Research on Hero Honda Essays

Research on Hero Honda Essays Research on Hero Honda Essay Research on Hero Honda Essay MARKET analysis OF HERO HONDA MOTORS LIMITED. [pic] [pic] A Project Report submitted in partial fulfillment of the requirements for Submitted by sUBMITTED TO ACKNOWLEDGEMENT A project cannot be said to be the work of an individual. A project is a combination of views and ides, suggestions and contributions of many people. I am extremely thankful to my project guide who gave me an opportunity to do this project report as a part of the curriculum. I wish to express my sincere gratitude to Hero Honda Company Staff dealers whose valuable information throughout my project work. Also I wish to thank all the respondents who gave me some of their valuable time to fill up the questionnaires, without which the project study wouldn’t have been a success. TABLE OF CONTENTS OBJECTIVES SCOPE OF THE PROJECT grand success. Information regarding the market share, cost factors, the marketing and promotional strategies etc was collected from primary data sources. INTRODUCTION HISTORY ABOUT THE CHAIRMAN Brijmohan Lall Munjal – Seeding a Dream [pic] Dont dream if you cant fulfill your dreams Brijmohan Lall Munjal is often fond of saying. The founder and patriarch of the $ 2. 8 billion Hero Group is your classic first generation entrepreneur. He is a man who started small, dreamt big and used a combination of grit and perseverance to create one of the countrys largest corporate groups and the Worlds No. 1 Two Wheeler Company. Instinctive from a young age, Brijmohan Lall made a rather unusual start in life. Around the time when the freedom movement in India was taking shape in the late 1920s, he walked into a newly opened  Gurukul  (Indian heritage school) near his home in Kamalia (now in Pakistan). He was only six years old then. Thus began an extraordinary tale of courage and perseverance. Brijmohan began his business story after partition in 1947, when he and his brothers relocated to Ludhiana. The family set up a company that provided poor people with basic transport (cycles). Three decades later, as India evolved, he added a second crucial chapter which visualized affordable and technologically superior transport to millions of middle class Indians. The rest is history. Building Relationships When Brijmohan and his brothers started out, there was no concept of organized dealer networks. Companies just produced, and most dealers functioned like traders. Brijmohan changed the rules of the business by trusting his gut instincts; introducing business norms that were ahead of their time, and by investing in strategic relationships. Brijmohan built a series of bonds and networks with hundreds of family members, vendors, dealers and employees. Much like the Japanese keiretsu system, these networks are now the glue that holds the Hero Group together. Thanks to the relationships that we have nurtured so passionately in the Hero Family, the younger generations of some of our bicycle dealers have become dealers of Hero Honda. These relationships have survived through generations through bad times and good times the patriarch now reminiscences. Besides bonding with his vendors and dealers, Brijmohan has been personally responsible for kindling a spirit of entrepreneurship amongst his employees, and today, 40 of his former employees are successful entrepreneurs. Staying Ahead Though not technically qualified in the conventional sense, few of his contemporaries have understood the dynamics of technology better than Brijmohan Lall has. He could always visualize the applicability of technology before others could. For example, in the 1980s, when all two-wheeler companies in India opted for two-stroke engine technology, Brijmohan preferred a four-stoke engine a technology that dramatically increased fuel efficiency and reduced maintenance costs. This technology was one of the biggest reasons for Hero Hondas stupendous success. Time and again, Brijmohan managed to steal a march over his industry peers. For example, when Honda Motors of Japan was looking for a collaborator in the 1980s, the Hero Group was not high up the pecking order initially as there were other more eligible and established suitors. Yet it didnt take long for the astute Japanese to realize that the Hero Group and Honda had much more in common than earlier perceived; there a sharp focus on financial and raw material management, and employee turnover was low. Honda officials were also amazed to find that the Munjals were already practicing Just-in-time-inventory at the time (JIT). It turned out that Brijmohan Lalls aspiration to provide cheap transportation to Indias poor by default ensured lean and cost-effective operations. This in turn increased vendor efficiency and led to near-zero inventories. A Corporate Citizen A frugal upbringing and a value system modeled on the famous Gurukul system which stresses the sanctity of the teacher-pupil relationship imbibed in Brijmohan a strong sense of social commitment and responsibility. There is a special place in his heart for Ludhiana, the city where he took roots. Today, Ludhiana is a modern, bustling city, but Brijmohan has played no mean role in its evolution. Several schools and educational institutions in Ludhiana owe their existence to the Munjal family. The Ludhiana Stock Exchange owes its existence to Brijmohans vision as does the Ludhiana Flying Club. Hes also set up the not-for-profit Dayanand Medical College and Hospital-an institute now rated as one of the best medical colleges in India, in terms of infrastructure, quality of staff and alumni profile. In and around Dharuhera, near the first Hero Honda plant, Brijmohan and his family have left their stamp of philanthropy. The Raman Kant Munjal Foundation which Brijmohan set up in memory of his eldest son, today runs a higher secondary school and a very modern and well-equipped 100-bed hospital at Dharuhera. The group has also adopted numerous villages and provides education, vocational training, drinking water, roads, streetlights nd sewerage. AUTO INDUSTRY- A REVIEW INTRODUCTION The Rs. 5500 crore Indian two wheeler segment is the second largest market fin the world after China. India’s two wheeler production is the third largest in the world after Japan and China. India has a well- developed two wheeler market with around 25 million households owning two-wheeler. The I ndian two wheeler industry made a modest beginning in the early 1950 when Automobile Product of India ( API ) started manufacturing scooter in India. Until 1958. API and Enfield( motorcycle) were the only two in production. In 1948, Bajaj auto began trading in imported Vespa scooter and the three – wheeler- finally, in 1960’s. it set up shop to manufacturer them in technical collaboration with piggaio of Italy. The agreement expired in 1971. In the initial stages, the scooters segment was regulated regime, foreign company was not allowed to operate in India, and waiting time for getting Bajaj scooters was as high as 12 years. Java, and escort. While the Enfield bullet was a four strokes bike, the Java and Rajdoot were two-strokes bikes. The motorcycles industry was originally dominated by Enfield with 350 cc bikes. The motorcycles industry was cc segment. The two wheelers segment was opened up to foreign competition in the mid 1980’s which saw the entry of the Japanese manufactures into the country. Classification of the Industry The two-wheeler segment can be categorized