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Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over
$1 billion for its stake. The discount will be between 30% and 50% to the current value of
Honda's stake as per the price of the stock after the market closed on Wednesday.
The rising differences between the two partners gradually emerged as an irritant.
Differences had been brewing for a few years before the split over a variety of issues, ranging
from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year
technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty
payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero
Honda (mainly managed by the Munjal family) to merge the company's spare parts business
with Honda's new fully owned subsidiary Honda Motorcycle and Scooter India (HMSI).
As per the arrangement, it will be a two-leg deal. In the first part, the Munjal family,
led by Brijmohan Lal Munjal group, will form an overseas-incorporated special purpose
vehicle (SPV) to buy out Honda's entire stake, which will be backed by bridge loans. This SPV
would eventually be thrown open for private equity participation and those in the fray include
Warburg Pincus, Kohlberg Kravis Roberts (KKR), TPG, Bain Capital, and Carlyle Group.
Honda will continue to provide technology to Hero Honda motorbikes until 2014 for
existing as well as future models.[20]
Company performance
During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12%
over last year. In the same year, the company had a market share of 57% in the Indian market.
Hero Honda sells more two wheelers than the second, third and fourth placed two-wheeler
companies put together. Hero Honda's bike Hero Honda Splendor sells more than one million](https://image.slidesharecdn.com/rbs1737prateekhero-160415080942/85/Rbs-1737-prateek-hero-16-320.jpg)
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Market Positioning
Positioning is the act of designing company’s offering and image to occupy a distinctive place
in the mind of a target market. The end result of positioning is value proposition, a cogent
reason why the target market should buy the product. [4]
Positioning in market is very important as well as difficult. It’s making the consumers aware
of your product. Each bike must have a unique selling point which needs to be well portrayed
in consumer’s mind so that he has an additional choice in his mind.
Market Segmentation
Hero MotoCorp caters to a wide consumer base. It has segmented its market based on income
and age. It caters to youth of all income groups. Its highest selling bike Splendor is a favorite
in sub urban and rural India. It portrays itself as the most efficient bike range to cater to Indian
Roads.
Target Market
Hero MotoCorp follows selective specialization. It has a wide range of bikes from Rs 37,000
to Rs 95, 000. Each product has multiple optional features. The USP that it uses are: strong,
sturdy and powerful, greater mileage, low maintenance cost, safe to ride, ease and comfort. Its
target market includes lower middle class consumer to upper middle class consumer. It is
affordable, available and acceptable by all.
Positioning Strategy
Fill it. Shut it. Forget it Campaign
This campaign focused on the mileage of Hero
bikes. It says that once you fill oil in the bike’s
tank, you are tension free. Due to its higher mileage,
you can travel as much as you want without bothering
to refill oil.](https://image.slidesharecdn.com/rbs1737prateekhero-160415080942/85/Rbs-1737-prateek-hero-31-320.jpg)
![51
Program review and monitoring
Contingencies - what-if planning
7. Commercialization (often considered post-NPD)
Launch the product
Produce and place advertisements and other promotions
Fill the distribution pipeline with product
Critical path analysis is most useful at this stage
8. New Product Pricing :
Impact of new product on the entire product portfolio
Value Analysis (internal & external)
Competition and alternative competitive technologies
Differing value segments (price, value and need)
Product Costs (fixed & variable)
Forecast of unit volumes, revenue, and profit
These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that
the NPD process takes, many companies are completing several steps at the same time (referred
to as concurrent engineering or time to market). Most industry leaders see new product
development as a proactive process where resources are allocated to identify market changes
and seize upon new product opportunities before they occur (in contrast to a reactive strategy in
which nothing is done until problems occur or the competitor introduces an innovation). Many
industry leaders see new product development as an ongoing process (referred to as continuous
development) in which the entire organization is always looking for opportunities.
For the more innovative products indicated on the diagram above, great amounts of uncertainty
and change may exist which makes it difficult or impossible to plan the complete project before
starting it. In this case, a more flexible approach may be advisable.
Because the NPD process typically requires both engineering and marketing expertise, cross-
functional teams are a common way of organizing projects.[16] The team is responsible for all
aspects of the project, from initial idea generation to final commercialization, and they usually
report to senior management (often to a vice president or Program Manager). In those industries
where products are technically complex, development research is typically expensive and
product life cycles are relatively short, strategic alliances among several organizations helps to
spread the costs, provide access to a wider skill set and speeds up the overall process.[citation
needed]](https://image.slidesharecdn.com/rbs1737prateekhero-160415080942/85/Rbs-1737-prateek-hero-51-320.jpg)
![52
Because both engineering and marketing expertise are usually critical to the process, choosing
an appropriate blend of the two is important. Observe (for example, by looking at the See
also or References sections below) that this article is slanted more toward the marketing side.
For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.[17][18]
A new product pricing process is important to reduce risk and increase confidence in the pricing
and marketing decisions to be made. Processes have been proposed to break down the complex
task of new product pricing into more manageable elements.
Product Life Cycle :
Introduction :
Hero Honda Passion is a motorcycle manufactured in India by Hero Honda. It is one of the
world's largest selling motorcycles, second only to Hero Honda Splendor. Passion debuted in
the year 2001.
Its graphics and colours were first refreshed in the year 2003 and it was rechristened Passion
Plus. Its graphics were again updated in the year 2008 and now black alloy wheels are
standard with an all black engine.
The engine is a 97.2 cc air-cooled, four-stroke single-cylinder. The chassis is a tubular double
cradle type. Although it is under 100 cc, it is marketed as an executive class bike due to its
styling and price.
Decline:
In this stage the sales begin to decline as the market becomes saturated the product becomes
technologically obsolete or customer tastes change. If the product had developed brand loyalty
the profitability may be maintained longer, nit costs may increase. The customers who take up
product in this stage are laggards and competition also declines. The company now takes up](https://image.slidesharecdn.com/rbs1737prateekhero-160415080942/85/Rbs-1737-prateek-hero-52-320.jpg)
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Rbs 1737 prateek hero
- 1. 1 Dissertation Report On “Reporton Hero MotoCorp” Submitted in the partial fulfillment of the requirement for qualifying Master of Management Studies Of University of Mumbai Submitted by Prateek Kamal Parihar Roll No: M1737 Specialization: Marketing Rustomjee Business School Dahisar (West) For Academic Year 2015- 2017 Project Guide: Darshan Pagar
- 2. 2 DECLARATION To, The Director, Rustomjee BusinessSchool, Rustomjee Acres, Rustom Irani Marg, Dahisar (West), Mumbai – 400 068 Respected Sir, I, the undersigned, hereby declare that the project report titled “Hero MotoCorp”is an original work developed and submitted by me under the guidance of <<Guide Name>>. The findings in this project are not copied from any report and are true to the best of my knowledge. Date: April 2016 Place: Mumbai Roll No: M1737 Signature of Student
- 3. 3 Contents Motorcycle Industry Information.........................................................................................................5 Definition:..........................................................................................................................................5 Historyfor motorcycle:.................................................................................................................6 INTRODUCTION for Hero Honda..........................................................................................................7 Company profile...............................................................................................................................10 Senior Management........................................................................................................................14 Termination of Honda joint venture........................................................................................15 Company performance................................................................................................................16 Recognition.................................................................................................................................17 The Brand Trust Report published by Trust Research Advisory has ranked Hero in the 13th position among the brands in India..............................................................................................................17 Suppliers.....................................................................................................................................17 Market Share ...................................................................................................................................18 Substitutes Among Competitor..........................................................................................................20 Intensity of Existing Rivalry :..................................................................................................21 Threat of Substitutes :.................................................................................................................22 a. Unlimited number of substitutes : Unlimited Number Of Substitutes (HERO MOTO CORP)" will have a long-term negative impact on this entity, which subtracts from the entity's value. .......................22 b. Substitute product is inferior : An inferior product means a customer is less likely to switch from HERO MOTO CORP to another product or service. ...................................................................22 Threat of New Competitors :.......................................................................................................22 Bargaining Power of Suppliers :..................................................................................................23 Bargaining Power of Customers :................................................................................................23 CBBE Pyramid :.................................................................................................................................24 Marketing mix of Hero Motors ..........................................................................................................27 Segmentation, Targeting andPositioning of Hero Moto Corp..............................................................28 BCG Matrix.......................................................................................................................................33 Ansoff Metrix...................................................................................................................................35 Brand Identity ..................................................................................................................................37 Holistic Marketing............................................................................................................................38 Co Branding......................................................................................................................................42
- 4. 4 SWOT Analyses :...............................................................................................................................43 Productv/s Brand.............................................................................................................................46 Brand Architecture :..........................................................................................................................47 New Development Product Process...................................................................................................47 Product Life Cycle.............................................................................................................................52 Difussion of Innovation.....................................................................................................................53 Levels Of Product..............................................................................................................................54 Brand - Product Matrix:.....................................................................................................................56 Brand Value Chain:...........................................................................................................................59 Brand Extension. Its advantages and disadvantages:...........................................................................62 Conclusion .......................................................................................................................................65 BIBLOGRAPHY..................................................................................................................................66
- 5. 5 Motorcycle Industry Information. Definition: Amotorcycle is broadly defined by law in most countries for the purposes of registration, taxation and rider licensing as a powered two-wheel motor vehicle. Most countries distinguish between mopeds of 49 cc and the more powerful, larger vehicles (scooters do not count as a separate category). A motorcycle (also called a motorbike, bike, or cycle) is a two three or four wheeled vehicle. Motorcycle design varies greatly to suit a range of different purposes: long distance travel, commuting, cruising, and sport including racing and off road riding. Motorcycling is riding a motorcycle and related social activity such as joining a motorcycle club and attending motorcycles rallies. In 1894, Hildebrand & Wolf miller became the first series production motorcycle, and the first to be called a Motorcycle. Motorcycles are usually a luxury good in the developed world, where they are used mostly for recreation, as a lifestyle accessory or a symbol of personal identity. In developing countries, motorcycles are overwhelmingly (Effect or Strength) utilitarian due to lower prices and greater fuel economy. Of all the motorcycles in the world, 58% are in the Asia Pacific and Southern and Eastern Asia regions, excluding car-centric Japan. According to the United States Department of Transportation the number of fatalities per vehicle mile traveled was 37 times higher for motorcycles than for cars. There are three major types of motorcycle: street, off-road, and dual purpose. Within these types, there are many sub-types of motorcycles for different purposes. There is often a racing counterpart to each type, such as road racing and street bikes, or motocross and dirt bikes. Street bikes include cruisers, sport bikes, scooters and mopeds, and many other types. Off-road motorcycles include many types designed for dirt-oriented racing classes such as motocross and are not street legal in most areas. Dual purpose machines like the dual- Types of bikes. Street bikes. On road bikes. Motocross bikes. Dirt bikes.
