DECLARATION

I hereby declare that the Dissertation project entitled “MARKETING AND SALES

TO HERO MOTORS” submitted by me as a partial fulfillment for the award of Masters

of Business Administration to RAJ SMS, VARANASI is original and genuine work carried

out by me.

Date:

Place:

1

ACKNOWLEDGEMENT

Apart from my own efforts, the success of any project depends largely on the encouragement

and guidelines of many others. I take this opportunity to express my gratitude to the people

who have been instrumental in the successful completion of this project.

I would like to thank my project faculty guide, for his constant follow-up, encouragement and

guidance to complete this project within the allotted time frame

I would like to thank, for giving me a chance to gain an exposure in the corporate world. I

would also like to thank for their kind cooperation and providing me with the academic

support.

Last but not the least; I would like to thank my Almighty for blessing me and making this

project a success.

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TABLE OF CONTENT

Chapter No Title

1 Introduction

2 Literature Review

3 Research Methodology

4 Industry profile

5 Company profile

6 Termination of Honda joint venture

7 Data collection

8 Data Analysis and interpretation

9 Findings and Discussions

10Suggestions and Recommendations

11 Conclusion

12 Bibliography

13 Annexure

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EXECUTIVE SUMMARY

Marketing starts with identifying the needs of customers and ends in satisfying those wants.

The goal of marketing is to attract new customers by promising superior value and to keep

current customers by delivering satisfaction based on their preferences retaining them.

As the customers are regarded as the superiors in today’s market, the level of satisfaction and

their preferences should be keenly studied.

The two-wheeler industry has been expanding rapidly. Gone are the days when possessing a

two-wheeler was seen as a luxury. Now days, it is viewed as a mere necessity.

Prior, sale of two-wheelers was mainly confined to urban areas but lately in rural areas the

bicycles are being replaced by power driven two-wheelers such as scooters, motorcycles.

Not only this, this industry has also customers ranging from all demographic segments. It has

been common sights that even school going children are driving two-wheelers. The women

customers are also increasing due to increase in women literacy and employment.

Getting a new customer is difficult, than retaining a current customer is a more

difficult one and not only that it is estimated that the cost of attracting a new customer is five

times the cost of retaining current customer. It requires a great deal of effort to induce

satisfied customer to switch away from their current preference. Thus, customer satisfaction

is been given top priority in today’s competitive world.

Therefore, keeping the above stated objective in mind, this study was conducted to ascertain

the customer’s satisfaction towards Hero two-wheelers in Hero MotoCorp Ltd. In view of

this, a detailed study of customer preferences, levels of satisfaction and their complaints and

suggestions was undertaken.

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1. INTRODUCTION TO THE DISSERTATION

The Dissertation is all about measuring the customer satisfaction in Hero Motors.

Every company is trying to satisfy its customers. The emphasis is on ways of retaining

customers, then on attracting new customers. It is easy to attract new customers then to retain

old customers. So, companies are trying to focus on this aspect of customer’s satisfaction.

The sale of a product does not end with the sale transaction but it is the point at

which the original marketing concept starts. The marketer has to see that whether the

customer satisfied with that particular product/service or not. The post purchase behavior is

important for a marketer. If there is any cognitive dissonance in the minds of the customers

then that is enough to lose a customer. Keeping this in mind the companies are giving more

importance to customer satisfaction.

This project work has been done to find out whether a customer is satisfied or

dissatisfied, also to measure the level of the customer satisfaction and provide this feedback

to the company. The first phase of the project involves the collection of information from the

customers for interpreting the characteristics based on which the customer feels satisfied or

dissatisfied. This information is collected by preparing a structured questionnaire. The

questionnaire consists of both open-ended and closed-ended questions. The questionnaire is

designed in such a way that a customer feels convenient to answer.

The collated information through the questionnaire is analyzed and presented in a

statistical form. The findings are listed and suggestions to solve problems faced have been

given in the suggestion part.

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INTRODUCTION TO CUSTOMER SATISFACTION

Whether the buyer is satisfied after purchase depends on the offers performance

in relation to the buyer expectation. In general satisfaction are a person’s feelings of pleasure

or disappointment resulting from comparing a products perceived performance relation to

his/her expectations. If the performance falls short of expectation, the customer is

dissatisfied. If the performance matches the expectation customer is satisfied. If the

performance exceeds the expectation the customer is highly satisfied.

Customer satisfaction cannot be very difficult. After all you either satisfied

with the services you receive or you are not. If you don’t you are not. If it is that easy, then

obtaining people's opinion about how satisfied they are with relatively straight forward

matter- or is it? Customer satisfaction is a marketing tool and a definite value added benefit.

It is often perceived by customers as important as the primary product or service your

organization offers. It looks at what is involved from 3 different angles, the first is from the

view of an organization wishing to understand, and measures, how satisfied its customer are

with the products and services they receive from it. The second is from the perspective of a

research agency that has been asked to obtain feedback from customers and about their

experiences when dealing with companies. Finally it considers the issue from the perspective

of consumers who participate in surveys, including both business customers and members of

general public

MEANING OF CUSTOMER SATISFICATION

Customer satisfaction is a business term, is a measure of how products and

services supplied by a company meet or surpass customer expectation. It is seen as a key

performance indicator within business and part of the four prospective of balanced score card.

In a competitive market place were businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key element of

business strategy customer satisfaction drives successful private sector business.

High performing businesses have developed principles and strategies for achieving

customer satisfaction. This paper presents a framework or set of ideas for using customer

6

satisfaction principles and strategies to improve the quality responsiveness, and possibility of

public sector privately provided services in vulnerable communities

The framework suggested that resident who live in tough neighborhoods can be supported

through customer satisfaction strategies to become empowered individuals who informed

perspectives influence decisions about what, how, when, and where services are available to

them.

Customer satisfaction is the customer’s response to the evaluation of the perceived

discrepancy between prior expectation and the actual performance of the product as perceived

after its consumption.

DEFINITION

Cocotte, woodruff and Jenkins (1987) define customer satisfaction as "conceptualized as a

feeling developed from an evaluation of the experience."

HERE, the timing of satisfaction response is driving consumption.

BUT there is general agreement with kotler (2003) that "customer satisfaction is a

person's feeling of pleasure or disappointment resulting from comparing a products perceived

performance in relation to his or her expectation." In short customer satisfaction is "The

provision of goods or services which fulfill the customer expectation in terms of quality and

service, in relation to price paid."

IMPORTANCE OF CUSTOMER SATISFACTION

It costs at least 7 times more to source a new customer than it does to retain existing

one a 'satisfied' customer tells 5-7 people in a year whilst a 'dissatisfied' customer will tell 14-

15 people.

7

Companies can boost profits anywhere from 25% to 125% by retaining a mere 5%

more of their exciting customers.

Totally satisfied customers were 6 times more likely to use that services and

commend it than ' satisfied' customers.

Customers who have a bad experience with you and do not complain are only 37%

likely to still do business with you.

Customers who have an opportunity to complain and the complaint is achieved are

95% likely to still do business with you.

FACTORS OF CUSTOMER SATISFACTION

1. Service of quality

2. reliability of service

3. knowledge of the staff

4. Being kept informed of progress

5. The way service kept its promises

6. The way the service handled any problem Friendliness of staff

7. How sympathetic staff were to your needs

8. Speed of enquiries

9. Number of time had to contact the service.

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2. REVIEW OF LITERATURE

Planning for the future to achieve the long-term objective is integral to the

survival and growth of every business. Strategic planning today has to take into cognizance

the rapid changes in technology, increased competitiveness and the turbulent business

environment, also with the world becoming one big global village.

