Hero future plan

Demerger of HERO & Honda

29th April‟11 ( FT, New Delhi)

Mint, New Delhi (13th May‟11)

Financial

Express, New

Delhi(24th Dec10)

Hindu Business Line, New Delhi (26th Oct10)

ET, New Delhi (27th Oct10)

BS, Kolkata (15th Oct‟10)

ET, New Delhi

(2th May‟11)

Hindustan

Times, New

Delhi(25th

Oct‟10)

Financial Express, New Delhi (24th Sep‟10)

Big Move – Media Coverage

1766

1752

Market Buzz

Challenge the Change

Project Theme

History : Hero Group

Indian Automobile Market at a Glance

Indian Two-wheeler Industry Scenario

Difference in approach (Hero Honda, Honda & Bajaj – Brand Building)

Hero vs. Honda (Positioning & SWOT analysis)

Hero Approach for Future

Index

History : Hero Group

Hero GroupBrijmohan Lall Munjal was born in 1923 at Kamalia, district Toba Tek Singh (now in Pakistan). He was

from a simple middle-class Hindu family. After completing his formal education he worked at the Army

Ordnance Factory, before moving his base to India after partition.

In 1944, when Brijmohan was 20, his family sensed partition, So Brijmohan along with his elder brothers

Dayanand Munjal, Satyanand Munjal and his younger brother Om Prakash Munjal came to India and

settled in Amritsar. The brothers initially started a business by supplying components to manufacturers of

bicycles in and around Amritsar. After the partition in 1947 the Munjal family completely shifted their base from

Pakistan to Ludhiana.

In 1961, Rockman Cycles Industries was established to manufacture bicycle chains and hubs. Under his leadership Hero

Cycles was the first company to export bicycles in large scale. In 1975 they had earned the distinction of Largest bicycle

manufactures in India. By 1986 Hero Cycles Limited entered the Guinness Book of Records as the largest manufacturers of

bicycles in the world

Hero Honda three manufacturing

units in India, Two of these are

based at Gurgaon and

Dharuhera which are located in

the state of Haryana in northern

India. The third and the latest

manufacturing plant is based at

Haridwar, in the hill state of

Uttrakhand

Brijmohan Lall Munjal

The company is a joint venture between India's Hero Group and Honda Motor Company, Japan that began in 1984.

In 2001, the company achieved the coveted position of being the largest two-wheeler manufacturing company in India and the

„World No.1‟ two-wheeler company in terms of unit volume sales in a calendar year by a single company. Hero Honda has

retained that coveted position till date.

HHML First Plant inauguration, (Gurgaon) HHML‟s First Vehicle hit the road

Hero Group Companies

Hero has excellent presence in two-wheeler, bicycle and auto component manufacturing

Hero Cold rolling Division

Majestic Auto Ltd

Munjal Auto Component

Hero Global Design

Indian Automobile Industry

2nd most populated country

4th largest economy in the world

2nd largest two-wheeler market

4th largest commercial vehicle

market

11th largest passenger car market

& is expected to become 7th largest

by 2016.

India emerged as Asia‟s 4th

largest exporter of automobiles,

behind Japan, South Korea and

Thailand.

By 2050, the country is expected

to Top the world in car volumes with

approximately 611 Mn. vehicles on

the nation‟s roads

Indian Automobile Market at a glance:

Growing working population

Fast paced urbanization

Increasing city limits

Lack of good public transport

Increased access to credit & lower interest loans

Middle class population is expending by 30Mn every year

Reasons for Growth :

Indian Two-wheeler Industry

0%

20%

40%

60%

80%

100%

'99 '00 '01 '02 '03 '04 '05 '06 '07 08

0

10

20

30

40

50

60

70

80

90

'99 '00 '01 '02 '03 '04 '05 '06 '07 08

Two wheeler market scenario

Year wise segment wise Industry data Year wise/segment wise Industry data (Mkt share)

<Two- wheeler market volume trend> <Segment wise contribution>

• The Indian two-wheeler market has grown from 3.4 Mn units in 1999 to 8.1 Mn. units in 2008 and crossed by

2010 crosses 10 Mn mark.

