooth ride in the 50s, 60s and 70s when the Government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s. the industry witnessed a steady growth of 14% leading to a peak volume of 1.9mn vehicles in 1990. The entry of Kinetic Hero in mid-eighties with a variometric scooter helped in providing ease of use to the scooter owners. This helped in inducing youngsters and working women, towards buying scooters, who were earlier inclined towards moped purchases. In the 90s, this trend was reversed with the introduction of scooterettes. In line with this, the scooter segment has consistently lost its part of the market share in the two-wheeler market. In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4 mn vehicles. Barring Hero Moto Corp , all the major producers suffered from recession in FY93 and FY94. Hero Moto Corp showed a marginal decline in 1992. The reasons for recession in the sector were the incessant rise in fuel prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing. Factors like increased production in 1992, due to new entrants coupled with the recession in the industry resulted in companies either reporting looses or a fall in profits. India is one of the very few countries manufacturing three- wheelers in the world. It is the world’s largest manufacturer and seller of three-wheelers. Bajaj Auto commands a monopoly in the domestic market with a market share of above 80%, the rest is shared by Bajaj Tempo, Greaves Ltd and Scooters India. The total number of registered two wheelers and three-wheelers on road in India, as on March 31, 1998 was 27.9mn and 1.7mn respectively. The two wheeler population has almost doubled in 1996 from a base of .6mn in 1990. Automobile Industry in India TVS Centra crosses an astounding 20,000 sales mark in 40 days Hosur, March 6, 2006: TVS Motor Company today announced that the sales of TVS Centra, powered by the indigenously developed Variable Timing Intelligent (VT-i) engine technology crossed 20,000 units in just 40 days since its launch in mid January 2004, the best ever clocked by any new product from the TVS Motor
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Company stable. This achievement is expected to spiral the overall growth of TVS Motorcycles sales in the coming months. The impressive sales figures reflect the customer's faith in the technological capability of TVS Motor Company to fully live up to its promise of delivering a world-class product at an affordable price. Due to excellent customer feedback across the country, TVS dealers are being pressurised with enquiries on the new 100 CC 4 Stroke Centra and its revolutionary VT-i engine technology. Having caught the public's imagination, TVS Centra has fully lived up to its promise of a 'Fill it Once a Month Bike' where a full tank of petrol lasts for a month based on the average use of motorcycle customers. A panel of leading auto experts in India, after having tested TVS Centra, have endorsed the fact that it was the 'best in its class' and also commended TVS Motor Company on its technology prowess and innovation. TVS Centra is powered by VT-i engines which are designed to deliver superb performance on fuel efficiency and torque delivery based on three fundamental actions namely variable ignition timing and superior combustion of fuel, friction reduction and fuel wastage reduction. Added to its technological edge are features that include attractive price, fuel efficiency, low maintenance, contemporary style, ride comfort and backed by TVS Motor Company's reliability, making it truly the preferred two-wheeler in its class. Chennai, January 5, 2004: India's leading two wheeler major, TVS Motor Company's commitment to produce the best technology in its products for its customers has led to the launch of TVS Centra with Variable Timing intelligent engines (VT-i), a 100 CC 4 Stroke motorcycle targeted at the Popular Segment. This revolutionary new VT-i engine technology, developed indigenously by TVS Motor Company, inbuilt into TVS Centra will make it the most fuel-efficient motorcycle in the Country. It will be rightfully called as the 'Fill it Once a Month Bike' where a full tank of petrol will last for a month based on the average use of motorcycle customers. The VT-i Engines by TVS Motor Company will go down in the history of the Automobile Industry in India as one of the most innovative technology developed indigenously. The VT-i engines are designed to deliver superb performance on fuel efficiency and torque delivery based on three fundamental actions namely variable ignition timing and superior combustion of fuel, friction
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reduction and fuel wastage reduction. This action facilitates deceleration fuel cut off, faster warm up of the Engine and has four curve ignition mapping Like all TVS Motor Company products, TVS Centra too has been engineered and designed keeping in mind extensive customer feedback and changing customer needs. TVS Centra will be the first motorcycle in India that will bundle price, mileage, maintenance, style, reliability, power, ruggedness and ride comfort making it truly a value for money personal transportation two-wheeler. Those who want all these performance attributes in a commuter motorcycle at a great price; nothing will beat the TVS Centra for all the advantages it offers. TVS Centra is built around to give a mileage that will offer atleast 10 per cent more than any other motorcycle in the country, today. It will be powered by 7.5 Brake HorsePower (Bhp) at 7250 RPM making it the most powerful motorcycle in its class. TVS Centra will also be known for its nimble handling and riding comfort enabling easy maneuvering even in busy city traffic. Its contemporary style with big muscular tank and well-rounded looks with a horizontal engine and superior ergonomics will mark a new standard in the popular segment of two wheelers. It will come with Econometer to keep a check on the mileage / power ratio, wide and skid free seat and Utility space. Victor the Saviour TVS launched Victor 110 cc model in September 2001, with leading cricketer Sachin Tendulkar as the brand ambassador the model has proved to be a big success. The success of TVS Victor is especially significant because it was developed with indigenous technology.
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Two stroke Max Range – On the way out The company is currently looking forward to phase out its two stroke Max range, which is perceived to be less fuel efficient with a new four stroke range. The change over is expected to take place by the end of June 2010. Two new launches could out TVS on a high growth trajectory TVS Centra TVS Centra a new 100 cc model has recently been launched and the company has set ambitions targets of achieving monthly sales in the range of 15000-20000 bikes per month. Also, a new upgraded 125 cc TVS Victor has been launched which will improve the trajectory of the company. Three Wheeler Project- Entering A New Market TVS Motor has set the stage for entry into the three-wheeler markets with the setting up of a new plant at Nanjangud, near Mysore in Karnataka. We understand that the company would be targeting the sub-one ton passenger and goods carriers segment of the market. With an investment of about Rs 50 crore in phase-1, it will cater to both passenger and cargo segments. The total investments for the three wheeler and four-wheeler quardricycle project are expected to be in the range of Rs 500 crore in the next twothree years. It plans to go with petrol version of three wheelers and expects higher demand to come from B class towns. The company expects higher margin and low competition in three-wheeler business as compared to its two-wheeler business. Three wheeler sales have grown at a CAGR of 7% over the last 9 years to 2.26 lakh units FY 03, and are expected to grow at the same rate for the next five years. TVS is expected to roll out its first three-wheeler by the end of FY05 to garner a 30% market share with around 100,000 unit sales by the end of FY08. Three-Wheeler Market Scenario These are two main segments in the Indian passenger three -wheeler markets are: Number of seats including driver not exceeding 4 and maximum max not exceeding 1 tonne. Number of seats including driver excluding 4 but not exceeding 7 max mass not exceeding 1.5 tonnes. The three-wheeler goods carrier segments are: Maximum mass not exceeding 1 tonne Others. 8
Around 95% of the three-wheeler sold in India belong to the smaller vehicles category in which Bajaj Auto is the major player and has around 90% market share. The other players in the segment are Atul Auto and Piaggio group, Italy. Similarly, in the three-wheeler segment, domestic sales of the goods carrying variety grew a whopping 46.95%. This growth in 2008-09 could have possibly come from two factors. 1) The increasing number of cities whose corporations have legislated that larger goods carrier, like trucks be kept out for logistics purpose. 2)The increase in the number of offerings in this category, especially from companies such as Mahindra & Mahindra and Piaggio vehicles pvt. Ltd. Quardricycle-A new introduction in the Indian market There is a new challenger emerging in the Quardricycle segment. These new vehicles could impact on the entry level sales. These new vehicle could impact on the entry level sales. Quardricycles are three wheelers converted into four wheelers by using, a column axle. All the major three-wheeler units have prepared Quardricycles prototypes. Plans setting up manufacturing units in Indonesia / Vietnam TVS motor is actively looking to set up a foothold in the south east Asian markets and has made top level visits to Indonesia & Vietnam. Indonesia is the third largest twowheeler market in the world with an estimated size this year of two million units. Presently in Indonesia there is one motorcycle for every 15 people, in Vietnam one for every seven people. Further in Indonesia forty million households, representing 86% of the total not having a motorcycle. Merger of engine components Division of Lakshmi Auto components with TVS Motor: TVS motor would merge engine component division of Lakshmi Auto Component Ltd. (LAC) and investments and other assests with itself and the dwap ratio has been fixed at once phase of TVS motor for every seven share held as consideration for the merger. Presently TVS motor holds 66.5% of equity capital of LAC, which would be cancelled. Around 66% of LAC’s sales come from the engine components division, mode of which is currently being sold to TVS motor. LAC’s total net sales in HI FY 09 were Rs. 69 crore and made anet profit of Rs. 10.5 crore..
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The Plastics and Rubber components division of LAC will be transferred to the wholly owned subsidiary company, Sundaram Auto Components Ltd. The total consideration on slump – sale based is Rs. 12.25 crore. Strong focus on R&D The company has put in place a strong R & D team consisting 400 engineers & is spending about 3% of its turnover on R & D every year and has in the process setup a strong world class facility for product design and development. During 2009-10, the company applied for 16 patents & published five technical research papers in international conference. Modified research projects are carried in association with leading international research labs and Indian institutes. R & D as percentage of sales in expected to increase from 1.5% in FY o2 to 3.2% in FY 11. Valuation The company’s valuations are dependent on five events: •
Current four businesses grow at the normal industry growth rates.
•
New product launches achieve their targets and are well accepted by the market.
•
Three wheeler foray achieve targeted volume in the desired rates of return on capital employed.
•
Quadricycle foray achieve the desired rate of return on the capital employed.
•
Overall investment returns.
•
In TVS motor company VICTOR is the most popular bike and very interestingly without any media interaction FIERO F2 has taken the 2nd spot with CENTRA on the 3rd spot which has taken a lead with only one place from MAX-R .It is recommended that FIERO F2 should be given equal sales promotion than CENTRA because of its popularity has come through people network and not through channel media.
