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Demerger of HERO & Honda
Big Move – Media Coverage



                                                  Financial
                                               Express, New                           29th April‟11 ( FT, New Delhi)
    BS, Kolkata (15th Oct‟10)                 Delhi(24th Dec10)




                                                                                                                         Hindustan
                                                                                                                        Times, New
                                                                                                      ET, New Delhi      Delhi(25th
                                             Hindu Business Line, New Delhi   (26th   Oct10)           (2th May‟11)       Oct‟10)




 ET, New Delhi (27th Oct10)




Financial Express, New Delhi (24th Sep‟10)                                                                Mint, New Delhi (13th May‟11)
Market Buzz




1766


              1752
Project Theme




Challenge the Change
Index
 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
History : Hero Group
Hero Group
Brijmohan 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.                                                                                            Brijmohan Lall Munjal
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

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.

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

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

                                                                                    Hero Global Design
Munjal Auto Component




                                                                Majestic Auto Ltd




                                   Hero Cold rolling Division




Hero has excellent presence in two-wheeler, bicycle and auto component manufacturing
Indian Automobile Industry
Indian Automobile Market at a glance:
                         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
Reasons for Growth :
  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
Indian Two-wheeler Industry
Two wheeler market scenario
            <Two- wheeler market volume trend>                                       <Segment wise contribution>
 Units in Lacs
   90                                                                        100%
                                                                     81
   80

   70                                                                         80%

   60
                                                                              60%
   50

   40       34
                                                                              40%                                                             81%
   30

   20                                                                         20%
                                                                                    33%
   10

     0                                                                         0%
            '99   '00   '01   '02      '03   '04   '05   '06   '07   08             '99   '00   '01    '02    '03   '04 '05      '06    '07    08
Year wise segment wise Industry data                                                                  Year wise/segment wise Industry data (Mkt share)

                                                               MC     SC
                                                                      ATSC   MPD
                                                                              FSC   CUB
                                                                                     MPD



 • 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.
Major Players in Indian 2 Wheeler Market:
Indian Two Wheeler Industry Scenario :
                                       OTHERS
                                        6%
                            ATSC
                            15%
                   GSC 1%
                                        Indian
                                      09年9月移動年
                   >180MC 1%
                                      2国内市場
                                        wheeler                100-110MC
                     150-180MC                                   51%
                       11%
                                      8,076千台
                                       Industry

                               125-135MC
                                 15%




  Entry level segment governs the industry with more than 50% contribution to the industry.
Manufacturer wise Positioning :
                             Volume




More than 1Lac units/month                                                            Network
Less than 1Lac units/month




                Approx 70% market is captured by HHML & Bajaj (Indian Manufaturers)
Manufacturer wise Positioning :
                                 Volume




More than 1Lac units/month                                                      Network
Less than 1Lac units/month




                             Honda as a group has more than 60% market share.
Manufacturer wise Contribution :


    1%                                                        1%     Market Share
           1%         Market Share
                                                        1%
     2%                (2008-09)      HHML                        0%  (2009-10)     HHML
                                                             2%
                      0%   0%         Bajaj         2%               0%
           2%                                                                       Bajaj
                                      TVS                                           TVS
                                      HMSI             13%                          HMSI
           14%
                                      Yamaha                                        Yamaha
                                      Suzuki                                 48%    Suzuki
                                48%
                                                 14%
     15%                              Enfield                                       Enfield
                                      Mahindra                                      Mahindra
                                      Othere                                        Othere
                                                         19%
                17%                   LML                                           LML




                                                 CY :
    LY :
                                                 •HHML is maintaining its position with 48%
    •HHML leads the position with 48% Market     market share.
    share
                                                 •Bajaj has improved its position from 17%
    •Followed by Bajaj with 17% & TVS by 15%     to 19%

                                                 •There is a slight dip in TVS & HMSI
Difference in Approach
Types of Approach


   Inactive
   Reactive
   Active
   Proactive
Difference in 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%.