into the scooter, mopeds, and motorcycles. Motorcycles: this segment has shown the best performance in the recent years. The market leaders in this section are Bajaj Auto. TVS, Mahindra, Hero Honda. [The splendor is the most popular segment among motorcycles. ] Two Wheeler Industry It wasn’t an easy year for the two wheeler industry. Rising interest rates and the economic slowdown resulted in delayed consumer decision making and a rise in loan defaults. Over the course of the year, banks withdrew financing facilities from satellite towns. The share of financing, which had increased rapidly to 50-60 per cent of the total retail sales by early 2007, has now come down to below 30 per cent. This came as a major setback for the two-wheeler industry. Ongoing government investments very clearly emphasis inclusive growth through improved connectivity, job-creation and improving quality of life. The rural road outlay has been upped by close to 60 per cent, the budget for the Urban Renewal Mission has been hiked by 87 per cent, and fund allocation to the ongoing National Highways program has been upped by 23 per cent. Importantly, India has added fresh impetus to its flagship job creation program for rural India: the National Rural Employment Guarantee Scheme. During 2008-09, this scheme, which provides 100 guaranteed days of work a day for the country’s rural poor, provided employment opportunities to more than 44 million households last year; a year ago, 33 million households were covered. During the year, there have been important developments in two-wheeler industry. The competition has strengthened though there are hardly any new entrants into the industry. There is an increasing emphasis on price and this has led to cost cutting efforts all across the industry, thereby, making the customer an ultimate beneficiary. The trend also saw introduction of new motorcycles with capacity ranging from 100 to 250cc bikes. We anticipate that many more new models will be launched during the year and provide customers plenty of choice at competitive prices. Businesses cannot consistently grow at 25-30 per cent. Each business has a tendency to taper and plateau after attaining a particular size. An annual growth rate of 10-12 per cent over a period of time is extremely healthy. The TCS study rankings are conducted at the motorcycle segment-level to provide comparisons among similar groups of motorcycles. Motorcycles ranking highest in their respective segments for TCS are: Hero Honda splendor plus (best standard motorcycle segment); Bajaj pulser (best executive motorcycle segment); Hero Honda karizma (best premium motorcycle segment); and Royal Enfield Bullet Electra (best cruiser motorcycle segment). The relatively low score for the executive segment indicates that most manufacturers have fallen short of meeting the high expectations of these buyers,. Production, sales growth of the industry The two-wheeler companies have been operating at high capacities due to high growth rates between 2009 and 2008. The growth is expected to lead to increase in the capacities from present 52 lakh units t o 65 lakhs per annum in the year 2009-10, whereas the actual production estimates by that period at an estimated growth rate of 18% is only 60 lakhs. Charts showing two-wheeler industry growth rates Demand In India the two-wheeler provide an easy and popular mode of personal transport for the middle classes. With public transportation system being inadequate and ineffective the demand for the two-wheeler is likely to rise. The two-wheeler sales are expected to touch the 5 million mark by the end of the decade as against the annual sales of 35,49,271 in 2008-09. Technology With liberalization and the increasing competition. The two- wheeler industry has witnessed technological changes. The four- stroke engine is being introduced in place of the traditional populations and fuel inefficient two stroke engine. The smaller capacity engine with the electronic fuel injection is also being used. Bajaj auto is now feeling the need to increase its technological competence. Wit the competition cashing in on the technological competence for their collaborators. Emphasizes being laid on lighter and fuel- efficient vehicles. A class of vehicle having fuel efficiency of a moped and sleekness and style of the motorcycles called scooterette is growing. The vehicles offer a fuel efficiency of 60-65 km p/h. They enter into new segment,Bajaj Auto has come out with TVS with Scooty pep and Hero Honda has come out with a Pleasure and upgraded version of sleek. Government policy The excise duty on two-wheeler , which has previous 10 percent to 30 percent according to the engine capacity, was rationalized is only two categories size. 15 percent for 75 cc engine capacity and 25 percent for above 75 cc engine capacity the excise duty structure has been left untouched since the 1993-94 budget. Marketing and The Distribution Like any other emerging country, India experienced the knock-on effects of the global crisis during the year in review. The effects were felt through the monetary, financial and real channels. Drying up of global finance impacted from the middle of the fiscal impacted domestic capital finance; and corporate earnings came off peaks. In April 2009, Reserve Bank of India predicted that the Indian economys growth for 2008-09 would slow to 6. 6 per cent, breaking an excellent five-year growth sequence. There were two dimensions to the economic slowdown. In the first half, inflation ran into double digits as a result of the global crude shock and the global food grain shortage. To control inflation, the RBI clamped down on money supply, and reduced liquidity in the economy. By the time inflation started coming under control, domestic interest rates started shooting up. Meanwhile, the global crisis erupted, putting further pressure on liquidity levels. By October 2008, slowdown was clearly apparent in export-intensive sectors, both in the manufacturing and service side. By December, the slowdown turned into de-growth. The cutback in demand from Europe and the US was so sharp that even a competitive rupee, which devalued by around 12 per cent during the year, couldnt act as a buffer. By December 2008, the growth momentum of the first six months was lost. Planned investment projects were shelved; live projects faced a shortage of funds as credit flows dried up. As money became dearer, pay packets became slimmer and risk aversion grew both from the demand and supply side. Compulsions of coalition politics at the Centre and the impending Lok Sabha elections didnt help either, and slowed down reforms and implementation of projects, particularly in critical sectors like roads, ports and power. The worst hit was the manufacturing sector. From the second half of the financial year, the index of industrial production contracted on three occasions, remained close to zero on two occasions, and was mildly positive only once. Two –Wheeler Financing Though two-wheeler are the most preferred from of transport in India,the fact remains that it is a lower end market product. Most two-wheeler manufacturer like Bajaj Auto and kinetic engineering have set up their own finance company since organized financiers do not think the returns are particularly attractive. The argument given by some financiers is that the price of a Yamaha or Hero Honda is so high that people prefer to buy a second hand car instead. This is particularly true of small town where people