- 6. 6 sport style aremade to go off-road but include features to make them legal and comfortable on the street as well. Each configuration offers either specialized advantage or broad capability, and each design creates a different riding posture. History for motorcycle: The history of motorcycle begins in the second half of the 19th century. Motorcycles are descended from the "safety bicycle," a bicycle with front and rear wheels of the same size and a pedal crank mechanism to drive the rear wheel. The Motorcycle was made as similar as Bicycle; the Motorcycle gives the same comfort as compare to bicycle. Despite some early landmarks in its development, motorcycles lack a rigid pedigree that can be traced back to a single idea or machine. Instead, the idea seems to have occurred to numerous engineers and inventors around Europe at around the same time. The first internal combustion, petroleum fueled motorcycle was the Daimler Reitwagen. It was designed and built by the German inventors Gottlieb Daimler and Wilhelm Maybach in Bad Cannstatt, Germany in 1885. The first commercial design for bicycle was a three wheel design called butler petrol cycle, conceived of and built by Edward butler in England in 1884. The Butler’s bicycle was the first design to be launch at International Inventions Exhibitions in London in 1885. Butler Petrol Cycle, it was three-wheeled vehicle with the rear wheel directly driven by a 5/8hp (466W) 600 cc flat twin four stroke engine (with magneto ignition replaced by coil and battery), equipped with rotary valves and a float-fed carburetor and Ackermann steering.
- 7. 7 The early inventionsin the history of bicycle were made by German inventors Mr. Gottlieb Daimler and Wilhelm May Bach in the year 1885. INTRODUCTION for Hero Honda Hero MotoCorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India. Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. The company is the largest two wheeler manufacturer in India. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at #108.
- 8. 8 In 2010, whenHonda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new corporate identity On June 4, 2012,Hero MotoCorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda Motors. Type Public company Traded as BSE: 500182 NSE: HEROMOTOCO BSE SENSEX Constituent Industry Automotive Founded January 19, 1984 Founder(s) Brijmohan Lall Munjal Headquarters New Delhi, India Area served India, Sri Lanka Key people Deya Varadh Sens (Chairman) Pawan Munjal (MD & CEO) Products Motorcycles, Scooters, Three-Wheeler vehicles Revenue 239.43 billion (US$4.36 billion) (2012) Net income 23.78 billion (US$432.8 million) (2012) Total assets 60.58 billion (US$1.1 billion) (2012) Parent Hero Group
- 9. 9 Website www.heromotocorp.com History Hero MotoCorpwas started in 1984 as Hero Honda Motors Ltd. 1956—Formation of Hero Cycles in Ludhiana (majestic auto limited) 1975—Hero Cycles becomes largest bicycle manufacturer in India. 1983—Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed Shareholders Agreement signed 1984—Hero Honda Motors Ltd. incorporated 1985—Hero Honda motorcycle CD 100 launched. 1989—Hero Honda motorcycle Sleek launched. 1991—Hero Honda motorcycle CD 100 SS launched. 1994 - Hero Honda motorcycle Splendor launched. 1997—Hero Honda motorcycle Street launched. 1999 - Hero Honda motorcycle CBZ launched. 2001 - Hero Honda motorcycle Passion and Hero Honda Joy launched. 2002—Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition launched. 2003—Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor plus, Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Karizma launched. 2004—Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ* launched. 2005—Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD Deluxe, Hero Honda motorcycle Glamour, Hero Honda motorcycle Achiever and Hero Honda Scooter Pleasure.
- 10. 10 2007—New Modelsof Hero Honda motorcycle Splendor NXG, New Models of Hero Honda motorcycle CD Deluxe, New Models of Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Hunk launched. 2008—New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour, Glamour Fi and Hero Honda motorcycle Passion Pro launched. 2009—New Models of Hero Honda motorcycle Karizma:Karizma - ZMR and limited edition of Hero Honda motorcycle Hunk launched 2010—New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda motorcycle Hunk and New Hero Honda Motorcycle Super Splendor launched. 2011—New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZ Xtreme, Karizma launched. New licensing arrangement signed between Hero and Honda. In August Hero and Honda parted company, thus forming Hero MotoCorp and Honda moving out of the Hero Honda joint venture. In November, Hero launched its first ever Off Road Bike Named Hero "Impulse". 2012-New Models of Hero MotoCorp Maestro the Masculine scooter and Ignitor the young generation bike are launched Company profile “Hero” is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group both owned 26% stake in the Company. In 2010, it was reported that Honda planned to sell its stake in the venture to the Munjal family.
- 11. 11 During the 1980s,the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it - Forget it' that emphasized the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. The technology in the bikes of Hero Honda for almost 26 years (1984–2010) has come from the Japanese counterpart Honda. Hero MotoCorp has three manufacturing facilities based at Dharuhera, Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per year. Hero MotoCorp has a large sales and service network with over 3,000 dealerships and service points across India. Hero Honda has a customer loyalty program since 2000, called the Hero Honda Passport Program. The company has a stated aim of achieving revenues of $10 billion and volumes of 10 million two-wheelers by 2016–17. This in conjunction with new countries where they can now market their two-wheelers following the disengagement from Honda. Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets, and they expected to launch sales in Nigeria by end-2011 or early-2012. CORPORATE PROFILE Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of two – wheelers, based in India. In 2001, the Company achieved the coveted position of being the largest two-wheeler manufacturing Company in India and also, the ‘World No.1’ two-wheeler Company in terms of unit volume sales in a calendar year. Hero MotoCorp Ltd. continues to maintain this position till date. Vision The story began with a simple vision – the vision of a mobile and an empowered India, powered by its bikes. Hero MotoCorp Ltd., company’s new identity, reflects its commitment
- 12. 12 towards providing worldclass mobility solutions with renewed focus on expanding company’s footprint in the global arena. Mission Hero MotoCorp mission is to become a global enterprise fulfilling its customers’ needs and aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts its customers into its brand advocates. The Company will provide an engaging environment for its people to perform to their true potential. It will continue its focus on value creation and enduring relationships with its partners. Strategy Hero MotoCorp key strategies are to build a robust product portfolio across categories, explore growth Opportunities globally, continuously improve its operational efficiency; aggressively expand its reach to customers, Continue to invest in brand building activities and ensure customer and shareholder delight. Manufacturing Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities. 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 Uttarakhand. Technology In the 1980’s the Company pioneered the introduction of fuel-efficient, environment friendly four-stroke motorcycles in the country. It became the first Company to launch the Fuel Injection (FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006.