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.

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%.

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.




                    Introduction
                      of Kinetic
                       Honda
            Introduction
              of HHML
Market Scenario in 1984



  Bajaj, Enfield, Escorts were present in the market

                          &

         Bajaj was the most preferred brand
                  (“Hamara Bajaj”)
Hero Honda Positioning
Difference in 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%.

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.

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%.

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.




                                                               Demerger of
                                                              Kinetic Honda

                          Introduction of
                           Kinetic Honda
           Introduction
             of HHML
Difference in 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%.

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.

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%.

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.




                                                                              Introduction
                                                                                 of HMSI
                                                               Demerger of
                                                              Kinetic Honda

                       Introduction of
          Introduction Kinetic Honda
           of HHML
Hero Honda Positioning
          Desh ki Dhadkan (introduction)   2001
Bajaj Positioning


                                            2001
          Old Bajaj changing to New Bajaj

      (Focused youths & respect Indian Culture)
Difference in 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%.

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.

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%.

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.



                                                                                             Honda has
                                                                                              arrived
                                                                              Introduction
                                                                                 of HMSI
                                                               Demerger of
                                                              Kinetic Honda
                    Introduction
                      of Kinetic
                       Honda
            Introduction
              of HHML
Honda Positioning



                                                 2004

                    Honda has arrived
   Honda is adopting Indian Culture & respect their values
                         (Heena Ad)
Hero Honda Positioning




  HHML started Celebrity endorsement & focused on Sports
                     (Dhak Dhak Go)
Bajaj Positioning



                                                       2007

  Bajaj started focusing on Young Bikers & Fun Biking Culture

      (Hami se aage nikal rahe hai hum – Hamara Bajaj)
Honda Positioning
Hero vs. Honda
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%.

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.

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%.

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.



                                                                                                            Honda - 10yrs
                                                                                             Honda has    Hero Honda – 25yrs
                                                                                              arrived
                                                                              Introduction
                                                                                 of HMSI
                                                               Demerger of
                                                              Kinetic Honda
                    Introduction
                      of Kinetic
                       Honda
            Introduction
              of HHML




                                                                                                         Honda Long Term Planner
Hero Honda “Fill it. Shut it. Forget it.”
Hero vs. Honda
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%.

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.

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%.

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.


                                                                                                                       Removal of Honda
                                                                                                                          from Hero
                                                                                                         Demerger of
                                                                                             Honda has   Hero Honda
                                                                                              arrived
                                                                              Introduction
                                                                                 of HMSI
                                                               Demerger of
                                                              Kinetic Honda
                     Introduction
                       of Kinetic
         Introduction Honda
           of HHML
Lesson from Indian Automobile JVs
  Kawasaki Bajaj (1986 ~ 2000)
  TVS Suzuki (1986 ~ 2000)                                                                           Removal of Honda
                                                                                                        from Hero
                                                                                       Demerger of
  Escort Yamaha (early 80‟s to late 90‟s)                                  Honda has   Hero Honda
                                                                            arrived
  Kinetic Honda ( 1984 ~ 98)                                Introduction
                                                               of HMSI
  LML Piaggio (1984 ~ 99)                    Demerger of
                                            Kinetic Honda
                  Introduction
                    of Kinetic
      Introduction Honda
        of HHML




                Know
                                                        Your Competition
                                                        Your Market
                                                        Your Customer



                    Have breakfast or be breakfast
Difference in Approach
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 Global Design
Munjal Auto Component




                                                                  Majestic Auto Ltd




                                     Hero Cold rolling Division




    Hero neither focused on “BRAND” nor diversified their business in other sectors.
Hero vs. Honda   (Hero Group)




       Hero Cup 1993
Hero vs. Honda                                                    (Honda Group)



           Honda R&D (India) Pvt Ltd.                     Honda Siel Power Products Ltd.