desire to own a car and they have the means the two wheeler is then only a second vehicle for the family. MARKET MECHANICS: Since 1985, when the first Hero Honda it has been and instant hit. A mileage miser with just about adequate performance further backed by image of Honda and Hero Cycles brand of aggressive marketing, it climbed up the sales chart outselling every other motorcycle by ten of thousands every year. Over the years, company has received its share of accolades, including the National Association of India Award against 200 contenders. SEGMENTATION, TARGETING POSITIONING From the current segmentation, targeting positioning and consumer surveys we found that our client has targeted the following segments: ? Congested areas of urban cities. Males/Females between the age group of 18-36 ? Middle class people , mostly officials executives The client analysis from our questionnaire it was found that our client has targeted the right segment HHML is overlooking one feature in bike which is its low maintenance cost and reliability (i. e. less chances of breakdown) which is absent in its competitors. Therefore, in order to meet the sales target, two option are ava ilable with the client, one is to redesign the bike and second is to reposition the bike as â€Å"Bike with one time investment†. Since redesigning of bike may involve a big task and huge investment therefore we recommended repositioning the bike. COMPANY PROFILE The Hero Honda story began with a simple vision – the vision of a mobile and an empowered India, powered by Hero Honda. This vision was driven by Hero Hondas commitment to customer, quality and excellence, and while doing so, maintain the highest standards of ethics and societal responsibilities. Twenty five years and 25 million two wheelers later, Hero Honda is closer to fulfilling this dream. This vision is the driving force behind everything that we do at Hero Honda. We understood that the fastest way to turn that dream into a reality is by remaining focused on that vision. There were many unknowns but we kept faith, and today, Hero Honda has been the largest two wheeler company in the world for eight consecutive years. Our growth has kept compounding. The company crossed the ten million unit milestone over a 19-year span. In the new millennium, Hero Honda has scaled this to 15 million units in just five years! In fact, during the year in review, Hero Honda sold more two wheelers than the second, third and fourth placed two-wheeler company put together. With Hero Honda, the domestic two wheeler market was able to show positive growth during the year in review. Without Hero Honda, the domestic market would have actually shrunk. Over the course of two and a half decades, and three successive joint venture agreements later, both partners have fine-tuned and perfected their roles as joint venture partners. What the two partners did was something quite basic. They simply stuck to their respective strengths. As one of the worlds technology leaders in the automotive sector, Honda has been able to consistently provide technical know-how, design specifications and R innovations. This has led to the development of world class, value for- money motorcycles and scooters for the Indian market. On its part, the Hero Group has taken on the singular and onerous responsibility of creating world-class manufacturing facilities with robust processes, building the supply chain, setting up an extensive distribution networks and providing insights into the mind of the Indian customer. Since both partners continue to focus on their respective strengths, they have been able to complement each other. In the process, Hero Honda is recognized today as one of the most successful joint ventures in the world. It is therefore no surprise that there are more Hero Honda bikes on this countrys roads than the total population of some European countries put together! The companys meteoric growth in the two-wheeler market in India stems from an intrinsic ability to reach out and come closer to its customers, with every passing year. Hero Hondas bikes are sold and serviced through a network of over 3500 customer touch points, comprising a mix of dealers, service centres and stockists located across rural and urban India. Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana, and its third and most sophisticated plant at Haridwar has just completed a full year of operations. It is difficult to imagine that all this has happened in the span of just two and a half decades! The best is yet to come. During the year in review, Hero Honda powered its way in a market that, for all practical purposes, was feeling the full effects of the economic slowdown in India. With an economic recovery now clearly on the cards, Hero Honda is all set to ride into another summit. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly puts it, We pioneered Indias two wheeler industry, weve steered it through difficult times; now it is our responsibility to set the pace again. . New Models The company has a large portfolio of brands, with the money-spinners being mainly Splendor Plus (the worlds largest selling bike) and Passion. However, the company claims it was the launch of the 150cc CBZ and 225cc KARIZMA which established Hero Honda as an inspirational brand. The launch of CBZ and KARIZMA got us into a different league altogether. Although the sales are just about 3,000 a month, it made us an overall bike company†, Hero Honda would launch a new model of the KARIZMA by the end of current year, the Managing Director, Mr. brijmohanlal Munjal, said. Meanwhile, the company is yet to decide on the location of its proposed Fourth manufacturing unit. The feasibility study is on, he said, adding that the new plant was likely to come up in the next 18 months. New launches are likely to help Hero Honda gain a market share in the coming quarters. Hero Honda Motors Ltd, has launched a new 100-cc four-stroke bike, CD deluxe and Dawn is likely to be phased out of the market once the new model sells 10,000 plus units per month. Sales Performance Hero Honda went against the grain and created a growth trajectory all of its own. Sales of the company grew by over 11 per cent in volume terms and in value terms; they grew by over 19 per cent. Effectively, this helped the company end the year with a market share of around 60 per cent. This robust performance helped the company increase earnings margin 120 basis points- a remarkable feat, considering that elsewhere in the world, the automobile industry went through its worst year in recent history. Hero Honda’s performance in its silver jubilee year helped it retain its position as the world’s largest two wheeler company for the eighth year in a row. It also helped the company cross the 25 million unit mark- becoming the first company in India to reach this milestone. Last year, two new models were launched, namely CBZ XTREME and HUNK to address super-style and economy segments. Passion pro has found its position firm amongst Indian models, only next to Splendor, the largest selling bike in the world in terms of sales performance. CBZ was re-launched as CBZ XTREME, in April 2007, with changes and value additions to cater to specific needs of the customers. Reportedly CBZ XTREME is doing well in its segments and has sold over 10,000 units in the initial months itself. Hero Honda has targeted a sale of over 3 million bikes for the year 2009-10. This effort is supplemented by a major launch this year, in