Strategy covers every aspect of business from business reengineering, new business

development, product development and brand positioning to advertisements promotional

campaigns, media and publicity. It is a game of innovation.

In fact, marketing people are involved in marketing 10 types of entities; goods,

services, experience, events, persons, places, properties, organizations, information and ideas.

Marketing management is the art and science of choosing target markets and getting, keeping

and growing customers through creating, delivering and communicating superior customer

value.

India is second largest manufacturer and producer of two-wheelers in the world. It

stands next to Japan and China in terms of the number of two wheelers produced and

domestic sales respectively.

Indian two-wheelers industry made small beginning in early 50’s when Automobile

products of India (API) started manufacturing scooter in India. Hero was established on 13th

of April 1984. The Indian two wheelers Industry can be broadly classified as scooter,

motorcycles and mopeds/scooters. In last six years domestic two-wheelers has seen

structural charges. This can be seen from the change in composition of two wheeler sales,

where the motorcycles have gained market share from the scooter and moped or scooters

segments.

The consumer is now faced with proliferation of brand models. Getting new customers as

well as retaining them is an important task of manufacturers. So service after sales is very

important. A satisfied customer brings in more name and goodwill to the company, which is

why customer satisfaction is given more importance in today’s competitive world. A study on

this aspect with Hero two-wheelers at Hero MotoCorp Ltd was made.

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Marketing mix of Hero Motors:

Product:

Hero motors are known 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.

10

Segmentation, Targeting and Positioning of Hero Moto

Corp

1. Introduction to Two Wheeler Bikes

A motorcycle (also called 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.

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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.)

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.

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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.

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.

Competition Bike’s Brands

The brands that I have chosen are:

Hero MotoCorp Ltd.

Yamaha Motor Company Limited

Bajaj Auto Ltd.

TVS Motor Company

Harley Davidson

13

MARKETING STRATEGIES OF HERO o PRODUCT RELATED STRATEGIES OF HERO

Product Range and New Models:

The Company's product range includes "Splendor" which is the largest selling motorcycle brand in

the world with over 6.9 lacs vehicles sold in 2000-01. A cumulative over 4 million customers are the

real foundation of the company's strength. The total shall soon cross the 5 million mark. Its volumes

have been growing at a strong pace of 40% p.a. over the last five years.

The Company launched a new 100 cc model "Passion" in January 2001. The motorcycle is focused on

style and contemporary design, compared to the Company's earlier motorcycles that were focused

on utility and/or style. "Passion" has received an excellent response from the market and has

established itself well, with sales reaching a level of 19000 units in March 2001, within just three

months of its launch.

In April 2001, another 100 cc model "Joy" was launched successfully. Its focus is on better styling

and improved riding comfort.

Hero Honda launches cheapest bike to ‘stall’ Bajaj Auto19.03 IST 16th Apr 2003 By India Express

Bureau

In an attempt to beat competition from its rival Bajaj Auto, Hero Honda Motors launched its

cheapest 100cc motorbike yet on Wednesday. The motorbike maker, in which India's Munjal family

and Japan's Honda Motor Co each hold 26 per cent stakes, said the new model, CD-Dawn, would

carry a showroom price of Rs 31,899 in Delhi. The company expects to sell 7,000-8,000 units of the

bike in April and hopes sales will touch 20, 000 a month in six months. Hero Honda, which accounts

for 45 per cent share of the domestic market, has faced slowing demand and cutthroat competition

after two consecutive years of 30 per cent-plus growth in the world's biggest motorcycle market. But

the firm has forecast at least 10 per cent growth in sales volume in the current financial year to

March 2004. Its sales in the past year to March grew 17.7 per cent to 1.68 million bikes.

14

Different models of Hero 4-strokes bikes:

Presenting CD deluxe, the stylish, true value 100 cc motorcycle from Hero Honda. Encompassing the

legendary Hero Honda values of fuel efficiency, economy and rock solid dependability.

Engine 4-Stroke OHC, Single Cylinder, Air Cooled

Bore X Stroke 50 X 49.5 mm

Displacement 97.2 cc

Compression Ratio 8.8 : 1

Max Power 5.44 Kw (7.4 PS) @ 8000rpm

Torque 0.79 Kgm @ 5000 rpm

Clutch Multi Plate Wet Type

Transmission 4-Speed Constant Mesh

Final Drive Roller Chain

Ignition Capacitor Discharge Ignition

Starting Kick Start

Frame Tubular Double Cradle

Suspension Front: Telescopic Hydraulic Fork Rear: Swing Arm with Hydraulic Shock Absorbers

Dimensions (LXWXH) 1970 X 720 X 1045 mm

Wheel Base 1230 mm

Ground Clearance 159 mm

Kerb Weight 108 Kg

Tyres Front: 2.75 X 18 - 4PR Rear: 2.75 X 18 - 6PR

Brakes Front: Internal Expanding Shoe Type - 130 mm Dia Rear: Internal Expanding Shoe Type - 110 mm Dia

Fuel Tank Capacity 10.5 Ltrs

Head Light Rectangular Multi Focal Reflector – 35

15

The world's best-selling motorcycle just got better. The Splendor+, a bike that will stop you

right in your tracks. Both by its looks and performance. Needless to add, owning a Splendor+

means a lot of other things too. Like getting admiring looks. Or the pride of riding a

motorcycle that meets the pollution control standards of this decade. That's the Splendor+.

The new face of trust.

Engine 4-stroke, single cylinder lair-cooled, OHC

Displacement 97.2.cc

Transmission 4-speed constant mesh

Ignition Electronic

Head light 12V 35/35W multi-reflector with halogen lamp

Frame Tubular double cradle type

Suspension (front) Telescopic hydraulic fork

Suspension (rear) Hydraulic spring loaded type with both side action

Wheelbase 1230 mm

Ground clearance 159 mm

Kerb weight 109 kgs

Tyre (front) 2.75*18-4 PR

Tyre (rear) 2.75*18-6 PR

Type of brake (front) Drum type (130 mm diameter)

Optional Disc type (240 mm diameter)

Type of brake (rear) Drum type (110mm diameter)

Max power 7.5PS @ 8000 rpm / 5.5 KW @ 8000rpm

Max speed 85 kmph

Fuel tank capacity 10.5 litres (reserve 1.4 litres)

16

Engine 4-Stroke OHC, Single Cylinder, Air Cooled

Bore X Stroke 52.4 X 57.8 mm

Displacement 124.7 cc

Compression Ratio 9.1: 1

Max Power 6.72 Kw (9 BHP) @ 7000 rpm

Torque 10.35 Nm @ 4000 rpm

Max Speed 90 Kmph

Clutch 4 - Speed Constant Mesh

Final Drive Roller Chain

Ignition Digital - CDI Ignition (AMI) Advanced Micro Processor Ignition system

Starting Kick StartSelf Start (Optional)

Frame Tubular Double Cradle

Suspension Front : Telescopic Hydraulic ForkRear : Swing Arm with Hydraulic Shock Absorbers

Dimensions (LXWXH) 1995 X 735 X 1095 mm

Wheel Base 1265 mm

Ground Clearance 150 mm

Kerb Weight 117 Kg (Kick Version)121 Kg (Self Version)

Tyres Front : 2.75 X 18 - 4 PR / 42PRear : 2.75 X 18 - 6 PR / 48P

Brakes Front Drum Type : Internal Expanding Type - 130 mm DiaFront Disc Type : Hydraulic Disc Type - 215 mm Dia (OptionalRear: Internal Expanding Type - 130 mm Dia

17

Fuel Tank Capacity 12 Ltrs. (Min)

Head Light 12V - 35W Multi Reflector Halogen Bulb - AC Type

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New two-tone body colours PLUS Body colour rear view mirrors PLUS Aluminum die cast

rear grip PLUS Heat protector on the muffler. All this and much more to make the biker and

his bike stay married for eve.