• The Motorcycle segment is the no.1 segment contributing to approx 80% of total sales.

MC ATSC FSC MPDMC SC MPD CUB

34

81

33%

81%

Units in Lacs

Major Players in Indian 2 Wheeler Market:

100-110MC

51%

09年9月移動年

国内市場

8,076千台

Indian

2 wheeler

Industry

125-135MC

15%

150-180MC

11%

GSC 1%

>180MC 1%

ATSC

15%

OTHERS

6%

Indian Two Wheeler Industry Scenario :

Entry level segment governs the industry with more than 50% contribution to the industry.

Approx 70% market is captured by HHML & Bajaj (Indian Manufaturers)

Manufacturer wise Positioning :

More than 1Lac units/month

Volume

NetworkLess than 1Lac units/month

Honda as a group has more than 60% market share.

Volume

Network


More than 1Lac units/month

Less than 1Lac units/month

Manufacturer wise Contribution :

48%

19%

14%

13%

2%2%

1%1%

0%

0%

Market Share(2009-10) HHML

Bajaj

TVS

HMSI

Yamaha

Suzuki

Enfield

Mahindra

Othere

LML

48%

17%

15%

14%

2%

2%

1% 1%

0% 0%

Market Share(2008-09) HHML

Bajaj

TVS

HMSI

Yamaha

Suzuki

Enfield

Mahindra

Othere

LML

LY :

•HHML leads the position with 48% Market

share

•Followed by Bajaj with 17% & TVS by 15%

CY :

•HHML is maintaining its position with 48%

market share.

•Bajaj has improved its position from 17%

to 19%

•There is a slight dip in TVS & HMSI

Difference in Approach

Inactive

Reactive

Active

Proactive

Types of Approach

HHML : Honda Motor Co. Ltd. Japan entered into Indian two-wheeler industry in the year of 1983 with a JV

with Hero Group of India and formed a co. called Hero Honda Motors India Ltd. Since its establishment, the

Company is the leader in the segment and currently holds market share of 48%.


Current Scenario : After completion of 10 years of HMSI in Indian two-wheeler market, Honda Motor Co. Ltd. Japan decided

to brake the JV with Hero Group of India and decided to serve Indian market independently with HMSI.

HMSI : In 1999 Indian Gov. Signed Free Trade Policy which made easy to foreign players to venture in

Indian market. HM Japan ventured again in India, the company decided to form its 100% subsidiary and

formed a co. called Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI) which started its business

operations in India in 2001. Company started its business with an entry in scooter segment thereafter

introduced motorcycle in 2004. Currently company has its presence in each segment with 9 domestic & 3

international products and enjoying a market share of 15%.

Kinetic : At the same time, to meet increasing customers demand, Honda Motor Co. Ltd. Japan also did a

JV with Kinetic Engineering Ltd. of India to venture into indian scooter market in 1985 but the JV could not

go for a long and in 1998 the JV between the two broke-down.

Introduction

of HHML

Introduction

of Kinetic

Honda

Market Scenario in 1984

Bajaj, Enfield, Escorts were present in the market

&

Bajaj was the most preferred brand

(“Hamara Bajaj”)

TVC\Bajaj\Hamara Bajaj 1989.flv

Hero Honda Positioning















Introduction

of HHML

Introduction of

Kinetic Honda

Demerger of

Kinetic Honda
















Introduction

of HHML

Introduction of

Kinetic Honda

Demerger of

Kinetic Honda

Introduction

of HMSI



Desh ki Dhadkan (introduction) 2001

TVC\HHML\HHML Dhak Dhak Go (1).flv

Bajaj Positioning

Old Bajaj changing to New Bajaj

(Focused youths & respect Indian Culture)

2001

TVC\Bajaj\Hamara Bajaj-2001.mp4















Honda has

arrived

Introduction

of HHML

Introduction

of Kinetic

Honda

Demerger of

Kinetic Honda

Introduction

of HMSI


Honda Positioning

Honda has arrived

Honda is adopting Indian Culture & respect their values

(Heena Ad)

2004

TVC\HMSI\Henna Film.DAT

TVC\HMSI\Henna Film.DAT


HHML started Celebrity endorsement & focused on Sports

(Dhak Dhak Go)