October end; this bike will have some exclusive features and will be in the 200cc plus range. There are some ambitious programmes of launching a new range of bikes with technical support from Honda in the coming years. With a slew of such measures the capacity available at present locations can at best support two-million production target at the existing plants. The company, therefore, is looking at the possibility of setting up a third plant to meet the future demand and for which techno-economic study is in progress. New Initiatives Customer and customer satisfaction is the purpose of our being an entity. To increasingly understand him and make him part of our ongoing business. Customer related initiative has been the increase of warranty period to three years since July 2008. This has attracted a great deal of customer attention. During the year the company has added nearly a hundred dealerships and SSPs. In terms of sheer numbers, the network has grown by 16% during the year 2008-09. We would endeavor to increase our reach to every corner of this country. Plans for the future In the previous year, the domestic two-wheeler industry entered a period of de-growth. However, this was arrested in 2008-09, largely on the back of Hero Hondas performance. After the blip of last year, the two-wheeler industry went back to a growth phase, largely driven by Hero Honda and exports. The industry clocked total volumes of 8. 5 million during the year in review, a growth of 5 per cent compared to a fall of 5 per cent in the previous year. The pace of growth was lower in the domestic market, where the industry clocked sales of 7. 43 million, a rise of only 2. 60 per cent. This, however, was a significant improvement over previous year when the industry had shrunk by 8 per cent. Motorcycles continue to constitute the largest chunk of the two-wheeler industry, and during the year in review, accounted for four fifth of sales. Interestingly, for the second year in succession, scooters increased their share in the two-wheeler pie from 14 per cent to 16 per cent. This is clearly a trend reversal from the last 10 years, where the share of scooters in the two-wheeler pie had been shrinking. Changing lifestyles among women, and the introduction of feature-rich, high-quality scooters possibly has much to do with the revival in demand The entry segment – made up of basic 100 cc bikes -Had started slowing two years ago, and during the year in review, sales in this segment were down by more than 15 per cent. This could be attributed to the fact that deluxe segment bikes have become affordable on account of a 4 per cent excise cut, 1 per cent reduction in CST and the special package of reduction in excise duty in December, which most manufacturers passed on to the consumers. The deluxe segment-made up of value for money and feature-rich bikes in the 100-125 cc category-grew by 15. 2 per cent. The 125-250 cc category-grew at 8. 8 per cent. The pace of growth has fallen from last years levels. There is no doubt that the higher interest rates have brought down growth. Nevertheless, this segment was still able to clock a growth rate in high single digits mainly because of the excitement caused by a slew of new models that came into this segment during the year. The bigger story, of course, is that buyers in small-town India and rural India, as well as employees of the state and Central government, were relatively less affected by the slowdown, and this benefitted the two wheeler industry. VISION Hero Honda now the leader in the two wheeler industry. Leaders are not born, they evolve over time. It all started on the auspicious. â€Å"Baisakhi Day† the 13th of April 1984, when the Hero Honda Motor Company joined hands. On its journey to take on the No. 1 morale, Hero Honda created some prominent milestones†¦.. This leadership has been achieved only because of its philosophy to excel in all areas. In fact, passion to excel is a credo of the entire Hero Honda family and is a way of life in Hero Honda. The changing Scenario of increasing competition and the entry of new brands has made the credo even more relevant. It serves as a constant reminder to ensure excellence in providing service to the customer. They are providing outstanding customer service. It is in keeping with Hero Honda’s own passionate commitment to provide ultimate customer satisfaction. Today, they consistently meet and exceed all requirement on quality, cost and delivery. OBJECTIVES Hero Honda’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities. This mission is what drives Hero Honda to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders. ACHIEVEMENTS AWARDS AND ACCOLADES |Year |Awards Recognitions | |2009 |ET Awards for Corporate Excellence   Hero Honda is the winner of the â€Å"Company of the Year award for 2008 09. | | | |2008 |NDTV Profit Business Leadership Award 2008   Hero Honda Wins the Coveted NDTV Profit Business Leadership Award 2008| | | | | |Top Gear Design Awards 2008   Hunk Bike of the Year Award | | | | | |NDTV Profit Car India Bike India Awards   NDTV â€Å"Viewers’ Choice Award† to Hunk in Bike category | | | | | |India Times Mindscape and Savile Row ( A Forbes Group Venture ) Loyalty Awards   â€Å"Customer and Brand Loyalty Award† | | |in Automobile (two-wheeler) sector | | | | | Asian Retail Congress A ward for Retail Excellence  (Strategies and Solutions of business innovation and | | |transformation) Best Customer Loyalty Program in Automobile category | | | | | |NDTV Profit Car India Bike India Awards   Bike Manufacturer of the year | | | | | |Overdrive Magazine   Bike Manufacturer of the year | | | | | |TNS Voice of the Customer Awards: | | | | | |No. 1 executive motorcycle Splendor NXG | | |No. 1 standard motorcycle CD Deluxe | | |No. remium motorcycle CBZ Xtreme | | | | |2007 |The NDTV Profit Car India Bike India Awards 2007 in the following category: | | | | | |Overall Bike of the Year CBZ X-treme | | |Bike of the Year CBZ X-treme (up to 150 cc category) | | |Bike Technology of the Year Glamour PGM FI | | | | | |Auto Tech of the Year Glamour PGM FI by Overdrive Magazine. | | | | | |Bike of the Year CBZ X-treme by Overdrive Magazine. | | | | | |Ranked CBZ X-treme Bike of the Year by B S Motoring Magazine   | | | | | |â€Å"Most Trusted Company† , by TNS Voice of the Customer Awards 2006. | | | | | |CD Deluxe rated as No 1 standard motorcycle by TNS Voice of the Customer Awards 2006. | |2006 |Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler Company). | | | | | |One of the 8 Indian companies to enter the Forbes top 200 list of world’s most reputed companies. | | | | | |No. 1 in automobile industry by TNS  Corporate Social Responsibility Award. | |Best in its class awards for each category by  TNS Total Customer Satisfaction Awards 2006: | | | | | |Splendor Plus (Executive) | | |CD Deluxe (Entry) | | |Pleasure (Gearless Scooters) | | | | | |Splendor Passion Top two models in two wheeler category by ET Brand Equity Survey 2006. | | | | | |Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler Company). | | | | |Top Indian company in the Automobile Two Wheeler sector by Dun Bradstreet   American Express Corporate Awards | | |2006. | | | | | |Her o Honda Splendor rated as Indias most preferred two-wheeler brand at the  Awaaz Consumer Awards 2006. | | | | | |Certificate of Export Excellence for outstanding export performance during 2003-04 for two-wheeler three- wheelers | | |- Complete (Non SSI) by Engineering Export Promotion