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COMPANY PROFILE
Fill it. Shut it. Forget it What started out as a Joint Venture between Hero Group, the world's largest bicycle manufacturers and the Hero Moto Corp Company of Japan, is today the leading manufacturer of India's largest selling motorcycle. Coming into existence on January 19, 1984. Hero Moto Corp gave India nothing less than a revolution on two-wheels made even more famous by the 'Fill it - Shut it - Forget it' campaign. Driven by the trust of over 30 lakh customers, the Hero Moto Corp product range today commands as much as 47% making it a veritable giant in the industry. Add to that technological excellence, an expansive dealer network, and reliable after sales service, and you have one of the most customer-friendly companies. In fact, every second bike sold in India today is a Hero Moto Corp ! Customer satisfaction, a high quality product, the strength of Hero technology and the Hero group's dynamism have helped HML scale new frontiers and exceed limits. In the words of Mr. Brijmohan Lall Munjal, the Chairman and Managing Director, "We will continue to make every effort required for the development of the motorcycle industry, through new product development, technological innovation, and investment in equipment and facilities and through and through efficient management." MILESTONE KEY MILESTONES OF HERO MOTO CORP Year Event 1983
Joint Collaboration Agreement with Hero Moto Corp, Ltd.,
1984
Hero Moto Corp. Incorporated
1985 First motorcycle "CD 100" rolled out 1987 100,000th motorcycle produced 1989 New motorcycle model - "Sleek" introduced
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1991
New motorcycle model - "CD 100 SS" introduced 500,000th motorcycle produced
1992
Raman Munjal Vidya Mandir inaugurated - A School in the memory of founder
1994
New motorcycle model - "Splendor" introduced 1,000,000th motorcycle produced
1997
New motorcycle model - "Street” and 2nd manufacturing plant at Gurgoan inaugurated
1998 2,000,000th motorcycle produced 1999 New motorcycle model - "CBZ" introduced Environment Management System of Dharuhera Plant certified with ISO-14001 by DNV Holland Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory of founder Managing Director, Mr. Raman Kant Munjal 2000
4,000,000th motorcycle produced Environment Management System of Gurgaon Plant certified ISO-14001 by DNV Holland Splendor declared 'World No. 1' - largest selling single two-wheeler model " Hero Moto Corp Passport Programmed" - CRM Programmed launched
2001 New motorcycle model - "Passion" introduced One million production in one single year New motorcycle model - "Joy" introduced 5,000,000th motorcycle produced 2002
New motorcycle model - "Dawn" introduced New motorcycle model "Ambition" introduced Appointed Virender Sehwag, Mohammad Kaif, Yuvraj Singh as Brand Ambassadors
2003 Becomes the first Indian Company to cross the cumulative 7 million sales mark Splendor has emerged as the World's largest selling model for the third calendar year in a row (2000, 2001, 2002) New motorcycle model - "CD Dawn" introduced New motorcycle model - "Splendor +" introduced New motorcycle model - "Passion Plus" introduced New motorcycle model -"Karizma" introduced 2004 New motorcycle model - "Ambition 135" introduced Hero Moto Corp became the World No. 1 Company for the third consecutive year. Crossed sales of over 2 million units in a single year, a global record. Splendor - World's largest selling motorcycle crossed the 5 million mark New motorcycle model -
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"CBZ*" introduced Joint Technical Agreement renewed Total sales crossed a record of 10 million motorcycles 2005 Hero Moto Corp is the World No. 1 for the 4th year in a row New motorcycle model - "Super Splendor" introduced New motorcycle model - "CD Deluxe" introduced New motorcycle model - "Glamour" introduced New motorcycle model - "Achiever" introduced First Scooter model from Hero Moto Corp "Pleasure" introduced 2006
Hero Moto Corp is the World No. 1 for the 5th year in row Fill it. Shut it. Forget it
The joint venture between india's hero group and Hero Moto Corp company, has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide. During the 80s, Hero Moto Corp became the first company in india to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'fill it - shut it - forget it' campaign captured the imagination of commuters across india , and Hero Moto Corp sold millions of bikes purely on the commitment of increased mileage Over 20 million Hero Moto Corp two wheelers tread indian roads today. These are almost as many as the number of people in finland , ireland and sweden put together! Hero Moto Corp has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Moto Corp. Every 30 seconds, someone in india buys Hero Moto Corp's top -selling motorcycle – splendor. This festive season, the company sold half a million two wheelers in a single month—a feat unparalleled in global automotive history. Hero Moto Corp bikes currently roll out from its three globally benchmarked manufacturing facilities. Two of these are based at dharuhera and gurgaon in haryana and the third state of the art manufacturing facility was inaugurated at haridwar, uttrakhand in april this year. These plants together are capable of producing out 4.4 million units per year. Hero Moto Corp 's extensive sales and service network now spans over 3000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockiest and authorized representatives of dealers located across different geographies. Hero Moto Corp values its relationship with customers. Its unique crm initiative - Hero Moto Corp passport program, one of the largest programs of this kind in the world, has over 3 13
million members on its roster. The program has not only helped Hero Moto Corp understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. Having reached an unassailable pole position in the indian two wheeler market, Hero Moto Corp is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of india , increasing urbanization and the empowerment of rural india will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Moto Corp in the years to come. As brijmohan lall munjal, the chairman, Hero Moto Corp
motors
succinctly points out, "we pioneered india's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.'' HERO MOTO CORP'S MISSION Hero Moto Corp’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 Moto Corp to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders. HERO MOTO CORP 'S MANDATE Hero Moto Corp 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 Hero Moto Corp Company. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status. FROM THE CHAIRMAN'S DESK LEADING WITH A DREAM We had a dream. The dream of making motorcycles that would touch and transform the lives of our customers by giving them a mode of transport that was fuel-efficient, comfortable and environment friendly. One that would enhance their efficiency at work, enable them to share moments of joy with their families and add up to a better quality of life. In a scenario where the customer had a few choices, our vision was to offer the highest quality at a reasonable price, to meet our customer’s expectations, and to exceed them. Behind the success of Hero Moto Corp, is the saga of team-work. We would like to acknowledge the role played by our jv partners, Hero Moto Corp company, all our business associates, shareholders and employees. 14
In the new millennium, we stand committed to innovation, to change, to achieving breakthroughs… to moving forward in the new century, while retaining the values that have been like a beacon in this journey thus far. 2007 - Hero Moto Corp. has appointed Mr. Yutaka Kudo as Director and Whole-time Director of the Company in the category of Executive Director w.e.f. April 1, 2007. - Hero Moto Corp is the World No. 1 for the 6th year in a row - New 'Splendor NXG' launched - New 'CD Deluxe' launched - New 'Passion Plus' launched - New motorcycle model 'Hunk' launched - 20 million production milestone achieved 2008 - Hero Moto Corp has informed that Mr. Arun Nath Maira. has been appointed as an Additional Director in the category of Non Executive and Independent Director w.e.f. December 20, 2008 by the Board of Directors by way of passing a resolution by circulation. - Hero Moto Corp Haridwar Plant inauguration - New 'Pleasure' launched - Splendor NXG lauched with power start feature - New motorcycle model 'Passion Pro' launched - New 'CBZ Xtreme' launched - 25 million production milestone achieved - CD Deluxe lauched with power start feature - New 'Glamour' launched - New 'Glamour Fi' launched 2010 - Hero Moto Corp has appointed Mr. Ravi Nath as an Additional Director in the category of Non Executive and Independent Director w.e.f. October 14, 2010 by the Board of Directors by way of Passing a resolution by circulation on October 14, 2010. BOARD OF DIRECTORS No. Name of the directorscategory of directorship 1 Mr. Brijmohan Lall Munjal 15
Chairman & whole-time director 2 Mr. Pawan Munjal managing director 3 Mr. Toshiaki Nakagawa joint managing director 4 Mr. Yutaka kudo whole-time director 5 Mr. Om prakash munjal non-executive director 6 Mr. Sunil kant munjal non-executive director 7 Mr. Masahiro takedagawa non-executive director 8 Mr. Takashi nagai non-executive director 9 Mr. Narinder nath vohra non-executive & independent director 10 Mr. Pradeep dinodia non-executive & independent director 11 Gen.(retd.) Ved prakash malik non-executive & independent director 12 Mr. Analjit singh non-executive & independent director 13 Dr. Pritam singh non-executive & independent director 14 Ms. Shobhana bhartia non-executive & independent director 15 Mr. Sunil bharti mittal non-executive & independent director Hero Moto Corp is the world no. 1 for the 5th year in a row PROMINENT AWARDS TO THE COMPANY Year
Awards & recognitions
2008
Ndtv profit car india & bike india awards - bike manufacturer of the year Overdrive magazine - bike manufacturer of the year Tns voice of the customer awards: No.1 executive motorcycle splendor nxg No.1 standard motorcycle cd deluxe No. Premium motorcycle cbz xtreme
2007
The ndtv profit car india & bike india awards 2007 in the following category: Overall "bike of the year" - cbz x-treme "bike of the year" - cbz x-treme (up to 150 cc category) "bike technology of the year" - glamout pgm fi "auto tech of the year" - glamout pgm fi by overdrive magazine bike
of
the
year"
-
cbz
x-treme
by
overdrive
magazine
ranked cbz x-treme " bike of the year" - by b s motoring magazine
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“most trusted company” , by tns voice of the customer awards 2006. Cd deluxe rated as "no 1 standard motorcycle" by tns voice of the customer awards 2006. 2006
Adjudged 7th top indian company by wallstreet journal asia (top indian two wheeler company) one of the 8 indian companies to enter the forbes top 200 list of world’s most reputed companies. No. 1 in automobile industry by tns corporate social responsibility award Best in its class awards for each category by tns total customer satisfaction awards 2006: Splendor plus (executive) Cd deluxe (entry) Pleasure (gearless scooters) Splendor & passion - top two models in two wheeler category by et brand equity survey 2006 Adjudged 7th top indian company by wallstreet journal asia (top indian two wheeler company) Top indian company in the automobile - two wheeler sector by dun & bradstreet american express corporate awards 2006 Hero Moto Corp splendor rated as india's most preferred two-wheeler brand at the awaaz consumer awards 2006. Certificate of export excellence for outstanding export performance during 2003-04 for two-wheeler & three- wheelers - complete (non ssi) by engineering export promotion council The ndtv profit car india & bike india awards 2006 in the following category: Bike maker of the year Bike of the year - achiever Bike of the year - achiever (up to 150 cc category) Bike of the year - glamour (up to 125 cc category) Ndtv viewers' choice award to glamour in the bike category
2005
Awaaz consumer awards 2005 - india's most preferred two-wheeler brand by cnbc in
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the 'automobiles' category Bike maker of the year award by overdrive magazine Icwai national award for excellence (second) in cost management 2004 in the private sector category by icwai 10th motilal oswal wealth creator award for as the most consistent wealth creator for the period 1991-2005 2004
Winner of the review 200 - asia's leading companies award (3rd rank amongst the top 10 indian companies) Gvc level 1 (highest rating) by crisil for corporate governance Adjudged as the best value creator - large size companies 2003-04 by the outlook money Corporate excellence award 2004 by indian institute of materials management Adjudged as the organization with innovative hr practices by ht power jobs for hr excellence Icsi national award for excellence in corporate governance 2004 by the institute of company secretaries of india
2003
Winner of the review 200 - asia 's leading companies award (3rd rank amongst the top 10 indian companies) Most respected company in automobile sector by business world Bike maker of the year by overdrive magazine
2002
Bike maker of the year by overdrive magazine Winner of the review 200 - asia 's leading companies award (4th rank amongst the top 10 indian companies) Company of the year of et awards for corporate excellence Ranked 4th in 'overall best managed company' category, ranked 3rd in 'best financial management' and 'best operational efficiency' category, ranked 6th in 'overall best investor relations' category, by asiamoney Highest wealth creating company of the year award by the money Gvc level 1 (highest rating) by crisil for corporate governance
2001
Bike maker of the year by overdrive magazine Winner of the review 200 - asia 's leading companies award (9th rank amongst the top 10 indian companies) Winner of three leaves award for showing corporate environment responsibility in the automobile sector by centre for science & environment 18
1999
National productivity award for the best productivity award in the category of automobile & tractor presented by vice president of india
1995
The analyst award 1995 presented to Hero Moto Corp. On being ranked 9th amongst the most investor rewarding companies in India
1995
National award for outstanding contribution to the development of Indian small scale industry (nsic award - presented by president of India)
1991
Economic times-harvard business school award for corporate performance to
Hero Moto Corp. KEY POLICIES AN ENVIRONMENTALLY AND SOCIALLY, AWARE COMPANY At Hero Moto Corp, our goal is not only to sell you a bike, but also to help you every step of the way in making your world a better place to live in. Besides its will to provide a high-quality service to all of its customers, Hero Moto Corp takes a stand as a socially responsible enterprise respectful of its environment and respectful of the important issues. Hero Moto Corp has been strongly committed not only to environmental conservation programmes but also expresses the increasingly inseparable balance between the economic concerns and the environmental and social issues faced by a business. A business must not grow at the expense of mankind and man's future but rather must serve mankind. "we must do something for the community from whose land we generate our wealth." A famous quote from our worthy chairman mr.brijmohan lall munjal. ENVIRONMENT POLICY WE at Hero Moto Corp are committed to demonstrate excellence in our environmental performance on a continual basis, as an intrinsic element of our corporate philosophy. TO ACHIEVE THIS WE COMMIT OURSELVES TO: Integrate environmental attributes and cleaner production in all our business processes and practices with specific consideration to substitution of hazardous chemicals, where viable and strengthen the greening of supply chain. Continue product innovations to improve environmental compatibility. Comply with all applicable environmental legislation and also controlling our environmental discharges through the principles of "alara" (as low as reasonably achievable).
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Institutionalise resource conservation, in particular, in the areas of oil, water, electrical energy, paints and chemicals. Enhance environmental awareness of our employees and dealers / vendors, while promoting their involvement in ensuring sound environmental management. QUALITY POLICY Excellence in quality is the core value of Hero Moto Corp's philosophy. We are committed at all levels to achieve high quality in whatever we do, particularly in our products and services which will meet and exceed customer's growing aspirations through: Innovation in products, processes and services. Continuous improvement in our total quality management systems. Teamwork and responsibility.
MISSION STATEMENT IN PURSUIT OF EXCELLENCE We, at Hero Moto Corp, 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 our customers. While doing so, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keep the momentum going to take the company to excellence in the new millennium". WE CARE FOR ENVIRONMENT A philosophy closest to Hero Moto Corp is that which pertains to the environment, which is why the company goes that extra step to ensure that each one of the high technology 4-stroke Hero Moto Corp motorcycles meet the most demanding of pollution norms at every level. This is a policy that the company has followed since the very beginning. WE CARE FOR COMMUNITY Hero Moto Corp is a company with a difference. Constantly involved in social activities, spreading. Awareness about the community and environment, the company has taken a giant step in the fields of Health care; Education; Engineering; Environment and many more International Marketing Based on our own brand of globalization, they have built our distribution network over 60 countries worldwide and multiplied our exports from 5 percent of total turnover in Fiscal 2007-08 to over 15 percent in Fiscal 2010-11.
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Motorcycles form the major chunk of the sales revenue of Hero Moto Corp. A small proportion of the revenue comes from the sales of spares. The proportion of sales revenue coming from each of these two segments in the FY10 is depicted in the graph below:
MAIN OBJECTIVE OF COMPANY Through the company has wide list goals to be achieved but the major objective of the company has to achieve areas follows:1. To provide right product to right people at right time. 2. Price should be reasonable; by this every level of person can afford the product. 3. To maximize the share holder’s value by customer value enhancement. 4. Changes should be according to prospective customer 5. To provide delivery of standard product. 6. To provide value for money to there consumers.