Engine 4-stroke, Single Cylinder, Air - Cooled OHC

Displacement 97.2 cc

Maximum Power 7.5 Ps at 8000 rpm

Gear Box 4 Speed Constant Mesh

Clutch Multi-Plate Wet Type

Max. Speed 85 Kmph.

Frame Tubular Double Cradle

Suspension (Front) Telescopic Hydraulic Fork

Suspension (Rear ) Swing Arm with 5 step adjustable hydraulic damper.

Tyre Size (Front ) 2.75 * 18- 4 PR /42 P

Tyre Size (Rear ) 3.00*18-4/6 PR

Brakes (Front) Internal Expanding Shoes Type (130mm)/ Hydraulic Disc Type (Optional)

Brakes (Rear) Internal Expanding Shoes Type (130 mm)

Final Drive Roller Chain

Battery 12 V-2.5 Ah

Ignition Electronic CDI

Starting Kick Starter

Wheelbase 1235 mm

Ground Clearance 160mm

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Length 1980 mm

Width 720 mm

Height 1060 mm

Kerb Weight 116 kgs.

Fuel Tank Capacity 12.8 litres (Reserve 1.1 litres)

Head light Halogen Bulb 35 W / 35 W

Karizima

The Karizima features a 223cc, 17PS power pack that accelerates you from 0-60 in 3.8 seconds.

Distinctive styling and Mag alloy wheels make this bike stand out before it races away from the pack.

Digital ignition and a constant vacuum carburetor facilitate better control of ignition timing.

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The legend refreshed…with all new body language. The original spirit of CBZ, now with a

cool, new look. A wonder bike that can take on the winds. And like you, it runs on passion.

Rev up and flaunt your style.

CBZ

Engine 4-stroke, single cylinder , air - cooled, OHC

Displacement 156.8cc

Clutch Type Manual

Clutch Primary -

Clutch Secondary Multi-plate wet

Transmission 5-speed constant mesh

Final Drive Roller chain Ignition Electronic

Starting Kick starter Frame Tubular single cradle

Suspension (Front ) Telescopic hydraulic fork

Suspension (Rear ) Swing arm with hydraulic damper- 5-step adjustment

Dimensions (L*W*H) 2100*755*1130mm

Wheel Base 1335mm

Ground Clearance 160mm

Kerb Weight 138 kg

Tyres:Front/Rear 2.75*18-42P/100/90*18-56P Max. Power 12.8 PS@8000 rpm

Max.Speed 100 kmph

Fuel Tank Capacity 12.5 1tr(2.5 ltr reserve)

o PLACE STRATEGY OF HERO HONDA

Today Hero Honda has managed to achieve indigenization of over 95 percent, a Honda record

worldwide. Hero Honda is at present the largest-selling Indian motorcycle and the most fuel-

efficient in its category - the outcome of Hero Group's foresight and another classic example of how

the Group strives to provide the customer with excellence and satisfaction.

Hero Honda became the first company in the country to introduce four-stroke motorcycles

and set the standards for fuel efficiency, pollution control and quality. It has a production

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capacity of 1.2 million motorcycles, which shall be enhanced to 1.5 million motorcycles in

the coming years. It has an excellent distribution and service network spread throughout the

country. Hero Honda is the market leader in motorcycles, with sales of over a million

motorcycles and a strong market share of 47% during 2000-01.

This is proved by the company's sales over the years:

YEAR SALES

2002-03 43,000 units

2003-04 96,200 units

2004-05 5,30,600 units

2005-06 7,61,210 units

2006-07 10,29,555 units

2007-08 14,25,195 units

2008-09 16,77,537 units

2009-10 18,23,234 units

As economies open up, are Asian enterprises ready for the global battle for export markets and

investment?

Hero Honda sales decline 1.2 pc

Our Bureau

NEW DELHI, May 1

HERO Honda, the country's largest motorcycle manufacturer, saw its sales decline by 1.2 per cent to

1,34,318 units in April 2003 from 1,35,961 units in the same month last year.

According to industry sources, sales of the company could have been affected by sluggish rural

demand combined with the 10-day trucker's strike affecting production as well as distribution of

products in April.

The company saw a growth of 16.06 per cent in sales volume during April compared to March.

Meanwhile, Hero Honda is planning to launch new 200 plus cc motorcycle during May, a company

release said.

22

The company today announced that it has achieved a milestone with its Daruhera plant, in Haryana,

becoming the first Indian two-wheeler plant to produce 5 million units. The 5 millionth motorcycle

was a Splendor. The first motorcycle, CD100, had rolled off the assembly line in April 1985.

Customer satisfaction, a high quality product, the strength of Honda technology and the Hero

group's dynamism have helped HHML scale new frontiers and exceed limits.

In the words of Mr. Brijmohan Lall Munjal, the Chairman and Managing Director, "We will

continue to make every effort required for the development of the motorcycle industry,

through new product development, technological innovation, investment in equipment and

facilities and through and through efficient management."

o PRICING STRATEGY OF HERO HONDA

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A rich background of manufacturing high value, reasonably priced products; an uncompromising

pursuit of the goals to attain quality along with customer satisfaction; the resulting affinity in

working cultures - brought the world's largest manufacturer of motorcycles in collaboration with the

world's largest bicycle manufacturer, bringing forth a market leader. Honda Motor Company of

Japan and the Hero Group entered a joint venture to setup Hero Honda Motors Limited in 1984.

The Karizima features a 223cc, 17PS power pack that accelerates you from 0-60 in 3.8 seconds.

Distinctive styling and Mag alloy wheels make this bike stand out before it races away from the pack.

Digital ignition and a constant vacuum carburetor facilitate better control of ignition timing

That’s why Priced at Rs. 76,206/- on road Mumbai the Karizma is available in seven

attractive shades.

If we take the example of Karizma (A bike of Hero Honda).

o PROMOTION STRATEGY OF HERO A thorough understanding of the fast-changing consumer behavior, new market segments and

product opportunities along with sensitivity to changing customer needs, form the core of Hero's

marketing strategy and philosophy.

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At Hero, we essentially have a completely customer-driven approach. A nation-wide dealer network

comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise holders for

motorcycles, ensures convenient access to the Group's products across the country.

With a deep sense of belonging to the Hero fraternity, the Group's dealer network has catalyzed

growth and acted as a strong bridge between the customers and the Group.

Conventionally, very few Indian bicycle manufacturers were interested in exports. However, the

Hero Group's foray into the overseas markets pioneered Indian exports in the bicycle segment as

early as 1963. It was a move prompted primarily by the need to be attuned to the global

marketplace.

While initial exports were restricted to Africa and the Middle East, today more than 50 percent of

the Group's bicycle exports meet the demands of sophisticated markets in Europe and America. This

is primarily because of appropriate product development and excellent quality that Hero offers.

The Group has undertaken a steady up gradation of technologies and there has been diversifications

and setting up of newer establishments to meet stringent international standards.

At the core of it all is a customer-centric scheme of policies and production ... and the bottom line is

to "Add Value while Engineering Satisfaction.

Advertisement strategy

Hero Honda has snagged the brat pack — Virender Sehwag, Mohammad Kaif, Yuvraj Singh and

Zaheer Khan. The two-wheeler maker, an official sponsor of the World Cup tournament to be played

in South Africa in February, has brought the young and exciting cricketers of the Indian team on

board as brand ambassadors.