                                   6 Group Companies in India
  Honda Motorcycle &                                                      Honda Siel Cars India
 Scooter India Pvt. Ltd.




            Hero Honda Motor Ltd                                Honda Motor India

 Honda has over 60% Market Share in Indian two-wheeler Market
Hero vs. Honda
2001       2002         2003        2004              2005              2006               2007             2008                 2009            2010
                                                     Color & Graphics                    Color & Graphics

          Activa                           OCT‟ 05                             SEP‟ 07                             MAR‟09


JUL ‟01                                                                                Color & Graphics        Color & Graphics                 Color & Graphics


                         Dio               OCT‟ 05                           OCT‟ 07                 OCT‟ 08

            SEP‟ 02                                     Color & Graphics                   Color & Graphics


                                Eterno     NOV‟ 05                             SEP‟ 07                            Stopped                          CB Unicorn

                      MAY‟‟03                                           Color & Graphics    Color & Graphics         Color & Graphics


                                             Unicorn          OCT‟05                     MAR‟07                APR‟08

                                 OCT‟ 04                                                    MMC/ Cast wheel
                                                                                                   Color & Graphics          Color & Graphics        CB Unicorn
                                                                                                                                                      Dazzler

                                                                                   Shine      APR. 07                   Oct‟08

                                                                        APR‟ 06                        Cast wheel,                                    CB Shine

                                                                                                            Aviator OCT‟09
                                                                                                  JAN „08                         May‟09

      Every year Honda introduced                                                                                CBF Stunner
    a Product & silently strengthened                                                             JUNE‟08                         PGM-FI

                                                                                                                                    Fun Bike
              its portfolio
                                                                                                                                 CB1000R
                                                                                                               FEB‟ 09                              CBR1000RR
                                                                                                                                   JAN‟10
                                                                                                                                 CB Twister
Manufacturer wise Positioning :
                              International




Conservative                                                     Modern




                                  Indian
               Hero Honda is yet to make its clear positioning
HERO HONDA ~ SWOT Analysis

      •Brand equity/reputation among customers         •New Brand has to be established
      •Aggressive Marketing                            •R&D setup
      •Strong Distribution Network                     •Less International Market know how
      •Deep Penetration in India Market                •Too much dependence on few models
      •Strong Resale Value                             •Hero is very much dependent on Honda

                                              S W
  •Fast growing sector
                                              OT
                                                    •Establish customer trust with new Hero Brand
  •Exports market is yet to be properly exploited   •Need to have a bigger presence in the executive seg.
  •Cruiser bike segment is unexplored by HHML       •Major bike makers in the world are lining up for India
  •Most reliable bike manufacturer in India         •Low cash reserves
  •Strong brand follower                            •Losing a foothold in the exports market
                                                    •Strong competition from Indian & International Brands
Hero Future Approach

   •Brand Building
   •Market Entering
Company’s Vision & Mission
Hero Honda
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.



Honda
Philosophy : 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.
Brand Building
 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
Introduction of New Logo




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

                                                                       2nd Hand 2-w
                                                                        (April’12)

                                                   Co. Owned Outlets
                                                      (March’12)

                                       Auto Expo
                                       (Jan’12)

                     Racing in India
                        (Oct’11)

New CI & Promotion
     (July’11)
Hero Future Approach

   •Brand Building
   •Foreign Market Approach
Major International Marketing Decisions
Framework for International Marketing
                                   Strategy Designing and managing markets
                                   Implementing and Managing Marketing Strategy
                                   Marketing Situation Analysis
                                   Designing Marketing Strategy


  Framework for Entering Foreign Market                                Entry Method
  Firm Capability                                                     Exporting
  Size                                                                Licensing
  Experience in International Business                                Franchising
                                                                       Contract Manufacturing
  Industrial Factors                                                   Contractual Joint Venture
  Expansion of industry                                               Equity Joint Venture
  International characteristics                                       Wholly Owned
  Technological strengths
  Publicity advantages