- 13. 13 Its plants useworld class equipment and processes and have become a benchmark in leanness and productivity. Hero MotoCorp, in its endeavor to remain technology pioneer, will continue to innovate and develop cutting edge products and processes. Products Hero Honda's product range includes variety of motorcycles that have set the industry standards across all the market segments. The Company also started manufacturing scooter in 2005. Hero Honda offers large no. of products and caters to wide variety of requirements across all the segments. Distribution The Company’s growth in the two wheeler market in India is the result of an intrinsic ability to increase reach in new geographies and growth markets. Hero MotoCorp extensive sales and service network now spans over to 5000 customer touch points. These comprise a mix of authorized dealerships, Service & Spare Parts outlets, and dealer-appointed outlets across the country. Brand The new Hero is rising and is poised to shine on the global arena. Company’s new identity “Hero MotoCorp Ltd.” Is truly reflective of its vision to strengthen focus on mobility and technology and creating global footprint. Building and promoting new brand identity will be central to all its initiatives, utilizing every opportunity and leveraging its strong presence across sports, entertainment and ground- level activation. KEY EXECUTIVES: S.No Name Designation
- 14. 14 1 Brijmohan LallMunjal Chairman 3 Pawan Munjal Managing Director 2 Ilam C Kamboj Company Secretary 4 Suman Kant Munjal Non-Executive Director 5 Paul Edgerley Non-Executive Director 6 Sunil Kant Munjal Joint Managing Director 7 Pradeep Dinodia Non-Executive & Independent Director 8 Pritam Singh Non-Executive & Independent Director 10 V P Malik Non-Executive & Independent Director 11 M Damodaran Non-Executive & Independent Director 12 Ravi Nath Non-Executive & Independent Director Senior Management. MR. RAVI SUD Sr. Vice President and Chief Financial Officer. MR. ANIL DUA
- 15. 15 Sr. Vice President- Marketing and Sales MR. VIKRAM KASBEKAR Sr. Vice President and Head of Operations & Supply Chain DR. ANADI S. PANDE Vice President (HRM, Corporate Planning & Strategy) MR. VIJAY SETHI Vice President and Chief Information Officer, Hero MotoCorp Ltd. MR. NEERAJ MATHUR Vice President- Strategic Sourcing & Supply Chain Management HARJEET SINGH Vice President and Head R&D Termination of Honda joint venture In December 2010, the Board of Directors of the Hero Honda Group has decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda. Under the joint venture Hero Group could not export to international markets (except Sri Lanka) and the termination would mean that Hero Group can now export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their bikes. So there are concerns that the Hero Group might not be able to sustain the performance of the Joint Venture alone. The Japanese auto major will exit the joint venture through a series of off market transactions by giving the Munjal family—that held a 26% stake in the company—an additional 26%. Honda, which also has an independent fully owned two wheeler subsidiary—
- 16. 16 Honda Motorcycle andScooter India (HMSI)—will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday. The rising differences between the two partners gradually emerged as an irritant. Differences had been brewing for a few years before the split over a variety of issues, ranging from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero Honda (mainly managed by the Munjal family) to merge the company's spare parts business with Honda's new fully owned subsidiary Honda Motorcycle and Scooter India (HMSI). As per the arrangement, it will be a two-leg deal. In the first part, the Munjal family, led by Brijmohan Lal Munjal group, will form an overseas-incorporated special purpose vehicle (SPV) to buy out Honda's entire stake, which will be backed by bridge loans. This SPV would eventually be thrown open for private equity participation and those in the fray include Warburg Pincus, Kohlberg Kravis Roberts (KKR), TPG, Bain Capital, and Carlyle Group. Honda will continue to provide technology to Hero Honda motorbikes until 2014 for existing as well as future models.[20] Company performance During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12% over last year. In the same year, the company had a market share of 57% in the Indian market. Hero Honda sells more two wheelers than the second, third and fourth placed two-wheeler companies put together. Hero Honda's bike Hero Honda Splendor sells more than one million
- 17. 17 units per year.On 1 June 2012, Hero MotoCorp reported its highest ever monthly sales at 5, 56,644 units in May, registering a growth of 11.28%. Recognition The Brand Trust Report published by Trust Research Advisory has ranked Hero in the 13th position among the brands in India. Motorcycle models Streak Achiever Ambition 133, Ambition 135 CBZ, CBZ Star, CBZ Extreme CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (Self Start) Glamour, Glamour F.I Hunk Karizma, Karizma R, Karizma ZMR FI Passion, Passion Plus, Passion Pro Pleasure Splendor, Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor NXG, Splendor PRO Hero Impulse launched in 2011 after the separation of hero and Honda. Its India's first off-road and on road Bike. Suppliers
- 18. 18 It is reportedHero Honda has five joint ventures or associate companies, Munjal Showa, AG Industries, Sunbeam Auto, Rockman Industries and Satyam Auto Components, that supply a majority of its components. Competitors: Bajaj Auto TVS Motor Maharashtra Scooters Atul Auto Scooters India Kinetic Engg LML Kinetic Motors VCCL Market Share
- 19. 19 45% market sharein the domestic two-wheeler market. 58% market share in the domestic motor cycle market Team hero. Hero good life is the industry’s largest customer relationship management program with 10 million members.
- 20. 20 May 2014 wasvery promising for two wheeler industry as every major company recorded increase in sales for this month. There is growth reported for domestic sales as well as exports. Hero remain Market leader with over 6 lakh sales, this is their record sales in a non festival month. But the cherry of cake is Honda with astonishing increase in sales. Honda recorded increase in sales by 55% and 126582 nos. This is even highest if you add up other manufactures sales nos. Bajaj reports steady growth thanks to their exports. M&M gain the highest growth percentage . Overall sales details are as below with comparison of last year sales. Substitutes Among Competitor
- 21. 21 Porter’s Five Forces Intensityof Existing Rivalry: a. Large industry size: Large industries allow multiple firms and produces to prosper without having to steal market share from each other. Large industry size is a positive for HERO MOTO CORP. b. Fast industry growth rate: When industries are growing revenue quickly, they are less likely to compete, because the total industry size is also growing. The only way to grow in slow growth industries is to steal market-share from competitors. Fast industry growth positively affects HERO MOTO CORP. … This statements will have a short- term negative impact on this entity, which subtracts from its value. c. Relatively few competitors: Few competitors mean fewer firms are competing for the same customers and resources, which is a positive for HERO MOTO CORP. …"Relatively Few Competitors (HERO MOTO CORP)" has a significant impact, so an analyst should put more weight into it. d. Exit barriers are low: When exit barriers are low, weak firms are more likely to leave the market, which will increase the profits for the remaining firms. Low exit barriers are a positive for HERO MOTO CORP. … "Exit Barriers Are Low (HERO MOTO CORP)" has a significant impact, so an analyst should put more weight into it. "Exit Barriers Are Low (HERO MOTO CORP)" will have a long-term negative impact on this entity, which subtracts from the entity's value. This statements will have a short-
- 22. 22 term negative impacton this entity, which subtracts from its value. This qualitative factor will lead to an increase in costs. Threat of Substitutes: a. Unlimited number of substitutes: Unlimited Number of Substitutes (HERO MOTO CORP)" will have a long-term negative impact on this entity, which subtracts from the entity's value. b. Substitute product is inferior: An inferior product means a customer is less likely to switch from HERO MOTO CORP to another product or service. Threat of New Competitors: a. Strong brand names are important: If strong brands are critical to compete, then new competitors will have to improve their brand value in order to effectively compete. Strong brands positively affect HERO MOTO CORP. … This qualitative factor will lead to a decrease in costs. This statements will have a short-term negative impact on this entity, which subtracts from its value. "Strong Brand Names Are Important (HERO MOTO CORP)" is an easy qualitative factor to overcome, so the investment will not have to spend much time trying to overcome this issue. b. Strong distribution network required: Weak distribution networks mean goods are more expensive to move around and some goods don’t get to the end customer. The expense of building a strong distribution network positively affects HERO MOTO CORP. … "Strong Distribution Network Required (HERO MOTO CORP)"has a significant impact, so an analyst should put more weight into it. This statements will have a short-term positive impact on this entity, which adds to its value. "Strong Distribution Network Required (HERO MOTO CORP)" will have a long-term negative impact on this entity, which subtracts from the entity's value. c. High capital requirements: High capital requirements mean a company must spend a lot of money in order to compete in the market. High capital requirements positively affect HERO MOTO CORP. … "High Capital Requirements (HERO MOTO CORP)" will have a long-term positive impact on this entity, which adds to its value. "High Capital Requirements (HERO MOTO CORP)" is an easy qualitative factor to overcome, so the investment will not have to spend much time trying to overcome this issue. d. Geographic factors limit competition: If existing competitors have the best geographical locations, new competitors will have a competitive disadvantage. Limiting geographic factors positively affect HERO MOTO CORP. … "Geographic Factors Limit Competition (HERO MOTO CORP)" has a significant impact, so an analyst should put more weight into it. "Geographic Factors Limit Competition (HERO MOTO CORP)" will have a long-term negative impact on this entity, which subtracts from the entity's value. e. Patents limit new competition: Patents that cover vital technologies make it difficult for new competitors, because the best methods are patented. Patents positively affect HERO MOTO CORP. … This statements will have a short-term positive impact on this entity, which adds to its value. This statement will lead to an increase in profits for this entity. This qualitative factor will lead to an increase in costs. "Patents Limit New Competition (HERO
- 23. 23 MOTO CORP)" isa difficult qualitative factor to overcome, so the investment will have to spend a lot of time trying to overcome this issue. f. Customers are loyal to existing brands: It takes time and money to build a brand. When companies need to spend resources building a brand, they have fewer resources to compete in the marketplace. These costs positively affect HERO MOTO CORP. g. High switching costs for customers: High switching costs make it difficult for customers to change which products they normally purchase, due to costs. High switching costs positively affect HERO MOTO CORP. Bargaining Powerof Suppliers: a. High competitionamong suppliers:Highlevelsof competitionamongsuppliersactsto reduce pricesto producers.Thisisa positive for HEROMOTO CORP.… "HighCompetition AmongSuppliers(HEROMOTOCORP)" has a significantimpact,soananalystshouldput more weightintoit.Thisstatementswillhave ashort-termpositive impactonthisentity, whichaddsto its value.Thisqualitative factorwillleadtoadecrease incosts. "High CompetitionAmongSuppliers(HEROMOTO CORP)" isa difficultqualitative factorto overcome,sothe investmentwillhave tospendalotof time tryingto overcome thisissue. b. Diverse distributionchannel:The more diverse distributionchannelsbecomethe less bargainingpowerasingle distributorwill have.Thispositivelyaffects HEROMOTO CORP.… Thisqualitative factorwill leadtoa decrease incosts. "Diverse Distribution Channel (HERO MOTO CORP)"is a difficultqualitative factortodefend,socompetinginstitutionswill have an easytime overcomingit. "DiverseDistributionChannel(HEROMOTO CORP)" will have a long-termnegative impactonthisentity,whichsubtractsfromthe entity'svalue.This statementswill haveashort-termnegativeimpactonthisentity,whichsubtractsfromits value. "Diverse DistributionChannel (HEROMOTOCORP)" isa difficultqualitative factorto overcome,sothe investmentwillhave tospend alotof time tryingto overcome thisissue. c. Volume iscritical to suppliers:Whensuppliersare reliantonhighvolumes,theyhave less bargainingpower,because aproducercanthreatento cut volumesandhurtthe supplier’s profits.Thiscan positively affectHEROMOTO CORP. d. Low cost ofswitching suppliers: The easier it is to switch suppliers; the less bargaining power they have. Low supplier switching costs positively affect HERO MOTO CORP Bargaining Powerof Customers: a. Low buyer price sensitivity:Whenbuyersare lesssensitive toprices,pricescanincrease and buyerswill still buythe product.Inelasticdemandpositivelyaffects HEROMOTO CORP. b. Product is important to customer: Whencustomerscherishparticularproductstheyendup payingmore for thatone product. Thispositivelyaffects HEROMOTO CORP.…"Product Is Importantto Customer(HEROMOTO CORP)" has a significantimpact,soananalystshould put more weightintoit. "ProductIsImportant to Customer(HEROMOTO CORP)" will have a long-termnegative impactonthisentity,whichsubtractsfromthe entity'svalue. c. Large number of customers:Whenthere are large numbersof customers,noone customer tendsto have bargaining leverage.Limitedbargainingleverage helps HEROMOTO CORP.