The Fab Four — along with team captain Sourav Ganguly — will feature in the ads for its latest

motorcycle model: the Ambition. Hero Honda is extremely cagey about saying how much they had

to fork out to bring the top cricketers to feature in the ads.

Atul Sobti, senior vice-president, marketing and sales declined to say how much they planned to

invest in the ad campaign. "It will give a lot of leverage to the new product Ambition by giving the

image of a powerful and efficient motorcycle. The powerfu-e-l bike will be well represented by the

leadership qualities, power and the capacity to face any challenges," he added.

The current ad for Ambition is tame; it shows an important file reaching a destination in time

because of the power of the motorcycle. "It does not properly appeal to the customers about the

power and efficiency of the product. 'Team Ambition' will be much better suited to represent the

product," sources said.

25

Hero Honda is hoping to crank up sales of Ambition because of the endorsements by the top

cricketers during the World Cup when cricket fever will be at its highest.

One major advantage is that none of its rivals will be able to use cricketers to endorse their products

before and after the World Cup because of the ambush-marketing clause that the International

Cricket Council (ICC) has worked into the players contracts.

The issue had sparked a row when it was raised just before the ICC champions trophy in Sri Lanka in

September but was resolved after a stand-off between ICC, the cricket boards of several nations and

the players.

Hero Honda plans to increase its market-share to 50 per cent this fiscal and is targeting sales of

10,000 Ambitions a month. Its share dipped from 48 per cent to 45 per cent.

The 133 cc Ambition generates 11 bhp of thrust, which has been kept low in order to improve fuel

efficiency. It has been placed in between the 125cc and 150cc motorcycle categories to draw the

maximum clientele. The bike accelerates from 0-60 kmph in only six seconds.

While launching the new campaign with the cricketers, Hero Honda is also drawing up plans for a

couple of ads with the other brand ambassador, Hrithik Roshan.

Hero Honda's association with cricket goes back to 1993, when it sponsored the Hero Cup. It was the

official sponsor of the recent ICC Champions Trophy in Sri Lanka and will have the same status for

the ICC World Cup in 2003.

PURPOSE OF THE STUDY

Whenever we think of the origin of Indian Two-wheelers market, we think of old and stodgy

Vespa based models of scooters and Japanese models of motorcycles, but now in the era of

globalization the situation has completely changed as the many industries are sizzling hot

with continuous poaching of scooters by motorcycles as well as regular launching of new

models of motor bikes. Earlier the shelf life of models was in tune of 10-15 years but now it

has come down drastically due to intense competition in motor bike industry. Hero Honda is

trying to save its dominance in motorbike market from rigorous attacks of Bajaj Auto and

26

TVS while Bajaj Auto is changing its portfolio by heavy inclusion of motorcycles in it. In

this battle LML Group, Kinetic Group, Yamaha Motors, Honda Motors and Royal Enfield are

also trying to provide something new to the customers.

Hero MotoCorp Ltd

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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. In 2010, When Honda decided to move out of the joint venture,[7] Hero

Group bought the shares held by Honda. Subsequently, in August 2011 the company was

renamed Hero MotoCorp with a new corporate identity. Product range of Hero MotoCorp

are: [5]

CD 100  Passion Passion Plus

CD 100 SS CBZ Karizma

Splendor  CD Dawn Ambition

Splendor + CBZ Star Ambition 135

Impulse Acheiver Pleasure

Street Hunk Joy

Glamour CD Deluxe

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 potrays 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.

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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.

Dhak dhak go Advertisement 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 heart beat of the entire

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nation uniting everyone as a nation.

Event sponsorships

Event sponsorships of various 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 heart beat 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.

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.

30

Yamaha Motor Company Limited

Yamaha Motor Company Limited, is a Japanese motorized vehicle-producing company.

Yamaha made its initial foray into India in 1985. Subsequently, it entered into a 50:50 joint-

venture with the Escorts Group in 1996. However, in August 2001, Yamaha acquired its

remaining stake becoming a 100% subsidiary of Yamaha Motor Co., Ltd, Japan (YMC).

Presently, its product portfolio includes: [6]

VMAX (1,679cc) Fazer (153cc) SS125 (123cc)

MT01 (1,670cc) FZ-S (153cc) YBR 125 (123cc)

YZF-R1 (998cc) FZ16 (153cc) YBR 110 (106cc)

FZ1(998cc) SZ-R(153cc) Crux (106cc)

YZF-R15 version 2.0 (150cc)

SZ & SZ-X (153cc)

Market Segmentation

Yamaha caters to the market of tier I and tier II cities. It caters to males between the age

group of 18 to 35. It caters to upper middle class families. It has high pick up and speed. It is

the most innovative and most stylish bike manufacturers. Therefore, it is youth centric.

Target Market

Yamaha has single segment concentration. It is known as a racing bikes manufacturer. Speed

Biking is mainly attributed to Yamaha. Thus positioning itself as a ‘manufacturer of safety

first’ bikes, as well as the most style conscious segment. It also focuses on comfort,

technology advancements. Its target customers are the people who are sporty, thrill loving

and style conscious.

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Positioning Strategy

YES Yamaha Advertisement

YES stands for Yamaha extended services. It tells

that now Yamaha is growing in all parts of the

country. It has good nationwide service. It can be

purchased easily. It gives good pick up, speed and

better mileage. It provides comfort. Therefore, this

advertisement portrays Yamaha as common man’s

racing bike. It conveys the message of ‘staying ahead

of tortoises’ focusing on the speed of the bike

.

Celebrity endorsements

John Abraham is the brand ambassador for

Yamaha SZR. The hard sturdy look of the bike

can be correlated with the masculinity of John

Abraham. It thus says that it is a bike for all

masculine, speed and thrill loving people.

Use of songs for advertisement

Yamaha thought it is the best way to portray the efficiencies of the bikes. To enhance the

advertisement and make it appealing, the song “Ruk Jaana Nahin” has been used as the

background score. The campaign is a national level campaign catering to regional markets as

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well including south, west and east India. The target consumer is essentially 24 yrs & above

from SEC A/B and preferably male.

Conclusion

Yamaha reflects racing bikes in India. It has good pick up and speed. It is famous for its

sturdy, stylish looks and best technologies. It caters to upper middle class and middle-middle

class income group, especially adult.

Bajaj Auto Ltd.

Bajaj Auto Limited, is an Indian motorized vehicle-producing company. Bajaj Auto is a part

of Bajaj Group. Its founded by Jamnalal Bajaj at Rajasthan in the 1930s. Bajaj Auto is the

world's third-largest manufacturer of motorcycles and second-largest in India.Over the last

decade, the company has successfully changed its image from a scooter manufacturer to a

two-wheeler manufacturer. Its product range encompasses scooterettes, scooters and

motorcycles. Its real growth in numbers has come in the last four years after successful

introduction of a few models in the motorcycle segment.[7]

CT 100 Platina Avenger

Discover Eliminator Wind 125

Caliber 115 Pulsar 150 KS  Kawasaki Ninja

Boxer

Market Segmentation

Bajaj caters to the mass consumer. It caters to middle-middle and upper middle income group

of consumers. It does not have the rural support. It still lags behind in the rural areas. It caters

to aspiring young men of the country.

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Target Market

Bajaj follows selective specialization while targeting its consumers. Its concentrates on the

youth of the country who are technology freak. It offers a wide variety, so that it can cater to

various income groups of the country.

Positioning Strategy

Celebrity endorsement

The very first TV Commercial of the Bajaj Discover

DTSi (125 cc at that time) in 2004 featured the Cine

Star of Asia, Jackie Chan. Jackie Chan is known for

his fast moves, action, and quick reflexes. So the

features of this bike could be easily related to

that of Jackie Chan. The bike is fast, has speed and

technology and can survive in all sorts of roads.

