Marketing Mix of Automotive Industry in india

AUTOMOTIVE

PROJECT REPORT On MARKETING MIX OF AUTOMOTIVE SECTOR

Submitted in the partial fulfilment of the requirement For the award of degree of MASTER OF BUSINESS ADMINISTRATION (MBA) To UNIVERSITY BUSINESS SCHOOL PANJAB UNIVERSITY REGIONAL CENTRE, LUDHIANA

SUPERVISED BY:

SUBMITTED BY:-

Mr. ASHISH SAIHJPAL

NAVDEEP ROSHAN

FACULTY

PUNEET JAIN

UNIVERSITY BUSINESS SCHOOL

SAHIL AGGARWAL SUMITGOYAL

1

University Business School, Panjab University Regional Centre, Ludhiana

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VIRENDER SINGH

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ACKNOWLEDGMENTS Words fail us to express our deep sense of gratitude to our revered supervisor, Mr. Ashish Saihjpal, University Business School, whose erudite guidance and supervision have made this work possible. We are very thankful for this valuable guidance and constant encouragement during the preparation of this project. We are highly thankful to all other members of department of UBS (PURC) for their suggestions and kind co-operation in this project work. We would like to thank all the respondents whose responses were of great importance for the project.

NAVDEEP ROSHAN PUNEET JAIN SAHIL AGGARWAL SUMIT GOYAL VIRENDER SINGH

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OBJECTIVE OF THIS STUDY This study is done in keeping following objectives in view:



To find out the present status of the automobile industries in India.

 To study the market research of the automobile industries. 

To study the distribution and marketing strategy adopt by automobile industries.

 To enhance our analytical skills in the field of practical application of Marketing

“The marketer’s watchwords are quality, service, and value.” PHILIP KOTLER

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S.NO. PARTICULARS

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OVERVIEW MARKET RESEARCH MARKET ENVIRONMENT SEGMENTATION TARGET MARKET NICHE MARKET MARKET MIX PRODUCT MIX PRICE PROMOTION PLACE PEOPLE PHYSICAL EVIDENCE PROCESS DEALING WITH THE COMPETITION DISTRIBUTION CHANNELS THE VALUE CHAIN SWOT ANALYSIS OF MARUTI UDYOG LTD. PRODUCT LIFE CYCLE INTRODUCTION OF TWO WHEELER KEY PLAYER IN TWO WHEELER INDUSTRY SEGMENTATION OF TWO WHEELER KEY DRIVERS OF THE INDIAN TWO WHEELER HERO HONDA PROFILE MARKET MIX OF HERO HONDA CASE STUDY OF KARIZMA SWOT ANALYSIS OF KARIZMA SWOT ANALYSIS OF COMPETITIOR (BAJAJ PULSAR 220) MARKETING MIX OF KARIZMA CONCLUSION BIBILIOGRAPHY

CONTENTS

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OVERVIEW OF AUTOMOTIVE SECTOR The industry is estimated to be a US$ 34 billion industry with exports contributing 5 per cent of the revenues. The growth of the Indian middle class with increasing purchasing power along with the strong growth of the economy over the past few years has attracted global major auto manufacturers to the Indian market. Moreover, India provides trained manpower at competitive costs making India a favoured global manufacturing hub. The Indian automobile industry is going through a technological change where each firm is engaged in changing its processes and technologies to maintain the competitive advantage and provide customers with the optimized products and services. The de-licensing of the sector in 1991 and the subsequent opening up of 100 per cent foreign direct investment (FDI) through the automatic route marked the beginning of a new era for the Indian automotive industry. Since then almost all the global major automobile players have set up their facilities in India taking the level of production of vehicles from 2 million in 1991 to 10.83 million in 2007–08. Stagnation of the auto sector in markets such as Europe, US and Japan on the other, have resulted in shifting of new capacities and flow of capital to the Indian auto industry. The Indian automobile industry has been growing at the rate of 15–27 per cent over the past five years. In two wheelers industry, Indian companies are the largest manufacturers in the world. Bikes are a major segment in the industry, the other two being scooters and mopeds. Moreover, Indian car makers are earning acclaim worldwide. The home-grown automaker, Maruti Suzuki has emerged as the fourth most reputed among 6


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auto companies in the world, even ahead of its parent Suzuki Motor Co of Japan, according to the Global 200: The World's Best Corporate Reputations list, compiled by US-based Reputation Institute.

EVOLUTION OF THE INDIAN AUTOMOBILE INDUSTRY

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Pre 1983 19831993 19932007 • Closed market • Growth of market limited by supply • Outdated models

Players • Hindustan Motors • Premier • Telco • Ashok Leyland • Mahindra & Mahindra • Suzuki, Japan and GOI joint venture to form Maruti Udyog • Joint ventures with companies in commercial vehicles and components Players • Maruti Udyog • Hindustan Motors • Premier • Telco • Ashok Leyland • Mahindra & Mahindra • De-licensing of the sector in 1993 8


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LEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATE

Manufacturer Ashok Leyland Asian Motor Works Atul Auto Bajaj Auto BMW India Daimler Chrysler India Eicher Motors Electrotherm India Electric Fiat India Force Motors Ford India General Motors India Hero Honda Motors Hindustan Motors Honda Hyundai Kinetic Motor Mahindra & Mahindra Majestic Auto Maruti Suzuki Piaggio Reva Electric Car Co. Royal Enfield Motors Scooters India Skoda Auto India Suzuki Motorcycles Swaraj Mazda Ltd. Tata Motors Tatra Vectra Motors Toyota Kirloskar TVS Motor Co. Volvo India Yamaha Motor India

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Segments LCVs, M&HCVs, Buses M&HCVs Three wheelers Two and Three Wheelers Cars and MUVs Cars LCVs, M&HCVs, Buses Two Wheelers Cars Three Wheelers, MUVs and LCVs Cars and MUVs Cars & MUVs Two Wheelers Cars, MUVs and LCVs Two Wheelers, Cars and MUVs Motors Cars and MUVs Two Wheelers Three Wheelers, Cars, MUVs, LCVs Three Wheelers Cars, MUVs Three Wheelers, LCVs Electric Cars Two Wheelers Three Wheelers Cars Two Wheelers LCVs, M&HCVSs, Buses Cars, MUVs, LCVs, M&HCVs, Buses M&HCVs Cars, MUVs Two Wheelers M&HCVs, Buses Two Wheelers


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MARKET RESEARCH Market research often refers to either primary or secondary research. Secondary research involves a company using information compiled from various sources, which is about a new or existing product.. Primary market research involves qualitative research (such as focus groups or one-on-one interviews) and quantitative research (such as surveys) as well as field tests or observations conducted for or tailored specifically to that product. Primary research, which is also called field research or original research, is useful for finding new information and getting customers' views on products.

SCORPIO Having defined the competitive framework, the next task undertaken was that of analyzing the consumer. Consumer segments of B and C category car buyers were analyzed in terms of their expectations from a car, their perceptions about cars and their relationship. Proprietary techniques of research, of the advertising agency Interface Communications, like Mind & Mood, ICON and VIP were used to understand this consumer. The findings were: * Size matters- big size stands for status * Consumers seek latest technology * Imagery but at affordable prices * The sheer thrill and passion of driving an SUV * Power of the vehicle makes a statement * But along with the others, luxury was a very important parameter * International vehicles define imagery SUVs like Pajero, Land Cruiser and Prado are seen as urban vehicles for the rich and famous consumers aspire to own these vehicles as the imagery of these vehicles has become very desirable. 10


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“Consumers want to consume premium imagery at prices affordable to them”

The Marketing Environment Marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The marketing environment offers both opportunities and threats. The environment continues to change rapidly. The marketing environment is made up of Micro-environment and Macro-environment. The Micro environment consists of the actors close to the company that affect its ability to serve its customers. These actors are: the company, suppliers, marketing intermediaries, customer markets, competitors and publics. The Macro environment consists of the larger societal forces that affect the microenvironment. These forces are: demographic, economic, natural, technological, political and cultural forces.

GM STUXX THE DEMOGRAPHIC ENVIRONMENT The demographic position will be on the United States. Since, the target market is for the middle class; it will provide a boost for the 32% of the total population. This product will produce a superior value to customers who always value the brand. Also, it will keep the popularity of the product at their trend. In this case, more and more customers will be able to keep this product if it satisfies their condition. Additionally, the middle class group will be loyal to this product brand and as generation goes by; this product will be there forever. On the other hand, this product is also designed for students, and working class people. This is due to the fancy and environmental design.

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Students will be so grateful to have fancy car while the working class group will tend to afford such an affordable environmental car design.