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LITERATURE REVIEW Marketing Strategy A thorough understanding of the fast-changing Marketing Strategy, 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. 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." PARTNERSHIPS, ALLIANCES AND JOINT VENTURES • Hero's quest for a low-budget, fuel-efficient and environment-friendly two-wheeler led Hero Moto Corp to enter into a Technical Collaboration with Steyr Daimler Punch of Austria in 1987 for the manufacture of the 65cc, Porsche-design minimotorcycles. •
Munjal Showa Limited was formed in Technical and Financial Collaboration with Showa Corporation, Japan, to design, develop and manufacture of front forks, shock absorbers, struts and gas struts.
•
Sunbeam Auto Limited has set-up a state of the art piston manufacturing facility in technical collaboration with M/S Hero Foundry Company Limited of Japan, the
22
pioneers in the world for manufacturing high-strength lightweight pistons used in light, powerful fuel-efficient engines Munjal Auto Industries Limited has a joint venture with the State-owned Gujarat Industrial Investment Corporation, to cater to the needs of the overseas market. •
Hero Cycles CR Division was set up in consultation with MECON, Asia's largest engineering consultants and in Technical Collaboration with Wean United, USA.
•
Hero Cycles Cold Rolling Division has also entered into a technical collaboration with Kawasaki Steel Corporation, Japan for the improvement of production yield, elimination of defects, reduction of customer returns and enhancement of maintenance operations against certain predetermined targets.
QUALITY Quality at Hero is attained not just by modern plants and equipment and through latest technology, but by enforcing a strict discipline. At the Group factories, attaining quality standards is an everyday practice - a strictly pursued discipline. It comes from an amalgamation of the latest technology with deep-rooted experience derived from nearly four decades of hard labor. It is an attitude that masters the challenge of growth and change - change in consumers' perceptions about products and new aspirations arising from a new generation of buyers. Conformance to quality at Hero begins on the shop floor. Every worker ensures at each stage of manufacturing that any of the faulty products are not allowed to go through further manufacturing and distribution cycles. Today quality is ensured from steel processing to the finished product. Each component goes through numerous tests at the stages of design, raw material procurement and, of course, during the manufacturing process. Constant technology up gradation ensures that the Group stays in the global mainstream and maintains its competitive edge. With each of its foreign collaborations, the Group goes onto strengthen its quality measures as per the book. The Group also employs the services of independent experts from around the world to assist in new design and production processes. Nevertheless, in this race to acquire the most modern techniques and technologies and to collaborate with the most advanced players in the market, the core competence continues to be derived from the Group's philosophy - "To Engineer Satisfaction."
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MARKETING MIX STRATEGY Product Mix
Product Variety Quality
Design
Brand Name
Warranties
Service
Features
Price Mix
List Price
Discount
Allowances
Payments Periods Credit
Terms Place Mix
Channels
Coverage
Assortments
Inventory
Transport
Promotion Mix
Sales Promotion
Advertising
Public Relations
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Direct Marketing
MARKETING MIX: Standardised Marketing Mix: An international marketing strategy for using basically the same product, advertising, distribution channels & other elements of the marketing mix in all the countries of company’s international market. Adapted Marketing Mix: An international marketing strategy for adjusting the marketing mix elements to each international target market, bearing more costs but hoping for a larger market share & return. International Scenario A two-wheeler is used as a personal/family vehicle or a goods carrier in the enveloping countries, whereas it is confined to sports/racing (heavy motorcycles) or short istance shopping (mopeds) in developed countries. The world two-wheeler market is dominated by Japan. Japanese manufacturers account for around 65% of the total two-wheeler production in the world. However, production within Japan has been declining due to lower domestic demand and shift in manufacturing base outside the country. Japan is also the world's largest exporter of two-wheelers in the world controlling around 75% of the world trade. Its major markets are China, USA and Europe. In terms of player positions, Hero Moto Corp Corporation, Yamaha Motors and Suzuki Motors Corporation share the top three slots in the world two-wheeler market. The table below shows the production and sales figures of motorcycles and scooters in Japan during the past decade More than 50% of the production in Japan is exported out of the country. This scenario contrasts directly with the Indian scenario. In India, only about 15% of the production in FY11 were exported The Asian continent is the largest user of two-wheelers in the world. This is due to poor road infrastructure and low per capita income, restrictive policy on car industry. The technology for two-wheelers is not as well developed as for car industry. This is due to oligopoly between top five players in the segment, compared to thirty manufacturers in the car industry.
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EXPORTS
HERO CYCLES HERO MOTO CORP HERO PUCH HERO CORPORATE SERVICES (Herosoft, Hero Mindmine, Hero serveIT) MUNJAL SHOWA LIMITED
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THE HERO MOTO CORP MISSION
1. Enhancing quality of life The Hero Moto Corp group is committed to creating a better quality of life for people everywhere and to furthering the interest of the society by being a responsible corporate citizen. 2.
Creating Happiness We will bring happiness into every home, offering high consumer durable vehicles at affordable prices, and comfort.
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3.
Achieving progress We will pursue innovative technologies in the field of customer care vehicles and energy, create product and services that will improve to quality of life, realize the goals of the world community and protect the environment
4.
Sustaining growth We will be a source of pride to our business associates by ensuring mutual prosperity and growth through the implementation of forward looking corporate strategies aimed at identifying opportunities and responding intelligently to dynamics of change.
5.
Pursuing Excellence We will provide a conducive environment for enabling our employees to develop their potential and make a significant contribution to the group success. PLACEMENT OF HERO MOTO CORP Hero Moto Corp Limited sells the motorcycle through a widely spread all India networks of over 450 of dealers. The motorcycle can be serviced at the authorized dealers or SSP’s (Spare and Service points). In the year 1996, Hero Moto Corp was the first company to introduce India’s first chain of automated services workshops. To expand the service network further to smaller towns, the company has appointed Service extensions. Hero Moto Corp genuine spare parts are available from the dealers, SSP’s and the stockiest. The company provides good after sales service through its well-established dealer network. The company has a policy of three S, Single S for stockiest, Double S for services and three SSS for sales. The company is having about 460 of SSS, which deals in Sales, Service, and Stock, 260 of SS, which deals in Service and Stock and 12 of S, which exclusively deals in stocks. The Network As On 31st March 2002 Is As Under: Dealers (3s_-Sales, Service, Spares)458, Ssp’s (2 S-Service And Spares)-256, Stockiest (Single S-Spares)-12 The company has developed a unique distribution network, which has given it a distinctive competitive advantage. The whole idea behind establishing this vast distribution network is to reach the customer even in the remote areas. The company has segregated the areas as Urban, Rural, and semi rural and has appointed dealers in many of these areas, after seeing the potential. The company’s major thrust is the easy availability of all the models in every part of the country. The company’s bikes are sold through the dealers and they are required to provide proper infrastructure, Workshops, Facilities, and trained Personals. The dealers are given targets 28
and they are required to sell sufficient number of vehicles to earn a return on investments. Regional offices are in constant touch with these dealers. Presently the company is having 8 regional offices in the country. The regional offices constantly assist these offices as a kind of linkage between the company and the dealer and the dealers. The sales and the marketing personals at the regional offices are trained and encourage maintaining a cordial relationship with various dealers on the basis of trust and understanding. The company’s service engineer and the other sales staff supervise all the facilities at the dealer and the service outlet from planning the layout to the errection of the specially designed benches and the tools. Infact all the possible efforts are made by the company to make the dealers to become the part of the Hero family and its culture. The company has appointed fleet of more than 400 trucks from around 45 transporters to assist them in the delivery of vehicle. From the factory and within the factory premises, the company has a good fleet of trucks and trailers. The company to deliver the vehicle to the dealer’s showroom in the gactory fresh condition uses these trucks and trailers. The cargos are loaded in the trucks and the trailers and they are delivered at the stockyards of the dealers in whichever part of the country they may be located. So the company in this way delivers the motorbikes in the fresh factory conditions. By the time the bike reaches our dealers they might have done hardly a coupler of kilometers. The company believes the marketing efforts should go beyond ensuring product availability. The focus is therefore on a vast distribution network. In order to ensure the customers a better quality service at the various stations, the company mounts an effective training porograme in which all the mechanic, supervisory staff and the other senior staff personnel participate. The company is also planning to set up some of the fully equipped express authorized highway. In these highways, one would see a Hero Moto Corp dealer every 15-25 KMS.This concept is thought by the company with a view to provide good after sales services to the customer. This exercise will also check the company to check the use of spurious products, which ultimately spoil the bike. The highways to be covered in this scheme are: •
NEW DELHI-GWALIOR
•
NEW DELHI-CHANDIGARH
•
AMBALA-LUDHIANA
•
KOLKATTA-DHANBAD
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The company has a dream to increase this figure of 458 dealers to 650 by the end of 2003 and increase the figure of 256 service stations to 350 by the end of the year 2003.The company is going by an expansion process. The company is perhaps the second company after Maruti Udyog Limited to implement a factory fresh concept. The company is the only company in the two-wheeler segment having so much of vast distribution network. Hero Moto Corp will be adding 25 more dealers and 50service stations to build a network of 575 dealership-cum-service points (including 400 dealerships) across the country. The level of investment in an automated Hero Moto Corp service station is expected to be around Rs 10 lakh, apart from land and building. ``No dealer has any problem in expanding business,'' says Tapan, Marketing manager. ``We've tied up with Citibank and Centurion to provide bill discounting through our dealers.’ Consumer Finance: In order to focus on organized consumer financing, Hero Moto Corp tied up with Tata Finance a week ago. This is Hero Moto Corp's second tie-up following Centurion, which is accounting for around 3,000 bikes a month through 100 dealerships. A thorough understanding of the fast-changing consumer behaviour, 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 catalysed 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. The Group has undertaken a steady upgradation 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. 30
PRODUCT STRATEGIES OF HERO MOTO CORP Hero
Hero shifted its focus from catering to the fuel efficient conscious consumer to try
and occupy other segments of the motorbike market and therefore the new product launches from Hero Moto Corp in the last three year have been in this direction. The company has also upgraded some of its bikes to stay in contention and to meet Euro emission norms. The new underlining theme for the company “One for everyone” has led to the launching of new products, which are as follows: Street Smart: Hero Moto Corp introduced its Street Smart in 1997. The company who were more inclined towards the scooters and who thought that the scooters were more safer than the motorcycles, thus Hero Moto Corp decided to launch the Street Smart. The bike was built in such a way that it resembled more like a scooters, than a motorcycle, but actually it is a motorbike. I.e. it is a “hybrid” Product Description (HERO MOTO CORP Ltd.) Hero Moto Corp has launched the following motorbikes in the Indian market. HERO MOTO CORP CD 100 HERO MOTO CORP CD 100 SS HERO SLEEK HERO MOTO CORP Splendor HERO MOTO CORP Street Smart HERO MOTO CORP CBZ HERO MOTO CORP Joy HERO MOTO CORP Passion HERO MOTO CORP Ambition Hero
Hero shifted its focus from catering to the fuel efficient conscious
consumer to try and occupy other segments of the motorbike market and therefore the new product launches from Hero Moto Corp in the last three year have been in this direction. The company has also upgraded some of its bikes to stay in contention and to meet Euro emission norms. The new underlining theme for the company “One for everyone” has led to the launching of new products With the launch of new motorbikes and various other motorbikes in the pipeline, Hero Moto Corp’s strategy is to get into these segments of the motorcycle market where they have not made in roads earlier.