This advertisement convinces you to be a master who always wins similar to Jackie Chan. It

portrays the image of the bike to be a master piece.

1.1.1 Pulsar mania

This advertisement symbolizes bike stunts of different range. The campaign beard innovative

punch line of “Definitely Male” positioning pulsar to be a masculine – looking model with an

appeal to sensitive customers. It boosts the male ego of its target customers. It makes them

feel themselves as the fastest Indian

Discover India with the power of 1 L petrol

This advertisement positions Bajaj as a fuel efficient bike with a greater mileage. It makes

you feel that you can travel to the most exhaustic and amazing places in India, i.e., discover

the undiscovered India. This also gives a patriotic touch to the mindset of people making

34

them fell proud of their nation. You can cross crowded lanes, mountain paths and explore the

rich heritage if India without any worries of oil refilling.

Hamara Bajaj

This was the tag line of Bajaj Auto Ltd. It positions Bajaj as your own bike. It gives the

feeling of belongingness therefore playing with the emotions of the consumers.

Conclusion

Bajaj is the second largest manufacturer of bikes in India after Hero Moto Corp. Its twin

spark technology, speed, fuel efficiency had made a favorite in Indian roads. It gives you a

feeling of belongingness. It makes you feel ‘male’ and emotionally binds you to Mother

India.

TVS Motor Company

TVS Motor Company is the third largest two-wheeler manufacturer in India and one among

the top ten in the world, and is the flagship company of the USD 4 billion TVS Group. TVS

Motor currently manufactures a wide range of two-wheelers from mopeds to racing inspired

motorcycles. Their bike’s range includes:

Apache RTR 180 Flame DS 125 Flame

TVS Jive StaR City Sports

Market Segmentation

The range of TVS bikes are less. It caters to the lower middle class and the middle-middle

class income groups. It caters to the youth. It segments itself on the basis of gender as well –

as it caters to male.

Target market

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TVS focuses on the multi segment strategy of targeting the market. It caters to youth of both

lower middle class and the middle-middle class income groups. It caters to those who are

passionate about owning a bike.

1.2 Positioning Strategy

1.2.1 Celebrity endorsements

TVS endorses Sachin Tendulkar as its brand

ambassador. Sachin is a the greatest cricketer

India has ever produced. Hence people can easily

link to it as something great and good. So,

TVS positions itself as a bike that is safe,

balance and can be easily maintained.

Powerful and stylish

This advertisement shows that TVS bikes are stylish, powerful, masculine and can be easily

flaunted off amongst peers. It gives you a feeling of superiority.

Conclusion

The aggressive marketing strategy along with the changed approach to advertisement

campaign boosted the demand for the TVS models. They can be easily affordable, reliable

and easy to maintain. TVS has positioned itself well in the bike’s sector. It arises a passion in

you to own something that you feel proud of.

Harley Davidson

Harley-Davidson often abbreviated H-D or Harley is an American motorcycle manufacturer.

Founded in Milwaukee,Wisconsin, during the first decade of the 20th century, it was one of

two major American motorcycle manufacturers to survive the Great Depression. The

36

company sells heavyweight (over 750 cc) motorcycles designed for cruising on the highway.

Harley-Davidson motorcycles (popularly known as "Harleys") have a distinctive design and

exhaust note. They are especially noted for the tradition of heavy customization that  gave rise

to the chopper-style of motorcycle.[8]

Market Segmentation

It caters to tier I and tier II cities. It caters to touring enthusiastic and outdoor oriented male

of high income groups between the age of 27 to 45. It caters to innovators or achievers who

are self employed business men and are ready to buy the product. They want to but it for

leisure riding, planning weekend rides etc.

Target market

It caters to people who golf, who own yachts, indulge in leisure activities, hoteliers, resort

owners in tourist destinations are always looking to add new luxury items into their fleet for

their clients to indulge into leisure activities.

 Positioning Strategy

The brand positions itself as:

Masculine

Free spirited

Rugged

Macho

Strong

Adventurous

Conclusion

Harley Davidson is a bike of the premium category. It caters to the high end people who wish

to derive pleasure while riding them.

STATEMENT OF THE PROBLEM

37

This Project has been titled “A comprehensive study Post purchase buyer behavior and

satisfaction towards Hero Motors Bikes after the split with Honda."

To study the new market of Hero motors after the split with Honda, the consumer response to

the bike and needed improvement aria

The study would help to understand the consumer satisfaction to their expectation.

OBJECTIVES

This study was conducted keeping the following objectives in mind.

1. To study the factors which influence the purchase of Hero two-wheelers?

2. To know the customer level of awareness of Hero two-wheelers.

3. To know the various factors, which influence customers in purchasing, they’re two -

wheelers?

4. To find the after sales service offered by Hero MotoCorp Ltd.

5. To know the customer level of satisfaction of Hero two-wheelers with respect to Hero

MotoCorp Ltd.

6. To find the profile of Hero MotoCorp Ltd two-wheeler customers.

7. To understand two wheeler sector in India.

8. How the split with Honda has affected Hero motors.

SCOPE OF THE STUDY

This study helps the organizations to increase their service and product quality and

in turn increase the market share, top and bottom line of the company.

NEED FOR THE STUDY

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Marketing starts with identifying the needs of customers and ends in satisfying those

wants. The goal of marketing is to attract new customers by promising superior value and to

keep current customers by delivering satisfaction based on their preferences retaining them.

Without customer, no market exists. As the customers are regarded as the superiors in

today’s market, the level of satisfaction and their preferences should be keenly studied.

The two-wheeler industry has been expanding rapidly. Gone are the days when

possessing a two-wheeler was seen as a luxury. Now days, it is viewed as a mere necessity.

Prior, sale of two-wheelers was mainly confined to urban areas but lately in rural

areas the bicycles are being replaced by power driven two-wheelers such as scooters,

motorcycles.

Not only this, this industry has also customers ranging from all demographic

segments. It has been common sights that even school going children are driving two-

wheelers. The women customers are also increasing due to increase in women literacy and

employment.

Getting a new customer is difficult, than retaining a current customer is a more

difficult one and not only that it is estimated that the cost of attracting a new customer is five

times the cost of retaining current customer. It requires a great deal of effort to induce

satisfied customer to switch away from their current preference. Thus, customer satisfaction

is been given top priority in today’s competitive world.

Therefore, keeping the above stated objective in mind, this study was conducted to ascertain

the customer’s satisfaction towards Hero two-wheelers in Hero MotoCorp Ltd. In view of

this, a detailed study of customer preferences, levels of satisfaction and their complaints and

suggestions was undertaken.

RESEARCH METHODOLOGY

The information required for this study obtained was basically through two sources.

39

Primary Data:

Primary Data has been gathered by a survey through a structured questionnaire.

The Data has been collected from 100 customers, through questionnaires, by using

simple random sampling. In addition interaction with the staff of Hero MotoCorp Ltd has

also given some information.

Secondary Data:

Secondary Data comprises of information obtained from annual reports, brochures,

manuals websites etc.

Target respondents

Gender: Male and female

Age group: 20-45

Sampling units: Hero Motors Two wheelers users

No. of Samples: 50 respondents

INDUSTRY PROFILE

40

The Indian two-wheeler contributes the largest volume amongst all the segments in

automobile industry. Though the segment can be broadly categorized into 3 sub-segments

viz. scooters, motorcycles and mopeds; some categories introduced in the market are a

combination of two or more segments e.g. scooters and step-thru. The market primarily

comprises five players in the two-wheelers segment with the most of the companies having

foreign collaboration with well-known Japanese firms earlier. But most of the companies are

now planning 100% subsidiaries in India. and growth anticipated is higher than the 16

percent achieved in the past 10 years

The automobiles sector is divided into four segments-two wheelers(mopeds, scooters,

motorcycles, electric two-wheelers), passenger vehicles (passenger cars, utility vehicles,

multi-purpose vehicles), commercial vehicles (light and medium-heavy vehicles), and three

wheelers (passenger carriers and good carriers).