- 24. 24 CBBE Pyramid: Keller's BrandEquity Model is also known as the Customer-Based Brand Equity (CBBE) Model. Kevin Lane Keller, a marketing professor at the Tuck School of Business at Dartmouth College, developed the model and published it in his widely used textbook, "Strategic Brand Management.” The concept behind the Brand Equity Model is simple: in order to build a strong brand, you must shape how customers think and feel about your product. You have to build the right type of experiences around your brand, so that customers have specific, positive thoughts, feelings, beliefs, opinions, and perceptions about it. When you have strong brand equity, your customers will buy more from you, they'll recommend you to other people, they're more loyal, and you're less likely to lose them to competitors Let's look at each step and building block in detail, and discuss how you can apply the framework and strengthen your brand. Step 1: Brand Identity – Who Are You? In this first step, your goal is to create "brand salience," or awareness – in other words, you need to make sure that your brand stands out, and that customers recognize it and are aware of it. You're not just creating brand identity and awareness here; you're also trying to ensure that brand perceptions are "correct" at key stages of the buying process. Application
- 25. 25 To begin, youfirst need to know who your customers are. Research your market to gain a thorough understanding of how your customers see your brand, and explore whether there are different market segments with different needs and different relationships with your brand. Next, identify how your customers narrow down their choices and decide between your brand and your competitors' brands. What decision-making processes do your customers go through when they choose your product? How are they classifying your product or brand? And, when you follow their decision making process, how well does your brand stand out at key stages of this process? You are able to sell your product because it satisfies a particular set of your customers' needs; this is your unique selling proposition , or USP. You should already be familiar with these needs, but it's important to communicate to your customers how your brand fulfills these. Do your clients understand these USPs when they're making their buying decisions? By the end of this step, you should understand whether your clients perceive your brand as you want them to, or whether there are specific perceptual problems that you need to address – either by adjusting your product or service, or by adjusting the way that you communicate your message. Identify the actions that you need to take as a result. Step 2: Brand Meaning – What Are You? Your goal in step two is to identify and communicate what your brand means, and what it stands for. The two building blocks in this step are: "performance" and "imagery." "Performance" defines how well your product meets your customers' needs. According to the model, performance consists of five categories: primary characteristics and features; product reliability, durability, and serviceability; service effectiveness, efficiency, and empathy; style and design; and price. "Imagery" refers to how well your brand meets your customers' needs on a social and psychological level. Your brand can meet these needs directly, from a customer's own experiences with a product; or indirectly, with targeted marketing, or with word of mouth. A good example of brand meaning is Patagonia®. Patagonia makes high quality outdoor clothing and equipment, much of which is made from recycled materials. Patagonia’s brand performance demonstrates its reliability and durability; people know that their products are well designed and stylish, and that they won't let them down. Patagonia’s brand imagery is enhanced by its commitment to several environmental programs and social causes; and its strong “reduce, reuse, recycle” values make customers feel good about purchasing products from an organization with an environmental conscience. Application The experiences that your customers have with your brand come as a direct result of your product's performance. Your product must meet, and, ideally, exceed their expectations if you want to build loyalty. Use the Critical to Quality Tree and Kano Model Analysis models
- 26. 26 to identify yourcustomers' needs, and then explore how you can translate these needs into a high quality product. Next, think carefully about the type of experience that you want your customers to have with your product. Take both performance and imagery into account, and create a "brand personality." Again, identify any gaps between where you are now and where you want to be, and look at how you can bridge these. Step 3: Brand Response – What Do I Think, or Feel, About You? Your customers' responses to your brand fall into two categories: "judgments" and "feelings." These are the two building blocks in this step. Your customers constantly make judgments about your brand and these fall into four key categories: Quality: Customers judge a product or brand based on its actual and perceived quality. Credibility: Customers judge credibility using three dimensions – expertise (which includes innovation), trustworthiness, and likability. Consideration: Customers judge how relevant your product is to their unique needs. Superiority: Customers assess how superior your brand is, compared with your competitors' brands. Customers also respond to your brand according to how it makes them feel. Your brand can evoke feelings directly, but they also respond emotionally to how a brand makes them feel about themselves. According to the model, there are six positive brand feelings: warmth, fun, excitement, security, social approval, and self-respect. Application First, examine the four categories of judgments listed above. Consider the following questions carefully in relation to these: What can you do to improve the actual and perceived quality of your product or brand? How can you enhance your brand's credibility? How well does your marketing strategy communicate your brand's relevancy to people's needs? How does your product or brand compare with those of your competitors? Next, think carefully about the six brand feelings listed above. Which, if any, of these feelings does your current marketing strategy focus on? What can you do to enhance these feelings for your customers?
- 27. 27 Identify actions thatyou need to take as a result of asking these questions. Step 4: Brand Resonance – How Much of a ConnectionWould I Like to Have With You? Brand "resonance" sits at the top of the brand equity pyramid because it's the most difficult – and the most desirable – level to reach. You have achieved brand resonance when your customers feel a deep, psychological bond with your brand. Keller breaks resonance down into four categories: Behavioral loyalty: This includes regular, repeat purchases. Attitudinal attachment: Your customers love your brand or your product, and they see it as a special purchase. Sense of community: Your customers feel a sense of community with people associated with the brand, including other consumers and company representatives. Active engagement: This is the strongest example of brand loyalty. Customers are actively engaged with your brand, even when they are not purchasing it or consuming it. This could include joining a club related to the brand; participating in online chats, marketing rallies, or events; following your brand on social media; or taking part in other, outside activities. Application Your goal in the last stage of the pyramid is to strengthen each resonance category. For example, what can you do to encourage behavioral loyalty? Consider gifts with purchase, or customer loyalty programs. Ask yourself what you can do to reward customers who are champions of your brand. What events could you plan and host to increase customer involvement with your brand or product? List the actions that you could take. Marketing mix ofHero Motors: Product:
- 28. 28 Hero motors areknown for its quality and advanced technology, satisfying the needs of the customers both in urban and rural areas. Place: Hero Motors concentrates not only on urban areas; it targets rural areas as well. It has its showrooms in almost every town in the country, making the two wheelers available everywhere in the country. Price: The pricing strategy of the Hero two wheelers is economical and value for money, they were very reasonably priced. Promotion: The promotional strategy of Hero Motors is sponsoring lot of national and international events and endorsed by the well knows personalities of the country. They sponsor the events like cricket world cups. Segmentation,Targeting and Positioning ofHero Moto Corp 1. Introduction to Two Wheeler Bikes
- 29. 29 A motorcycle (alsocalled a motorbike, bike) is a two wheeled motor vehicle. Motorcycles vary considerably depending on the task they are designed for, such as long distance travel, navigating congested urban traffic, cruising, sport and racing, or off-road conditions. Motorcycles are one of the most affordable forms of motorized transport in many parts of the world and, for most of the world's population, they are also the most common type of motor vehicle. There are around 200 million motorcycles (including mopeds, motor scooters, motorized bicycles, and other powered two and three-wheelers) in use worldwide, or about 33 motorcycles per 1000 people. India, is the second largest producer of two-wheelers in the world. In the last few years, the Indian two-wheeler industry has seen spectacular growth. The country stands next to China and Japan in terms of production and sales respectively. Majority of Indians, especially the youngsters prefer motorbikes rather than cars. Capturing a large share in the two-wheeler industry, bikes and scooters cover a major segment. Bikes are considered to be the favorite among the youth generation, as they help in easy commutation. The two-wheeler market in India is the biggest contributor to the automobile industry with a size of Rs. 100,000 million. The motorcycle market share is about 81.5% of the total two wheeler market in India. Three- fourths of the total exports in the two wheeler automobile industry are made in the motorcycle segment. Segmentation, Targeting and Positioning Related to Bikes A market segment consists of a group of customers who share a similar set of needs and wants. The major segmentation variables—geographic, demographic, psychographic, and behavioral segmentation. Geographic Segmentation (nation, states, regions, cities, density, climate, etc.)
- 30. 30 Demographic Segmentation(age, family size, gender, income, family life cycle, occupation, religion) Psychographic segmentation (lifestyle, personality) Behavioral segmentation (occasions, benefits, user status, usage rate, loyalty status, attitude towards product) For bikes, demographic segmentation plays an important role. Bikes cater to a particular age group, gender and/or income group. Depending upon the segment, the features of the bike varies. Hence, marketers should have a good knowledge about what features to add on as per the segment they want to cater to. Market Targeting Once the firm has identified its market-segment opportunities, it has to decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups. In evaluating different market segments, the firm must look at two factors: the segment's overall attractiveness and the company's objectives and resources. After evaluating different segments, the company can consider five patterns of target market selection. Single – segment concentration: Through concentrated marketing, the firm gains a strong knowledge of the segment's needs and achieves a strong market presence. Selective specialization: A firm selects a number of segments, each objectively attractive and appropriate. Product specialization: The firm makes a certain product that it sells to several different market segments. Market specialization: The firm concentrates on serving many needs of a particular customer group. Full market coverage: The firm attempts to serve all customer groups with all the products they might need. Manufacturers of bikes need to be very precise while selecting their target market. They should understand the consumer’s demand and then accordingly place their product. The product’s features should satisfy its target customers and should be at per with the value it promises to its target customers.