Council. | |The NDTV Profit Car India Bike India Awards 2006 in the following category: | | | | | |Bike Maker of the Year | | |Bike of the Year Achiever | | |Bike of the Year Achiever (up to 150 cc category) | | |Bike of the Year Glamour (up to 125 cc category) | | |NDTV Viewers Choice Award to Glamour in the bike category | | | | |2005 |Awaaz Consumer Awards 2005 Indias most preferred two-wheeler brand by CNBC in the Automobiles category. | | |Bike Maker of the Year Award by Overdrive Magazine. | | |ICWAI National Award for Excellence (Second) in Cost Management 2004 in the private sector category by ICWAI. | | |10th Motilal Oswal Wealth Creator Award for as the most consistent wealth creato r for the period 1991-2005. | |2004 |Winner of the Review 200 Asias Leading Companies Award (3rd Rank amongst the top 10 Indian companies). | | |GVC Level 1 (Highest Rating) by CRISIL for corporate Governance. | |Adjudged as the Best Value Creator Large Size Companies 2003-04 by The Outlook Money. | | |Corporate Excellence Award 2004 by Indian Institute of Materials Management. | | |Adjudged as the Organization with Innovative HR Practices by HT Power Jobs for HR Excellence. | | |ICSI National Award for Excellence in Corporate Governance 2004 by The Institute of Company Secretaries of India. | |2003 |Winner of the Review 200 Asia s Leading Companies Award (3rd Rank amongst the top 10 Indian companies). | | |Most Respected Company in Automobile Sector by Business World. | | |Bike Maker of the Year by Overdrive Magazine. | |2002 |Bike Maker of the Year by Overdrive Magazine. | |Winner of the Review 200 Asia s Leading Companies Award (4th Rank amongst the top 10 Indian companies). | | |Company of the Year of ET Awards for Corporate Excellence. | | |Ranked 4th in Overall Best Managed Company category, ranked 3rd in Best Financial Management and Best | | |Operational Efficiency category, ranked 6th in Overall Best Investor Relations category, by Asiamoney. | | |Highest Wealth Creating Company of the Year Award by the Money. | | |GVC Level 1 (Highest Rating) by CRISIL for Corporate Governance. | |2001 |Bike Maker of the Year by Overdrive Magazine. | | |Winner of the Review 200 Asia s Leading Companies Award (9th Rank amongst the top 10 Indian Companies). | |Winner of Three Leaves Award for showing Corporate Environment Responsibility in the Automobile Sector by Centre for | | |Science Environment. | |1999 |National Productivity Award for the Best Productivity Award in the category of Automobile Tractor presented by Vice| | |President of India. | |1995 |The Analyst Award 1995 presented to Hero Honda Motors Ltd. on being ranked 9th amongst the most investor rew arding | | |companies in India. | |1995 |National Award for outstanding contribution to the Development of Indian Small Scale Industry (NSIC Award Presented| | |by President of India). | |1991 |Economic Times-Harvard Business School Award for Corporate Performance to Hero Honda Motors Ltd. | SALES [pic] MARKET SHARE METHODOLOGY The project involves the study of four- strokes bike segment in two wheeler industry sector, which involved: 1. Market survey/ Researches 2. Meeting the retailers and the customers 3. Desk Research RESEARCH APPROACH I did two types of surveys (Data source): PRIMARY SURVEY 1. P/S T1 was done visiting Hero Honda Motors Ltd. Corporate office, Basant Lok, Vasant Vihar regarding segmentation, targeting and positioning of their brands in the two wheeler sector. A lot of desk research was also done. 2. P/S T2 conducted by visiting Hero Honda Motors Ltd. And retailers of Hero Honda {Khanna Automobiles ESS AAY Agencies , auto needs(INDIA) Pvt. Ltd). Basic objective was to know their product price, distribution channel, their customers , their process of segmentation ,targeting and positioning in the problems faced by the customers and lastly their views about the model. 3. P/S T3 conducted by taking views of the customers using this model of Hero Honda i. e. Hero Honda splendor. Their view points About the model, their grievances/ complaints about it. Last but not the least their views about modification required in it. RESEARCH INSTRUMENT The research instrument used was a structural questionnaire. It was formulated after detailed discussion. SAMPLING PLAN a) sampling unit: The sampling unit constituted the people in the middle income going in for bikes. ) sampling size: the sample size consists of 45 customers, out of which 5 refused to fill the questionnaire and 5 forms were found incomplete. c) sampling procedure : Convenience sampling. B) SECONDARY SURVEY 1) S/S T1 was conducted gaining information from different magazines newspaper. And on company from their annual reports and balance sheets and their website. 2) Promotional strategies used at present like sponsoring programme and various event which have no direct bearing on the product. However the main focus is to influence youth- the largest group. e. g. Hero Honda Sa Re Ga Ma Pa. Review of Literature This chapter presents an exhaustive literature review of quality dimension in marketing strategies. The discussion in this chapter is centered on how more the quality dimension in marketing strategies understood as part of this research. Furthermore, this chapter explores the topic specific to the industries viz. Two Wheeler Industry. The term marketing strategies began to find its way into the academic marketing literature only in the late 1980’s. The first use of the term is attributable to Professor Leonard Berry of Texas A M University in an American Marketing Association presentation in 1983. The literature on marketing strategies in the early 1990’s for the most part did not approach the subject from the consumer’s perspective. There were of course notable exceptions. In 1990, John Czepiel, Professor of Marketing at the New York University observed that a marketplace based marketing strategies is â€Å"the mutual recognition of some special status between exchange partners. (Czepiel, 1990). Susan Fournier refers to what marketing is supposed to be â€Å"the epitome of customer orientation† (Fournier, 1999). The literature in services marketing, in recognition of such facts, defines marketing as the attraction, maintenance and enhancement of marketing strategies (Berry, 1997), or attracting, developing and retaining marketing strategies (Berry and Parasuraman, 1991). Traditional measures of service marketing strategies The primary outcome measures of marketing strategies, satisfaction and quality, have an extensive literature in both the product and service fields yet, particularly in the services literature, there are still some lack of conceptual distinction between the two constructs. Since it is reasonable to assume a high level of correlation between the two constructs, most studies adopt one or the other measure, often without any discussion of the justification for the choice. Satisfaction has proven to be an elusive construct to capture. Much of the literature on satisfaction focuses on the expectancy-disconfirmation paradigm as a means of identifying the process by which customers make satisfaction evaluations. Within this paradigm, satisfaction occurs when expectations are confirmed or positively disconfirmed. Measures generally focus on assessing disconfirmation at the attribute level although recent extensions of the model include affective dimensions and emotions (Oliver, 1991). Several alternatives to the expectancy-disconfirmation paradigm have been proposed. Some suggest