The industry is one of the key drivers of economic growth of the nation. Since the

globalization of the sector in 1991 and the subsequent opening up of 100 percent FDI through

automatic route, Indian automobile sector has come a long way. Today, almost every global

auto major has set up facilities in the country.

The world standings for the Indian automobile sector, as per the Confederation of Indian

Industry, are as follows:

Largest three-wheeler market

Second largest tow-wheeler market

Tenth largest passenger car market

Fourth largest tractor market

Fifth largest commercial vehicle market

Fifth largest bus and truck segment

The sector has shown a sluggish growth of 12 percent in 2012. The trend is likely to stay with a 10

percent growth outlined for 2013 citing high ownership costs (fuel costs, cost of registration, excise

duty, road tax) and slow rural income growth. Solid but cautious growth is expected over the next few

years. However, from a long-term perspective, rising incomes, improved affordability and untapped

markets present promising opportunities for automobile manufactures in India. According to

Macquarie equities research, sale of passenger vehicles is expected to double in the next four years

Two Wheeler & its role in Indian Context:

41

As the cities grow & suburbs expand, transportation needs becoming more & more

acute, with mounting pressure on its public transportation for which two wheelers are ideal.

The two-wheeler Industry today has a significant role in the Indian economy, with an

annual turnover of Rs. 9000 crores and compounded average growth of 10%. In recent years,

it is of the few industrial sectors in the growth phase today considers personal transportation

as one of the basic needs.

The two-wheeler industry basically comprises mopeds, scooters, scooters and

motorcycles. Mopeds are basic entry-level products aimed at lower/middle income groups,

offering company. This category dominated by TVS SUZUKI, which has a market share of

50% today. The other major players in this segment include KINETIC ENGG., HERO

MOTORS and BAJAJ AUTO.

Scooters, which found largest segment in the industry (37 percent) is dominated by

BAJAJ AUTO. It is however facing stiff competition from LML, which offers better style

and technology to the Indian customers. However, dominance of this category has been

declining because of shift in the customer preferences.

Major part of the growth in the two-wheeler industry has come from motorcycle

especially, the Indo-Japanese 100cc motorcycles, which are considered, fuel efficient, reliable

and suited for rough roads.

Scooters also growing at a fast phase and are being increasingly perceived as a better

option providing convenience and motor style, by urban customers. In this category, TVS

Scooty holds a dominant market share.

With sales of over three million vehicles, India is the second largest two-wheeler

market in the world. Vehicle has become a necessity for day-to-day busy life, with the

accelerated industrial and business activity in a liberalized environment. However, given the

limited purchasing power and to high cost of cars, majority of the middle class vehicle users

prefer two wheelers.

With sales of over million vehicles, India is the second largest two-wheelers market in

the world. China is the market leader with around 51 percent of the Asia Market, India,

42

Thailand; Indonesia & Taiwan are the other key markets for two-wheelers with market share

of 19 percent, 10 percent, 9 percent and 5 percent respectively.

In the last four to five years, the two-wheeler market has witnessed a market shift

towards motorcycles at the expense of scooters. In the rural areas, consumers have come to

prefer sturdier bikes to withstand the bad road conditions. In the process the share of

motorcycle segment has grown from 48% to 58%, the share of scooters declined drastically

from 33% to 25%, while that of mopeds declined by 2% from 19% to 17% during the year

2000-01. The Euro emission norms effective from April 2000 led to the existing players in

the two-stroke segment to install catalytic converters. 4-stroke motorcycles are now

replacing all the new models. Excise duty on motorcycles has been reduced from 32% to

24%, resulting in price reduction, which has aided in propelling the demand for motorcycles.

Fierce competition has also forced players to cut prices of certain models.

Competition has intensified over the last couple of years altering the dynamics in the

motorcycle segment with various companies planning to cash in on this spurt in demand by

calling off their JVs like Suzuki Motors planning to break off with TVS. Recently, Honda

Corporation of Japan announced its intentions to set up a 100% subsidiary to manufacture

scooters and motorcycles. Other players in the two-wheeler industry include Bajaj Auto Ltd.,

Kinetic Motor Co.Ltd. LML and Escorts Yamaha. Low interest regime has helped in

reducing cost of loans, which will help in boosting sales of 2-wheelers, since 80% of the two-

wheelers are credit –stimulated.

The two-wheeler industry is passing through a critical but interesting phase. For many

years, it was growing continuously but the turning point came in 1996=97 when it started

slowing down. The impact was really (MI) felt in the next year when the overall growth was

hardly two percent. This was also possible only because the motorcycle segment showed a

healthy growth of 15 percent. The scooter segment went down by 3 percent and mopeds by 6

percent.

Another highlight is that the motorcycle sales have surpassed the scooter sales for the

first time in 1998-99. Until then, motorcycle sales were always trailing behind.

The net result is that motorcycles now account for 41 percent of the two-wheeler

market, while scooters account for 36 percent. Mopeds have been able to hold their own at

about 21 percent.

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GROWTH OF MOTORCYCLES

It is therefore not surprising that every major player is trying to get into the

Motorcycle market to have a piece of the cake.

Hero MotoCorp Ltd is indisputable the leader with 38 percent share followed by Bajaj

with 27 percent (includes M-80), TVS at 19 percent and Escorts at 13 percent. Now LML and

Kinetic have announced their plans to manufacture motorcycles, which are likely to come in

the market by next year. The battle is expected to be fierce but the consumer will be the

greater beneficiary.

The growth in motorcycles is slowly losing its hold. It is considered a family vehicle

but perhaps there is competition from the second hand car markets where prices have fallen

down rapidly. A1992 Maruti 800 is now available for just 70,000.

The scooter manufactures have to watch this phenomenon and bring our many new

product variants in the right price slots to sustain their shares in the market. The moped

market has been steady with an average growth of 3 percent. It is dominated by TVS which

holds 48 percent market share followed by Kinetic and Majestic Auto at 23 percent and 18

percent respectively.

In each segment, there is a wide gap between the first two contenders, which makes

their products positioning and marketing strategies most interesting. The two wheelers market

seems to be maturing. There are the usual their conventional segment of scooters, mopeds

and motorcycles. Two new segments are being created.

NEW SEGMENTS

A Step is through segment like Kinetic K4-100, Honda Street, Bajaj M-80, which is

quite close to the motorcycle segment. The other segment is scooterettes or mini scooters in

which vehicles such as Kinetic SX/Style, TVS Scooty, Hero Winner, Bajaaj

Sunny/Sprite/Safire and LML trendy can be considered. These are vehicles under 75 cc and

largely targeted at the youth market such as college students, young boys and girls and new

couples. They get the advantage of lower excise duty at 16 percent as compared to 24 percent

applicable over 75 cc. The trend is towards push button start vehicles.

44

Among the majors in the two-wheeler industry, first quarter figure for the current year of

some players has been encouraging. The company sold 313,303 units last month as compared

to 325,360 units in the same month last year. With this, BAL has recorded as 87 percent

growth in the motorcycle segment in the first quarter with sales of 130,577 units (93,631

units in the corresponding period last year) BAL estimates market share of the first quarter-

Geared scooters 75.9%, unguarded scooters- 16.5%, Step-thrus-72.3% and motorcycle-

20.5%.