THE NATURAL ENVIRONMENT This product is basically designed to reduce the carbon emission from fuels and help to preserve our environment. It is very important to design such car to help decrease the rate of carbon dioxide from the air and provide a better condition to tackle global warming. This car will provide a boost to the natural environment because it is safer and has an image to be friendlier to the environment itself. In this case, more and more people will tend to buy such car to protect the environment by reducing the carbon emission to the air. THE ECONOMICAL ENVIRONMENT The world is facing a shortage of fuel and it has become an economical crisis to everycountry. This is evidence as the price of fuel is increasing and the probability of the price of a barrel to increase at any day is very high. Therefore, this product will help customers to save money because it consumes less fuel. The fuel consumption is one of the best criteria based on this product. On the other hand, customers will be able to satisfy with this kind of product because it is not too expensive and everybody has the privilege to afford one. This product will satisfy the superior value of all different customers since it has a very good design to solve to fuel shortage, less expensive, and can be affordable to anyone.

THE TECHNOLOGICAL ENVIRONMENT The fastest growing of information technology helps this product to be at its best. Its design is basically provided with the help of information technology. Looking at its design, this product benefits a lot from the technological sectors. This proves that this 12


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product is favourable to the environment. Also, this product can be modified or even upgraded to the standard where it will be suitable at any environmental condition. The Information technology is very effective in letting this product to be very efficient. In this case, it helps customers to satisfy this kind of product in this technological environment.

THE SOCIAL AND CULTURAL ENVIRONMENT It is believed that protecting the environment is a great concern. Therefore, this product is purposely designed to be environmentally friendly. As a result, most people in the United States and elsewhere are willing to offer such kind of product to save the environment. If more and more people are keen to buy such kind of product then the environment would be safe at any cost. Consequently, people will be more supportive to save what is best for the communities and the environment.

SEGMENTATION A market segment consists of a group of customers who share a similar set of wants The marketer does not create the segments; the marketer’s task is to identify the segments and decide which one(s) to target. Segment marketing offers several benefits over mass marketing. The company can create a more fine-tuned product or service offering and price it appropriately for the target segment. The company can more easily select the best distribution and communication channels, and it will also have a clearer picture of its competitors, which are the companies going after the same segment. In the context of automotive sector, we would be classifying it in the following ways-: 13


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 BASED ON THE PRICE OF THE CAR  BASED ON THE LENGTH OF THE CAR  BASED ON THE USER SEGMENT

BASED ON THE PRICE OF THE CAR On the basis of price of car we can segment the car in following ways-:  Economy Segment o The economy segment of car ranges up to Rs. 2.5 lacs. The products in ths segment are Maruti 800, Alto and the newly launched product of TATA motors i.e. NANO.  Mid- Size Segment o The mid-size segment of car ranges from 2.5 lacs to 4.5 lacs. It includes the products like Hyundai santro, Maruti zen, Tata Indica etc.

 Luxury car segment o The luxury segment of car ranges from 4.5 lacs to 10 lacs. It includes the products like Honda city, Hyundai Verna, Mahindra Scorpio etc.  Super luxury car segment o

The super luxury segment of car ranges above 10 lacs. This segment satisfies the elite class of the society. It includes the products like Skoda Laura, Honda Accord, BMW, Mercedes, Audi etc.

BASED ON THE LENGTH OF THE CAR  A segment- Cars that are less than 3.5 meters long (800, omni) 14


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 B segment- Cars between 3.5 meters to 4 meters long( Zen, SX4, Santro)  C Segment- Cars between 4 meters to 4.5 meters long (Verna, Honda city, ford

fiesta)  D segment- Cars that are more than 4.5 meters long( Mercedez, Sonata, Accord, Skoda)

BASED ON THE USER Segmentation of automotive sector is also based on the user of the products. Like the example of TATA Motors, when it observed that their product ‘INDICA’ is used extensively by the taxi operators, it came up with a new model of the car having Round Tail Lights to distinguish it from the car having vertical tail lights used by the individual buyers.  Individual Buyers  Taxi operators -:  Government /non-government institutions

TARGET MARKETS The segment that gives the greatest opportunity to the marketer is called target marketing.

VOLVO MOTORS

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Volvo Motors develops its cars for buyer to whom automobile safety is a major concern. Volvo therefore positions it’s as a safest a customer can buy.

.

HYUNDAI MOTORS

Hyundai marketing strategy is differentiated marketing. Its primary consumer target is middle to upper income professionals who need true value for their money and comfortable ride in city conditions. Its secondary consumer target is college students who need style and speed. Its primary business target is midsized to large sized corporate that want to help their managers and employees by providing them a car for ease of transport. Its secondary business target is entrepreneurs and small business owners who want to provide discounts to managers buying a new car. Each of the four marketing strategies conveys Hyundai differentiation to the target marketing segments identified above.

Hyundai Santro professionals

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is

targeting

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Accent was launched to target corporate clients

NICHE MARKET A niche is a more narrowly defined group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub segments.

BMW is targeting high class people but it is mainly targeting the young people who earn a lot of money up to the age of 35-40 years and want to have a stylish saloon.

Mercedes is also targeting high class people but it is mainly targeting the CEO’s, chairmen, etc of age group of 50-60 years.

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MARKETING MIX A Marketing mix is the division of groups to make a particular product by pricing, product, branding, place, and quality. Although some Day1 marketers have added other P's, such as personnel, packaging and physical evidence, the fundamentals of marketing typically identifies the four P's of the marketing mix as referring to: "Marketing Mix" is set of correlated tools that work together to achieve company's objectives, they are: product, price, promotion, place. The set of controllable tactical marketing tools, product, price,place and promotion that the firm blends to produce the response it wants in the target market: •

Product - A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are often service based like the tourism industry & the hotel industry. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system.

•

Price – The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. The business may increase or decrease the price of product if other stores have the same product.

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•

Place – Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.

•

Promotion – Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements advertising, public relations, word of mouth and point of sale. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and billboards. One of the most notable means of promotion today is the Promotional Product, as in useful items distributed to targeted audiences with no obligation attached. This category has grown each year for the past decade while most other forms have suffered. It is the only form of advertising that targets all five senses and has the recipient thanking the giver. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations

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PRODUCT MARUTI SWIFT

European Styling. Japanese Engineering. Dream-Like Handling.

The new Swift is a generation different from Suzuki design. Styled with a clear sense of 20


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muscularity, its one-and-a-half box, aggressive form makes for a look of stability, a sense that

it

is

packed

with

energy

and

ready

to

deliver

a

dynamic

drive. Its solid look is complemented by an equally rooted road presence and classdefining ride quality. New chassis systems allow for the front suspension lower arms, steering, gear box and rear engine mounting to be attached to a suspension frame. You get lower road noise, and a greater feeling of stability as you sail over our roads with feathertouch ease.

TATA INDICA Though a late entrant, the Indica quickly established itself as the benchmark for the segment. By offering exciting features, the car changed the rules of the category in Space, Power, Style, Safety and Economy for international market. The Indica ensured a pleasant ride and handling experience as it had features like wide large tyres, generous leg room and independent front and rear suspension. It developed a new segment of diesel small cars along with its petrol offering. The luggage space was also the best in its class. The rigid 980 kgs steel body of the car was rigorously tested at India's first and only crash test facility. A collapsible steering wheel, impact absorbing bumpers, antisubmarine seats, crumple zones and side impact beams are just a few of the features that make the Indica one of the safest cars on the roads today. Savings are ensured with the fuel-efficient 1.4L diesel engine, while the 1.4L petrol engine is optimized for performance.

Indica features for international market:

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•

Collapsible steering column

•

Side-impact beam


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•

Energy-absorbing crumple zones in the front

•

Anti-submarine seats

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Child-safety locks on rear doors

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Laminated front and rear windshield glass

SCORPIO

Rational benefits: World class vehicle, good looks, car like comfort,

great value

Emotional benefits: Ownership experience of thrill, excitement and power Relational benefits: Young modern, premium, city companion / extension of lifestyle.

PRODUCT, SERVICES AND BRANDING STRATEGY What is a Product? Product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include more than just tangible goods. Broadly defined, products include physical objects, services, events, persons, places, organizations, ideas or mixes of these entities. Services are a form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Example: banking, hotel and airline. Products, Services and Experiences:

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Today, companies are creating and managing customer experiences with their products.

Levels of Products and Services: Product Planners need to think on three levels: 1. Core Benefit: This addresses the question “What the buyer is really buying?”. At this level, marketers must define the core: problem-solving benefits or services that consumer seeks. 2. Actual Product: At this level, the core benefits must be turned into actual products. Product planners need to develop product and service features, design, quality level, brand name and packaging. 3. Augmented Product: Finally at this level, the product planners must bundle the products with services. They must build an augmented product by offering additional consumer services and benefits.