that values are better predictors of satisfaction because values are more enduring than pre-purchase expectations. Others question the expectancy-disconfirmation model as being overly dependent on situational induced factors. As an alternative they proposed the comparison level model, which suggests that consumers examine each product attribute against a reference set of attribute levels. Each of these theories has been supported in empirical studies. Yet none has been overwhelmingly accepted as an adequate explanation for consumer post-purchase evaluations. Perhaps this is because satisfaction with a product or service has traditionally been studied as a unidimensional construct. However, in many studies, researchers have found that satisfaction is not a unidimensional construct (Leigh 1987). In fact for many products and services the use of an overall, summary satisfaction measure may mask important diagnostic information about the nature of satisfaction, its determinants and consequences. Further, the nature of these dimensions may vary across services. Another explanation for the inadequacies of existing satisfaction measures may lie in questions raised in the consumer behaviour literature regarding the emphasis placed on satisfaction research as the main method of post-purchase evaluations. Woodruff and Gardial have suggested that while satisfaction describes the customers reaction to the value received from a particular offering, customer value describes the nature of the marketing strategies between user and product. With few exceptions (Gardial et al. , 1992; Woodruff and Gardial, 1996), studies of post-purchase evaluation do not address the possible marketing strategies between value and satisfaction / dissatisfaction. Yet, as discussed in Woodruff and Gardial (1996) the perception of receiving added value is critical to understanding the nature of the relationship. Relationships, which are not perceived as being mutually beneficial, are terminated. The importance of value to the service experience may explain the use of quality as another measure of service effectiveness as in econometric terms value equals quality divided by cost. Regardless of the paradigm, traditional measures of satisfaction used in the service sector operationalize the concept on a discrete transaction basis and generally assess the construct from only one partners point of view. Yet it is clear that service relationships are built upon repeated encounters and are dyadic. If the intention is to evaluate satisfaction with the relationship, current measures of satisfaction seem inadequate. Researchers often distinguish between satisfaction and quality based on a longitudinal dimension with satisfaction seen as a transaction specific evaluation while quality represents a long-run overall evaluation or attitude. However, the distinction between satisfaction and quality in service delivery has become blurred (Bitner, 1990; Bolton and Drew, 1991). In fact Zeithaml et al. , (1990) define quality as meeting or exceeding customer expectations, the traditional definition of satisfaction within an expectancy disconfirmation paradigm. One of the most prominent measures of service quality is the SERVQUAL measure based on Parasuraman et al. (1985) gap model. This model suggests that differences between consumers expectations about the performance of a general class of service providers and their assessment of the actual performance of a specific firm in that class drives perceptions of quality. The measurement of quality is functionally identical to satisfaction measures based on the expectancy-disconfirmation model. The distinction arises primarily from the nature of the items or attributes used. Another approach to SERVQUAL is simple performance measures. The marketing literature provides considerable evidence that this approach is superior to the expectations-performance gap model (Bolton and Drew, 1991; Cronin and Taylor, 1992; Woodruff, et al. , 1983). In a test of their performance-only (SERVPERF) model, Cronin and Taylor provide evidence that performance explains more of the variation in service quality than does SERVQUAL (Cronin and Taylor, 1992). Both SERVQUAL and SERVPERF are global measures of service quality. The use of a global measure in the evaluation of service relationships may, however, not be adequate. Particularly in service relationships relying on social and structural bonding mechanisms which have increasing levels of customization, a global measure may not provide the details necessary to fully assess the strengths/weaknesses of the relationship. Quality measures, like satisfaction measures have been criticized as being largely unidimensional (Zeithaml, 1988). Though SERVQUAL is an attempt to correct for this deficiency there are still other dimensions, which may lead to a purchase experience particularly as that occurs in a marketing strategies context. Zeithaml (1988) recognized these failings and proposed a model from an exploratory study utilizing a means-end hierarchy to investigate the marketing strategies between price, quality and value. The resulting model indicates that perceived quality is one of many concepts (i. e. , perceived sacrifice, high-level abstractions, intrinsic attributes) that result in perceived value which then leads to purchase. Obviously satisfaction and quality are important concepts in the evaluation of service relationships. Both are necessary but not sufficient to good relationships. However, much controversy surrounds these constructs and their marketing strategies (Cronin and Taylor, 1992; Parasuraman et al. , 1994; Teas, 1993). Some literature suggests that satisfaction is an antecedent of service quality (e. g. , Bitner, 1990; Bolton and Drew, 1991) while Parasuraman et al. (1985) suggest that perceived service quality leads to satisfaction. Cronin and Taylor (1992) in their test of SERVPERF found evidence that the latter is in fact the correct causal order. Thus it appears that to adequately evaluate service relationships, both concepts must be measured to account for the ongoing nature of the relationship. Relationships are a multiplex phenomenon. The nature of the marketing strategies depends on the kinds of satisfaction desired by the parties involved; the clients may seek socio-emotional provisions and/or instrumental provisions, and may allow these concerns to determine their focus in the relationship. Thus their behavioral intentions may depend on the provision criterion. The relations also depend on whether the types of bonds are substantively grounded or emotionally based. This view reinforces the presence of such variables as trust, which are primarily socioemotional, and the more instrumental provisions such as legal, planning and technical bonds, which partly reflect the variable commitment. The conceptualization of such variables cannot be completely socioemotional or instrumental, and in the interests of clarity and functionality, the definitions of the antecedent states of loyalty in the marketing strategies are based on trust, intimacy, etc. But it reinforces the basic assumptions in the model. That the presence of attitudinal variables like trust also play a role and they determine the overall benefits (provisions) perceived even in a business relationship. Thus, it is not solely direct commercial value related considerations but also such attitudinal considerations, which go beyond the service interaction or episode, which determine loyalty. Marketing