In the scooters segment, sales of Bajaj Sunny and Bajaj Spirit increased by 170

percent to 7,876 units. First quarter sales registered an impressive 78 percent growth with

sales of 19,562 (10,995 units). The overall sales grew by 9.3 percent in the quarter when the

company sold 3.24 lakh vehicles.

BAL however reported a decline in sales of scooters by 15.6 percent in the first

quarter. The company hopes to increase the share of motorcycle in its product basket from 18

percent last year to 30 percent by 2003-04.

Hero MotoCorp Ltd enjoys tremendous brand equity in the motorcycle segment.

Kinetic Motors, another important player, managed to grow in 1999-2000, when the

scooters segments a whole slipped by around 5 percent. TVS Suzuki, a motor two-wheeler

market, has reported a growth of 13 percent in the first quarter period and sold 2.19 lakh

units. Sales of motorcycles and scooters were up by 18 percent and that of mopeds by 8

percent over the same period last year.

The current year therefore promises to be a testing time for the two-wheeler industry.

Industry pundits feel that an overall growth rate of 5 percent should be possible as against 9

percent projected earlier. The sales volume therefore is expected to be around 3.8 million in

2000-2001.

DRAMATIC CHANGES:

HeroMotoCorp is now world’s largest manufacturer of two-wheelers. The company has

benefited from the demand shift to motorcycles, as it focuses solely on this product segment

(although has a product called Pleasure in Scooter segment). With fuel efficiency and riding

45

comfort as the main selling points, HMC has been able to address a wide market and post

robust sales growth even after its separation from the Japanese major Honda.

The coming years will see increasing competition due to the parity in products

and price. The only differentiators will be technology, quality, product range and service.

Imaginative marketing will emphasize relationship building, customer satisfaction and

relationship. All is exploring new techniques such as direct marketing and institutional sales.

Some of them are taking the vehicle actually to the customer’s doorstep. Now the customer is

the king.

HISTORICAL DEVELOPMENT OF TWO WHEELER INDUSTRY

India is the second largest manufacturer and producer of two-wheelers in the world. It

stands next to Japan and China in terms of the number of two-wheelers produced and

domestic sales respectively. This distinction was achieved due to variety of reasons as if

respective policy followed by the Government of India towards the passenger car industry,

rising demand for personal transport, inefficiency in the public transportation system etc.,

In Indian two-wheeler, industry made a small beginning in the early 50s when

Automobile Products of India (API) started manufacturing scooters in the country. Until

1958, API and Enfield were the sole producers.

In 1948, Bajaj Auto began trading in imported Vespa scooters and three wheelers.

Finally, in 1980, it setup a shop to manufacture them in technical collaboration with Piaggio

of Italy. The agreement expired in 1971.

In the initial stages, API it was later overtaken by Bajaj Auto dominating the scooter

segment. Although various Government and Private enterprises entered the fray for scooters,

the only new player that has lasted until today is LML.

Under the regulated regime, foreign companies were not allowed to operate in India.

It was a complete seller market with the waiting period for getting a scooter from Bajaj Auto

being as high as 12 years.

The motorcycles segment was no different, with only three manufacturers via Enfield,

Ideal Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot

were two-stroke bikes. Enfield 350cc bikes and Escorts 175cc bike initially dominated the

46

motorcycle segment.

The two-wheeler market was opened to foreign competition in the mid 80’s. And

then the market leaders-E5corts and Enfield- were caught unaware by the onslaught of the

100 cc bikes of the four IndoJapanese joint ventures. With the availability of fuel-efficiency

low power bikes, demand swelled resulting in Hero Honda — the only producer of four-

stroke bikes (100cc category), gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TYS Suzuki and

Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively.

These two players initially started with assembly of CKD kits, and later on progressed to

indigenous manufacturing. In the 90’s the major growth for motorcycle segment was brought

in by Japanese motorcycles, which grew at a rate Of nearly 25% CAGR in the last five years.

The industry had a smooth ride in the 50’s, 60’s and70’s when the government prohibited

new entries and strictly controlled capacity expansion. The industry saw a sudden growth in

the 80’s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mm

vehicles in 1990.

The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in

providing ease of use to the scooter owners. This helped in inducing youngsters and working

women towards buying scooters, who were earlier inclined towards moped purchases. In line

with this, the scooter segment has consistently lost its part of the market share in the

two~whee1er market.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a

decline of 15% in 1991 and 8% in1992, resulting in the production loss of 0.4mn vehicles.

Barring Hero Honda, all the major producers suffered from recession in FY93 and FY94.

Hero Honda showed a marginal decline in 1992.

The reasons for recession in the sector were the incessant rise in fuel price, high input

costs and reduced purchasing power due to significant rise in general price level and credit

crunch in consumer financing. Factors as if increased production in 1992, due to new entrants

coupled with the recession in the industry resulted in either company reporting losses or fail

in profits.India is one of the very few countries manufacturing three wheelers in the world. It

is the world’s largest manufacturer and seller of three wheelers. Bajaj Auto commands a

47

monopoly in the domestic market with a market share of above 80%; Bajaj Tempo, Greaves

Ltd and Scooters in India share the rest.

The total number of registered two-wheelers and three-wheelers on road in India, as

on March 1998 was 27.9nm and 1 .7nin respectively. The two-wheeler population has almost

doubled in 1996 from a base of 12.6mn in 1990.

PENETRATION OF TWO-WHEELERS:

On a base of around 28mn vehicles on Indian roads and around 175mn households,

there were only 160 motorized two-wheelers per thousand households in FY98. This

compares poorly with countries like Thailand where it is around 600 per thousand

households. Also with a household size of 5.5 persons and more than one wage earner in

about 60% of the households, the potential for a second vehicle demand is also good.

The number of households in the low-income group has fallen since FY86 and has

been more pronounced in the post-reform period. On the other hand, the number of

households in the middle, upper middle and high-income groups that form the consumer base

for twowheelers, have increased. Their share of the total number of households has increased

from 10.6% in FY88 to 20.5% inFY96. This rising income profile however, has, been more

pronounced in the urban areas as average annual growth in industry surpassed that of

agriculture in the period FY93 to FY96.

48

Market SegmentsTwo wheelers segment accounted for about three quarters of the total automotive production in the country during FY13.

49

COMPANY PROFILE

Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer

of two - wheelers, based in India. In India, it has a market share of about 46% share in 2-

wheeler category. The 2006 Forbes 200 Most Respected companies list has Hero Honda

Motors ranked at 108. On 31 March 2013, the market capitalisation of the company was INR

308 billion (USD 5.66 billion)

Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of

Japan. In 2010, when Honda 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.

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.

HeroMotoCorp is now world’s largest manufacturer of two-wheelers. The company has

benefited from the demand shift to motorcycles, as it focuses solely on this product segment

(although has a product called Pleasure in Scooter segment). With fuel efficiency and riding

comfort as the main selling points, HMC has been able to address a wide market and post

robust sales growth even after its separation from the Japanese major Honda.

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

towards providing world class mobility solutions with renewed focus on expanding

company’s footprint in the global arena.

50

MISSION

Hero MotoCorp's 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's 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 MotoCorp two wheelers 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 are

based at Haridwar, in the hill state of Uttrakhand.

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.

Its plants use world class equipment and processes and have become a benchmark in leanness

and productivity.

51

Hero MotoCorp, in its endeavor to remain a pioneer in technology, will continue to innovate

and develop cutting edge products and processes

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's 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.

Supply chain management

As the Company prepares to produce a wider range of products, efforts are being taken to

align the supply chain and prime up its supplier base. During the year, the Company kick-

started the process of migrating its existing brands to the new brand. The exercise is expected

to be completed during 2012-13.