Hyundai Santro CORE PRODUCT Core Product is the problem solving services or benefits that consumers purchase the product for, and by applying this concept to Santro you can state that the core product is speed, transportation, and freedom to go anywhere, easy traveling, and convenience. ACTUAL PRODUCT

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Actual product meaning the product’s parts, quality, features, design, brand name and other attributes received. Now, if we use these things and combine it with Santro we can state that the actual product is: Santro, as the brand name, it matters little about the name, because HYUNDAI is very famous already, people will recognize the brand in an instance, and features such as the fact that the car is fully customizable, so you can add most things to your car, i.e. Stereo, big speakers, rims for the tires, TV in seat etc., also design, where you can choose between a lot of colours, seat colour, and fabrics, all the things you can imagine. And of course the quality, the car will be regular HYUNDAI standard, meaning quality will be the same as for any other car made by HYUNDAI, which is high quality. AUGMENTED PRODUCT Augmented product is the additional consumer services and benefits built around the core and actual product, as well as add value and differentiate the product from its competition. The augmented product for Santro is after-sale services such as free yearly check up, as well as a free oil check after 2 years, free installation of additional features when you customize your car, and help with car insurance, and quick repair services.

PRODUCT CLASSIFICATIONS GM STUXX From the 4 product classifications, convenience, shopping, specialty and unsought, the Stuxx is classified as a specialty good, since specialty goods are purchased infrequently, and most of the times, buyers make special purchasing effort. By listing some of the characteristics for specialty products we can say that substitutes are not accepted, and that the product is infrequently purchased, and since our Stuxx is a GM we know that there are some brand loyalty as well. And if we look at the strategy, we can note limited distribution, and consumers “might” seek our product regardless of location, 24


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STAGES IN ATTRIBUTES

DEVELOPING

PRODUCT

AND

SERVICE

PRODUCT ATTRIBUTES Product attributes consist of several categories, such as Product quality, Product features, Product style and design. For Stuxx product quality is the performance quality, because it can be used a lot and still last for a long time (Durability). And as for Product style we know that Stuxx offers many colours and many styles used to attract attention from trendy consumers, and general consumers, the style however does not contribute to better performance. For Product design, the car has a very special chassis that allows many changes, making this a fully customizable car, where you are free to alter appearance, features, construction, such as adding items on the back of the car, lowering the car making it look more stylish like a race car.

BRANDING There are several advantages for buyers when talking about branding, first of all product recognition, everyone knows GM, so if they know GM, then they know Stuxx as well. Quality on Stuxx is same standard as the rest of GM‘s cars. There are. But not only buyers have advantages, no, sellers as well. Here are a few examples, basis for product’s quality, provides legal protection, helps to segment the markets.

BRAND STRATEGY A study of international brand names was done and a classification of brand names of midsize cars and

SUVs was done into groups.

International

brand naming trends and

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strategies were analyzed. New names were generated. These brand names were researched massively first by qualitative techniques and then by quantitative techniques.

The name that emerged as most popular, and which was also the most liked name internally at Mahindra was SCORPIO.

BRAND ENDORSEMENT STRATEGY The relation between Scorpio and the mother brand Mahindra was also deliberated upon. The strategy chosen for Brand Endorsement was - Scorpio from Mahindra shadow endorsement, one which does not shout “Mahindra.” The Mahindra brand image was not modern and young. There was a need to create a strong distinct modern brand. Hence Mahindra as a Masterbrand could not contribute towards enhancing the Value Proposition. Yet Mahindra had to provide source reassurance. Also the distribution would be through Mahindra dealerships. Hence it became a shadow endorser.

PACKAGING Since product is a car, packaging might not be of much importance. Cars usually don’t come in a box. However, since Santro is made for students and older, they have decided to make a big box, free of all charges, if the car is a gift for someone’s birthday. Santro is a good choice as a “first” car; parents can easily buy it as a gift for their young teenagers/students. 26


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LABELING No labelling, however for curious users, there will be a small brochure about the “ingredients” car parts, so they can see how exactly the car works, and what and where the different parts are from.

PRODUCT SUPPORT SERVICES As for product support services, there are 3 things to know: Assess the value of current services and obtain ideas for new services. Assess the cost of providing the extra services and putting together a package of services that delights the customers and yields profits for the company. All these, are already applied to Santro if we look at Augmented Product, which I wrote about earlier. Customers would be delighted about those extra services, and might tell friends about them and in the end make more profit for the company.

PRODUCT LINE DECISIONS (The Product Mix) When it comes to product line decisions, and product mix to be exact; we will find that there are 3 types, namely width, length and depth. As for Stuxx, it is definitely width, because Stuxx is a different product line for GM.

PRICE MARUTI SWIFT After launching cars for the masses since so many years, India’s largest automobile manufacturer is now targeting the premium segment with their latest model from the Suzuki’s stable. Pricing of this premium hatchback is start from Rs.4 lakh. This price range would practically rip apart Hyundai’s offering in Getz, which is priced at a much higher tag of Rs. 4.5 lakh. Both the companies are known for their value based 27


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offerings and Maruti with their extensive service network and brand reputation for making reliable cars should get the customer’s nod over their competition.

TATA INDICA Tata Motors adopted a competitive pricing strategy for Indica in the global market. Prices were fixed on the basis of the norms prevailing in the international market. Also the prices offered by their competitors like Toyota, Ford, Fiat, were kept in mind while deciding the prices.

SCORPIO Pricing

Strategy:

to

be

a

premium

brand

yet

having universal appeal .Scorpio was to compete with the midsize cars like Hyundai Accent, Ford Ikon, Opel Corsa, Maruti Suzuki Esteem on the one side and UVs like Toyota Quails, Tata Safari and the Tata Sumo on the other. Scorpio adopted the penetrative pricing strategy positioned in the psychological price barrier of Rs. 5 -7 Lakhs.

PROMOTION MARUTI SWIFT When Maruti Udyog launched the Swift, the automotive industry was agog with expectation that the car had the makings of a real winner. Three versions were launched with the base variant carrying a retail tag of Rs 3.85 lakh, ex-showroom, New Delhi, and this aggressive pricing only reinforced this feeling. 28


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Event Organized By Maruti to Promote Swift

Fever FM and Maruti Suzuki Swift organize a Night Rally for Delhi-ites On March 24, 2009

In a co-operative marketing initiative, Fever FM and Maruti Suzuki Swift came together to organize a Night Rally in Delhi. The Swift Night Life Rally was organized for the Swift Life Club. The brand tied up with the station to extend the experience to the people who were unable to participate in the activity.

Honda Road Shows The company plans to stage road shows, to display vehicles in the pavilions during various college festivals and exhibition.

Hyundai Television advertisements Advertisements to promote and market our product are shown on leading television channels. Major music and sports channels promote and they reach out to the youth will be promoted through Star, Zee, Sony and 29


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A TV Commercial by Hyundai

doordarshan etc as it has more viewers.

. Radio Radio is the medium with the widest coverage. Studies have recently shown high levels of exposure to radio broadcasting both within urban and rural areas, whether or not listeners actually own a set. Many people listen to other people's radios or hear them in public places. So radio announcements are made and advertisements are announced on the radio about the product features and price, qualities, etc.

Print Ads Daily advertisements in leading newspapers and magazines are used to promote the product. Leaflets at the initial stage are distributed at railway stations, malls, college areas and various other locations.

Print ad by BMW

Workshops and Seminars Workshops and seminars are held in colleges and big corporate to make people aware about the companies past performance and product features, its affordability and usage, vast distribution network.

Banners, neon signs 30


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Hoardings, banners, neon signs are displayed at clubs, discs, outside theatres, highways and shops to promote its brand car.

Booklets and pamphlets Booklets are kept at car showrooms, retail battery outlets, etc for the customer to read. These booklets provide information about its company; the products offered which suits the customers need accordingly.