- 31. 31 Market Positioning Positioning isthe act of designing company’s offering and image to occupy a distinctive place in the mind of a target market. The end result of positioning is value proposition, a cogent reason why the target market should buy the product. [4] Positioning in market is very important as well as difficult. It’s making the consumers aware of your product. Each bike must have a unique selling point which needs to be well portrayed in consumer’s mind so that he has an additional choice in his mind. Market Segmentation Hero MotoCorp caters to a wide consumer base. It has segmented its market based on income and age. It caters to youth of all income groups. Its highest selling bike Splendor is a favorite in sub urban and rural India. It portrays itself as the most efficient bike range to cater to Indian Roads. Target Market Hero MotoCorp follows selective specialization. It has a wide range of bikes from Rs 37,000 to Rs 95, 000. Each product has multiple optional features. The USP that it uses are: strong, sturdy and powerful, greater mileage, low maintenance cost, safe to ride, ease and comfort. Its target market includes lower middle class consumer to upper middle class consumer. It is affordable, available and acceptable by all. Positioning Strategy Fill it. Shut it. Forget it Campaign This campaign focused on the mileage of Hero bikes. It says that once you fill oil in the bike’s tank, you are tension free. Due to its higher mileage, you can travel as much as you want without bothering to refill oil.
- 32. 32 Dhak dhak goAdvertisement campaign Dhak dhak refers to the heart beat. Therefore, this campaign showed that if you are riding a Hero bike you are listening to your heart. This campaign connects emotionally to the consumer as it shows the connection of bikes to the heart of every Indian. Desh ki Dharkan Advertisement Campaign Desh ki dharkan refers to the heart beat of the country. It symbolizes that all people In India are emotionally attached to their country? Even though there are a lot of cultural differences but the entire country stands as one. This campaign places Hero bikes as the heartbeat of the entire nation uniting everyone as a nation. Event sponsorships
- 33. 33 Event sponsorships ofvarious cricket matches is a positioning strategy as cricket has a huge fan base in India. It positions itself as a strong, reliable, affordable and greater mileage bikes. Celebrity endorsements Various celebrity endorsements are used as their positioning technique. Saurav Ganguly, when he was captain of Indian Cricket team was their brand ambassador along with Hritik Roshan. Both these personalities are unique in their fields. Saurav Ganguly was the face of Indian cricket. People worshiped him. So, through Saurav Gaunguly, Hero potrayed itself as the heartbeat of the country. Iconic figure Hritik Roshan is known for his youth and physique. So through him Hero tried to lure the youth. Hum me hai hero campaign This is the recent advertisement of Hero MotoCorp. This advertisement tries to prove that we all are born super starts. We just need to focus and believe in ourselves. There is nothing impossible in this world and there is nothing that can’t be achieved. Through perseverance we can reach great heights and achieve whatever we want. We just need to believe firmly that we are a hero. BCG Matrix:
- 34. 34 To use thechart, analysts plot as catter graph to rank the business units (or products) on the basis of their relative market shares and growth rates. Cash cows :are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. Dogs: or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off. Questionmarks: (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a
- 35. 35 dog when themarket. growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. Stars: are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom. Ansoff Metrix: Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. The output from the Ansoff product/market matrix is a series of suggested growth strategies which set the direction for the business strategy. These are described below: Marketpenetration Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market penetration seeks to achieve four main objectives:
- 36. 36 Maintain orincrease the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling Secure dominance of growth markets Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors Increase usage by existing customers – for example by introducing loyalty schemes A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Marketdevelopment Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including: New geographical markets; for example, exporting the product to a new country New product dimensions or packaging: for example New distribution channels (e.g. moving from selling via retail to selling using e- commerce and mail order) Different pricing policies to attract different customers or create new market segments Market development is a more risky strategy than market penetration because of the targeting of new markets. Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. A strategy of product development is particularly suitable for a business where the product needs to be differentiated in order to remain competitive. A successful product development strategy places the marketing emphasis on: Research & development and innovation
- 37. 37 Detailed insightsinto customer needs (and how they change) Being first to market Diversification Diversification is the name given to the growth strategy where a business markets new products in new markets. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. However, for the right balance between risk and reward, a marketing strategy of diversification can be highly rewarding. Brand Identity : Hero Honda Motor Ltd (HHML), world’s single largest two-wheeler manufacturer, has appointed creative firm Law & Kenneth to develop communication strategy for launching and establishing its new brand identity. This comes on the heels of the appointment in March of London-based Wolff Olins, part of the Omnicom Group, to design a new identity for HHML. Wolff Olins is working on developing the brand architecture, name, logo and positioning of HHML after the split with Honda Motor Corporation. Law & Kenneth is India’s largest independent brand communications firm. Anil Dua, senior vice-president (sales & marketing) of HHML, said: “Law & Kenneth has been mandated to bring alive the positioning of the new brand, and evolve an impactful 360-degree campaign to communicate the same. Wolff Olins and Law & Kenneth will
- 38. 38 work closely togetherto ensure seamless transition between the strategic thought behind the new identity and the new brand campaign.” Hero Honda initiated the rebranding exercise to carve a new identity after termination of the joint venture agreement between Honda of Japan and the Munjals’ Hero Group last December. HHML has rights to use the Hero Honda brand on its products till 2014, but the company is keen on promoting new products, to be introduced in its portfolio under its own name. The Munjals, through their group company, Hero Investments Pvt Ltd, bought Honda’s stake in Hero Honda for Rs 3,841 crore. Through a technological collaboration, HMC would continue to provide products to Hero Honda till June 2014. While Hero Honda would now work at building presence in markets abroad, Honda, through its wholly-owned subsidiary, Honda Motorcycle and Scooter India Ltd, is looking at scaling up operations in Indian. Hero Honda would start physical work to put in place a distribution network to export products abroad. Dua had earlier said, “We have so far been a national player, with limited global presence. We will now look at rapidly tapping opportunities worldwide. In our existing exports’ market, we will use the joint brand during the transition period for our products. In new geographies, we will project our own brand.” The company is looking at exploring markets in South Africa, South Asia, West Asia and Latin America. Holistic Marketing :
- 39. 39 A marketing strategythat is developed by thinking about the business as a whole, its place in the broader economy and society, and in the lives of its customers. It attempts to develop and maintain multiple perspectives on the company’s commercial activities. Holistic marketers engage in a host of carefully planned, interconnected marketing activities and satisfies an increasing broader set of constituents and objectives. They also consider a wide range of effects of their actions. Holistic marketing include the following. Relationshipmarketing: The concept of customer service led to a new concept called relationship management. As competition increased, the organisation started to realise the importance of customer value. They realised that it’s not just always low prices, but also other aspects like delivery, image, brand associations and the relationship with the customers becomes key factors. The ultimate aim of a relationship marketing approach is for the customer to become a ‘partner’ of the organisation, by contributing to marketing decisions through a one-to-one relationship.
- 40. 40 Internal Marketing: Internal marketingis based on the fact that the employees are the internal customers of a company. Employee satisfaction is the utmost important for a firm to achieve its goal. Internal marketing ensures building a skilled and self-motivated workforce and that every member of the organization properly understands the company’s marketing orientation and philosophy towards the customer satisfaction. Internal marketing is also about maintaining harmony and co-ordination among various marketing functions and activities within the organization. There should not be any conflicts within the marketing department or between marketing and other departments because that would somehow negatively affect external marketing also. Integrated Marketing: Integrated Marketing is the tactical delivery of blended strategy to ensure that you capture all touching points with your clientele. As we are morphing into a more digital arena we are seeing
- 41. 41 an increasing trendof consumers using different forms of communication with respective brands through various platforms. Social Marketing: Cause-related marketing supports a cause. Different kind of organisation conduct social marketing in India that includes, government, autonomous institutions, foundations, NGOs etc. Choosing the right goal and objective of social marketing is difficult. Corporate social responsibility is one of the major part of every major player.
- 42. 42 Co Branding Companies thathave complementary products will often work together to raise awareness of their specific brands. This "co-branding" approach allows customers who are loyal to one brand or the other to see for themselves how the products work together India's two-wheeler giant, the Hero MotoCorp, has signed American golf legend Tiger Woods as its brand ambassador in a four-year deal that targets capturing new markets in North America and Europe. The deal, for an undisclosed amount, can be termed as the biggest for an Indian manufacturer in terms of association with a global icon is concerned. Interestingly, the announcement has come two days before the start of the prestigious PGA event World Challenge, which is hosted by Tiger Woods Foundation and Hero MotoCorp Ltd as the title sponsors. "We have gone beyond the Hero World Challenge and we will also have Tiger Woods as our corporate partner for the next four years starting from December 1," Pawan Munjal, Managing Director, Hero Motocorp India, told a select media gathering here. "It is an endorsement deal with Tiger Woods in which he will not only be partnering but also promoting Hero as a brand across the globe," Munjal said adding that "It is not just for the US market." Hero Group is world's largest two-wheeler manufacturer but still considered only a domestic player. Joining hands with Woods is clearly a move to create a space at global level. The 38- year-old golf legend is a 14-time major championship winner, second only to Jack Nicklaus (18). Asked what made them choose a player, whose reputation took a beating five years back due to his infidelity scandal, Munjal said they have taken a very "conscious" decision.