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PRICING STRATEGIES OF HERO MOTO CORP The company has a policy to price its product very competitively. In today’s world, one cannot has a skimming pricing says Mr. Tapan, marketing manager, Hero Moto Corp. Necessarily the pricing policy is completely a blend of two strategies i.e. Penetration and Skimming. It has been the company’s policy to provide the customers with value for money-give more for less. We are the only company in the two wheeler segment that is in the process of passing on the whole benefit of cost advantage achieved as a result of the increased localization levels of upto 60% to the customers. We are in the process of keeping our product increasing popular and affordable. The company keeps telling its customers to think about Quality rather than price. Further if one talks about the changes in the price in the last three years, the prices have never been changed except the budgets except once in APRIL 2011,when the company started off with their “celebration offer”, and thus decided to sanctioned a discount and curtail on every Model Rs 1001\-. The company is surely in a business of delivering quality rather than price. For instance the Boxer, which is of only 29,990 and is the cheapest bike of the industry. The company gives importance to the quality rather than cheap products. Well Hero Moto Corp has bikes at different price point but there is one common thing that is they are priced at a premium of INR 2000- 3000 from the competitors and it seems their strategy is working fine with the target customers as it is the largest seller of bikes in the Indian market with a market share of 48 % .Customers are redy to shell out the extra money because they believe and its fact that the fuel efficiency of the bikes is much better than its competitors the different price points for Hero Motors Limited are : NAME
PRICE
Dawn -------------------
32,000
Splendor ---------------
41,000
Passion ----------------
44,000
Cbz---------------------
52,000-60,000
Thus we find that HML has bikes for every one for entry level customers they have dawn which is a no frill attached product whose emphasis is on mileage with performance .And for customers who like to have bike which is good at performance and with descent looks they have Splendor which is their fastest selling bike and
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account for half of the total sales. Customers who are looking for style with performance can go for Passion which is a huge success among the urban class as it is priced little bit higher than splendor and the looks of the bike are astounding. For customers who want style and power they have CBZ which is targeted towards the premium segment and it was a runaway success initially but is not a hot seller now due to some problems. Hero Moto Corp is planning to introduce few more models in years time in order to make their portfolio of products more versatile. They are trying to introduce new models and they are trying to introduce models at the premium segment as it has high margins and the company feels that it’s the segment which is will grow in the near future as the income of people will increase with the change of life styles .HML also intend to introduce few models which are economical in nature as they this segment provides the volumes to the company. Hero Moto Corp still wants to charge a price of premium as its brand enjoys a high level of respectability and reliability among the target customers as their products have already proved their mettle in the market and enjoy high level of brand equity among the target customers. Hero Moto Corp has an advantage of large no of dealers and also economies of scale which help them to absorb the costs to a great extent. PROMOTIONAL STRATEGIES OF HERO MOTO CORP Hero Moto Corp rides safe Hero Moto Corp's `Ride Safe and Good Rider' campaign is aimed at communicating the philosophy of delivering safe products and promoting good driving for the overall safety of the Hero Moto Corp customer. Created by McCann Erickson, the ad-- Hero Moto Corp cares for your safety--invited all Hero Moto Corp owners to attend the Ride Safe programme on October 27, 2011 at Delhi's India Gate lawns. This was the first phase of the programme, where three instructors from Japan demonstrated techniques of right driving. In the second phase, Hero Moto Corp will communicate the launch of the 4S concept (sales, service, spare parts and safety) at Hero Moto Corp dealerships. The focus of the third phase will be to promote the launch of the Hero Moto Corp Safety Riding Promotion School, which will have riding simulators and safety riding tracks Hero Hero will take the riding programme-- where trained personnel will give riding tips to bike owners-- to over 100 dealerships across 90 towns. Promotion in this sector cannot be like that in the Fast Moving Auto pats (Automobile) sector. The promotions in this sector are like 0% finance schemes and 33
other sort of things. The company takes the services of many good and reputed advertising agencies like Reddifuusion, Lintas, sachi & Sachi and others. The company has also signed a kind of agreement with two celebrities just now to be their brand ambassadors. Hero Moto Corp, a leading manufacturer of motorcycles, has roped in film actor Hrithik Roshan and captain of Indian Cricket team Sourav Ganguly as its brand ambassadors for three years till 2003. They would endorse the company products, attend corporate and brand events and help promote its "we care" campaign comprising safety riding, environment, and friendliness. Hrithik and Ganguly said they were glad to be associated with Hero Moto Corp. Hero has embarked upon an ambitious project to achieve sale of one million bikes this year with a market share of 47 per cent. The turnover would be in excess of Rs. 3000 crore. In October alone, 1,12,000 motorcycles have been sold, Compared to 66,063 units in the corresponding period last year, the increase in sales is a phenomenal 69 per cent. Cumulative sales jumped up by 41.58 per cent to 5.72 lakhs units during AprilOctober as against 4.04 lakh units in the same period last year. At Hero Moto Corp , our goal is not only to sell the customer a bike, but also to help him at every step of the way in making the correct riding decisions. Assisting him in making the right judgments on the road, and helping him to choose the right helmet and other riding equipment And as bike handling requires know-how, skill, and rigorous mental conditioning, we have put together certain safety tips and suggestions that will enhance the riding comfort. Last but not the least, it is always important to remember - a good rider is a safe rider. Hero Moto Corp is enhancing the Advertising &Promotion budget by around 35 per cent from Rs 41 crore in 1999-2000. Apart from concentrating on mainstream Splendor-- the world's largest selling bike-- and upscale CBZ motorcycles, Hero Moto Corp has identified ``soft areas'' like services and spares parts for the purpose of intense communication. The creative account of Hero Moto Corp rest with big names like Hindustan Thompson Association, Lintas, Sachi and Sachi and so on. Hero Moto Corp is also planning a major campaign to re-launch the restyled step-thru Street Smart. While customer references-- and not media strategy-- are expected to support the CD brand sales, Hero Moto Corp will look at social areas -- like civic issues,
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association with Non Government Organizations, contribution to greener causes-- for corporate communications. The corporate campaign will be largely complemented by on-ground initiatives under the umbrella brand of ``We Care'', incorporating activities in the arena of community services, safety and services programmes, tree-plantations and environmental-friendly projects. In line with Hero's worldwide, safety riding programme, this fiscal Hero Moto Corp Motors Limited will take the riding programme-- where trained personnel will give riding tips to bike owners SPORTS & ENTERTAINMENT In sports promotions, Hero Moto Corp
will stickto cricket (following title
sponsorship of the World Cup last year, it has signed a three-year contract for HeroHero-Salve Challenger Trophy) andgolf (it will continue with Hero-Hero Masters Golf). Moreover, after a successful association with movies-- last year it signed Pyar Mein Kabhi Kabhi starring Dino M and Twinkle-- Hero Moto Corp is in theprocess of identifying title sponsorships of youth-centric movies. Says Sobti, “In terms of media exposure, we are looking at sports, moviesand news. Niche channels are also worth putting your money on.'' For theCBZ, this year it is planning to run commercials in youth channels like MTV;Discovery and Star Movies. In sports promotions, Hero Moto Corp will stick to cricket, it has signed a three-year contract for Hero-Hero-Salve Challenger Trophy) and golf (it will continue with Hero-Hero Masters Golf). Moreover, after a successful association with movies-- last year it signed Pyar Mein Kabhi Kabhi starring Dino M and Twinkle-- Hero Moto Corp is in the process of identifying title sponsorships of youth-centric movies. In terms of media exposure, the company is looking at sports, movies, and news. For the CBZ Motorcycle, this year it is planning to run commercials in youth channels like MTV; Discovery and Star Movies. The Target: “Services will be a major differentiator,'' says Sobti.``The campaigns will highlight the high level of services and automatedfacilities at our dealerships.'' Hero Moto Corp is expecting a 30-35 per centgrowth in spare parts revenue, which accounted for Rs 100 crore in 1999-2000.In the new fiscal, Hero Moto Corp is aiming to take the sales of Splendor from40,000 a month to 50,000 a month; CBZ from 4,500 a month to 5,000; and a10-15 per cent growth in CD and CD-SS brands up from 35
25,000 a month now. There-launched step-thru Street Smart is expected to account for around25,000-30,000 in the first year. Services will be and is the differentiator. The campaigns will highlight the high level of services and automated facilities at the company’s dealerships. Hero Moto Corp is expecting a 30-35 per cent growth in spare parts revenue, which accounted for Rs 100 crore in 1999-2000.In the new fiscal, Hero Moto Corp is aiming to take the sales of Splendor from40, 000 a month to 50,000 a month; CBZ from 4,500 a month to 5,000; and 10-15 per cent growth in CD 100 and CD100-SS brands up from 25,000 a month now. Supporting all of the Hero Moto Corp's growth projections are amulet-pronged strategy including a thrust on a customer relationship programme, major increase in advertising and promotion (A&P) spending, expansion of dealership network, and a focus on organized consumer financing. DEALERSHIP EXPANSION Hero Moto Corp will add 25 more dealers and 50service stations to build a network of 575 dealership-cum-service points(including 400 dealerships) across the country. The level of investment in an automated Hero Moto Corp service station isexpected to be around Rs 10 lakh, apart from land and building. “No dealerhas any problem in expanding business,'' says Sobti. “We've tied up withCitibank and Centurion to provide bill discounting through our dealers.''Consumer Finance: In order to focus on organised consumer financing, HeroHero tied up with Tata Finance a week ago. This is Hero Moto Corp's secondtie-up following Centurion, which is accounting for around 3,000 bikes a month through 100 dealerships. “We've got a good internal rate (based on IRM), which is standard acrossthe country,'' says Sobti. ``These finance companies bring refreshinglycustomer-friendly focus to our organisation.'' With Tata Finance, Hero-Hero's reach will be extended to over 150dealerships. Also, Tata Finance is expected to add 2,000 bikes a month. Presently, consume financing, including non-organised financing, contributes around 20,000 Hero Moto Corp
bikes a month. Gauging Consumer: Hero Moto Corp
is chalking out a
customer relationship programme, which is expected to be established in the next three years. “We're discussing with Result McCann,'' says Sobti. The programme will initially attempt at building relationships with Hero Moto Corp's top three to five lakh owners, out of its customer base of three million.
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SALES PROMOTIONS Hero Moto Corp regularly has promotions running for its dealers as well as customers in order to ensure that there is a interest among the target customers abut the company and its products. Normally Company participates in road shows, Sponsors college festivals, promotes eco friendly initiatives, Have festive Season offers, and sometimes price discounts to attract the attention of the people. These promotions are targeted mainly on youngsters as they are the primary buyers of bikes. The company launches financial schemes as Zero % finance schemes in collaboration with different banks so that customers can pick bikes in easy installments. The effect of these promotions can be understood from the fact that 35 % of bikes are sold through this medium. INTRODUCTION OF MARKET RESEACH Marketing is a restless, changing dynamic field, since 1920 many important and dramatic changes have taken place in marketing. Thousands of new products, including those of entire new industries such as automobiles, electronic and computers, textiles, footwear etc. have appeared on the market. Though al these occur through a gradual procedure of change but pronounced shift in the orientation of times from production to marketing moreover, the role of marketing itself has been changing. The various crises of the 1970’s material and energy shortage, inflation, economic stagnation, high unemployment, dying industries have forced the marketing executives to assume a wide range of responsibilities that have grown in complexities. Due to the many challenges offered by the environment, the companies executives are becoming more driven in their strategy decision making for making sound marketing decisions in response to this requirement of formalized means of acquiring many ways has reached a stage of maturity i.e, marketing research. Market research has become a great tool for these companies to get the feedback and formulate strategies accordingly in today’s eager to know. What consumer perceives about various brands for the perfect selection of target market. In an era where competitive pressures have make the cost of failure prohibitive, research has become crucial in getting the market plan right. As the project was “globalization of Hero Moto Corp” I found that the company is making it’s marketing mix strategies by considering the consumer at the central point because, now a days, the consumer has become more aware and is no more a novice. That’s why marketing research has 37
become an important tool in the hand of marketer to understand the versatile nature of ever changing consumer behavior as depicted by the marketing research, as refined by American Marketing Association. “Is the function which links the consumer, customer and public to the marketer through the information used to identify and refined marketing opportunities and problems, generate, refine and evaluate marketing actions: monitor marketing performance and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues designs the method for collecting information managers and implements the data collection process, analysis the results and communicates the finding and their implications.” ADVERTISING The advertising includes both print and television media. The company uses the services of Lintas, Sachi, and Sachi but Hindustan Thompson Association deals main of the advertising. Besides of giving the commercial advertising the company also releases the advertisement, which are of public interest and especially the company releases the social advertising as to how to go about the safe driving. The company keeps on sponsoring different Programes and various kinds of games like the company every year sponsors Golf Championship. c The company has also recently decided to increase their adverting budget for the current year as they have to release more advertisements in public interest and the company has to re-launch the Street Smart model once again which was a tremendous failure in the early stager of its launch. Sale Promotion-The company does sale promotion for both dealers and the customers. The company is currently offering the promotion to their customers as they are offering a discount of 1001.This discount is the company sanctioned discount and the dealers may also offer some kind of discount due to competition to attract customers and to increase the sale figures. The company also offers a kind of promotion to the dealers; The Company is having a slab system as a tool for promotion to the dealer. Advertising & Promotion: Hero Moto Corp is enhancing the A&P budget by around 35 per cent from Rs 41 crore in 2010-2011. Apart from concentrating on mainstream Splendor-- the world's largest selling bike-- and upscale CBZ motorcycles, Hero Moto Corp has identified ``soft areas'' like services and spares parts for the purpose of intense communication.
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While customer references-- and not media strategy-- are expected to support the CD brand sales, Hero Moto Corp will look at social areas -- like civic issues, association with NGOs, contribution to greener causes-- for corporate communications. The corporate campaign will be largely complemented by on-ground initiatives under the umbrella brand of ``We Care'', incorporating activities in the arena of community services, safety and services programmes, tree-plantations and environmental-friendly projects. In line with Hero's worldwide, safety riding programme, this fiscal Hero Moto Corp will take the riding programme-- where trained personnel will give riding tips to bike owners-- to over 100 dealerships across 90 towns. PERSONAL SELLINGAs a part of sales promotion, the company also does personal selling to the corporate sector. This is done in case of institutional selling. In the beginning only the CSD canteens were included but now even Multi National Companies also form a part of the institutional selling Hero’s corporate week-The week in December 2001 was observed as the corporate week. This week was observed in the year 201 to spread awareness among the corporate employees about the company and its range of products. In this week various vendors participated as well as various dealers participated. This platform was also used as making and building more cordial relations among the employees and the dealers. CHANNEL OF DISTRIBUTION IN HERO MOTO CORP Hero Moto Corp continues to have the same policy of directly approaching the dealers. However the company has made some changes in the dealership requirements. The company has now divided its into three categories, A, B and C depending upon the status of the town. Hero Moto Corp has made some regulations and its dealers are bound to fulfil specific requirements for their showroom and workshops in terms of area. The company has also started focusing on the rural marketing such as Agartala (Tripura), Tinsukia (Assam) and Bhagalpur (Bihar). The company has also increased the number of dealers from 350to 400. Distribution ChannelsHero Moto Corp has very strong Distribution channel in India. Hero Moto Corp distributions their through Regional officer, Authorized dealers Etc.