TOYOTA COROLLA The Promotion for Toyota Corolla consists of a blend of activities making its Promotion Mix. Its Promotion Mix consists of almost all the possible techniques of Promotion used for any other product. Some of the major elements of Promotion Mix of Toyota Corolla are listed as under: Advertising It uses many different techniques of Advertisement as a part of its Advertising Strategy. Most of the Print Ads of Toyota Corolla are individually targeted at one of these factors such as Comfort, Performance, Styling, Power, Leg Room, Design, and Driving Pleasure. One most common feature of almost all the Ads is that in every Advertisement, the fact that it is the World’s Largest Selling Car and its presence across 160 countries is present. This is done to because the company wants to differentiate the product in terms of its Reliability that it is an entrusted brand of 30 Million people across the globe. The fact that it is present in 160 countries proves that it is a Global Car. There are 3 TV Commercials of this Car in India. The Commercials show that this Car is targeted mainly at the Indian youth and young Executive. It has been positioned as

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a little sportier which is the main reason that it is for young people and is also like by them too. The Brochures, Posters/Leaflets are such designed that shows that Corolla is a car for people who demand Performance, Style, Power and Sheer Driving Pleasure. The car being a perfect combination of these factors makes it a huge success across its segment. The Other Sources of Advertisement include Bill Boards, Display Signs, POP, Displays, Symbol/Logo. The company does the Advertising of Corolla by displaying Bill Boards and Display Signs at various target places where it feels that prospective buyer will come across it. At the showroom also, there are huge amount of Point Of Purchase Displays and also Symbols/Logo which add to it. One of the major sources of Sales Promotion is Trade Fairs like AUTO EXPO, MOTOR SHOW etc. The company used to take part in these types of fairs and used it for its Sales Promotion. But now the trend is shifting because the company thinks that if they want to launch a product on a National Level, then there is no need for such kind of shows as now there are various other powerful sources of media available to them. Moreover the cost spent on these kinds of fairs was not justified. So therefore the company is now keeping away from fairs. In 1999 Toyota last time participant at the RAC rally in Britain.

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Some other Sales Promotion technique used by the company is the Festival Season Offers it introduces in the market at the time of Diwali, New Year, Christmas, Navratri etc to boost short term sales.

Public Relations and Community Building Exercise

•

Contribution to Tsunami

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Toyota Kirloskar Motor wins Best Ornamental Garden award for its landscape

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Toyota Kirloskar signs MoU with Bangalore University for promotion of Japanese Language

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Toyota observes earth day by supporting local schools

•

Organizing Drawing/Painting Competition on ‘Me and my Environment’ for kids from Govt. Schools.

33


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34


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35


AUTOMOTIVE

PERSONAL SELLING Personal Selling largely takes place at the Dealers’ End. The way the customer is attended depends mainly on the Dealer as he acts as an interface between the company and the Consumer.

The various cases in which Personal Selling takes place is Individual Sales, Corporate Sales, Sales Presentations, Fair and trade Shows. Mostly in case of Individual Sales the Customer goes to the showroom and takes a look at the product. There he is attended to by the Sales Personnel of the Dealership. Sometimes the Senior Sales Executive has to make Sales Presentation to Corporate Buyers. Personal Selling is also practiced at Trade Fairs and Auto Shows wherein the Company appointed Sales Personnel attend prospective customers and also book their orders. DIRECT MARKETING In the case of Direct Marketing the Company Officials directly contact the Prospective buyers with the information available through various sources. For example in case of Road Shows, Trade Fairs, Auto shows etc. Sometimes the existing customers also provide references of prospective buyers such as their friends or relatives.

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Toyota Stall at the Auto Expo GM STUXX GMI has launched several industry first programs such as Opel Club Card facility, Opel Carnivals, Opel Autobahn newsletter, chauffeur training programmes, mobile road-show caravan, car exchange programme for Opel customers, OK 5-Star used car programme, There is two-year and four-year warranty schemes, 2 year service holiday etc. Such programmes have helped GM in building its brand equity and developing a loyal customer base.

SCORPIO Brand Promise: ‘Luxury of a car. Thrill of an SUV’ this brand positioning addresses the key consumer Insight and the product delivers the promise. The position is also a unique proposition, which will help the brand have a distinct image in the consumers’ mind.

‘Baseline - “Nothing Else will do” The baseline captures the essence of the brand, which is superiority and uncompromising attitude. It also summarises the spirit behind the making of the Scorpio. Media Strategy *Dramatic and high impact launch

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* High visibility * Push brand image even by the media vehicle Building impact through multiple-media * PR, Mass Media, Direct Marketing, Events Public Relations Pre-launch excitement and buzz was created by a full blown PR program. Media coverage on the IDAM process, the people behind the Scorpio, the obsession, the world class technology, etc set the tone for the hyped up launch. PR was also the first tool used for launching the Scorpio. The coverage of the launch was massive. It got four cover stories Mass Media ‘While the media targets would be achieved through the right selection of the media mix, the Scorpio media posture was to ensure that Scorpio was present on the decided media but ‘with a difference.’ Scorpio would use media innovations to create differentiation on the traditional media and do things in a ‘bigger and better’ manner. Customer Relationship Management (CRM) CRM as a tool was used to create positive word-of-mouth, to monitor customer experiences and generate referrals. A series of CRM activities were implemented with regular direct communication, events and customer research. The CRM plan included a welcome Pack on filling up Scorpio Club (Top Gear) form, satisfaction surveys, Events, Festive offers, Rewards Program, etc.

TATA INDICA ‘More car per car’ is the famous tagline of this product. The Indica’s positioning has remained consistent with the brand's offering in an increasingly competitive market.

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The Indica is now synonymous with the word ‘More, by encapsulating the inherent product strengths and marrying them with the customer trait of desiring ‘More’. A promotion strategy for Indica v2 in international market is more or less same as that of the Indian market. Media innovations have been a key to the success of the Indica.

Tata at 29th Bangkok International Motor Show 2008

The positioning was strengthened with the successful launch of the Indica V2, which assumed the leadership position in the year of its launch. The Indica v2 was launched in the international market only through the press medium, with three diesel versions and a petrol version, and this campaign shattered many automobile advertising myths. The car was launched without any television advertising, but through high-impact newspaper ads, dominating the medium and delivering the desired impact. Headlines such as ‘You’ll never have to suffer a small car again’ assisted customers in distinguishing between their old choices and the Indica. This, in effect, placed the Indica on the pedestal of leadership, set to change the rules of the game. A recent campaign for the Indica V2 has helped in building the product on the rational platform and adds an emotional layer. Anchored on the insight ‘It’s only human to 39


AUTOMOTIVE

want more’, the campaign revolves around interesting candid moments in the daily lives of normal everyday people who desire more; be it a boy wanting the other boy’s bigger lollipop, or a baby crying when her parents stop driving her around in the Indica V2. The latest campaign moves to the ‘Even more car per car’ positioning.

PLACE

MARUTI SWIFT The car manufacturing company, called Maruti Suzuki Automobiles India Limited, is a joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30 per cent stake respectively. The Rs1,524.2 crore plant has a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units per annum. The car manufacturing plant will begin commercial production by the end of 2006. The engine and the transmission plant has owned by Suzuki Power train India Limited in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. The ultimate total plant capacity is three lakh diesel engines. However, the initial production is 1 lakh diesel engines, 20,000 petrol engines and 1.4 lakh transmission assemblies.

TATA INDICA Tata automobile group have a very large distribution network all over the world. Tata Indica v2 is exported and assembled in many countries. South Africa has an assembling unit for consumer vehicles. Other places where the company’s products (Tata Indica) are exported and in some assembled also are mentioned below:

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•

Africa :- Algeria , Angola , Ethiopia , Ghana , Kenya , Mauritius , Sudan , Uganda , South Africa , Senegal etc.

•

Europe: - Greece, Hungary, Italy, Malta, Portugal, Spain,

•

Switzerland, UK and Ireland.

•

CIS: - Belarus, Russia, Ukraine.

•

Asia: - Bangladesh, Malaysia, Sri-Lanka, Nepal, Bhutan.

•

Australia continent

PEOPLE There are various types of people in any Organization. The various types of people in case of Toyota can be classified as Customers, Sales Executives, Society, Government, Competitors, and Media. The most important out of these is our Customers. A customer can be any person who purchases the product; he may or may not use that product for himself. A consumer is one who actually uses the product himself. For example a father purchases Corolla for his son. In this case the father will be the Customer and son will be the Consumer. The main people involved in the purchase decision of the car are the Family Members. In a recent study conducted, it was found out that these days children play a major role in deciding which car to buy for the family. The company has to seriously take into consideration all these factors. Also the factors that whether one uses the car for travelling, office, shopping or family/personal etc. As this car falls into a segment where price range is between 9-11 Lacs, so the company has to target those people who not only have the ability to spend that much amount of money but are also willing to spend that much amount of money. Data regarding the purchasing power of different classes of people is also very necessary. Customers’ tastes and preferences have to be taken into consideration.

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Next comes the Sales Executives who deal with the final customers and finish the sales call. The Sales Executives play a major role. As the people of the organization they are a window through which the customers interact with the company. They have to be trained properly through customized modules designed especially for them taking into consideration the various factors.

