Hero Honda Modified

8/8/2019 Hero Honda Modified

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HERO HONDA

FILL IT. SHUT IT. FORGET IT



COMPANY PROFILE

The joint venture between India's Hero Group and Honda MotorCompany, Japan, has not only created the world's single largest

two wheeler company but also one of the most successful joint

ventures worldwide.

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. The company introduced new generation motorcycles that set

industry benchmarks for fuel thrift and low emission.



Hero Honda bikes currently roll out from its three globally

benchmarked manufacturing facilities. Two of these are

based at Dharuhera and Gurgaon in Haryana and the third

state of the art manufacturing facility was inaugurated at

Haridwar, Uttrakhand in April this year. These plants together

are capable of producing out 4.4 million units per year.

Hero Honda's extensive sales and service network now

spans over 3000 customer touch points. These comprise a

mix of dealerships, service and spare points, spare parts

stockiest and authorized representatives of dealers located

across different geographies



New plant at Haridwar ² the gateway to another success story



AWARDS TO THE COMPANY

2009 ET Awards for Corporate Excellence

2008

NDTV Profit Business Leadership Award 2008

TopGear Design Awards 2008

NDTV Profit Car India & Bike India Awards

India Times Mindscape and Savile Row ( A ForbesGroup Venture ) Loyalty Awards

Asian Retail Congress Award for Retail Excellence NDTV Profit Car India & Bike India Awards

Overdrive Magazine



COMPANY OF THE YEAR

T he awards seeks to ²

Recognize a company that has consistently set clear

performance benchmarks for the rest of the industry

and strived to become a world leader



STRATEGIES DURING RECESSION



1. PRODUCT PROPOSITIONING

Hero Honda first to go beyond the product end of the story.

Diagnosis was that the customers differentiation in terms of

propositioning the product to customers was weak

It shows in its dominance of cricket, selection of youth and

style icons and associated with shows like MTV roadies



2. DISTINCT SEGMENTS

Traditionally, the motorcycle market has been seen ascomprising three distinct segments :

1. Entry (100 cc engine capacity, 65 % of the market)

2. Executive (125-135 cc, 20 % of the market)

3. Premium (150 cc, 15 % of the market)

Entry level for the rural market and the other two for the

urban markets.

Hero Honda, conventional segment said, is strong in thesegment of entry segment with 80 % market share and

weak in the other two where its share ranges between 15-

20 %.



Hero Honda found that these were not watertight categories.

Customers trade freely between a top-end 100 cc motorcycle

and a low end 125 cc motorcycle or between a premium 125 cc

motorcycle and a basic 150 cc motorcycle.



3. HOLISTIC MOTORCYCLE EXPERIENCE

Hero Honda realized that a customer does look at the engine

capacity, but what he finally seeks is a holistic motorcycle

experience.

So, Hero Honda decided to look at the motorcycle market notfrom engine capacity but from the customers point of view

how the brackets the products available in the market using

his demographic and psychographic profile.

This took the company to unchartered waters of consumer

profiling what is his lifestyle attitude, what he holds dear in

life and so on.



Hero Hondas in scheme of things are :

1. Entry (35% of the market)

2. Deluxe (50% of the market)

3. Premium (15% of the market)

The company has a lions share of the first two segments anda growing share of the premium segment.



4. PRODUCT DEVELOPMENT

Hero Hondas different view of looking at the market and its

share has become a cornerstone in its strategy

It now shapes the companys product development, placementand promotion moves.

Hero Honda comes out with new motorcycles, variants and

refreshes keeping the customer profile of each segment in mind.



5. UPTO DATE CUSTOMER FEEDBACK

According to the VP (Sales and Marketing), Hero Honda

doesnt moves an inch without customer feedback.

On behalf of Hero Honda, TNS talks to thousands of customers

every month to monitor brand health share of mind, brandchoice, share of voice, loyalty indices etc.



6. INCREASED ADVERTISING ANTE

Hero Honda has upped the advertising ante in the last couple

of years.

Hero Honda has decided to focus more on market shares

rather than profit and also it would offer no discounts on itsmotorcycles.

Also, the company did some aggressive planning and last year

launched a 3 min advertisement on television to mark its silver

jubilee.