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HERO MOTO CORP IN INDIAN HAS 3500 AUTHORISED DEALER Criteria for selection of distributions; •
Financial position to the distributors
•
Goodwill
•
Situation of show room
•
Past record
•
Experience
•
Promotion
a)
Sale – locating customers
Hero Moto Corp
regularly has promotions running for its dealers as well as
customers in order to ensure that there is a interest among the target customers abut the company and its products. Normally Company participates in road shows, Sponsors college festivals , promotes eco friendly initiatives ,Have festive Season offers , and sometimes price discounts to attract the attention of the people . These promotions are targeted mainly on youngsters as they are the primary buyers of bikes. The company launches financial schemes as Zero % finance schemes in collaboration with different banks so that customers can pick bikes in easy installments . The effect of these promotions can be understood from the fact that 35 % of bikes are sold through this medium. b)
Qualifying customers
"We are happy with our financial performance. It gives immense joy to see this kind of results in the 25th year of our company. I wish to thank all our stakeholders – customers, associates, dealer friends, ancillaries and also our joint venture partners Hero Moto Corp Co – for their continuous support." Sales Performance Hero Moto Corp reports leadership performance with 50 % net profit in q2, 10-11 defies industry trend with turnover (net sales & other operating income), at rs. 3202 crore; ebidta at 13.58 per cent Aug’09 Aug ’10 fy 09-10 fy 10-11 • Total turnover (Net sales & Other Operating income)Rs 3202 crores, growth of 35.6 per cent • Net profit after tax at Rs 306.30 crores, growth of 50 per cent • EBIDTA margin for the quarter 13.58 per cent
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• Total sales for Q2 stands at 9,72,095 units, growth of 28.5 per cent • Total sales for H1 stands at 18,66,349, growth of 19.7 per cent • Over 55 per cent share in domestic motorcycle market • Launches first-of-its kind music video to celebrate 25 years of Hero Moto Corp New Delhi, October 21, 2008: Hero Moto Corp (HML), the world's largest twowheeler company for seven consecutive years, today firmly reiterated its undisputed leadership in the domestic two-wheeler market with impressive bottom line growth for the second quarter (Q2) – July to September - of this financial year (FY) 200809. Even as the industry continued to face tough market conditions on account of uncertainty over interest rates and overall credit squeeze, the company reported 50 per cent growth in profit after tax (PAT) at Rs 306.30 crore for the second quarter. Hero Moto Corp's profit after tax in the corresponding period last fiscal (July - Sept, 2010-11) stood at Rs 204.33 crore. Total turnover (Net sales & Other Operating income) grew to Rs 3202 crore, a growth of 35.6 per cent over Rs 2361 crore recorded in the corresponding period last fiscal. The company has recorded an EBIDTA margin of 13.58 per cent in the quarter. The EBIDTA margin in the previous quarter (April - June '08) was 12.20 per cent. The strong financial performance is in line with the company's better-than-industry top line growth. After posting a growth 11.38 per cent in the first quarter, the company kicked off the second quarter with a 39.8 per cent growth in sales in the month of July, and followed up with 26.8 per cent growth in August and 22.4 per cent in September. Hero Moto Corp consistently keeps growing its share in the domestic motorcycle market, and currently enjoys over 55 per cent share. Hero Moto Corp's cumulative sales for the second quarter (Q2) this FY stands at 9,72,095 units - a growth of 28.5 per cent over Q2 last FY (2009-10). The cumulative sales for the first six months (H1) stands at 18, 66,339 units of twowheelers compared to 15, 59,486 units sold in H1 in the last FY – reflecting a consistent 19.7 per cent growth in cumulative sales. Dr. Brij Mohan Lall, Chairman, Hero Moto Corp, said "We are happy with our financial performance. It gives immense joy to see this kind of results in the 25th year of our company. I wish to thank all our stakeholders – customers, associates,
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dealer friends, ancillaries and also our joint venture partners Hero Moto Corp Co – for their continuous support." Mr. Pawan Munjal, MD & CEO, Hero Moto Corp., said "Our numbers speak for themselves. Even in this volatile and competitive environment, our top line continues to outpace the industry growth, our market share is at an all time high, and the financial balance sheet is a delight – all the factors which form the hallmark of a resilient company with cutting-edge management. We will continue to keep innovating – in bringing in technologically-superior products, in our network expansion, in brand building, in our financial management, and in our communication." "Going forward, we will have to keep a close watch on the commodity prices movement, and other factors such as inflation, interest rate scenario and availability of retail finance. These factors will play a crucial role in the industry growth in the subsequent quarters," he added. Hero Moto Corp has already rolled out its festive season initiatives, with the launch of four new models – the all-new "Passion Pro" and three refreshes of its existing models - new CBZ X-treme, a self–start version of Splendor NXG and the refreshed Pleasure. During the coming months, the company will further augment its product portfolio with new launches across segments. Key Hero Moto Corp brands continue to drive strong volumes across segments CD Deluxe in entry segment, Glamour, the new Splendor NXG, Splendor + and Passion Plus in deluxe segment, and Hunk, CBZ X-treme and Karizma in the premium segment. Celebrating its 25th year, Hero Moto Corp released an innovative music video in the month of September. Titled " Hero Moto Corp Dhak Dhak Go", and involving as many as eight brand ambassadors of Hero Moto Corp, the music video has been receiving rave reviews. Hero Moto Corp recently won two very coveted awards - "The Most preferred Brand of two-wheelers" award at the recent CNBC Awaaz Consumer Awards 2010, and the "NDTV Profit Business Leadership Award". Hero Moto Corp closes calendar year 2007 with sales of over 33 lakh bikes Hero Moto Corp consolidates market leadership with impressive growth of 15% in March’10
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Hero Moto Corp Continues Growth Momentum With 9.5 Per Cent Increase in May Sales Hero Moto Corp Continues To Consolidate Market Leadership With 27 Per Cent Growth In August Sales Hero Moto Corp Net Profit Zooms 31% To Rs 275 Crore In Q3 (Fy 2010-11) Hero Moto Corp passes on excise duty cut benefit to customers Hero Moto Corp posts record 6 lakh-plus units in retail sales in October 2010 Hero Moto Corp’s positive performance continues in Nov ’10 Hero Moto Corp’s September ’08 sales jump 22 per cent Hero Moto Corp’s strong sales performance continues into 2010 Reports 13% growth in cumulative sales in apr-nov’2010 Hero Moto Corp closes calendar year 2007 with sales of over 33 lakh bikes New Delhi, Tuesday, April 21, 2010: Recap of year 2008… • Slew of launches across various segments this calendar year • Multi-focal strategy leading to better-than-industry performance and gain in market share • Doubled volume and share in the premium segment • Consolidated over 50 per cent share in domestic motorcycle market New Delhi, January 2, 2011: Hero Moto Corp (HML), the world’s largest twowheeler manufacturer, today reported cumulative sales of 33, 09,051 units of twowheelers for the period January–December 2010. The company’s cumulative sales for the calendar year 2009 was 32, 53,229. This achievement is significant in view of the prevailing slow down of the two wheeler industry. For the month of December 2007, HML reported sales of 240,532 units of twowheelers. The company’s sales for the corresponding period last year were 252,462 units. The better than industry performance of HML through 2010 has been possible due to the company’s multi-focal strategy of bringing in new products across segments, supporting them with extensive 360 degrees communication, leveraging properties such as cricket and entertainment for brand building and augmenting its distribution network. As a result, Hero Moto Corp’s share in the domestic motorcycle market has grown to upward of 50 per cent. Year 2007 saw Hero Moto Corp launch new models across segments. The company more than doubled its volume and share in the premium segment this year, with the 43
new all-muscle and macho Hunk, and the sporty and stylish CBZ X-treme both doing very well. New 100cc bike Splendor NXG, refreshed Pleasure, new Super Splendor, refreshed Passion Plus, were other additions to Hero Moto Corp’s product portfolio in 2010. The company crossed the twenty million cumulative sales mark this year and launched the special edition Splendor Plus to mark the occasion. In the month of December, continuing with its engagement with youth, Hero Moto Corp brought the legendary rock band Scorpions to India, for performances in Mumbai and Bangalore as part of the band’s “Humanity World Tour 2009-10”. This came close on the hills of the very popular ‘Hero Moto Corp Campus Rock Idols’, a nationwide contest of amateur rock bands that culminated into a grand finale in Delhi in the first week of December. Hero Moto Corp consolidates market leadership with impressive growth of 15% in March’08 For fy 2009-10, Hero Moto Corp overtakes previous fiscal’s sales tally, even as domestic motorcycle industry declines by more than 10 % New Delhi, Tuesday, April 21, 2010: Achievements and Highlights for FY 0-08 o Defying the industry trend, Hero Moto Corp achieved sales of 33,37,142 units of two-wheelers, thereby consolidating leadership in domestic motorcycles market with more than 52 per cent market share. o Hero Moto Corp retained the coveted position of 'World's No 1 two-wheeler company' on unit sales by a single company during calendar year 2007 for the seventh year in a row. o Crossed half a million retail sales in the festive season in 2009, and achieved landmark cumulative sales of twenty million bikes in course of 2009. New Delhi, March 31, 2010: Hero Moto Corp (HML), the world’s largest twowheeler manufacturer, further consolidated its undisputed market leadership, reporting impressive sales numbers for the month of March. Once again, defying the industry trend, the company sold 3,20,594 units of two-wheelers in the month, a growth of 15 per cent. Hero Moto Corp had sold 277,915 units of two-wheelers in March 2011. The company’s total sales for the financial year 2009-10 stand at 33,37,142 twowheelers, as compared to 33,36,756 units for the previous financial year (2007-08).
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This is significant in view of the severe slowdown that the domestic two-wheeler industry is going through for the past more than a year. Mr. Pawan Munjal, Managing Director, Hero Moto Corp said, “The year 2009-10 has seen a leadership performance from us. Despite the industry slowdown, we have been able to manage positive growth thereby taking our share in the domestic motorcycle market upward of 52 per cent. At the end of the financial year, I would definitely like to thank our millions of customers across the country, who have made it possible. We will continue to focus on our customers and they can surely look forward to many more launches and various initiatives in the coming year.” HML’s good run through the industry slump in 2007 has been possible due to the company’s multi-focal strategy of bringing in new models and variants across segments, supporting them with innovative communication across media, leveraging properties such as cricket and entertainment for brand building and augmenting its distribution network. Hero Moto Corp also recently associated itself with the Indian Premier League (IPL) as a partner and is also the official sponsor of the Delhi Daredevils (Delhi’s IPL Team). Fiscal 2009-10 saw Hero Moto Corp launch new models across segments. The company more than doubled its volume and share in the premium segment this year, with the new all-muscle and macho Hunk, and the sporty and stylish CBZ X-treme both doing very well. Other new launches such as Splendor NXG, and refreshes of successful models including Pleasure, Super Splendor, and Passion Plus, were added to Hero Moto Corp ’s product portfolio in the FY 07-08. The company also crossed the landmark 20 million cumulative sales during the course of year. Hero Moto Corp continues growth momentum with 9.5 per cent increase in may sales New launches such as the refreshed splendor nxg & hunk driving volumes in respective segments New Delhi, Tuesday, April 21, 2009: New Delhi, June 1, 2008: Carrying on its impressive growth momentum in the new financial year (2008-09), (HML), the world’s largest two-wheeler manufacturer for seven consecutive years, today reported a 9.5 per cent growth in its sales in May 2008.