Corolla Owners’ Profile •

Age

: 25-45

•

Occupation

: Business Class or High Level Service Executives

•

Social Class

: These people (Lower Upper to Higher Upper Class) generally

have an

existing C

segment car before they purchase Corolla •

Areas

: Urban/ Sub Urban, major Cities/Towns

•

Income Level

: More than Rs. 2 lacs p.m.

PHYSICAL EVIDENCE The Physical Evidence is created by displaying physically the product. Along with that creating an atmosphere for the customers where in they feel the presence of product. Toyota creates a powerful physical evidence for its customers through its Showrooms, Hoardings, Logo etc. All the showrooms are designed on a common 42


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platform. The interiors of all the showrooms across India are the same. The designs for the same are created by a team of Professionals in this field. The designs are prepared very carefully keeping into consideration various factors such as customers’ tastes and preferences, likes and dislikes etc. You will always find a Toyota showroom having the Toyota Bill Board outside with white base and red foreground. This creates a physical presence and people can feel the product.

SHOWROOM INTERIOR AND EXTERIOR

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SCORPIO Infrastructure Thirty-five showrooms across the country were redone entirely with the same look and identity and a décor built around movement, technology and sportiness. The theme

focused

on

giving

the

customer

a

memorable

experience.

The showroom revamp was centered on the intention to provide a uniform customer experience at all the touch points and to provide the customer with a unique “experience” and not just a “product”. Therefore the back office would remain outside the customer’s line of vision because the customer would be concerned with the product and not with the paperwork.

PROCESS The various processes involved in getting available the product from the manufacturer to the end consumer are to be efficiently performed by the company. The processes start when the customer is contacted by the Sales Personnel of the Dealership or the customer contacts the Dealership if he is interested to buy a Corolla. The data regarding the various customers can be had from various sources of data available through different agencies which specialize in providing data. After the call is made, an appointment is fixed. The Sales Executive prepares for the meet. He collects all the possible information which would be needed for the meeting i.e. data about the 44


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customer, details about the car, maximum permissible discount structure, finance options, delivery terms, free accessories which will be provided to the customer. The sales personnel will find out that what is the present vehicle used by the customer, his present buying power, satisfaction level, seriousness in buying etc. Along with that he will also find out his exact needs, desired level of satisfaction, lifestyle patterns etc. Sales personnel also ask certain questions through which he comes to know about the various factors he wants to know. He asks both open as well as closed ended questions. With the help of these questions, he can come to know the various reasons due to which he is buying that car. These can be Performance, Safety, Comfort, Driving Pleasure, Appearance etc. These processes either lead to completion of sales call or sometimes unfortunately leads to unsuccessful sales call which could not be competed.

DEALING WITH THE COMPETITION “Poor firms ignore their competitors; average firms copy their competitors; winning firms lead their competitors” PHILIP KOTLER

GENERAL ATTACK STRATEGY FRONTAL ATTACK: the attacker matches its opponent’s product, advertising, price and distribution.

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In this advertisement BMW is using frontal attack strategy against its biggest competitor AUDI

AUDI is replying the BMW advertisement

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Along with AUDI and BMW, SUBARU and BENTLEY are using frontal attack strategy against each other’s products.

DISTRIBUTION CHANNELS SCORPIO Since the Scorpio was targeted at an urban clientele it needed a stronger distribution presence in Metros and urban areas. Hence, the distribution channel had to focus on providing an appealing experience for modern car buyers and on offering international

standards

of

auto

retail.

The Scorpio was launched in a phased manner - first in Metros Mumbai, Delhi, Bangalore, Chennai. Twenty cities were included over a period of 4 months and within a year 50 cities were covered. This ensured attention to main markets and to

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ensure that initial production of the vehicle could match demand. Dealerships were revamped prior to launch in a particular city.

The Marketing Distribution Channel of Toyota Kirloskar Motor India, the Manufacturer of Corolla, is a Single Level Channel depicted

Manufacturer-TKM India, Bangalore

Toyota Flagship Dealer

Consumer

DISTRIBUTION CHANNEL OF HYUNDAI

STOCKIST

DEALERS

48

SUB DEALERS University Business School,

Panjab University Regional Centre, Ludhiana BOOKING AGENTS

AUTOMOTIVE

THE VALUE CHAIN The Value-Chain Network within Stuxx is a significant medium for measuring the products quality and performance, from Inbound Logistics-to- Operations-toOutbound Logistics-to- Marketing/Sales-to-Service. As a manufacturing firm, GM that produces Stuxx manufactures the vehicle and then distributes it to its store all over USA. The whole team network has a common purpose in operation and that is to produce and to sell it to make the customer smiling when disembarking. This common belief has brought a successful feedback to the overall sales and because providing the service for selling is considered an important task by the employees at Stuxx, it has never failed. Stores are designed so that accommodating a customer is luxurious but keeping his/her perception to as “not expensive”-sense.

SWOT ANALYSIS OF MARUTI UDYOG LTD.

   

STRENGTHS WEAKNESSES OPPURTUNITIES THREATS

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STRENGTHS The Quality Advantage Maruti Suzuki owners experience fewer problems with their vehicles than any other car manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1 in the premium compact car segment and the Esteem in the entry level mid - size car segment across 9 parameters. The J.D. Power APEAL Study 2004 proclaimed the Wagon R no. 1 in the premium compact car segment and the Esteem No.1 in the entry level mid size car segment. This study measures owner in terms of design, content, layout and performance of vehicles across 8 parameters.

A Buying Experience like No Other Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities, with a workforce of over 6000 trained sales personnel to guide our customers in finding the right car. Our high sales and customer care standards led us to achieve the No.1 nameplate in the J.D. Power SSI Study 2004. Quality Service across 1036 Cities In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7 parameters: least problems experienced with vehicle serviced, highest service quality, best in-service experience, best service delivery, best service advisor experience, most user-friendly service and best service initiation experience. 92% of Maruti Suzuki owners feel that work gets done right the first time during service. The J.D. Power CSI study 2004 also reveals that 97% of 50


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Maruti Suzuki owners would probably recommend the same make of vehicle, while 90% owners would probably repurchase the same make of vehicle.

WEAKNESSES Commodity price risk MUL’s commodity price risk relates to higher cost due to change in price of input such as Ferro-alloys (steel), non Ferro alloys (aluminium), plastic and rubber, which go into the production of automobile. In order to mitigate these risks, the company continues to attempt to enter into long term contracts based on its projection of prices in a volatile commodity market, where your company gives top priority to ensuring smooth availability of inputs, long term contracts are helpful. They also help to minimise the impact of growing input price. Conversely, long term contractor dilute the benefit if any, of a decline in input price. Exchange Rate Risk Your company is exposed to the risks associated with the fluctuation in foreign exchange rates mainly on import of component & raw material and export of vehicles. Your company has a well structured exchange risk management policy. The company manages its exchange risk by using appropriate hedge instrument depending on the prevailing market condition and the view on the currency.

OPPURTUNITIES Leading Growth As the market leader, your company led the growth in the passenger car sector last year. Maruti's sales went up 30% to 4,72,000 units. This, as I said earlier, is the highest annual sale since your company began operations 20 years ago. Maruti also gained market share, mainly on account of its performance in the competitive A2 segment where it increased its share from 40.3% in 2002-03 to 47.7% in 2003-04. 51


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The record sales performance was reflected in the financials. Net Sales (excluding excise) grew by 31% to Rs 93,456 million. Operating Profit Margin increased from 0.8 % in 2002-03 to 4.7 % in 2003-04. Profit after Tax jumped 270% to Rs 5421 million. Your company is committed to motorising India. Towards this end, your company's partnership with State Bank of India and its Associate Banks took organised finance to small towns to enable people to buy Maruti cars.

THREATS In the course of its business, MUL is exposed to a variety of market and other risks including the effects of demand dynamics, commodity prices, currency exchange rates, interest rate, as well as risk associated with financial issues, hazards event and specific asset risk. Wherever possible, we use the instrument of insurance to mitigate risk.

Business risk The automotive industry is very capital intensive. Such investment requires a certain scale of operation to generate viable returns. These scales depend on demand. Maruti is still depending mainly on the Indian market. Although 2004-05 was year of continued growth for the Indian economy, whether this growth momentum will continue has to be seen.

THREATS FROM COMPETITORS Tata Motors Limited In the 2004 fiscal year, Tata Motors generated revenues of $3,542.2 million (INR154,935.2 million). The company made a net profit of $185 million (INR8,103.4 million) in the 2004 fiscal year.

General Motors Corporation 52


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For the fiscal year ended December 2004, GM generated revenues of $193,517 million, an increase of 4.3% from the previous year. The company reported a net income of $2,805 million for fiscal 2004, down 26.6% from the previous year.