7. TARGET CUSTOMERS PREFERENCE

Research showed that Hero Hondas target customers (in the agebracket of 18-35 years) relate to four subjects : Cricket, Music,

Movies and Adventure.

Thus, it roped in film stars Hrithik Roshan and Priyanka Chopra,

joined the Indian Premier League sponsorship bandwagon and got

associated with TV shows like sa re ga ma pa



8. VARIANTS EVERY YEAR

The lifecycle of motorcycles has dropped down sharply in thelast few years.

Hence, none of the 13 motorcycles of Hero Honda in the market

is not more than2

years old.

The company has decided to launch 8 or 9 new products,

variants or refreshes every year.



9. RURAL RESCUE

Around mid2

007, consumer finance companies started to pullthe plug on automobile finance as bad loans had risen with

alarming rapidity.

As a result, 2007-08 was bad for industry. But, Hero Honda

found that its sales were flat and not declining.

This was because of strong sales in rural market.

500 sales representatives were taken on a mission Har gaon,

Har angan.

Each wave has resulted in additional sales of 15,000 16,000

motorcycles.



10. INCREASED NUMBER OF TOUCH

POINTS

Hero Honda has decided to rapidly ramp up its touch points

with customers show rooms , service centres and so on.

The number has rose from 2000 in 2006 to 3500 now.

The plan is to add at least 500 every year.



RESULTS AND FINANCIAL ANALYSIS

1) SALES

Despite a slow down in the two-wheeler industry, sales of

the company grew by 11.53 per cent.

The company ended the year with a market share of about

57%

Hero Honda sold 37,22,000 units in 2008-09 compared to

33,37, 142 units in 2007-08

In value terms, total sales ( net of excise duty) increased by

19.2 percent to Rs. 12319 crores from Rs. 10332 crores in

2007-08.



2) PROFITABILITY

The companys earning before interest depreciation and

taxes (EBIDTA) margins increased from 13.33 per cent in

2007-08 to 14.16 per cent in 2008-09 and the operating

profit (PBT before other income) increased by 28.4 per cent

from Rs 1221.79 crores in 2007-2008 to Rs1568.86 crores in2008-09.



3) CASH FLOWS

Growth in sales turnover and better efficiencies in working

capital management improved the cash flow from

operations from Rs. 1211.78 crore to Rs 1359 crore.

4) CAPITAL EXPENDITURES

During the year, the company incurred a capital expenditure

of Rs. 318.05 crore. The funds went into the expansion of

operations



5) RAW MATERIALS

Softening metal prices particularly aluminum and nickel in

second half of the year combined with better sales

realization to bring down the share of material costs

considerably.

Raw material costs came down from 71.6 per cent to 71.0per cent



CONSIDER THE STATS.

Last August, Hero Hondas market share was around 54%. The credit squeeze had taken the breadth out of bike market

Yet in the next 12 months, Hero Honda increased its market

share to 59%.

It clocked one of its best numbers in the first quarter of thisfiscal selling one million units for the first time in a quarter.

Hero Hondas attractively priced 100cc motorcycles changed

that game as the market moved slowly and surely towards

bikes.

When the slowdown hit, the entire market suffered a severe

setback, yet Hero Honda actually increased its market share,

totaling up one million units in the just ended

quarter.



FUTURE PLANS NEW LAUNCHES



CHALLENGES AHEAD

There might be a difficulty as Hero Honda has launched its 100

cc motorcycle.

Tata Nano, can take some customers away from two wheelers.

The company has tasked its engineers to come out with a low-

cost motorcycle, one that combines the price of a moped and

the performance of a motorcycle through value engineering and

tax planning.



TO CONCLUDE

Our performance in the month of June, as indeed in the first quarter, is very satisfying, coming as it does on the back of a

high base last year. Our strategy has been driven by innovation

in every sphere of our activity building a robust product

portfolio across categories, exploring new markets, aggressively

expanding the network and continuing to invest in brand

building activities. Going forward, we will continue to stay true

to our strategy, and carry on setting new benchmarks.

Mr. Anil Dua,Sr. Vice-President

(Marketing & Sales)



THANKYOU

Hero Honda Modified

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