TVC\HHML\HHML Dhak Dhak Go (2).mp4

Bajaj started focusing on Young Bikers & Fun Biking Culture

(Hami se aage nikal rahe hai hum – Hamara Bajaj)

2007

Bajaj Positioning

TVC\Bajaj\Hamara Bajaj_2007.mpg

Honda Positioning

TVC\HMSI\Corporate TVC (60 Sec).VOB




Hero vs. Honda












Honda - 10yrs

Hero Honda – 25yrs

Introduction

of HHML

Introduction

of Kinetic

Honda

Demerger of

Kinetic Honda

Introduction

of HMSI

Honda has

arrived

Honda Long Term Planner

Hero Honda “Fill it. Shut it. Forget it.”




Hero vs. Honda












Removal of Honda

from HeroDemerger of

Hero Honda

Introduction

of HHML

Introduction

of Kinetic

Honda

Demerger of

Kinetic Honda

Introduction

of HMSI

Honda has

arrived

KnowYour Competition

Your Market

Your Customer

Have breakfast or be breakfast

Removal of Honda

from HeroDemerger of

Hero Honda

Introduction

of HHML

Introduction

of Kinetic

Honda

Demerger of

Kinetic Honda

Introduction

of HMSI

Honda has

arrived

Kawasaki Bajaj (1986 ~ 2000)

TVS Suzuki (1986 ~ 2000)

Escort Yamaha (early 80‟s to late 90‟s)

Kinetic Honda ( 1984 ~ 98)

LML Piaggio (1984 ~ 99)

Lesson from Indian Automobile JVs

HHML Approach

Celebrity - Hrithik, Priyanaka

Sports - Cricket, Shooting, Hockey, Tennis

Music & Reality - Sa Re Ga Ma Pa & Roadies

Focus was on Indian Culture, Tradition & their Values

Key attribute : Marketing & Distribution

Honda Approach

Key attribute : Quality & Technology


Bajaj approach

Key attribute : Fun Biking & Youth Centric

Hero vs. Honda

Hero vs. Honda (Hero Group)

Hero neither focused on “BRAND” nor diversified their business in other sectors.

Hero Cold rolling Division

Majestic Auto Ltd

Munjal Auto Component

Hero Global Design

Hero Cup 1993

Hero vs. Honda (Hero Group)

Honda has over 60% Market Share in Indian two-wheeler Market

Honda Motorcycle & Scooter India Pvt. Ltd.

Honda Siel Cars India

Honda Siel Power Products Ltd.

Hero Honda Motor Ltd Honda Motor India

6 Group Companies in India

Hero vs. Honda (Honda Group)

Honda R&D (India) Pvt Ltd.

2007 200820062005200420022001 20092003 2010

CB Twister

CBF Stunner

Aviator

OCT‟ 04

OCT‟05Unicorn MAR‟07

MMC/ Cast wheel

Dio

SEP‟ 02

Color & Graphics

OCT‟ 05

Color & Graphics

OCT‟ 07

Activa OCT‟ 05

Color & Graphics Color & Graphics

SEP‟ 07

Eterno

MAY‟‟03

NOV‟ 05

Color & GraphicsColor & Graphics

SEP‟ 07

Shine

APR‟ 06

JAN „08

APR. 07

JUNE‟08

Cast wheel,

APR‟08

Color & GraphicsColor & Graphics

MAR‟09

Color & Graphics

Oct‟08

Color & Graphics

Color & Graphics

OCT‟ 08

Fun Bike

CBR1000RR

PGM-FI

FEB‟ 09

May‟09

OCT‟09

Stopped

Color & Graphics

JAN‟10

CB1000R

JUL ‟01

CB Shine

CB Unicorn

CB Unicorn

Dazzler

Hero vs. Honda

Every year Honda introduced

a Product & silently strengthened

its portfolio

Hero Honda is yet to make its clear positioning

International

Indian


Conservative Modern

•Brand equity/reputation among customers

•Aggressive Marketing

•Strong Distribution Network

•Deep Penetration in India Market

•Strong Resale Value

•New Brand has to be established

•R&D setup

•Less International Market know how

•Too much dependence on few models

•Hero is very much dependent on Honda

•Establish customer trust with new Hero Brand

•Need to have a bigger presence in the executive seg.