PRODUCT LIFE CYCLE

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INTRODUCTION 54


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The feeling of freedom and being one with the Nature comes only from riding a two wheeler. Indians prefer the two wheelers because of their small manageable size, low maintenance, and pricing and easy loan repayments. Indian streets are full of people of all age groups riding a two wheeler. Motorized two wheelers are seen as a symbol of status by the populace. Thus, in India, we would see swanky four wheels jostling with our ever reliable and sturdy steed: Two wheelers in India are the second largest producer and manufacturer 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. Indian two-wheeler industry has got spectacular growth in the last few years. Indian two-wheeler industry had a small beginning in the early 50's. The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. 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.

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 mid80s. 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 Honda - then the only producer of four stroke bikes (100cc category), gaining a top slot.

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The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero Honda 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 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. 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 0.4mn vehicles. Barring Hero Honda, all the major producers suffered from recession in FY93

and

FY94.

Hero

Honda

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 company either reporting losses or a fall in profits.

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Key players in the Two-wheeler Industry

There are many two-wheeler manufacturers in India. Major players in the 2-wheeler industry are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor

57

Company

Ltd

(TVS).


AUTOMOTIVE

SEGMENTATION OF TWO WHEELER A Two Wheeler Sector Sub-Segmenting in the three Segments. 1. Motorcycle 2. Scooter 3. Mopeds

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Segment-wise Analysis of Indian Two Wheeler Market Segment

Description

A1

Scooter engine capacity less than 75 cc Scooter with 5% engine capacity between

A2

59

share in 2001- Share in 2006CAGR 02 07 with 5% 0% 33.99%

10%

32.9%


AUTOMOTIVE

75-125 cc (Scooterette) A3

Scooter with engine capacity between 125-250 cc Motorcycle with engine capacity between 75-125 cc Motorcycle with engine capacity between 75-125 cc Motorcycle with engine capacity between 75-125 cc Mopeds

B1

B2

B3

C1

12%

1%

-27.7%

62%

66%

14.9%

5%

17%

44.8%

1%

1%

5.7%

10%

5%

-2.7%

Growth Prospects and Key Drivers of the Indian Two Wheelers Industry The growth witnessed by the Indian two wheeler industry indicates the growing demand for low cost personal transportation solutions amongst the 300 million Indian middle class consumers. Despite this spectacular growth rate, the two wheeler penetration (number of two wheelers per 1000 inhabitants) in India remains lower than other Asian countries. This fact provides an opportunity for continued growth in the market. India has the lowest Penetration of two wheelers as compared to countries like Taiwan, Thailand, Malaysia, Vietnam, Indonesia and China. In the present scenario, growth in the two wheeler Industry will be driven by several factors: 60


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Rise in India’s Young Working Population With the rising levels of per capita income of people, the Indian two wheeler market offers a huge potential for Growth. This growth is relevant in the light of the fact that 70 per cent of India’s population is below the age of 35 Years and 150 million people will be added to the working Population in the next five years. The number of women in the urban work force is also increasing; this will lead to the Growth of gearless scooters. Rise of India’s Rural Economy and Growth in Middle Income Households The growth prospects of the Indian rural economy offer a significant opportunity for the motorcycle industry in India. The penetration of motorcycles amongst rural households with income levels greater than US$ 2,200 per annum has already increased to over 50 per cent. The current target Segment for two wheelers, i.e., households belonging to the Income category of US$ 2,200–12,000 is expected to grow at a CAGR of 10 per cent. Greater Affordability of Vehicles The growth in two-wheeler sales in India has been driven by an increase in affordability of these vehicles. An analysis of the price trends indicates that prices have more or less stagnated in the past. This has been part of the marketing strategy adopted by the manufacturers to gain volume, as well as conscious efforts adopted to bring down costs. The operating expenses of leading manufacturers have declined by around 15 per cent in the last five years. With greater avenues of financing, the customer’s capacity to own a two wheeler has improved. Rapid Product Introduction and Shorter Product Life Cycle

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The last five years have witnessed a sharp increase in new product launches in the two-wheeler industry. It is estimated that close to 50 new products have been launched by manufacturers during this period, filling up all price points and targeted at various consumer segments. Inadequate Public Transport Systems in most Urban Areas The economic boom witnessed in the country and the increased migration to urban areas have increased the traffic congestion in Indian cities and worsened the existing infrastructure bottlenecks. Inadequate urban planning has meant that transport systems have not kept pace with the economic boom and the growing urban population. This has increased the dependence on personal modes of transport and the two wheelers market has benefited from this infrastructure gap.

Challenges faced by the industry Despite the high growth achieved in the past and the high potential in the future, the two-wheelers market faces some challenges.

Rising Customer Expectations The growth witnessed by the Indian two wheeler industry has attracted a number of new entrants to the market and it is expected that the Indian industry will become more competitive in the future. The plethora of products introduced in the past has also raised customer expectations with respect to reliability, styling, performance and economy. Environmental and Safety Concerns The increasing demand for two wheelers will need to be managed to address issues relating to overcrowding of roads. Another problem is the insufficient infrastructure for inspection to ensure adherence to emission norms. As the industry grows, it is 62


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important to regulate the sale of used two wheelers in a more organised manner for which a mechanism needs to be evolved. Unregulated sale of two wheelers, especially in the rural areas, are likely to create issues related to emissions and safety of vehicles. Creation of Distribution Infrastructure Leading companies need to ensure that on one hand they build adequate infrastructure in terms of dealerships and servicing stations in the urban areas and on the other ensure that their distribution infrastructure also reaches the rural areas

COMPANY PROFILE Hero Cycles and Honda Motor Company of Japan linked their joint venture in India in April 1984, few could have imagined that the two would go on to create history and become the subject of a case study at business schools, internationally. 63


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But that's the Hero Honda saga. In a little over two decades, the world's largest manufacturer of bicycles and the global leader in motorcycles have created not only the world's single largest motorcycle company but also the most endearing and successful joint venture for Honda Motor Company worldwide. The company has sold over 15 million motorcycles and has consistently grown at double digits since its inception and today, every second motorcycle sold in the country is a Hero Honda. In two decades, Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana that now churn out over 3 million bikes per year. In this period, Hero Honda has set up over 2400 customer touch points, comprising a mix of dealers, service centres and stockists across rural and urban India. Today, Hero Honda is an amalgam of winning networks and relationships with internal and external stakeholders, including Investors, Dealers, Vendors and Employees. These relationships have helped the company hold on to the mantle of World No.1 for years in succession. Hero Honda has relied on 3 R's-- Reach, Research and Reliability as its basic building blocks. Using feedback from the market, a fully-equipped R&D centre has consistently created best practices in designing, testing and harmonization, besides placing strong emphasis on road safety and ride quality. This emphasis has helped Hero Honda build products that are ahead of their time. In the 1980s, for example, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' CAMPAIGN captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage. Hero Honda was also one of India's first automotive companies to get close to the customer. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly

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puts it, "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.''

Key Highlights •

Hero Honda enjoys a significant brand premium. Its aggressive pricing strategy to take on the competition has helped it in volume growth.

•

Variant launches in each of Splendor and Passion has helped in stemming the loss in market share in the face of the competition. Hero Honda now plans to launch two new models in the 100cc segment in FY05 on a new platform.

•

The company has started logging good volume growth after the launch of Passion Plus and Splendor Plus as well as the CD-Dawn, which has also rejuvenated its product range. Volumes should improve further, due to the base effect and improved rural sentiment on the back of higher farm incomes.

•

Aggressive cost controls and significant economies of scale are expected to aid Hero Honda in retaining margins.

•

Hero Honda will continue to be an attractive dividend yield play as the company continues to generate significant free cash flows as its capital requirements are limited

Marketing MIX

PRODUCT Product Range and New Models The Company's product range includes "Splendour" which is the largest selling motorcycle brand in the world with over 6.9 lakhs vehicles sold in 2000-01. A

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cumulative over 5 million customers are the real foundation of the company's strength. The identity of Hero Motors in the market has been established through two of its leading international products - Hero Puch and Hero Winner. When Hero Motors entered into a technical collaboration with Styr Daimler Puch of Austria, Hero Puch was born which marked a new chapter in the two-wheeler scenario of the country. Hero Puch, the mini-motorcycle designed by Ferdinand Porsche combined the power (4.15 bhp) and ease of a motorcycle and at 91 km/hr, the economy of a moped.