  Geographic Factors
  Country risks
  Cultural differences                                                   Strategies for entering foreign
  Market efficiency                                                          market(s) for business
  Market knowledge

  Specific – Relevant Factors
  Asset value
  Commitment risks
  Specific strategies                                                 Porter‟s competitive strategy theory
                                                                       Low capital cost strategy
  Strategic Factors                                                    Differentiation strategy
  Strategic motives                                                   Focus strategy
  Allies in international business
STP
                    Segmentation




                     Hero
      Positioning                  Targeting
Porters 5- Forces


                    Substitutes




New Entrants           Hero       Customer




                     Supplier
PESTEL : Strategy
Suggestion
How to enter
Degree of involvement
                                                                High Involvement, High Cost

                                                                     Equity stake
                                                                     or acquisition

                                                     Joint Venture

                                       Contract
                                     Manufacturing

                       Licensing


          Exporting

     Low Involvement & Low Cost
                                                                                      Cost




                                   India should be
                                   the first Priority
Vision for International Markets
                  Culturally Close



           Organic              Acquisition
  Easy
                                              Difficult to
to enter
                                                 enter


           Franchise          Joint Venture

                  Culturally Distant




                                         Latin America, Africa, Middle East & South East Asia
Focus Required

 4 A’s                     Awareness




         Acceptability
                         Customer          Availability




                           Affordability
Learning



“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
Thank you

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Hero future plan

  • 2.
  • 3.
  • 4. Big Move – Media Coverage Financial Express, New 29th April‟11 ( FT, New Delhi) BS, Kolkata (15th Oct‟10) Delhi(24th Dec10) Hindustan Times, New ET, New Delhi Delhi(25th Hindu Business Line, New Delhi (26th Oct10) (2th May‟11) Oct‟10) ET, New Delhi (27th Oct10) Financial Express, New Delhi (24th Sep‟10) Mint, New Delhi (13th May‟11)
  • 7. Index  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
  • 9. Hero Group Brijmohan 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. Brijmohan Lall Munjal 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 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. 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 HHML First Plant inauguration, (Gurgaon) HHML‟s First Vehicle hit the road
  • 10. Hero Group Companies Hero Global Design Munjal Auto Component Majestic Auto Ltd Hero Cold rolling Division Hero has excellent presence in two-wheeler, bicycle and auto component manufacturing
  • 12. Indian Automobile Market at a glance:  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
  • 13. Reasons for Growth :  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
  • 15. Two wheeler market scenario <Two- wheeler market volume trend> <Segment wise contribution> Units in Lacs 90 100% 81 80 70 80% 60 60% 50 40 34 40% 81% 30 20 20% 33% 10 0 0% '99 '00 '01 '02 '03 '04 '05 '06 '07 08 '99 '00 '01 '02 '03 '04 '05 '06 '07 08 Year wise segment wise Industry data Year wise/segment wise Industry data (Mkt share) MC SC ATSC MPD FSC CUB MPD • 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.
  • 16. Major Players in Indian 2 Wheeler Market:
  • 17. Indian Two Wheeler Industry Scenario : OTHERS 6% ATSC 15% GSC 1% Indian 09年9月移動年 >180MC 1% 2国内市場 wheeler 100-110MC 150-180MC 51% 11% 8,076千台 Industry 125-135MC 15% Entry level segment governs the industry with more than 50% contribution to the industry.