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Hero Moto Corp sold 3,12,317 units of two-wheelers in May 2008, as compared to 2,85,109 units in the corresponding month last year. This comes close on the heels of a nine per cent growth the company had reported in the month of April with sales of 2,86,252 units of two-wheelers. Thus Hero Moto Corp has already clocked a total sales of 5,98,569 units of two-wheelers in this financial year. According to Mr. Anil Dua, Sr. Vice President (Marketing & Sales), Hero Moto Corp ., “Our recent launches such as the refreshed Splendor NXG and the 150cc Hunk have been driving volumes in their respective segments. While Hunk has contributed largely to doubling our volume and share in the premium segment, the refreshed Splendor NXG has been driving the volumes in the deluxe segment. Our new campaign for Splendor NXG is currently on air on all mainline TV channels. We continue our strategy of brand building, and we will continue to utilize our various properties in the field of cricket and youth entertainment towards this end. We have carried forward our commitment to the promotion of cricket by partnering the highly-successful Indian Premier League (IPL), as well as being the official team sponsor of the Delhi Daredevils.” Hero Moto Corp was bestowed the “Enterprise Excellence Award 2007” by the Indian Institution of Industrial Engineering (IIIE) at an awards function held in Goa in the month of May. Hero Moto Corp Continues To Consolidate Market Leadership With 27 Per Cent Growth In August Sales New Delhi, Tuesday, April 21, 2009: Reports robust sales of 305,516 units during the month • Cumulative sales in April – August ’08 grows by 19 per cent New Delhi, September 1, 2008: Hero Moto Corp (HML), the world’s largest twowheeler manufacturer, further consolidated its leadership in the domestic motorcycle market, with a robust 26.8 per cent growth in sales for the month of August 2008. The company sold 305,516 units of two-wheelers in August 2008, compared to 240,875 units in the corresponding month last year. With this, Hero Moto Corp ’s cumulative sales in this financial year so far (AprilAugust 2008) stands at 14,81,077 units as against 12,44,919 units in the corresponding period last year – reflecting a 19 per cent growth in cumulative sales.
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This carries forward the company’s positive growth trajectory since the beginning of this financial year (2008-09), further augmenting its more than 55 per cent share in the domestic motorcycle market. According to Mr. Anil Dua, Sr. Vice President (Marketing & Sales), Hero Moto Corp , “Our strategy is yielding results. The strategy hinges on creating winning brands across segments, investing in brand building, exploring untapped markets in rural and upcountry areas while consolidating urban presence and rapidly expanding our network. However, the industry continues to face uncertainty on account of high interest rates and overall credit squeeze. The festival month of October is going to be crucial in determining the overall outlook of the industry for the year.” Key Hero Moto Corp brands continue to drive strong volumes across segments CD Deluxe in entry segment, Glamour, the new Splendor NXG, Splendor + and Passion Plus in deluxe segment, and Hunk, CBZ X-treme and Karizma in the premium segment. Hero Moto Corp’s scooter Pleasure has also been growing strongly, with more than 12,000 units being sold in August this year. Hero Moto Corp net profit zooms 31% to rs 275 crore in q3 (fy 2007-2008) Reports turnover of rs. 2795 crore records ebidta of 13.95% New Delhi, Tuesday, April 21, 2009: Q3 Highlights Corporate performance: • Consolidated over 50% share in the domestic motorcycle market • Reported highest ever sales in a month in October 2007 (365,022 units) • Crossed half a million retail sales in the festive season • Closed calendar year 2007 with sales of over 33 lakh two-wheelers Achievements: • Retained the coveted position of World No 1 two-wheeler company for the seventh consecutive year • Crossed landmark sales of Two Crore bikes; celebrated the achievement with “Hero Moto Corp BIKE-A-THON”- a nationwide marathon of Hero Moto Corp bikes under the “Hero Moto Corp Country” campaign New Launches: • Launched two new models Hunk (150cc) & refreshed Splendor+ along with a Special Edition
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• Doubled volume and share in the premium segment - currently own almost 20% share New Delhi, January 31, 2008: Hero Moto Corp . (HML), the world’s largest twowheeler manufacturer, today reported 31% per cent growth in profit after tax (PAT) at Rs 275 crore for the third quarter (October-December) of this financial year (2007-08). Hero Moto Corp’s profit after tax in the corresponding period last fiscal stood at Rs 209.18 crore. Total Turnover (sales turnover plus other income, net of excise) grew to Rs 2795.17 crores, a growth of 3.54 per cent over Rs 2699.63 crores recorded in the corresponding period last fiscal. The company has recorded an EBIDTA margin of 13.95% in the quarter. The EBIDTA margin in the previous quarter (JulySeptember’07) was 12.39%. This strong financial performance comes close on the heels of the company’s good overall sales even in the face of the prevailing slowdown in the two-wheeler industry. Hero Moto Corp’s cumulative total turnover for the first three quarters (April–December 2007) of this financial year stood at Rs. 7673.43 crores. Hero Moto Corp's strategy for aggressive top line growth through new product launches, brand building initiatives backed by innovative communication has resulted in market share gain across every segment. Indeed, Hero Moto Corp’s share in domestic motorcycles market has been growing upward of 50 per cent, despite the slowdown in the two-wheeler industry. According to Mr. Brijmohan Lall, Chairman, Hero Moto Corp., “Our performance during the third quarter of this fiscal has been very encouraging considering the current slowdown in the two-wheeler industry. We have been consistently reporting better-than-industry sales numbers, and it has also been reflected in our bottom line. We wish to thank all our customers and stakeholders for reposing their faith in our company and our products.” Mr. Pawan Munjal, Managing Director & CEO, Hero Moto Corp . said, “Given the industry slowdown scenario, we are very enthused by our robust financial numbers for the third quarter. However, this was not unexpected. We had undertaken some strategic initiatives since the beginning of this fiscal, including a conscious effort to rationalize costs across the board, and its results are now visible. Our bottom line has seen a consistent improvement, and we have been able to demonstrate that it is possible to keep gaining market share while maintaining a robust bottom line. 48
“With input costs softening and our sharp focus on cost efficiencies, we should be able to further improve upon our financial results,” he added. Hero Moto Corp Passes on Excise Duty Cut Benefit To Customers New Delhi, March 1, 2008: Passing on the excise duty cut benefit in Budget 2008 to customers, Hero Moto Corp
(HML), the world’s largest manufacturer of
motorcycles, today reduced prices on all its models, ranging from Rs1000/- to Rs 2400/-. The company, which sold 265,431 units of two-wheelers in the month of February, reduced the price of Splendor+ by about Rs 1300/- (ex-showroom Delhi) and on Karizma by about Rs 2400/- (ex-showroom Delhi). Similarly, the price of its bestselling 150cc bike Hunk has been reduced by about Rs 1800/- (ex-showroom Delhi). Mr. Pawan Munjal, MD & CEO, HML, said “Hero Moto Corp has taken the voice of the customer to the government, and consequently the excise duty on twowheelers has been reduced to 12 per cent from 16 per cent. This is a welcome move, and we are happy to pass on the entire benefit to customers. The reduction in excise duty cut will enable us to draw more customers to our fold, but the basic factors causing the industry slowdown still remain unattended. Credit financing has been withdrawn in some key markets, while interest rates on consumer loans also remain very high. This credit squeeze continues to be the most critical factor adversely impacting industry growth, and we still don’t see any indication from the banks and the government to address this concern. For the industry to make a turnaround and get back on the path of growth, the government has to address these key issues.” c)
Contacting customer and making sale
Sales performance Hero Moto Corp reports leadership performance with 50 % net • Total turnover (Net sales & Other Operating income)Rs 3202 crores, growth of 35.6 per cent • Net profit after tax at Rs 306.30 crores, growth of 50 per cent • EBIDTA margin for the quarter 13.58 per cent • Total sales for Q2 stands at 9,72,095 units, growth of 28.5 per cent • Total sales for H1 stands at 18,66,349, growth of 19.7 per cent • Over 55 per cent share in domestic motorcycle market • Launches first-of-its kind music video to celebrate 25 years of Hero Moto Corp 49
New Delhi, October 21, 2008: Hero Moto Corp (HML), the world's largest twowheeler company for seven consecutive years, today firmly reiterated its undisputed leadership in the domestic two-wheeler market with impressive bottom line growth for the second quarter (Q2) – July to September - of this financial year (FY) 2008-09. Even as the industry continued to face tough market conditions on account of uncertainty over interest rates and overall credit squeeze, the company reported 50 per cent growth in profit after tax (PAT) at Rs 306.30 crore for the second quarter. Hero Moto Corp 's profit after tax in the corresponding period last fiscal (July - Sept, 200910) stood at Rs 204.33 crore. Total turnover (Net sales & Other Operating income) grew to Rs 3202 crore, a growth of 35.6 per cent over Rs 2361 crore recorded in the corresponding period last fiscal. The company has recorded an EBIDTA margin of 13.58 per cent in the quarter. The EBIDTA margin in the previous quarter (April - June '08) was 12.20 per cent. The strong financial performance is in line with the company's better-than-industry top line growth. After posting a growth 11.38 per cent in the first quarter, the company kicked off the second quarter with a 39.8 per cent growth in sales in the month of July, and followed up with 26.8 per cent growth in August and 22.4 per cent in September. Hero Moto Corp consistently keeps growing its share in the domestic motorcycle market, and currently enjoys over 55 per cent share. Hero Moto Corp's cumulative sales for the second quarter (Q2) this FY stands at 9,72,095 units - a growth of 28.5 per cent over Q2 last FY (2007-08). The cumulative sales for the first six months (H1) stands at 18, 66,339 units of two-wheelers compared to 15, 59,486 units sold in H1 in the last FY – reflecting a consistent 19.7 per cent growth in cumulative sales. Dr. Brij Mohan Lall, Chairman, Hero Moto Corp, said "We are happy with our financial performance. It gives immense joy to see this kind of results in the 25th year of our company. I wish to thank all our stakeholders – customers, associates, dealer friends, ancillaries and also our joint venture partners Hero Moto Corp Co – for their continuous support." Mr. Pawan Munjal, MD & CEO, Hero Moto Corp., said "Our numbers speak for themselves. Even in this volatile and competitive environment, our top line continues to outpace the industry growth, our market share is at an all time high, and the financial balance sheet is a delight – all the factors which form the hallmark of a resilient company with cutting-edge management. We will continue to keep 50
innovating – in bringing in technologically-superior products, in our network expansion, in brand building, in our financial management, and in our communication." "Going forward, we will have to keep a close watch on the commodity prices movement, and other factors such as inflation, interest rate scenario and availability of retail finance. These factors will play a crucial role in the industry growth in the subsequent quarters," he added. Hero Moto Corp has already rolled out its festive season initiatives, with the launch of four new models – the all-new "Passion Pro" and three refreshes of its existing models - new CBZ X-treme, a self–start version of Splendor NXG and the refreshed Pleasure. During the coming months, the company will further augment its product portfolio with new launches across segments. Key Hero Moto Corp brands continue to drive strong volumes across segments - CD Deluxe in entry segment, Glamour, the new Splendor NXG, Splendor + and Passion Plus in deluxe segment, and Hunk, CBZ X-treme and Karizma in the premium segment. Celebrating its 25th year, Hero Moto Corp released an innovative music video in the month of September. Titled " Hero Moto Corp Dhak Dhak Go", and involving as many as eight brand ambassadors of Hero Moto Corp, the music video has been receiving rave reviews. Hero Moto Corp recently won two very coveted awards - "The Most preferred Brand of two-wheelers" award at the recent CNBC Awaaz Consumer Awards 2008, and the "NDTV Profit Business Leadership Award". d)
Order filling
In order to protect against fraudulent encashment, how can one incorporate the details of his bank account on his dividend warrant. What is the procedure that he should follow? If one is holding shares in physical form, he should duly fill the request updation form for bank mandate and sent the same to our R & ST Agent, M/s. Karvy Computershare Private Limited. The Company will take on record such request complete in all respect and incorporate the same on future dividend warrants. However, if one is holding the shares in electronic mode then such details needs to be furnished to the respective Depository Participant with whom one holds the demat account and not to Hero Motors Limited or our R & ST Agent. 51
e)
Payment Collection
All elements of current assets are not equally liquid. Inventories are the most illiquid of current assets. Also bank overdraft, cash credit & other short-term borrowings which are used as a means of financing current assets. These are renewable & become due for payment at a particular point of time. Repayment schedule for such working capital finance is not as short as it is for sundry creditors. Even such financing arrangements may go year after year with increasing level of cash credit & bank overdraft limits. So these short term liabilities are excluded from current liabilities while qualifying liquidity. The lacuna of this approach is that debtors & advances may become more illiquid than inventories. The ratio is calculated as below
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COMPETITORS OF HERO MOTO CORP BAJAJ The Bajaj Group came into existence during the turmoil and the heady euphoria of India's freedom struggle. Jamnalal Bajaj, founder of the Bajaj Group, was a confidante and disciple of Mahatma Gandhi, and was deeply involved in the effort for freedom. The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the Company today, are often traced back to its birth during those long days of relentless devotion to a common cause. Kamalnayan, the eldest son of Jamnalal Bajaj, succeeded his father in 1942, at the age of twenty-seven. Putting the Nation before business, he devoted himself to the latter only after India achieved independence in 1947. But when he did so, he put his heart and soul into it. Within a short while, he not only consolidated the Group, but also diversified into various manufacturing activities, elevating the Group to the status it enjoys till this day Rahul Bajaj today heads the Group. He has been the Chief Executive Officer of Bajaj since 1968 and is recognized as one of the most outstanding business leaders in India. As dynamic and ambitious as his illustrious predecessors, he has been recognized for his achievements at various national and international forums. Bajaj is currently India's largest two and three-wheeler manufacturer and one of the biggest in the world. Bajaj has long left behind its annual turnover of Rs.72 million (1968), to currently register an impressive figure of Rs.42.16 billion (US$ 936 million). TVs- Ltd: They have a vision of being a highly profitable and socially responsible, leading manufacturer of high value, environmentally friendly, lifetime personal transportation products for customers in global markets and to provide fulfillment and prosperity for employees, dealers and vendors Suzuki TVS Suzuki broke out of the bottoming formation with a rise in volume and went into a major uptrend. The stock is well above its rising 30 WMA and its earlier intermediate bottoms, and hence, the major trend of the stock is up. The relative strength line for the stock has moved past its zero line, indicating that the stock is outperforming the indices. Investors ust hold on to the long positions in the stock