CASE STUDY OF HERO HONDA HUNK Hero Honda new Bike hunk launched with a new features after the study of market research by company A sure-shot head-turner, the Hunk comes with never before features and looks:Product highlights: •

150cc Engine, delivering raw power of 14.2 BHP @ 8500 RPM and a torque of 12.80 N-m @ even at a low RPM of 6500

•

Unmatched super acceleration of 0-60 Km ph in flat 5 seconds

•

New Generation "Advanced Tumble Flow Induction" (ATFI) Technology engine - which delivers the best balance of Fuel efficiency and Power

•

Advanced Microprocessor Ignition System -"AMI" with Multi Mapping Digital CDI along with "Carburettor controlled Variable Ignition" delivers the optimum Power, quicker throttle response and Fuel efficiency

•

Unique "Anti-Kick back" device prevents Kick back during starting convenient, safe and effortless kick start.

PRICE 66


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Faced with an uncomfortable scenario of Bajaj Auto closing in on Hero Honda Motors in monthly unit sales, managing director Pawan Kant Munjal said the company has put in place a strategy to retain its leadership in the Rs 33,000 crore twowheeler markets. That includes developing new high-performance engines in 100cc, expanding capacity to beyond 5 million units and reducing the price of 100cc bikes, if needed. “As confident as they are of upstaging us, we are confident of retaining our leadership and growing our lead,” Munjal told FE in an exclusive interview. Reiterating that unlike Bajaj, which is exiting the 100cc segment, Munjal said Hero Honda intends to strengthen its offerings in the segment. He said the company is developing new engines that will deliver superior performance in the 100cc bikes in future. To counter Bajaj’s move to offer 125cc bikes at the price of 100cc bikes, Munjal said Hero Honda could reduce prices of its 100cc bikes to nullify Bajaj’s strategy. Bajaj Auto plans to exit the entry-level motorcycle market by August-September next year and offer higher capacity bikes in the 100cc price range of Rs 34,000 to Rs 42,000. “We have dominated the 100cc segment for many years and will continue to dominate. Possibly it may be the reason for Bajaj Auto leaving the segment,” Munjal told FE. The gap between Hero Honda and Bajaj Auto has narrowed from 92,206 in September, 2005 to 37,833 in September, 2006

PLACE DEALER NETWORK

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At Hero essentially they 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. Strong dealer company relationship 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. Sales agents from Hero travels to all the corners of the country, visiting dealers and send back daily postcards with information on the stock position that day, turnover, fresh purchases, anticipated demand and also competitor action in the region. There are more than 1000 committed dealers & service outlets spread across the country. The authorized workshop have well laid out standards for motorcycle servicing supported by fully equipped infrastructure in terms of quality precision instruments, pneumatic tools & a team of highly trained service technicians. Having your motorcycle serviced at an authorized workshop ensures highest standards of service quality and reliability

PROMOTION HHML is an organization, which is known for its innovative & Aggressive Marketing. Rs.120 crores was the Annual budget for market for the financial year 2002-2003. All the mediums are used extensively, be it print or mass media like T.V & hoardings. HHML also promotes sports in the country. It is also the sponsor of the ICC world Cup 2003 and half of the Indian team represents Hero Honda. Those players are 68


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Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh, Zaheer Khan and Sourav Ganguly as Brand Ambassadors.

Superstar Hrithik Roshan is also a

Brand Ambassador for Hero Honda Company. They will endorse the company products, attend corporate and brand events and help promote its "We Care" campaign comprising safety riding, environment and friendliness Also, advertising is done at a local level by dealers, in which HHML also contributes to help dealer promote the dealership in the local area. HHML has print ads that the customer gets to see almost every day in newspapers, magazines, etc. This has increased the brand recall by a significant number. They also have their bikes featured in various TV programs like top drive on star news and others which act as a strong reference.

ADVERTISING STRATEGY Hero Honda is currently the number one company in terms of sales and has been dominant in the two-wheeler segment since the past decade. Since the inception of hero Honda, the company has been using television as a major role for its publicity. Though hero Honda was dominant in sales it lacked the skills of creating a spectacular ad till now. Though it had a vast range of mobikes, its advertising strategy was not up to the mark. For its publicity hero Honda has been using many famous celebrities like Saurav Ganguly, the captain of Indian cricket team, Hritik Roshan and other famous personalities as their brand ambassadors. Thus, hero Honda has been spending huge amounts on its publicity.

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70


Print adds

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Glamour

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Some of the Events Sponsored During the Years 2000  NKP Salve Challenger Trophy.  Stardust Hero Honda Millennium Honours Award.

 Masters Golf Championship.  20th Cinema Express Award. 2002  India-England Women's Cricket Series.  Masters Golf Championship.  Second Indian Television Academy Award.  21st Cinema Express Award.  First Indian Television Academy Award 2003  8th Cricket World Cup in South Africa.

HERO HONDA ROADIES To attract young generation Hero Honda sponsored MTV Roadies. It is the one of the most

popular

Show

among

youngster. A Live reality show in which some group of people travel across the country on the bike. They

ride

HERO

HONDA

KARIZMA. This show become the key factor in promoting the bike karizma between the youngster

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HERO HONDA CAMPUS ROCK IDIOLS In today scenario in India rock culture is becoming very popular among youngster. To capture this young generation, Hero Honda is organizing Campus Rock Idols every year at all over major cities in India.

HERO HONDA SA RA GA MA PA CHALLANGE

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Brand Ambassadors CRICKETERS Hero Honda promotes his cricketers brand ambassadors as a ‘Team Ambition’ in 2003 World Cup. The 'Team Ambition' has many similarities in personality with the Hero Honda brand, such as 'splendor of performance', 'passion to excel' and 'ambition to win', signifying their respective desires to lead the way

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Hero Honda, through the advertisements, hopes to communicate the brand identity to its customers in a language and appeal that is well identified and comprehended by them.

FILM STAR Hero Honda signed bollywood star Hrithik Roshan for his premium bike Karizma. The customised all-chrome Karizma, a very stylish bike that truly befits his brand ambassador and style icon Hrithik Roshan

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BOLLYWOOD STAR HRITHIK ROSHAN

HERO HONDA SIGNED MAHESH BABU A SUPERSTAR IN ANDHRA PRADESH TO CAPTURE MARKET IN AP

Hero Honda -India‘s number one two wheeler in sales. Now this big company is roping Mahesh Babu as their Brand ambassador for AP. The company is very much confident that young Mahesh Babu brings them up in their sale figure and at the same time Mahesh Babu‘s fan following will be utilized

for

brand

image

of

Hero

Honda.

HERO HONDA KARIZMA

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Hero Honda Karizma was the first real sports bike in India. The bike addresses to those who have a passion for speed and styling and head-turning looks. It has 17 ps power thrust and picks up 0-60 in 3.8 heart-stopping seconds. The bike is based on power and styling. Disc brakes and Mag wheels makes Karizma the safest jet on the road.

Company Stroke Maximum Power Displacement Hero Honda Motors India Ltd. 4Stroke 16.8 bhp @ 7000 rpm 232 cc Striking Features: 1. Style 2. Sporty position of the seat. 3. It stands on its feet even at speeds reaching up to 130 kmph.

S.W.O.T. ANALYSIS OF KARIZMA STRENGTH • It has a good speed and sporty look . • Karizma is the First bike in India launched under Sports Bike Segment.

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• Loyal Customer Base: In the past four years, Karizma has been successful in building up a good and loyal base among its customers. • After Sales Service: Till today, customers are satisfied with the after sales service provided by Hero Honda for this particular product. • Refinement, comfort, great handling and that much-sought-after big bike feel are all available on the Karizma. • Brand Recall: the name Karizma itself is a metaphor to its success. The brand Karizma has given a good platform to this product in the Sports Bike Segment.

WEAKNESS • High Maintenance: The maintenance of Karizma is high as compared to its biggest competitor Bajaj Pulsar 200cc and 220cc. • Fuel Efficiency: The pulsar 200cc offers an impressive mileage of 38.3kpl in city and 42.4kpl in highway against the Karizma offers only 30kpl in city and a decent figure of 45kpl in highway. • Less Promotion: the promotions and ads of Karizma are very less as compared to its competitors.

OPPORTUNITIES • If Hero Honda comes up with the idea of changing some features of Karizma, like self cancelling indicators, soft touch handle bar and digital speedometer, it will help them to boost up the sales of Karizma.

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• If they are able to improvise the fuel efficiency of Karizma, it will be a golden opportunity to take over the market.

THREATS • The major threat faced by Hero Honda Karizma is from Bajaj Pulsar, who has always been the market leader in the 150 plus segment with 60% market share. • Karizma’s strong competitors Bajaj and TVS, in 150 cc plus segment, already posses certain features like self-controlling indicators, soft touch handle bar which Karizma lacks. • The competitor Pulsar 200cc has already come up with oil cooled engine which delivers maximum power. This is again a major threat to Karizma.