•Major bike makers in the world are lining up for India

•Low cash reserves

•Losing a foothold in the exports market

•Strong competition from Indian & International Brands

S W

O T•Fast growing sector

•Exports market is yet to be properly exploited

•Cruiser bike segment is unexplored by HHML

•Most reliable bike manufacturer in India

•Strong brand follower

HERO HONDA ~ SWOT Analysis

Hero Future Approach

•Brand Building

•Market Entering

Vision : 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 Honda‟s

commitment to customer, quality and excellence, and while doing so, maintaining the highest

standards of ethics and societal responsibilities. Hero Honda believes that the fastest way to

turn that dream into a reality is by remaining focused on that vision.

Strategy : Hero Honda‟s key strategy has been driven by innovation in every sphere of activity

– building a robust product portfolio across categories, exploring new markets, aggressively

expanding the network and continuing to invest in brand building activities.

Company’s Vision & MissionHero Honda

HondaPhilosophy : Honda operates on a principle, which is followed worldwide by all Honda

companies. Maintaining a global viewpoint, we are dedicated to supplying products of the highest

quality, yet at a reasonable price for worldwide customer satisfaction. Honda's philosophy is

based on the company's guiding principle and advocates 2 fundamental beliefs:

1. Respect for Individual – Initiative, Equality & Trust

2. Three Joy – Joy of Buying, Joy of Selling, Joy of Creating

Principle : Maintaining a global viewpoint, we are dedicated to supplying products of the highest

quality yet at a reasonable price for worldwide customer satisfaction.

Introduction of new Brand Logo & CI

Strengthen new Hero Brand

Focus on R&D

Deep penetration in Indian Market

Make a Vision for International Markets

Focus on 4As

Brand Building

Introduction of New Logo

Hero should create a new CI first and it should be introduced in phased manner

Strengthen New Hero Brand

New CI & Promotion

(July’11)

2nd Hand 2-w

(April’12)

Racing in India

(Oct’11)

Auto Expo

(Jan’12)

Co. Owned Outlets

(March’12)

Hero Future Approach

•Brand Building

•Foreign Market Approach

Major International Marketing Decisions

Strategy Designing and managing markets

Implementing and Managing Marketing Strategy

Marketing Situation Analysis

Designing Marketing Strategy

Framework for Entering Foreign Market

Firm Capability

Size

Experience in International Business

Industrial Factors

Expansion of industry

International characteristics

Technological strengths

Publicity advantages

Geographic Factors

Country risks

Cultural differences

Market efficiency

Market knowledge

Specific – Relevant Factors

Asset value

Commitment risks

Specific strategies

Strategic Factors

Strategic motives

Allies in international business

Entry Method

Exporting

Licensing

Franchising

Contract Manufacturing

Contractual Joint Venture

Equity Joint Venture

Wholly Owned

Porter‟s competitive strategy theory

Low capital cost strategy

Differentiation strategy

Focus strategy

Framework for International Marketing

Strategies for entering foreign

market(s) for business

STP

Hero

Segmentation

TargetingPositioning

Hero

Substitutes

Customer

Supplier

New Entrants

Porters 5- Forces

PESTEL : Strategy

Suggestion

Exporting

Licensing

Contract

Manufacturing

Joint Venture

Equity stake

or acquisition

Degree of involvement

CostLow Involvement & Low Cost

High Involvement, High Cost

How to enter

India should be

the first Priority

Vision for International Markets

Easy

to enter

Organic Acquisition

Franchise Joint Venture

Difficult to

enter

Culturally Close

Culturally Distant

Latin America, Africa, Middle East & South East Asia

Customer

Awareness

Availability

Affordability

Acceptability

4 A’s

Focus Required

“If this business were split up, I would give you

the land and bricks and mortar, and I would

take the brands and trade marks, and I would

far better than you.”– John Stuart

Learning

Thank you

Date post:	15-Jul-2015
Category:	Business
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