strategies strength can be seen as the resistance to disruption of the relationship. The marketing strategies are developed partly on a basis of evaluations made and partly as a result of bonding and commitment (Strobacka, Strandvik and Gronross, 1994). Thus the strength of marketing strategies can be derived only partly from behavioural variables since they only give an indication (Hoekstra, 1993) . In most studies when measuring marketing strategies strength one indicator at a time is used. Since a behavioural and a mental dimension can be distinguished in a marketing strategies (Poiesz and Van Raaji, 1993, Storm, 1991), the individual indicator can be behavioural (descriptive) or mental (attitudinal) in nature. From the behavioural point of view indicators like length of the relationship, recency, frequency, monetary value and regularity are used most often to get an idea of marketing strategies strength. Another behavioral indicator could be whether the customer simultaneously uses also competing companies or only uses company X (Liljander and Strandvik, 1994). From the mental viewpoint a variable like satisfaction, involvement, perceived switching costs, long-term expectations, trust and commitment has been used as an indicator of marketing strategies strength. Typically, commitment and trust are seen as central to the marketing strategies paradigm of relational partners, and are posited as key mediating variables (KMV) (Morgan and Hunt, 1994). Morgan and Hunts KMV model rests on the assumptions that these two are key because they encourage marketers to work at preserving the marketing strategies investments with partners/clients, resist short term gains which may be lesser than expected benefits of staying on in the relationship, and as they view potentially high risk actions as acceptable since they expect that partners will not act opportunistically. Further, both the key variables should be present for the existence of the loyal behaviour patterns indicated here. Satisfaction plays a major role here, and leads to trust when some other antecedent conditions are satisfied, like shared values and goals, dependence based on stable expectation/perception of performance, and perceived switching costs. The notion of sharing is central to the conveyance of meaning. People and entities to whom we feel closest and who mean the most to us are generally those with whom we have a great deal in common. They share the same values they demonstrate what Duck (1994) refers to as shared meaning. In the same way, it is proposed that commitment follows trust later on the ladder, and though some commitment elements start forming at this stage, the fuller commitment only follows when there is the antecedent of trust itself, which has led to the other more direct, definitive antecedents, like the various bonds and the positive attitude to interaction with each other. Commitment, defined as the attitude towards interacting with each other, coupled with the bonds of various types, is a determinant of marketing strategies strength (Liljander and Strandvik, 1995). Marketing strategies strength is closely related to loyalty, or behaviors, which reflect loyalty like recommendations, repurchase intentions and actual repurchase, etc. Storbacka, Strandvik and Gronroos, 1995). Marketing literature talks about four sources of consumer trust:- Generalized trust (derived from social norms) System trust (rule of law, regulations, contracts, bureaucracy professionals) Personality based trust (general tendency to trust/distrust determined by personality traits) Process based trust (developed through repeated interactions, firm/brand specific, interpersonal) A customer’s first encounter with a service firm is his or her first ‘moment of truth’ and is a potential first step on a road leading away from reliance on generalized, system and personality based trust towards a reliance on process based trust. Because system and generalized trust are held in common by members of society and are equally available to all firms, they offer less potential for competitive advantage. By building process based trust, however, service firms can encourage customer retention and gain competitive advantage (Barney and Hansen, 1994). Trust is a multidimensional construct with cognitive, affective and behavioral dimensions and recent empirical investigations (Cummings and Bromiley, 1996) have supported this theorizing. In relationships, individuals trust cognitively based on their knowledge of their partner’s character, they trust affectively based on their emotion towards their partners and they trust behaviorally by taking actions that display trust in their partners. Previous conceptualization s of trust in marketing research has tended to emphasize the cognitive dimension. The affective dimension of trust has been largely ignored in the literature. However, more recently, marketing researchers have examined social support behaviour in service relationships (Adelman and Ahuvia, 1995; Adelman, Ahuvia and Goodwin, 1993), which engender affective trust. Trust is built up when there are assurances of higher and stable levels of satisfaction (the exceeding of expectations, every time, in the service quality approach), and there is lower risk perceived, security, a feeling of reliability about the supplier, and assistance. This level of service quality obviously builds trust, and can explain the threshold of satisfaction which precedes a change in loyalty behaviour, for some additional benefits are being offered, and the interactions assume a greater number of dimensions. Trust will lead to sharing of goals and values, as at this stage, assistance is expected and also given, in achieving goals that are perceived to be for the common good of both partners. Dwyer et al. (1987) marketing strategies development process model posits that with time, a marketing strategies moves along a continuum from awareness to commitment and the latter represents the highest stage of relational bonding. It must be acknowledged that the possibilities for creating and managing trust and commitment in relationships may be limited (Gronroos, 1994). A natural consequence of this may be the stage of opening up, giving more and accurate feedback by sharing more vital knowledge, which corresponds to intimacy. Marketing strategies literature also enriches the explanation of why there is sharing, and also why that sharing seems to provide a jump in the level of loyalty related behaviour. Intimacy talks of socioemotional benefits, which strengthen the relationship; and it implies a sharing of vital information, sharing socially and psychologically. In service quality terms, this would imply an increase in satisfaction due to more need areas being satisfied, as needs other than the usual instrumental provisions are being satisfied. Here the type of marketing strategies positive, cemented through socioemotional provisions including bonds such as social, planning, clubs, etc and a positive attitude towards interacting with each other. This directly impacts marketing strategies strength and hence loyalty. The difference between marketing strategies strength and customer loyalty is the difference between the object. The object of customer loyalty maybe either the service provider/firm or a particular service worker. The former is referred to as service loyalty, the latter as personal loyalty. High levels of customer trust towards the firm’s employees would be expected to translate