- 43. 43 "Let me tellyou, we are absolutely thrilled to be in a partnership with Tiger. Hero and Tiger together represent the best in our respective professions. Whatever happened is now all behind him. He went public, apologised for what has happened and he is back in the game," Munjal said. "People are back with him, many corporates are back with him and obviously Hero took a very conscious call," he added, explaining the move. SWOT Analyses : SWOT analysis is a strategic planning method used to evaluate the Strengths ,Weaknesses ,Opportunities, and Threats involved in a projector in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500companies.A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning has been the subject of much research. Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses:are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.
- 44. 44 First, the decisionmakers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. .The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development. Internel and Externel Factors : The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories: •Internal factors – The strengths and weaknesses internal to the organization. •External factors – The opportunities and threats presented by the external environment to the organization. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the4P's; as well as personnel, finance, manufacturing capabili ties, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting list suncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important. Strength 1.Huge brand equity/reputation among customers. 2.Models/products in almost every bike segment. 3.Healthy growth in profits. 4.Brilliant relations with customers and dealers. 5.Strong Resale Value.
- 45. 45 6.Strong Research &Development. 7.Quality product for each category. 8. Dedicated Human Resource. 9. Awareness in the people. 10. Highly competitive features neology with international collaboration. Weakness 1.Hero is very much dependent on Honda. 2.Low cash reserves due to massive dividend pay outs. 3.Very difficult to cop up if contract discontinues. 4.Virtual absence in the highly lucrative bike segments. 5.Imports >31% of its spare parts requirements. 6.Slow to react to market changes- Slow innovation- late entrants into the 125ccsegment. 7.Too much dependence on few models. 8.Absence of digital speedometer except Karizma. 9.Absence of variants except Hunk. Opportunities 1.Bikes Segment is still a fast growing sector. 2.HHML can still make it up by launching a strong model in 150cc segment. 3.125cc bike segment - This segment is yet to pick pace. 4.Exports market is yet to be properly exploited. 5.Cruiser bike segment is unexplored by HHML. 6.Variants can be launched to increase the market share. 7.Hero Honda is the most reliable bike manufacturer in India strong brandfollower. Threats 1.Hero Honda will need to have a bigger presence in the executive segment. 2.It will be a great threat for Hero is the collaboration breaks up.
- 46. 46 3.All major bikemakers in the world are lining up for India. 4.Absence in 150cc could harm the growth plans of HHML as future lies in the150cc and 125cc markets. 5.Low cash reserves. 6.Strong competition from Bajaj, Yamaha & TVS Product v/s Brand: A product is anything we can offer to a market for attention, acquisition, use or consumption that might satisfy a need or want. A product may be a physical good, a service, a retail outlet, a person, an organization, a place or an idea. According to American Marketing Association (AMA), “a brand is a name, term, sign, symbol, or design, or communication of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competition.” Technically speaking, then, whenever a marketer creates a new name, logo, or symbol for a new product, he or she has created a bran Product Brand Product is made in a factory. Brand is made in the minds of consumer. Products can be copied. Brand is Unique. Product can be quickly outdated. Successful brand is timeless. . BRANDPRODUCT
- 47. 47 Brand Architecture : Brandarchitecture is the structure of brands within an organizational entity. It is the way in which the brands within a company’s portfolio are related to, and differentiated from, one another. The architecture should define the different leagues of branding within the organization; how the corporate brand and sub-brands relate to and support each other; and how the sub-brands reflect or reinforce the core purpose of the corporate brand to which they belong. Often, decisions about Brand Architecture are concerned with how to manage a parent brand, and a family of sub-brands - Managing brand architecture to maximize shareholder value can often include using brand valuation model techniques. Corporate dominant strategy : A strategy is dominant if, regardless of what any other players do, the strategy earns a player a larger payoff than any other. Hence, a strategy is dominant if it is always better than any other strategy, for any profile of other players' actions. Depending on whether "better" is defined with weak or strict inequalities, the strategy is termed strictly dominant or weakly dominant. If one strategy is dominant, than all others are dominated. For example, in the prisoner's dilemma, each player has a dominant strategy. Mixed Brand Strategy : A mixed brand is a product marketed under its own name and that of a reseller because the segment attracted by the reseller is different from its own market. Brand dominant strategy : Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive offerings. There is often a geographic element to the competitive landscape. In defining market dominance, you must see to what extent a product, brand, or firm controls a product category in a given geographic area. New Development Product Process :
- 48. 48 In business andengineering, new product development (NPD) is the complete process of bringing a new product to market. New product development is described in the literature as the transformation of a market opportunity into a product available for sale and it can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). A good understanding of customer needs and wants, the competitive environment and the nature of the market represent the top required factors for the success of a new product. Cost, time and quality are the main variables that drive the customer needs. Aimed at these three variables, companies develop continuous practices and strategies to better satisfy the customer requirements and increase their market share by a regular development of new products. There are many uncertainties and challenges throughout the process which companies must face. The use of best practices and the elimination of barriers to communication are the main concerns for the management of NPD process. 1. Idea Generation is often called the "NPD" of the NPD process. Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats). Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. Lots of ideas are generated about the new product. Out of these ideas many are implemented. The ideas are generated in many forms. Many reasons are responsible for generation of an idea. Idea for new product can come from many sources, such as customer, scientists, competitors, employees, channel member, and top management. customer need and wants are the logical place to start the search. Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your
- 49. 49 OPPORTUNITY ANALYSIS tosupport your ideas in the Idea Screening Phase (shown in the next development step). 2. Idea Screening : The object is to eliminate unsound concepts prior to devoting resources to them. The screener should ask several questions: Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment / target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price? 3. Idea Development and Testing Develop the marketing and engineering details Product Idea - It is an idea for a possible product that the company can see itself offering to the market. Product Concept - It is a detailed version of the idea stated in meaningful consumer terms. Product Image - It is the way consumers perceive an actual or potential product. Investigate intellectual property issues and search patent databases Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively?
- 50. 50 Prove feasibilitythrough virtual computer aided rendering and rapid prototyping What will it cost to produce it? Testing the Idea may involve asking a number of prospective customers to evaluate the idea 4. Business Analysis : Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market and such tools as the Fourt- Woodlock equation Estimate profitability and break-even point 5. Beta Testing and Market Testing : Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to determine customer acceptance 6. Technical Implementation: New program initiation Finalize Quality management system Resource estimation Requirement publication Publish technical communications such as data sheets Engineering operations planning Department scheduling Supplier collaboration Logistics plan Resource plan publication
- 51. 51 Program reviewand monitoring Contingencies - what-if planning 7. Commercialization (often considered post-NPD) Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage 8. New Product Pricing : Impact of new product on the entire product portfolio Value Analysis (internal & external) Competition and alternative competitive technologies Differing value segments (price, value and need) Product Costs (fixed & variable) Forecast of unit volumes, revenue, and profit These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities. For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist which makes it difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable. Because the NPD process typically requires both engineering and marketing expertise, cross- functional teams are a common way of organizing projects.[16] The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set and speeds up the overall process.[citation needed]
- 52. 52 Because both engineeringand marketing expertise are usually critical to the process, choosing an appropriate blend of the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.[17][18] A new product pricing process is important to reduce risk and increase confidence in the pricing and marketing decisions to be made. Processes have been proposed to break down the complex task of new product pricing into more manageable elements. Product Life Cycle : Introduction : Hero Honda Passion is a motorcycle manufactured in India by Hero Honda. It is one of the world's largest selling motorcycles, second only to Hero Honda Splendor. Passion debuted in the year 2001. Its graphics and colours were first refreshed in the year 2003 and it was rechristened Passion Plus. Its graphics were again updated in the year 2008 and now black alloy wheels are standard with an all black engine. The engine is a 97.2 cc air-cooled, four-stroke single-cylinder. The chassis is a tubular double cradle type. Although it is under 100 cc, it is marketed as an executive class bike due to its styling and price. Decline: In this stage the sales begin to decline as the market becomes saturated the product becomes technologically obsolete or customer tastes change. If the product had developed brand loyalty the profitability may be maintained longer, nit costs may increase. The customers who take up product in this stage are laggards and competition also declines. The company now takes up
- 53. 53 the step tophrase out weak products. Distribution of the product in this stage is selective with cut down of prices. Difussionof Innovation : Diffusion of Innovation Theory, developed by E.M. Rogers in 1962, is one of the oldest social science theories. It originated in communication to explain how, over time, an idea or product gains momentum and diffuses through a specific population or social system. The end result of this diffusion is that people, as part of a social system, adopt a new idea, behavior, or product. Adoption means that a person does something differently than what they had previously. The key to adoption is that the person must perceive the idea, behavior, or product as new or innovative. It is through this that diffusion is possible. Innovators – They are technology enthusiastic; they are venturesome and enjoy tinkering with new products and mastering their intricacies. In return for low prices, they are happy to conduct alpha & beta testing report on early weaknesses. These are people who want to be the first to try the innovation. They are venturesome and interested in new ideas. These people are very willing to take risks, and are often the first to develop new ideas. Very little, if anything, needs to be done to appeal to this population. 2.5% of sales for lays come from innovators they accept any new product introduced in the market and also except the product due to low price.