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while more long positions in the stock must be added after the next intermediate correction. The intermediate trend of the stock is still up and investors will have to wait for some more time before the stock actually goes into an intermediate downtrend. Keep a close watch at the stock and investors holding the stock must continue to do so. Trading volumes are less, and hence, investors must pick small quantities. LML LML is also in a major uptrend like the other stocks in this sector, as the stock moved past its earlier intermediate top and its 30 WMA in the current intermediate rise. The stock is still in an intermediate uptrend and is currently moving sideways. It could drop into an intermediate downtrend on a close below 19. The breakout by the stock was not accompanied by a rise in volume and this is not a very bullish sign. Thus, investors must look at other stocks in this sector which are also in a major uptrend and are more stronger. The relative strength line has moved above its zero line and could fall back if the stock goes into an intermediate downtrend. Investors must always pick up the strongest stocks in the strong sector, and hence, must avoid this stock, even though it is in a major uptrend. KINETIC MOTORS Kinetic Engineering Ltd., founded in the year 1970, is the leading manufacturer and exporter of 2-wheelers. Born of the vision of the late Shri H. K. Firodia, Kinetic Engineering Ltd., it has produced useful, heart - winning products for over two decades. KEL manufactures a wide range of Mopeds, Scooters and Motorcycles that are very popular in the country and are well recognized for their fuel economy, quality and reliability. KEL has 3 manufacturing plants at Ahmednagar Pitampur (Indore) an Goregaon (Pune) with the capacity to manufacture 4 lakh vehicles per year. Their well endowed technologically advanced manufacturing set up have enabled them to reach high quality standards. The company also exports these vehicles to countries like USA, Canada, Sweden, Latin America, Denmark and the Middle East An agreement has recently been reached between Yamaha Motor Co., Ltd. (YMC) and its joint venture partner in India, Escorts Limited (Chairman and Managing Director: Mr. Rajan Nanda. Location: Faridabad, suburbs of New Delhi) under which YMC will acquire all of the 26% of the stock presently held by Escorts Limited in the
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two companies' motorcycle manufacturing and marketing joint venture, Yamaha Motor Escorts Ltd. (YMEL). The aims of this move to make Yamaha Motor Escorts a 100% YMC subsidiary are to increase the overall speed of managerial and business decisions, to improve product development capabilities and production efficiency, while also strengthening the marketing organization. Plans call for the change in the company's name and other procedures to be completed by the end of June. Ever since the establishment of the first technical assistance agreement between the two companies in 1985, YMC and Escorts Limited have built a cooperative relationship dedicated to the manufacture and sales of Yamaha brand motorcycles in an environment of growing motorcycle demand in the Indian market. In November of 1995, the two companies established the joint venture company Escorts Yamaha Motor Limited, based on a 50-50 capital investment. In June of 2005, that investment ratio was changed to 74% for YMC and 26% for Escorts Limited and YMC assumed managerial control of the company with the name being changed to YMEL and undertook numerous measures to build the company's motorcycle manufacturing and marketing operations. In addition to YMC acquiring Escorts' 26% of YMEL stock, the company's name will be changed to Yamaha Motor India Private Limited (YMI) and concerted efforts will be made to heighten its competitiveness in the Indian market and promote the spread of the Yamaha brand with target themes of developing products with greater appeal and a distribution network that can respond more quickly to user needs. Furthermore, YMC will work to develop YMI as an exporter of business type motorcycles to neighboring countries and other markets such as Africa and Latin America, and also as a production base that can assume a variety of roles in Yamaha's global manufacturing network. Presently, India's annual motorcycle demand has grown to exceed 3.8 million units, which makes it the second largest market in the world, with steady growth is anticipated for the future. Now that YMI has become a 100% YMC subsidiary, the introduction of several new models is planned, and it is our goal to increase annual production to 350,000 units in the fiscal year 2005 and to 550,000 units by the fiscal year 2010.
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SWOT ANALYSIS: HERO-HERO STRENGTH Technological support from Hero Moto Corp. The company has a deeply penetrated dealer network (640 including service station) The company provides good after sales service through its well-established dealer network. The company enjoys a huge market share and well established brands like Splendor, CD100, CBZ, etc.(Splendor is world’s largest selling motorcycle)
WEAKNESS Hero Moto Corp depends on Hero for new products and this is a big weakness considering it from the post 2005 point of view. The reason being that the technological tie-up between Hero Moto Corp and Hero Moto Corp will cease to exist. Exports has never grown beyond 4% The company doesn't have a product catering to Rs. 25,000 - Rs. 30,000 segment. The company imports about 31% of its spares requirements. This makes the company vulnerable to the import policies of the government. It also exposes them to the exchange rate risk.
OPPORTUNITY THREATS The motorcycle segment is growing at The technical collaboration with Hero is the rate of 33%, which provides a great valid only till 2005 and this is a serious opportunity for the company to cash on. threat as they have been dependant on Also it is experiencing a shift in the Hero for technology. Also Hero has set customer preference from 4-stroke up its 100% subsidiary in India, which mobikes to 2-stroke mobikes. This again shall start producing motorcycles from provides an excellent opportunity to 2004. This will further increase the competition. Hero Moto Corp to leverage its market share and market leadership for sustained Threats from Chinese companies which profitability. are going to launce Hi-Tech and Low cost products Weak competition in 125 cc & 200(+) cc The company has plans to foray into the scooter segment, which can also be a segment major threat for the future prospects of the company.
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DATA ANALYSIS For finding the result of Marketing Strategy in purchase of motor bike we have to go through the customers perception and attitude. As for example age group, house holds annual income and purchase. These things focus the Marketing Mix. Then we have to go in details of all factors of coaster of Marketing Strategy as family, gender, geographic location, social, cultural, income age, sex etc. consumer behaviour are quite different their prepurchase, purchase decision and post purchase behaviour. For different product consumer behaves in different way. For buying the motel motor bike consumer prefer look robustness, Mileage and comfortable. Brand image of the products is very important. Finding through the consumer survey through questionnaire as follows. •
Approximately 60% user are between the age group of 18 to 25, then 25-35. thus mostly the young prefer to riding the bike generation.
•
Most of the customer are in the annual income group 60,000 to 1 lakh. It means high income group mostly preferred four wheeler.
•
Most of the customer between the age group of 25 to 35 use bike office going purpose and 18 to 25 for college going or maintain their fined circle
•
Brand of the product most affect the behaviour of the consumer.
•
Customer known about the brand mostly through T.V. and word of month.
•
Price a not effect the consumer it the quality, availability and after sales services are good.
•
In case of decision making friends, parents players an important role.
•
Consumer buying decision affected by physical feature and technological feature of the bike.
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1. MOTOR BIKE USERS AGE GROUP Age 14-18 18-25 25-35 ABOVE 35
Percentage (%) 20 60 15 5
5%
15%
20% 14-18 18-25 25-35 Above 35 60%
2. PURPOSE OF PURCHASE OF BIKE? OFFICE GOING COLLEGE GOING MAINTAINS FRIENDS OTHER PURPOSE
39% 25% 14% 22%
22% 39%
Office going College going Maintains Friends
14%
Other purpose 25%
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3. MARKET SHARE OF BIKE? HERO MOTO CORP BAJAJ SUZUKI YAMAHA OTHERS
40% 32% 12% 11% 5% 5%
11%
Hero Honda Bajaj Suzuki Yamaha Others
40%
12%
32%
4. BRAND AWARENESS MEDIUM? TV NEWSPAPER WORD OF MOUTH DEALER EFFORT OTHERS
9%
38% 25% 23% 9% 5%
5% 38%
TV Newspaper Word of mouth
23%
Dealer effort Others 25%
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5. PURCHASE INFLUENCER QUALITY & FEATURE OF PRODUCT PRICE EASE OF AVAILABILITY BRAND IMAGE OF THE PRODUCT AFTER SALES SERVICE VALUE OF MONEY
15% 10% 15% 24% 32% 4% Quality & feature of product Price
4%
15%
32%
Ease of availability
10%
Brand image of the product After sales service
15% 24%
Value of money
6. PHYSICAL FEATURES THAT EFFECTS MOST? LOOKS BODY BUILDS STYLE ROBUSTNESS
35% 25% 22% 18%
18% 35%
Looks Body builds Style
22%
Robustness 25%
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7. PAYMENT MODE FOR PURCHASES ONE TIME PAYMENT FINANCIAL OPTION EXCHANGE OFFER OTHERS
15% 65% 12% 8%
8%
12%
15% One time payment Financial option Exchange offer Others 65%
8. TECHNOLOGICAL FEATURES EFFECT BUYING? POWER - ECONOMY MODE MILEAGE FOUR STROKE ENGINE OTHER
12%
22% 48% 18% 12%
22% Power - economy mode
18%
Mileage Four stroke engine Other 48%
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9. PURCHASE MADE FROM AUTHORIZED DEALER NEAR BY DEALER ONLINE OTHER
47% 33% 13% 7%
10. BETTER AFTER SALES SERVICE BRAND ? BAJAJ CALIBER PASSION TVS VICTOR AMBITION OTHERS
18% 24% 28% 25% 9%
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11. BIKE PREFER IN FUTURE PURCHASE? CALIBER PULSAR PASSION AMBITION OTHER
22% 15% 27% 29% 7%
7%
22%
Caliber
29%
Pulsar Passion 15%
Ambition Other
27%
Hero Moto Corp has built leadership positions primarily due to its belief in the following principles Understanding stakeholder (incl. International partners and customers) expectations and delivering value for money Managing relationships Creating a Performance culture “Partnership Approach” with ancillaries Efficient Current Asset Management Accepting and using ever-changing technology as a facilitator Strong quality and process orientation
Results of Hero Moto Corp initiatives The Hero Moto Corp philosophy of empowering and training human capital, use of appropriate technologies, and constantly being close to the customer and with the maintaining a healthy work environment with the highest standards of ethics and corporate governance has resulted in the Group companies through excelling in their chosen field through, impressive attitude year after year, leading to impressive financials and healthy returns to all stakeholders . Hero Moto Corp to finalise third unit location, investment soon TWO-WHEELER manufacturer Hero Moto Corp is close to finalising a location for its third manufacturing plant in the country. The company, which now has capacities
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of 2,40,000 units annually from its existing manufacturing facilities will shortly announce the location and investments that will go into the new manufacturing facility, Mr Pawan Munjal, Managing Director, said here on Monday. "We have been experiencing capacity constraints, especially after launching new models, and while we are in the process of continuously adding capacities the issue will be resolved after our third facility is set up," Mr Munjal said. "We expect to reach the three-million level in this fiscal with our existing facilities," he added. The two-wheeler company is also in talks with joint venture partner Hero to make its operations a sourcing hub for the export markets, Mr Munjal said. "Hero has manufacturing and distribution presence across the world but we are convincing them to make us the sourcing hub for the 100, 125 and 150 cc range. There is a significant cost advantage in it and the talks are currently on about various possibilities," he said. The company's exports, largely to Sri Lanka, Bangladesh and Latin America, grew over 60 per cent in the last fiscal to 65,000 units and it is expecting to cross the 100,000-mark this year. Mr Munjal, however, ruled out the possibility of setting up assembly operations to feed its export business. Hero Motors, meanwhile, is also gearing up for the launch of two other models, one of them in the 150 cc power segment of the motorcycle market, in the current fiscal. Work is also under way on a range of new Quantum Core engines that Hero is now developing that will soon be deployed on its new vehicles, especially in the power range, said Mr Atul Sobti, Executive Director, Business Operations. Meanwhile, the company's new 125 cc Glamour model has already sold over 15,000 units in the two weeks since its launch, according to Mr Sobti, who said that work is on to ramp up production in a phase, given the capacity constraints that it is currently experiencing. "We expect to reach the level of 30,000 units/month six months from now," he said Hero Moto Corp sales up 34% Hero Moto Corp on Thursday reported a 34 per cent rise in sales in May at 3.03 lakh units as against 2.26 lakh units in the same month last year. The sales in the domestic market stood at 2,93,758 units during May this year, while exports stood at 9,908 units sales increased due to export and company is going globaly
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Passport to Customer Loyalty Last April Hero launched the Hero Moto Corp Passport, a program designed to increase customer loyalty. Customers who sign up are issued "passports," and they receive points when purchasing parts or referring new customers. "This helps us in getting to know our customers better," says Pawan Munjal. "We have 600,000 members in the program, and we also organize events where they can meet sports stars and film stars. This creates loyalty in our customers." But to create loyal customers, a company must first have loyal employees. "Fortunately, Hero has a good name, Hero has a good name, so we attract very good people," says Brijmohan Lall, who at 79, still continues to put in a full day's work as chairman. "With our long experience we have created a friendly atmosphere. My door is never closed, so anyone can walk in at any time." As a reward for becoming the world's largest motorcycle manufacturer, the Munjals took the managers (along with their wives) who had contributed most to this success on a vacation to Switzerland last year. "We conducted a seminar on top of a Swiss mountain to symbolize our success," says Brijmohan Lall. "We also invited a professor from Harvard University to come and give us a talk on how we must now compete and sustain ourselves at this new level." Hero Moto Corp's IT Strategy With the Indian motorcycle market opening up to overseas competitors and more fierce domestic competition, Hero Moto Corp decided it needed to overhaul its various computer systems and create a single integrated IT system. Rather than continue to use computers merely for data processing, it sought to use IT to integrate business operations such as product planning, materials resource planning, financials and sales and distribution. It was also looking to automate its internal supply chain, reduce overall costs, and create a transparent information system that would help managers make decisions more quickly. To do all this it teamed up with SAP in June 2000 to implement the system, and went live in February 2001. "Now we can look at the same information, when earlier we had three or four different versions, which didn't always match," says Pawan Munjal. "Now we (the managers) can all look at the same costs, for example, because all the information is up there on the screen. Nothing is hidden, everything is transparent. So there are no arguments over figures now, which used to waste time and hold up decision-making."