into positive attitudes towards the firm and high levels of customer commitment to the firm ‘s employees would expect customer patronage of the firm. Therefore when a customer has a strong marketing strategies with multiple personnel from the firm, researchers suggest a direct path between marketing strategies strength and true customer loyalty to the service firm. Customer satisfaction with a company’s products or services is often seen as the key to a company’s success and long-term competitiveness. In the context of marketing strategies marketing, customer satisfaction is often viewed as a central determinant of customer retention. However there is a need to look beyond customer satisfaction as several studies have established that higher levels of customer satisfaction may not always result in higher levels of customer loyalty. A few empirical investigations in this area indicate that a direct marketing strategy between these constructs is weak or even non-existent. Some studies suggest satisfied customers may not be sufficient to create loyal customers (Cronin and Taylor, 1992; Fornell, 1992; Oliver, 2000). These studies tend to support Reichheld’s (1993) argument that customer satisfaction is not a surrogate for customer loyalty. In recent times, customer satisfaction has gained new attention within the context of the paradigm shift from transactional marketing to marketing strategies marketing (Gronroos, 1994; Sheth and Parvatiyar, 1994), which refers â€Å"to all marketing activities directed towards establishing, developing and maintaining successful relational exchanges (Morgan and Hunt 1994). In numerous publications, satisfaction has been treated as the necessary premise for the retention of customers and therefore has moved to the forefront of relational marketing approaches (Rust and Zahorik, 1993). Kotler sums this up when he states: â€Å"The key to customer retention is customer satisfaction† (Kotler, 1994). Consequently, customer satisfaction has developed extensively as a basic construct for monitoring and controlling activities in the marketing strategies marketing concept. There are obviously aspects of marketing strategies strength other than customer satisfaction. These include, for instance, the existence of bonds between the customer and the provider. These bonds function as switching barriers beside customer satisfaction. Another dimension relates to the customers (and the providers) commitment to the relationship. Commitment might be based on customers intentions and plans for the future. Within the interaction approach and network approach to industrial marketing six different types of bonds have been suggested (Dwyer et al. , 1987). These are social bonds, technological bonds, knowledge bonds, planning bonds, and legal/economic bonds. Although these six bonds can also be found in consumer markets, they are somewhat limited for this purpose. In addition to these bonds, Liljander and Strandvik (1995) have suggested that the consumer may also have geographical, cultural, ideological and psychological bonds to a service provider. They propose that ten different types of bond can be identified in the consumer market: legal, economic, technological, geographical, time, knowledge, social, cultural, ideological and psychological. Liljander and Strandvik (1995) argue that the first five bonds-legal, economic, technological, and geographical and time bonds constitute effective exit barriers for the consumer. They can be seen as contextual factors that cannot easily be influenced by the customer but can be observed and managed by the service firm. They are more likely to be perceived in a negative sense than the other five bonds. It is, for example, associated with high costs for the customer to switch banks if she is tied up with a mortgage in one bank. These bonds can prevent the customer from switching banks even when the service given is of low quality. The other five bonds- knowledge, social, cultural, ideological and psychological bonds, represent perceptual factors, which are difficult to measure and manage by the firm. For example the cultural, ideological and psychological are directly connected to the customers values and preferences. A psychological bond, where the customer is convinced of the superiority of a bank, is probably a very effective exit barrier. The consequence of bonds is that the customer might accept lower levels of service quality, compared with other service companies, without breaking the relationship. Quality dimension of marketing strategies: Studies specific to Two-wheeler Industry One of the ways in which companies have tried to establish bonds is through the loyalty programs. Loyalty programs recently gained considerable practical and academic attention in the context of marketing management. The fundamental managerial objective of these programs is to reward loyal customer behaviour with special services or rebates and thereby at the same time to promote this loyal behaviour in order to realize the economic benefit of long term business strategies (Reichheld 1993, Sharp and Sharp 2008). The extent to which loyalty program actually achieve this objective has become increasingly the subject of scientific study (Strauss et al. , 2002, Verhoef, 2007, Yi and Jeon, 2004, Noordhoff et al. , 2008). Usually, such studies have focused on the question of how strong the supposed connection between participation in a loyalty program and increased customer satisfaction and loyalty actually is. Marketing Research on loyalty programs has increased in the last years. The effect of loyalty programs on loyalty and their critical success factors were investigated in the context off various industry settings such as automotive industry (Stauss et al. , 2005), financial services (Bolton et al. , 2007), retail stores (Noordhoff et al. , 2008). The results of an empirical study of Stauss et al. (2002) indicate that the membership in an automotive customer club has a remarkable impact on the marketing strategies. Bolton et al. (2001) shows that participants of a loyalty program of a financial services provider actually tend to realize increased revenues and higher service usage levels and to overlook negative service experience. Noordhoff et al. (2008) is of the contention that a small number of alternative loyalty programs in a market and only little familiarity off customers with these programs positively affect the success of the program. This is in accordance with the results of the study of researchers who finds especially high levels of spurious loyalty among members of frequent flyer programs who are participating in several different programs. According to Stauss, Schmidt and Schoeler (2002), â€Å"More and more companies are implementing loyalty programs in order to enhance their knowledge of their customers, to identify their valuable customers, to differentiate and give personal attention to these valuable customers and especially to raise profits by increasing customer retention and by enabling a more efficient use of marketing goals†. They are of the opinion that few firms systematically verify whether the program they implemented actually achieve these goals. The consequences could be that the programs do not achieve the retention effect aimed at or even that the overall marketing strategies with the firm is weakened. Zins (2007) in his study of the commercial two wheeler industries opines that if loyal customer needs to be traced, three conceptual perspect