  • 18. Manufacturer wise Positioning : Volume More than 1Lac units/month Network Less than 1Lac units/month Approx 70% market is captured by HHML & Bajaj (Indian Manufaturers)
  • 19. Manufacturer wise Positioning : Volume More than 1Lac units/month Network Less than 1Lac units/month Honda as a group has more than 60% market share.
  • 20. Manufacturer wise Contribution : 1% 1% Market Share 1% Market Share 1% 2% (2008-09) HHML 0% (2009-10) HHML 2% 0% 0% Bajaj 2% 0% 2% Bajaj TVS TVS HMSI 13% HMSI 14% Yamaha Yamaha Suzuki 48% Suzuki 48% 14% 15% Enfield Enfield Mahindra Mahindra Othere Othere 19% 17% LML LML CY : LY : •HHML is maintaining its position with 48% •HHML leads the position with 48% Market market share. share •Bajaj has improved its position from 17% •Followed by Bajaj with 17% & TVS by 15% to 19% •There is a slight dip in TVS & HMSI
  • 22. Types of Approach Inactive Reactive Active Proactive
  • 23. Difference in 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%. 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. 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%. 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. Introduction of Kinetic Honda Introduction of HHML
  • 24. Market Scenario in 1984 Bajaj, Enfield, Escorts were present in the market & Bajaj was the most preferred brand (“Hamara Bajaj”)
  • 26. Difference in 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%. 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. 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%. 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. Demerger of Kinetic Honda Introduction of Kinetic Honda Introduction of HHML
  • 27. Difference in 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%. 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. 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%. 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. Introduction of HMSI Demerger of Kinetic Honda Introduction of Introduction Kinetic Honda of HHML
  • 28. Hero Honda Positioning Desh ki Dhadkan (introduction) 2001
  • 29. Bajaj Positioning 2001 Old Bajaj changing to New Bajaj (Focused youths & respect Indian Culture)
  • 30. Difference in 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%. 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. 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%. 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. Honda has arrived Introduction of HMSI Demerger of Kinetic Honda Introduction of Kinetic Honda Introduction of HHML
  • 31. Honda Positioning 2004 Honda has arrived Honda is adopting Indian Culture & respect their values (Heena Ad)
  • 32. Hero Honda Positioning HHML started Celebrity endorsement & focused on Sports (Dhak Dhak Go)
  • 33. Bajaj Positioning 2007 Bajaj started focusing on Young Bikers & Fun Biking Culture (Hami se aage nikal rahe hai hum – Hamara Bajaj)
  • 35. Hero vs. Honda 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%. 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. 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%. 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. Honda - 10yrs Honda has Hero Honda – 25yrs arrived Introduction of HMSI Demerger of Kinetic Honda Introduction of Kinetic Honda Introduction of HHML Honda Long Term Planner
  • 36. Hero Honda “Fill it. Shut it. Forget it.”
  • 37. Hero vs. Honda 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%. 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. 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%. 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. Removal of Honda from Hero Demerger of Honda has Hero Honda arrived Introduction of HMSI Demerger of Kinetic Honda Introduction of Kinetic Introduction Honda of HHML
  • 38. Lesson from Indian Automobile JVs Kawasaki Bajaj (1986 ~ 2000) TVS Suzuki (1986 ~ 2000) Removal of Honda from Hero Demerger of Escort Yamaha (early 80‟s to late 90‟s) Honda has Hero Honda arrived Kinetic Honda ( 1984 ~ 98) Introduction of HMSI LML Piaggio (1984 ~ 99) Demerger of Kinetic Honda Introduction of Kinetic Introduction Honda of HHML Know Your Competition Your Market Your Customer Have breakfast or be breakfast
  • 39. Difference in Approach 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