- 54. 54 Early Adopters -These are people who represent opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage. They are fewer prices sensitive and willing to adopt the product if given personalized solution and good service. They enjoy leadership roles, and embrace change opportunities. They are already aware of the need to change and so are very comfortable adopting new ideas. Strategies to appeal to this population include how-to manuals and information sheets on implementation. They do not need information to convince them to change.13.5% of sales for Lays come from early adopters they adapt to changes in market at fast rate and help to generate profits. They are part of Growth stage in PLC. Early Majority – They are deliberate pragmatics who adopts technology when its benefits are proven and a lot of adoption has already taken place. These people are rarely leaders, but they do adopt new ideas before the average person. That said they typically need to see evidence that the innovation works before they are willing to adopt it. Strategies to appeal to this population include success stories and evidence of the innovation effectiveness. 34% of sales for Lays come from early majority these, people are part of maturity stage of PLC and are ready to purchase the product, irrespective of price. Late Majority – They are skeptical conservatives who are risk adverse, technology shy, and prove sensitive. These people are skeptical of change, and will only adopt an innovation after it has been tried by the majority. Strategies to appeal to this population include information on how many other people have tried the innovation and have adopted it successfully. 34% of sales in maturity stage also come from PLC. Laggards – They are traditional-bound and resist the innovation until the status quo is no longer defensible. These people are bound by tradition and very conservative. They are very skeptical of change and are the hardest group to bring on board. Strategies to appeal to this population include statistics, fear appeals, and pressure from people in the other adoptergroups.16.5% of sales of lays comes from laggards i.e. from decline stage. They are the last once to consume. They look into various factors before purchasing i.e. price is the most important factor. Lays successfully adopted laggards by pricing their product at low cost. Levels Of Product :
- 55. 55 Core Product : Thecore product or benefit of Hero Honda Passion is Travelling and saving the time by reach on desire place at right time. Basic Product : The basic product of Hero Honda splendor are Engine, Handle ,Shockers, Wheels, Gear box and chain set etc. ExpectedProduct : The expected products of Hero Honda splendor are: - 1.It should be 5 gear gear box. 2.It should be 90 Kmpl mileages. 3.It should be 120 Km/hour Maximum speed. 4.It should be disk brake or power brake. 5.It should be steel body Augmented Product : The augmented products of Hero Honda Splendor are: - 1.It provides monthly check up for decrease the pollution. 2.It provides fast service of the product. PotentialProduct : This is about augmentations and transformations that the product may undergo in the future.
- 56. 56 Brand - ProductMatrix: To characterize the brand architecture strategy of a firm, one useful tool is brand-product matrix, a graphical representation of all the brands and products sold by the firm. The matrix (or grid) has firm’s brands as rows and the corresponding products as columns. The rows of the matrix represent brand-product relationships. They capture the firm’s brand-extension strategy in terms of the number and nature of products sold under its different brands. A brand line consists of all products-original as well as line and category extensions-sold under a particular brand. Thus, a brand line is one row of the matrix. We want to judge a potential new product extension for brand a brand on how effectively it leverages existing brand equity from parent brand to the new product, as well as how effectively the extension, in turn, contributes to equity of the parent brand. The columns of the matrix represent product-brand relationships. They capture the brand portfolio strategy in terms of the number and nature of brands to be marketed in each category. The brand portfolio is the set of all brands and brands lines that a particular firm offers for sale to buyers in a particular category. Thus, a brand portfolio is one column of the matrix. Marketer’s design and market different brands to appeal to different market segments. We can characterize a firm’s brand architecture strategy according to its breadth (in terms of brand-product relationships and brand extension strategy) and its depth (in terms of product- brand relationships and the brand portfolio or mix). For example, a brand architecture strategy
- 57. 57 is both deepand broad if the firm has a large number of brands, many of which have been extended into various product categories. Some other terms useful in understanding how to characterize the brand architecture strategies of a firm: A product line is a group of products within a product category that are closely related because they function in a similar manner, are sold to the same customer group, are marketed through the same type of outlets, or fall within the given price ranges. A product line may include different brands, or a single family brand or individual brand that has been line extended. A product mix (or product assortment) is set of all product lines and items that a particular seller makes available to buyers. Thus, product line represents different sets of columns in product-brand matrix that, in total, make up the product mix. A brand mix (or brand assortment) is a set of all brand lines that a particular seller makes available to buyers. Estimating market demand for a Brand: The measures of market demand Companies can prepare as many as 90 different types of demand estimates for 6 different product levels, five space levels, and three time periods. Each demand measures serves a specific purpose. A company might forecast short-run demand to order raw materials, plan production, and borrow cash. It might forecast regional demand to decide whether to set up regional distribution. There are many productive ways to break down the market: The potential market is the set of consumers with sufficient level of interest in a market offer. However, their interest is not enough to define a market unless they also have sufficient income and access to the product. The available market is set of consumers who have interest, income, and access to particular offer. The company or government may restrict sales to certain groups; a particular state might ban the sale of alcohol to anyone less than 25 years of age. Eligible adults constitute the qualified available market. The target market is the part of the qualified available market the company decides to pursue. The company might concentrate its marketing and distribution effort on developing economics.
- 58. 58 The penetratedmarket is the set of consumers who are buying the company’s product. These definitions are a useful tool for market planning. If company isn’t satisfied with its current sales, it can try to attract a larger percentage of buyers from its target market. It can lower the qualifications for potential buyers. It can expand its available market by opening distribution elsewhere or lowering its price or it can reposition itself in the minds of its customers. Major concepts for measuring demand are market demand and company demand, within each; we distinguish among a demand function, a sales forecast, and potential. Market demand: The marketer’s first step in evaluating marketing opportunities is to estimate to market demand. Market demand for a product is the total volume that would be bought by a defined group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Market forecast: Only one level of industry expenditure will actually occur. The demand corresponding to this level is call market forecast. Market potential: The market forecast shows expected market demand, not maximum market demand. For the latter, we need to visualize the level of market demand resulting from a very high level of industry marketing expenditure, where further increases in marketing effort would have little effect. Market potential is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. Company demand: Company demand is the company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. It depends on how the company’s products, service, prices, and communications are perceived relative to the competitors’. Other things equal, market share depends on the relative scale and effectiveness of its market expenditure. Marketing model builders have developed sales response function to measure how companies’ sales are affected by its marketing expenditure levels, marketing mix, and marketing effectiveness. Company Sales Forecast: Once the marketers have estimated companies demand, their new task is to choose a level of marketing effort. The company’s sales force is the expected level of company sales based on chosen marketing plan and an assumed marketing environment. Company Sales Potential: It is the sales limit approached by company demand as company marketing effort increases relative to that of competitors. The absolute limit of company demand is, of course, the market potential. The two would be equal if the company got 100 percent of market. In most cases, company sales potential is less than the market potential, even when company marketing expenditure increases considerably.
- 59. 59 Estimating Current Demand: TotalMarket Potential: Total market potential is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing efforts and industry marketing effort and potential number of buyers by average quantity each purchases, times the price. Total market Potential= Potential number of buyers* Average quantity purchased by a buyer* the price Brand Value Chain: Brand value chain is a structured approach to assessing the sources and outcome of brand equity and the manner by which marketing activity create brand value. It rellllllcognizes many different people in the organization affect brand equity and need to be aware about relevant branding effects. The brand value chain, thus, provides insight to brand managers, chief marketing officers, managing directors, and chief executive officers, all of whom may need different types of information. Brand value chains have several basis premises. Fundamentally, it is assume that the value of the brand ultimately resides with the customers. Based on insights, the model next assumes that the brand value creation process begins when the firm invests in a marketing program targeting the consumer and potential consumers. The associated marketing activity then affects the consumers’ mindset- what the customer knows and feels about the brand. This mindset, cross a broad group of customers, produces the brand performance in the market place- how much and when the customer purchase, the price that they pay, and so forth. Finally, the investment community considers market performance- other factors such as replacement cost and purchase price in acquisitions- to arrive at assessment of shareholders value in general and value of brand in general.