S.W.O.T. ANALYSIS OF COMPETITOR

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(BAJAJ PULSAR 220cc)

STRENGTHS • Pulsar 220cc features India’s First Oil Cooled Engine which delivers maximum power making it most powerful engine offered by Bajaj. • New Pulsar also provides Digital Speedometer, Self Cancelling Indicators which is for the First time in this segment in India. • Fuel efficiency: Pulsar 220cc delivers an impressive mileage of 38.2 kmpl in city as compared to Karizma which delivers 30 kmpl in city. • Customer Base: In past decade Bajaj has established a strong base amongst its customers.

WEAKNESS • Style and Design: PULSAR 200cc and 220cc derives their styling from there previous version Pulsar 150 Dts-i and 180 Dts-i. • Pricing; Bajaj 220cc (Rs 82449 basic price) is costlier than karizma (Rs 78000 basic price)

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OPPORTUNITIES

• Taking into consideration the reviews of the customers regarding the “fairing” of 220cc and making the needful changes will be an opportunity to capture an even larger share of the 200cc+ segment.

THREATS • The biggest threat is faced from the goodwill of Karizma in this segment who is the “Four-Stroke

Two

Wheeler

Ruler”

of

the

Indian

bike

market.

• Certain technical faults in the bike design which are potentially dangerous to the rider’s safety can be disastrous to the image of the bike.

Brand Image create By Bajaj Brand image create by Bajaj through his pro bike showroom which display his premium bikes range such as pulsar 220, Avenger, Pulsar 180 etc.

BAJAJ’s Pro Bike Showroom The Bajaj Prebaking showrooms will definitely be one of the integral elements in his overall brand strategy to reinforce the image of Bajaj being a manufacturer of quality performance motorcycles in the country. It's the retail experience a dedicated biker feels when he or she steps into a Probiking outlet. It's a new space they have created and there's a work to be completed.

BAJAJ PULSAR ‘DEFINATELY MALE’ 81


lot of

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Bajaj pulsar make an image of that there bike is only for guys. Through his Definitely Male Campaign they shows behave of a young guys. This Advertisement helped lot Bajaj to create brand positioning.

Chatting merrily, three girls Walk by a line of motorbikes.

...making her turn in Consternation. She pulls it away

One's

dupatta

skims

the

MVO:

Bajaj

bikes and then gets stuck...

...

The

logo,

"Pulsar".

Pulsar, definitely male

Slowly to reveal...

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MARKET MIX OF KARIZMA

PRODUCT DESIGN, ENGINEERING AND INTERIORS Hero Honda has taken a lot of styling cues for this bike from Honda’s old model VFR 800, the Japanese giant’s legendary and largest selling superbike. Similarities are visible in the alloy die-cast wheels, the tailpiece, the front indicators, the fairing, the silencer unit, seat, panel shapes and instrument binnacle. Even the way Hero Honda has painted parts of the side panels silver to look like exposed aluminium frame sections, reminds one of the genuine thing on the VFR. One cannot help but think that the steering column section of the bike looks crude and empty just below the handlebar mounts. Fit and finish is excellent and no less than the high standards we have come to respect Hero Honda for. The company has kept with the times, and grafted an aircraft-type fuel filler cap onto the tank. The tank recesses easily accommodated the legs of our tallest testers. The amber backlighting for instruments is exciting. Being connected directly to the battery, all lights and instruments work independently of the rpm of the engine, and are a boon at night.

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BRANDING: BRAND NAME: KARIZMA In Hindi, “KARISHMA” means “something inexplicably magical”. In English, “CHARISMA” (pronounced Karizma) means “the ability to inspire followers with devotion and enthusiasm”. The way this bike has turned out to be, it is probably both. The monogram of Karizma itself is very attractive and eye catchy because of the colour. In order to overcome the competition faced from its biggest competitor bajaj220 dts-I, the company has tried to attract the customers by changing the graphics of Karizma i.e. an attractive new logo, which represents the bike’s cutting edge imagery of being racy. International styling graphics with a pronounced `R’ on the tank and an asymmetrical one on the visor in keeping with the latest international trend.

PRICING

the new Karizma will also continue to be priced at almost the same level as the previous version, with on-road prices for the regular variant working out to Rs 79,000-80,000. The special edition variant with red mag-wheels will be costlier by about Rs 1,000. Bajaj has launched 52 Prebaking outlets – which will house only high performance bikes. Pulsar 200cc would be available at such Probiking showrooms at select locations across the country for an attractive price of Rs.65, 497 (ex showroom, New Delhi).

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PROMOTION ADVERTISEMENT: Hero Honda Karizma Agency: A fighter plane is on a regular sortie when the pilot notices a moving object. Zooming his camera, he captures a bike cruising at high speed. Informing the control tower, the pilot dives in for a closer look. The bike gathers speed and enters a tunnel to beat the fighter aircraft. Reaching the air-base, the rider meshes with the staff as they examine the images... ... of the motorcycle, unaware that its owner is amidst them. MVO: "Hero Honda Karizma. Jet Set Go."

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The all-new-Karizma has been created by the Hero Honda’s research and development team to mark the company’s highest-ever sales of over 3.03 lakh units in May 2006. Celebrating its milestone of rolling out 15 million bikes, two-wheeler major Hero Honda, presented a tailor-made ‘all-chrome Karizma’ motorcycle to Bollywood star Hrithik Roshan. “This super bike will surely match my super hero image,” Hero Honda brand ambassador Hrithik said, as Hero Honda Managing Director Pawan Munjal handed over the keys to the star.

HERO HONDA MTV ROADIES In mtv roadies the all competent use only the Hero Honda karizma bike from the last six years. So, by sponsoring the show hero Honda promoting their brand karizma among the youngster.

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The Hero Honda family is elated to have achieved the landmark figure of 15 million motorcycles in the shortest ever time-span. The customized all-chrome Karizma truly befits our brand ambassador and style icon Hrithik Roshan,” Mr Pawan Munjal said. Group Chairman Brijmohan Lall Munjal said, entertainment and sports are everyone’s favourites. Though, they are not physically involved in sales, celebrities help in promoting the product, he said.

PLACE CHANNELS OF DISTRIBUTION As a company, dealers play a major role in serving customers, while growing and sustaining markets. Hero Honda has a network of more than 3500 strong and dedicated Authorized dealers. A network that has helps Hero Honda’s name and its 87


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promise of reliable quality to every part of the country. The power of this highly efficient and motivated network goes a long way to create goodwill for Hero Honda brand among countless consumers besides creating availability and after sales services. The channel of distribution is a direct dealer network. A direct dealer is a dealer who is authorized to purchase the product directly from the company and sell.

PHYSICAL DISTRIBUTION: As a company, dealers play a major role in serving customers, while growing and sustaining markets. Hero Honda has a network of more than 3500 strong and dedicated Authorized dealers. A network that has helps Hero Honda’s name and its promise of reliable quality to every part of the country. The power of this highly efficient and motivated network goes a long way to create goodwill for Hero Honda brand among countless consumers besides creating availability and after sales services.

CONCLUSION India’s expedition to become a global auto manufacturing hub could be seriously challenged by its inability to uphold its low-cost production base. A survey conducted by the research, KMPMG firm reveals that the Indian auto component manufacturers are increasingly becoming skeptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising. The survey said many executives believe that India’s cost advantage is grinding down fast as labour costs are constantly increasing and retaining employees is becoming more and more difficult. Increased presence of global automotive companies in the country was cited as one of the reasons for the high erosion rate.

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Indian auto businesses will only flourish if they boost investments in automation. In the longer term, cost advantage will only be retained if Indian capital can be used to develop low-cost automation in manufacturing. This is the way to preserve our low cost. Global auto majors are also cynical about India’s low cost manufacturing base. India taxation remains a big disadvantage. This is not about tax rates it is just about unnecessary complexity. But some companies also believe there is scope for reducing the cost of doing business. In spite of this there are opportunities to exploit lower costs right across the board. It’s true that labour costs are definitely increasing but they are still five per cent of the total operational costs. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. Low-cost base can never last long. The company said Indian industry has till now relied on very labour intensive model but it would have to switch to a more capital intensive model

BIBILIOGRAPHY

MARKETING MANAGEMENT BY PHILIP KOTLER WIKIPEDIA TOYOTA OFFICIAL SITE MARUTI OFFICIAL SITE TATA OFFICIAL SITE 89


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HYUNDAI OFFICIAL SITE AUTO INDIA MAGAZINE AUTODRIVE MAGAZINE BBC NEWS SITE INSIDETIME.COM HERO HONDA OFFICIAL SITE DOMAIN-B.COM

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WITH THIS WE END OUR MEMORABLE ODYSSEY………..

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Marketing Mix of Automotive Industry in india

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