  • 41. Hero vs. Honda (Hero Group) Hero Global Design Munjal Auto Component Majestic Auto Ltd Hero Cold rolling Division Hero neither focused on “BRAND” nor diversified their business in other sectors.
  • 42. Hero vs. Honda (Hero Group) Hero Cup 1993
  • 43. Hero vs. Honda (Honda Group) Honda R&D (India) Pvt Ltd. Honda Siel Power Products Ltd. 6 Group Companies in India Honda Motorcycle & Honda Siel Cars India Scooter India Pvt. Ltd. Hero Honda Motor Ltd Honda Motor India Honda has over 60% Market Share in Indian two-wheeler Market
  • 44. Hero vs. Honda 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Color & Graphics Color & Graphics Activa OCT‟ 05 SEP‟ 07 MAR‟09 JUL ‟01 Color & Graphics Color & Graphics Color & Graphics Dio OCT‟ 05 OCT‟ 07 OCT‟ 08 SEP‟ 02 Color & Graphics Color & Graphics Eterno NOV‟ 05 SEP‟ 07 Stopped CB Unicorn MAY‟‟03 Color & Graphics Color & Graphics Color & Graphics Unicorn OCT‟05 MAR‟07 APR‟08 OCT‟ 04 MMC/ Cast wheel Color & Graphics Color & Graphics CB Unicorn Dazzler Shine APR. 07 Oct‟08 APR‟ 06 Cast wheel, CB Shine Aviator OCT‟09 JAN „08 May‟09 Every year Honda introduced CBF Stunner a Product & silently strengthened JUNE‟08 PGM-FI Fun Bike its portfolio CB1000R FEB‟ 09 CBR1000RR JAN‟10 CB Twister
  • 45. Manufacturer wise Positioning : International Conservative Modern Indian Hero Honda is yet to make its clear positioning
  • 46. HERO HONDA ~ SWOT Analysis •Brand equity/reputation among customers •New Brand has to be established •Aggressive Marketing •R&D setup •Strong Distribution Network •Less International Market know how •Deep Penetration in India Market •Too much dependence on few models •Strong Resale Value •Hero is very much dependent on Honda S W •Fast growing sector OT •Establish customer trust with new Hero Brand •Exports market is yet to be properly exploited •Need to have a bigger presence in the executive seg. •Cruiser bike segment is unexplored by HHML •Major bike makers in the world are lining up for India •Most reliable bike manufacturer in India •Low cash reserves •Strong brand follower •Losing a foothold in the exports market •Strong competition from Indian & International Brands
  • 47. Hero Future Approach •Brand Building •Market Entering
  • 48. Company’s Vision & Mission Hero Honda 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. Honda Philosophy : 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.
  • 49. Brand Building  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
  • 50. Introduction of New Logo Hero should create a new CI first and it should be introduced in phased manner
  • 51. Strengthen New Hero Brand 2nd Hand 2-w (April’12) Co. Owned Outlets (March’12) Auto Expo (Jan’12) Racing in India (Oct’11) New CI & Promotion (July’11)
  • 52. Hero Future Approach •Brand Building •Foreign Market Approach
  • 54. Framework for International Marketing Strategy Designing and managing markets Implementing and Managing Marketing Strategy Marketing Situation Analysis Designing Marketing Strategy Framework for Entering Foreign Market Entry Method Firm Capability Exporting Size Licensing Experience in International Business Franchising Contract Manufacturing Industrial Factors Contractual Joint Venture Expansion of industry Equity Joint Venture International characteristics Wholly Owned Technological strengths Publicity advantages Geographic Factors Country risks Cultural differences Strategies for entering foreign Market efficiency market(s) for business Market knowledge Specific – Relevant Factors Asset value Commitment risks Specific strategies Porter‟s competitive strategy theory Low capital cost strategy Strategic Factors Differentiation strategy Strategic motives Focus strategy Allies in international business
  • 55. STP Segmentation Hero Positioning Targeting
  • 56. Porters 5- Forces Substitutes New Entrants Hero Customer Supplier
  • 59. How to enter Degree of involvement High Involvement, High Cost Equity stake or acquisition Joint Venture Contract Manufacturing Licensing Exporting Low Involvement & Low Cost Cost India should be the first Priority
  • 60. Vision for International Markets Culturally Close Organic Acquisition Easy Difficult to to enter enter Franchise Joint Venture Culturally Distant Latin America, Africa, Middle East & South East Asia
  • 61. Focus Required 4 A’s Awareness Acceptability Customer Availability Affordability
  • 62. Learning “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