- 60. 60 The model alsoassumes no. of factor intervene between these stage. These linking factors determine the extent to which the value is created at one stage transfers or multiples to other stage. Three set of multiplier moderate the transfers between the marketing program and the three value stages; the program multiplier, the consumer multiplier and market multiplier. There are both negative and positive effects of multipliers. Value Stages: Brand value creation begins with marketing activity by the firm. Marketing program investment: Any marketing investment program investment that can contribute to brand value development, intentionally or not, falls in to first value stage. Marketing activities like product research development include product design, communications- like advertising, promotion, sponsorship, direct and interactive marketing, personal selling, publicity, trade or intermediary support and employee training. Parle is spending on promotion activities to build up the brand image in the minds of their consumers. They train their employees so that it becomes easy for them to communicate the product information to consumers. Market investment is also done for bringing in new product, to bring about changes into existing product. Parle came up with variants in biscuit category like salted, glucose, Marie lite. Program Multiplier: The ability of marketing program to affect the consumers mind set will depend on its quality. A well-integrated marketing program carefully designed and implemented to be highly relevant and unique, is likely to achieve high returns on investments. There are different means to judge the quality of the marketing program. These are few of them: Clarity: How understandable is the brand marketing program? Do customers properly interpret and evaluate its meaning? Relevance: How meaningful is the brand to the consumers? Do consumers feel the brand is one they should seriously consider? Distinctiveness: How unique is the marketing program? How creative and differentiating is it? Consistency: How cohesive and well integrated is the marketing program. Do all aspects combine to create biggest impact with customers? Does marketing program relate effectively to past marketing program and properly balance continuity and change, evolving the brand in right direction? Parle is very successful in creating brand awareness through its marketing activities i.e. they have clarity in communicating their brand identity. When we consider Parle-G, they were able to make changes in their advertisement over the years but with a consistent message. Also, the message communicated to people with help of different channel is consistent. Consumers’ Mindset: In what ways the consumers have changed their minds as results of their marketing program? Consumer mindset involves all that exist in the minds of consumers with respect to brand: feelings, experience, images, perceptions, belief and attitude. Understanding consumers’ mindset can have important implications for marketing programs. 5 dimensions have emerged from prior research:
- 61. 61 Awareness: Theextent to which the customers can recall and recognize the brand and can identify the products and service. Association: The strength, favorability, and uniqueness of perceived attributes and benefits for the brands. Attitude: Over all evaluations of the brand in terms of quality and the satisfaction it generates. Attachment: How loyal the customers feel towards the brand. Activity: The extent to which customers use the brands, talk to others about it, and seek out brand information, promotion, and events. Parle has made a remarkable build up in the minds of the customers, by creating awareness among the people, carrying out marketing activities like promotion, advertising, etc.,. Consumer Multiplier: Success with consumers or customers may not translate to success in the marketplace. Unless other conditions also prevail. The ability of the customer mind set to create value at the next stage depends on various contextual market factors external to the customers. Three such factors are competitive superiority; channel and other intermediary support; and customer size and profile. The value created in the minds of customers translates to favorable brand performance when competitors provide no significant threat, when channel members and other intermediaries provide strong support, and when a sizeable number of profitable customers are attracted to the brand. Parle has vast distribution channel to cater large markets and different set of customers. They have an edge over their competitors i.e. they are leading in biscuits industry due to their strong channel support. Parle is successful to target a large consumer size i.e. people of all age group and income level. There market reach is spread across geographical all areas. Market Performance: The consumer multiplier and market multipliers affect how customers react or respond in the marketplace to the brand in a variety of ways. There are 6 key aspects or dimensions of that response. The first two (related) dimensions are price premium and price elasticity. How much extra are customers willing to pay for a comparable product because of its brand? Third dimension, market share, measures the success of the marketing program driving brand unit sales. Taken together, the first three dimensions determine the direct revenue stream attributable to the brand over time. Fourth dimension is the success of the brand in
- 62. 62 supporting line andcategory extensions and new product launches into related categories. This dimension captures brand expansion potential and the ability to add enhancements to the revenue stream. Fifth dimension is cost structure or, more specifically, the ability to reduce marketing program expenditures fir the brand because of the prevailing customers’ mindset. In other words, because customers already have favorable opinions and knowledge about the brand, any aspect of the marketing program is likely to be more effective for the same expenditure level. When combined, these factors lead to brand profitability, the sixth dimension. In short, brand value is manifested at this stage by profitable sales value. Parle has experienced success in its entire product; it’s due to good marketing strategy. Parle expanded its line and category; earlier it was producing glucose biscuit. Parle has 70% of market share, which shows that they have good brand profitability. Market multiplier: How much the value manifested in the performance of a brand translates to shareholder value again depend on external factor reflected in the investors’ sentiment multiplier. First, what are the dynamics of the financial markets as a whole (e.g. interest rates, investor sentiment or supply of capital)? Second, what is the risk profile for the category in general and the brand in particular? How vulnerable is the brand likely to be to various facilitating and inhabiting factors? Fourth, how important is the brand as part of the firm’s brand portfolio and all the brands it has? Shareholder value: Based on available information about a brand, as well as many other considerations, the financial marketplace formulates opinion and makes various assessments that have direct financial implications for the brand value. Three particularly important indicators are the stock price, the price/earnings ratio, overall market capitalization for the firm. Brand Extension. Its advantages and disadvantages: A brand extension occurs when a firm uses an established brand name to introduce a new product. When a new brand is combined with an existing brand, the brand extension can also be a sub-brand. An existing brand that gives birth to a brand extension is the parent brand. If the parent brand is already associated with multiple products through brand extension, then it may also call as family brand. Brand extension falls into two general categories: Line extension: Marketers apply the parent brand to a new product that targets a new market segment within a product category the parent brand currently serves.
- 63. 63 E.g. Parle biscuits:Parle-G, Monaco, Hide & Seek, Milk-Shakti, Milano. Parle snacks, Parle confectionary Category extension: Marketers apply the parent brand to enter a different product category from the one it currently serves. E.g. Parle: Parle-G, Parle rusk, Parle Marie. Advantages of Brand Extension: Well –planned and well implemented extensions offer a number of advantages like facilitating new product acceptance and providing feedback benefits to the parent brand. 1. Facilitates New Product Acceptance: A new product introduced as a brand extension may be more likely to succeed as it helps to: Improve Brand Image: Consumers can form similar inferences and expectations about the likely composition and performance of a brand extension, based on what they already know about brand itself. These inferences may improve the strength, favorability and uniqueness of the extension’s brand association. Parle can comes up with new range of product in portfolio as it has built up positive image in the mind of customers and has strength to earn high revenues and profits. Reduce Risk Perceived by Customers: Although corporate brands can lack specific product associations because of the breadth of products attached to their name, their established reputation for introducing high quality products and standing behind them may be an important risk-reducer for consumers. Increase the Probability of Gaining Distribution and Trial: Potential for increased consumer demand for new products extension may convince retailers to stock and promote it. Avoid Cost of Developing a New Brand: Developing new brand elements are an art and a science. To conduct the necessary consumer research, employ skilled personnel, design high – quality brand names, logos, symbol, packages can be quite expensive, and there is no assurance of success. Allow for Packaging and Labeling Efficiencies: Similar or identical packages and labels for extensions can result in lower production costs and if coordinated properly, more prominence in the retail store where they can create a “billboard” effect. . Permit Consumer Variety Seeking: If marketers offer a portfolio of brand variants within a product category, consumers who need a change- because of boredom or satiation- can switch without having to leave the brand family. A complement of line
- 64. 64 extensions can alsoencourage customers to use the brand to a greater extent or in different ways. Even to compete effectively in some categories, marketers may need to have multiple items that together form a cohesive product line. 2. Provide Feedback Benefits to the Parent Brand: Brand extension can also provide feedback to the parent brand in a number of ways: Clarify Brand Meaning: Extension can help clarify meaning of a brand to consumers and define the kinds of markets in which it competes, an important first step in the brand architecture process. Enhance the Parent Brand Image: According to the customer based brand equity model, one desirable outcome of a successful brand extension is that it may enhance the parent brand image by strengthening an existing brand association, or a combination of these. Bring New Customer into the Brand Franchise and Increase Market Coverage: Line extension can benefits the parent brand by expanding market coverage, such as by offering a product benefit whose absence may have prevented consumers from trying the brand. Revitalize the Brand: Sometimes brand extension can be a means to renew interest in and liking for the brand. It helps in making brand more contemporary and relevant. Permit Subsequent Extensions: One benefit of a successful extension- especially a category- is that it may serve as the basis for subsequent extensions. Disadvantages of Brand Extension: Can Confuse or Frustrate Consumers: Different varieties of line extensions may confuse and perhaps even frustrate consumers about which version of the product is the “right one” for them. Can Encounter Retailer Resistance: Many brands now come in a multitude of different forms. As a result, it has become virtually impossible for a grocery store or supermarket to offer all the different varieties available across all different brands in any one product category. Many retailers often feel that many line extension are merely “me-too” products that duplicate existing brands in a product category and should not be stocked even there is space. Can Fail and Hurt Parent Brand Image: The worst possible scenario for an extension is not only to fail, but to harm the parent brand image in the process. Unfortunately, these negative feedback effects can sometimes happen. If parle comes up with a product which fails in the market it would be very difficult for the firm to change up the minds
- 65. 65 of consumer, andindirectly affect the parent brand. Can Succeed but Cannibalize Sales of Parent Brand: Even if sales of a brand extension are high and meet targets, success may result merely from consumer switching from existing offering of the parent brand- in effect cannibalizing it. Can Succeed but diminish Identification with Any One Category: One risk of linking multiple products to a single brand is that the brand may not be strongly identified with any one product. Thus, brand extension may observe the brand’s identification with its original categories, reducing brand awareness. Can succeed but Hurt the Image of Parent brand: If customers see the brand extension’s attribute or benefit association as inconsistent or even conflicting with corresponding association for the parent brand, they may change their perception of the parent brand as a result. Can Dilute Brand Meaning: The potential drawbacks of a brand extension’s lacks of identification with any one category and a weakened image may be especially evident with high quality or prestige brands. Can Cause the Company to Forgo the Chance to develop a New Brand: One easily overlooked disadvantage of brand extension is that by introducing a new product a brand extension, the company forgoes the chance to create new brand, with its own unique image and equity. Thus, introducing a new product as a brand extension can have significant and potentially hidden cost in terms of the lost opportunities of creating a new brand franchise. Conclusion : Hero MotoCorp is the biggest two wheeler manufacturer in the world. It has the highest market share in India. It has successfully delivering its promise to its target customers. The aggressive market positioning strategy that it uses places it way above its competitors. It relates itself to every Indian. It is a bike for the Indian consumers satisfying all their needs. In this study I came to know that there are more then different two- wheeler companies manufacturing different types of vehicles. As the time is changing the demands and preference are also changing very rapidly. So if the companies wants to survive in this competitive market, they have produce the goods and services as per the needs of customers to delight them. The hero MotoCorp is the No. 1 two wheeler company in India which produce wide variety of product with different models, aesthetics etc, by which it has captured a large market share in two-wheeler market .
- 66. 66 Now there areother companies like Bajaj , Suzuki, Yamaha, TVS etc. Which are giving competition to Hero MotoCorp. BIBLOGRAPHY : www.google.co.in Marketing management, 13th edition, Kotler, Keller ,Koshy, and Jha , Pearson Education Times of India The Economic Times The Hindu www.herohonda.com www.wikipedia.com
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