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There are improvements on the factory floor too, now that manufacturing has been brought into the new IT system. In the past there was no accurate way of checking the consumption of raw materials and inventory in general. So excess stocks in some areas became an inevitability. "Now we know what should be there and what is there," says Pawan Munjal. At the same time, defective parts and materials are no longer accepted, forcing suppliers to upgrade their quality. "The next step is to get dealers and suppliers online, so that orders can be taken directly by the suppliers," says Pawan Munjal. This will eliminate any wastage that is still left in our supply chain." In upcoming issues of the SAP 30th Anniversary Leadership Interview series, we learn how experience, innovation and vision are driving other major Asian corporations to be leaders in their fields
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CONCLUSION AND RECOMMENDATIONS, The motorcycle industry had a perceptible shift from a buyer market to the seller market with the variety of choices. Now the customer even has a plethora of choices to choose the best-suited requirement. All the players, weather be it HML, Yamaha or any other will have to compete on the basis of many things like attributes, reliability and so on. There is no doubt in the fact that Hero Moto Corp Company rules the motorcycle industry and has a good brand name, but the company will certainly have to initiate some efforts. The company has then highest market share in the motorcycle industry and maintaining such a good share will pose a challenge to the company. The company is doing very well in the business. According to me, no other company can beat this company in the years to come because of its strong brand name in the market. This company would be successful in the years to come as the company has good amount of brand loyal customers. When there is talk of bike, the first thing that comes to mind is Hero Moto Corp because of strong brand image. In our study the main emphasis was towards the marketing mix elements (Product, Place, Price and Promotion). The analysis is totally based on the marketing mix elements. Further for analyzing the market share of the company properly; a survey was conducted which also forms a part of the findings. The two-wheelers market has had a perceptible shift from a buyers market to a sellers market with a variety of choices. Players will have to compete on various fronts viz pricing, technology, product design, productivity, after sale service, marketing and distribution. In the short term, market shares of individual manufacturers are going to be sensitive to capacity, product acceptance, pricing and competitive pressures from other manufacturers The segments, motorcycles have witnessed capacity additions in the last one-year and it will continue in the upcoming period as and when Hero opens a local subsidiary. Over this period, only the motorcycle segment is expected witness higher demand visà-vis supply, while the scooters and mopeds supply will outstrip demand. As incomes grow and people feel the need to own a private means of transport, sales of two-wheelers will rise. Penetration is expected to increase to approximately to more than25% by 2010. The motorcycle segment will continue to lead the demand for two-wheelers in the coming years. Motorcycle sales is expected to increase by 20%yoy as compared to
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1% growth in the scooter market and 3% by moped sales respectively for the next two-years The four-stroke scooters will add new dimension to the two-wheeler segment in the coming future. Perhaps, the moped segment will be the worst affected due to Y2K emission norms applicable from April 2002 as not many of the present models confirm to the norms The three-wheeler segment will witness 10%yoy growth for the next two years. In spite of entry of Piaggio, Italy into the three-wheeler segment in the country, Bajaj Auto will continue to dominate the segment. In this segment, we would see players shifting from diesel to cleaner fuels like CNG in line with norms set out by various state governments. On surveying Hero Moto Corp globalization, it was found that the competetion & price where preferred in the bike comparison with other company. Serviceman and businessman both like this Hero Moto Corp bike, Mileage,4-stroke,4-gear&11.0 BHP. Opinions are all most same.
In my survey I found that there are only 05% bike
exports to outside India JOURNEY SO FAR Indian companies had relied heavily on their foreign counterparts for technical support, design of the model etc., while they provided the distribution and branding in the Indian market. Now that the international market for motorcycles is fairly developed and consumers are well aware, most of these foreign manufacturers are planning to enter the market on their own. The inadequacy of the public transportation system, the upwardly mobile middle class, which has the disposable income and the intent to own a two-wheeler and the sheer size of the Pakistan,bangladeshand srilanka market is proving to be an attractive factor to many multinational companies. India's two-wheeler industry is the second largest market in the world after China. Hero Moto Corp, whose tie-up with Hero-Hero is going to expire soon, has already entered the fray with Hero-Activa. Others are also queuing up. Yamaha Corporation, which was operating in India through a joint venture with Escorts Group, had decided to call it quits in mid-2001 by buying off Escorts' 50 percent share in the joint venture. Yamaha now plans to tap the Indian market on its own with models such as RX-135, RXZ, YBX125, YD125, and ACE. Its name has become fairly established while the joint venture had been in operation for two decades. On its own now, Yamaha has started implementing its ambitious plans for 68
the Indian market and has embarked on a challenge 21 project, a time-bound initiative that is aimed at reorienting and revitalizing the entire Indian operations in order to achieve a competitive edge. Yamaha has set for itself the target of capturing 21 percent of motorcycle market by 2005. India is one of the few countries where Yamaha, the world's second largest motorcycle manufacturer operates a fully-owned subsidiary.
RECOMMENDATION There are no two opinions that the automobile industry is faring very well in the Indian market since the early 90’s.However it can perform better in the market of it o The first recommendation is obviously about the customer care. Presently the company has a customer relation department but it has to be made stronger and more service provider to help the customers. o The distribution network should be made stronger so that the customers don’t feel dissatisfied for services, sales, and stocks. o This is a age of customer delight and the company should not forget that “customer is the king” o Everywhere there is a game of production and volumes, the company that produces more can save more and prices could be made more competitively o The company should always go for quality o The R & D base should be made stronger as the level of indigestion should come down. After doing market research I would like to suggest or recommend to the Company that there are certain out comes of research, which followed through the formal and informal procedure during the research. Thus we are bound to draw the attention of Company to certain points which are ought to be perceived by the Company with full care. 1. Publicity and advertisement should be broad, because competition is more. 2. Size and weight of bike should be match with their C.C. 3. company should follow world wide strategies for increasing their global revenue. 4. Bike should have stepping facility. Which may help during critical situation. 5.
Company should provide promotional schemes to the customers.
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6. All the protective parts of wheels should made of plastic and leg guard also be strong. 7. Now Company is required to recover the faith of customers towards the brand image. 8. Company should improve the mileage of the Bikes. 9. Prices of the Bike must be set as it can be approved by major part of the population. 10. Fuel tank portion can be changed.
LIMITATIONS •
In my survey I found some limitations are as follows:
•
Time was limited.
•
Material on internet is very limited.
•
Some customer’s were in hurry so they were not given proper opinion.
•
Foreign data is not available on the net.
•
Bikes are exporting to very limited country
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FUTURE PROSPECTS FUTURE Hero Moto Corp Is planning to launch bikes at a super Premium ranges i.e. 80,000 INR just in order to show the technical expertise of the company in front of its customers. With competitors already in this segment Like Bajaj Eliminator we can accept A cruiser bikes from them in this segment. In addition, the firm is also in the process of assessing the feasibility of introducing high-powered models from the Hero stables as fully-built imported bikes. This is the first time after the major debacle of BMW's 645cc bike that the Hero group is now planning a foray into the lifestyle bike segment. BMW, in alliance with Hero Moto Corp, had introduced the premium bike at Rs 4.5 lakh. But an embarrassingly low demand saw the firm trimming its tag to Rs 1.8 lakh. In addition, the firm is also planning to launch a new volume bike, to be produced with an engine capacity between 100cc and 156cc, by September 2002, Munjal said while unveiling its new basic 100cc bike Dawn. Priced at Rs 37,855 (ex- showroom Delhi), Dawn would replace its existing 100cc motorcycle Joy, which was launched last year. The firm has also phased out its 100cc bike Sleek citing low volumes.
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APPENDICES QUESTIONNAIRE Motor bike is not a luxury it has become the necessity in 21st century. I would like take few minutes of your precious time, Just to know about your views for different bike. I assure you that your information will be confidential and it would not be share by other organization. Name: Age:
Sex:
Occupation: 1. Which of the following best describe your age group? a) 14-18
b) 18-25
c) 25 to 35
d) above 35
2. What is the size of your family (Including children)? a) Single
b) 2 to 3
c) 3-4
d) above 4
3. Which of the following best identifies you house hold annual income? a) Below 60,000
b) 60,000 to 1 Lakh
c) 1 to 2 lakh
d) Above 2 lakhs
4. For which purpose you purchase the motorbike? a) College going
b) Office going
c) Maintain friend circle
d) Other purpose
5. Which of following company’s motorbike do you have ? a) Bajaj
b) HERO MOTO CORP
c) Suzuki
d) Yamaha
e) Any other
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6. How come you know about that brand? (can make more than one) a) T.V.
b) Newspaper
c) Dealer effort
d) World of mouth
e) Internet
f) Any other
7. Rate the following in order of influence you purchase a bike? a) Brand image of the product b) Price c) After sales service d) Quality and feature of product e) Ease of availability f) Value for money 8. Which option you prefer when you purchase a bike ? a) One time payment b) Financial option c) Exchange offer d) Any other. 9. Who was the decision maker in your purchase of motor bike? a) Parents
b) Friends
d) Spouse
e) Other
c) Yourself
10. Which physical features contributed most in you buying decision? a) Looks
b) Body build
c) Style
e) Robustness
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11. What technological feature effected in your buying decision? a) Power – economy mode b) Mileage c) Four stroke engine
d) Any other
12. From where did you purchase your bike? a) Authorized outlet
b) Near by dealer
c) Online
d) Any other
13. Which brand has better after sales service? a) Bajaj Caliber
b) Passion
c) TVS victor
d) Ambition
e) LML Freedom
f) Other.
14. Are you satisfied with your decision? a) Highly satisfied b) Satisfied c) Neither satisfied nor dissatisfied d) Dissatisfied 15. Which bike do your prefer for buying in future? a) Caliber
b) TVS Victor
c) Pulser
d) Passion
e) Ambition
f) LML Freedom
g) Other
Thank you
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REFERENCE & BIBLIOGRAPHY 1. Phillip Litler “Marketing management” (Prentice-Hall of India Pvt.). 2. Harper W. Bayd, Ralph West Fall, and Stanley F. Stasch “Marketing research (AITBS Publisher 7th ed. 2001). 3. A.G. Sawyer and Davied J Howard, Journal of Marketing research 1999. 4. consumer Behaviour by Leon G. Schiffman and Leslie Lazar Kanuk (Fifth edition) 5. Research Methodology by C.R. Kothari (Second Edition) 6. Business world and Business India magazine. 7. Auto India Magazine for two and four wheeler.
INTERNET http://encyclopedia.thefreedictionary.com/Hero+Hero http://www.heroHero.com/co_policy.htm http://www.heroHero.com/co_board_directors.htm http://www.cmsnl.com/news/Hero-to-strengthen-structure-of-its-rdoperations_news245.html http://www.etalkindia.com/indian_automobiles_news_forums/new_variant_of_hero_ Hero_bikes_launchedglamour_fi_and_cd_delux-t3336.0.html http://www.cmsnl.com/search.php
[email protected] website of Hero Moto Corp bike.
[email protected] website of Suzuki motor bike. nvswaminathan@bajajauto,com.
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