During the year, the Company also commenced the process of working with its vendors to

develop new parts. The Company’s Supply Chain Management function is built on three

planks:

Cost

Quality

Sustainability

Tracking inventory cost effectively and efficiently is known to be a key source of competitive

advantage in the automobile industry. Hence, it comes as no surprise that cost leadership is

the Company’s prime focus area. Continual pressure on margins forced the Company and its

supply chain partners to find innovative and alternate ways to combat inflation. Considerable

attention was given to managing component inventory in the system, with double-digit

growth in inventory turnover. To align HR processes with the supply chain, top two HR

consulting firms in India are working with supply chain partners. The exercise is aimed at

improving robustness of people processes and resulting in a direct impact on quality, cost,

productivity, delivery and reliability. The move will enable supply chain partners move to the

next orbit of operational excellence. The Company initiated more than 30 quality

52

improvement projects with supply chain partners to provide better quality products to

customers.

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.

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—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

53

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.

Hero No. 1 and going strong

When Hero parted ways with Honda three years ago, there were a whole lot of people who

thought it was all over for the Munjals-promoted group.

If the numbers of 2013-14 are anything to go by, these naysayers would probably have to eat

their words. Hero MotoCorp wrapped up with sales of 6.25 million bikes and scooters,

considerably ahead of its former Japanese partner’s tally of 3.72 million units. Bajaj Auto

followed with 3.42 million with TVS Motor just short of the two million-unit mark (1.99

million).

Industry sources say Hero will sit pretty so long as its killer duo, the Splendor and Passion,

continue to catch the eye of the market. “Sure, they have been around for years but buyers

don’t seem to mind,” an executive from a rival two-wheeler company said. These two brands

account for nearly 60 per cent of Hero MotoCorp’s sales and are going as strong as ever.

54

Expansion

Yet, there is no denying the fact that Honda is already proving to be a serious adversary. At

the time of its split with Hero, it only had one plant in Haryana which was churning out 1.6

million bikes/scooters annually. Since then, the company has added Rajasthan, Karnataka and

Gujarat to its expansion plans. In the following weeks, its capacity will reach 4.6 million

units and, following the commissioning of the Gujarat facility, this will be close to six million

units.

This remarkable buildup will happen in the next 18 months which means Honda will quickly

bridge the gap with Hero unless the latter manages to replicate this kind of a feverish pace.

By the end of 2015-16, Honda is targeting 40 per cent of the market and is likely to take the

top slot very soon thereafter.

It will also be interesting to see what Bajaj Auto has up its sleeve while the tug-of-war

between Hero and Honda intensifies in the coming months. The Pune-based company has

reiterated that it will focus on its Pulsar and Discover brands in motorcycles while leveraging

KTM both here and overseas. Bajaj will also continue to focus on building its exports

business which could take up 50 per cent of its volumes in the next couple of years.

TVS Motor, likewise, is gradually building its numbers and will have reason to be pleased

with its scooter business. The Jupiter has quickly established itself as a brand to reckon with

while the more established Scooty is also in auto mode.

Indeed, scooters have been the biggest growth story of 2013-14 as evident in the portfolio of

Honda, Hero, TVS, Yamaha and Suzuki. The notable exception to this list is Bajaj, once

synonymous with the traditional geared scooter. The company is categorical that it will stick

to motorcycles which form a larger part of the global canvas. Will it change its mind about

scooters in the near future? This remains the million dollar question.

Directors

55

Founder Director and Chairman : Dr. Brijmohan Lall Munjal

Managing Director and CEO : Mr. Pawan Munjal .

Board of Directors

Name of the person Nature of the Office

Mr. Sunil Kant Munjal Non Executive Director

Mr. Suman Kant Munjal Director

Mr. Paul Edgerley Non Executive Director

Mr. Pradeep Dinodia Director

Gen. (Retd.) V. P. Malik Director

Mr. Analjit Singh Director

Dr. Pritam Singh Director

Mr. M. Damodaran Director

Mr. Ravinath Director

Dr. Anand C.Burman Director

Dr. Brijmohan Lall Munjal

Mr. Munjal is the founder Director and Chairman of the Company and

the $3.2 billion Hero Group. He is the Past President of Confederation of Indian Industry

(CII), Society of Indian Automobile Manufacturers (SIAM) and was a Member of the

Board of the Country's Central Bank (Reserve Bank of India). In recognition of his

contribution to industry, Mr. Munjal was conferred the Padma Bhushan Award by the

Union Government.

Corporate Governance

At Hero MotoCorp, it is the firm’s belief that the essence of Corporate Governance lies in

the phrase ''Your Company''. It is ''Your'' Company because it belongs to you - the

shareholders. The Chairman and Directors are ''Your'' fiduciaries and trustees. Their

objective is to take the business forward in such a way that it maximizes ''Your'' long-term

value.

56

This Company is committed to benchmarking itself with global standards for providing good

Corporate Governance. It has put in place an effective Corporate Governance System which

ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with.

The Board has also evolved and adopted a Code of Conduct based on the principles of Good

Corporate Governance and best management practices being followed globally.

GRADING POSITIVES

Market leadership, strong brand equity, professional management, high operating efficiency

and established scale economies. Strong financial profile characterized by healthy margins,

high profitability and cash generation. Potential upsides to our estimates: (1) HMCL sustains

its current market share, leveraging its brand equity, product performance and distribution

strengths; (2) industry growth exceeds our estimates over the medium term despite existing

concerns on macro-economic scenario; (3) HMCL betters the margins estimated by us via

sustained business growth and increases in operating efficiency even in the face of

competitive and cost pressures.

GRADING SENSITIVITIES

Key sensitivities to our estimates include:

(1) Inflation in input costs not being neutralized by price increases because of competitive

pressures;

(2) High concentration on Executive segment;

(3) Intensifying competition from global players;

(4) Ability to develop in-house technical capability or form alternate technical tie-ups with

external institutions.

Company History - Hero Moto Corp

1956—Formation of Hero Cycles in Ludhiana(majestic auto limited)

1975—Hero Cycles becomes largest bicycle manufacturer in India.

57

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 Motocorp SuperSplendor, Hero Honda motorcycle CD Deluxe, Hero Honda

motorcycle Glamour, Hero Honda motorcycle Achiever and Hero Honda Scooter

Pleasure.

2007—New Models of 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.

58

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 Musculine scooter and Ignitor the

young generation bike are launched.

2013-Hero MotoCorp unveiled line-up of 15 updated products including Karizma R,

ZMR, Xtreme, Pleasure, Splendor Pro, Splendor iSmart, HF Deluxe ECO, Hero

Motocorp SuperSplendor, Passion Pro and Xpro, Glamour and Glamour FI etc. It also

introduced three new technologies- Engine Immobilizer in new Xtreme, Integrated

Braking System (IBS) in new Pleasure and i3S (Idle Stop and Start System) in new

Splendor iSmart.

Awards & Recognitions on 2011

Two-wheeler Manufacturer of the Year award by Bike India magazine. Adjudged the

"Bike Manufacturer of the Year" at the Economic Times ZigWheels Car and Bike

Awards.

CNBC Awaaz - Storyboard special commendation for "Effective rebranding of a new

corporate entity" by CNBC Awaaz Consumer Awards

"Most Recommended Two-Wheeler Brand of the Year" award by CNBC Awaaz

Consumer Awards

Colloquy Loyalty Awards "Innovation in Loyalty Marketing International 2011" for

Hero Good Life

"Best Activity Generating Short or Long-Term Brand Loyalty" by the Promotion

Marketing Award of Asia Order of Merit for Hero Good Life

Ranked No 1 brand in the Auto (Two-Wheelers) category in the Brand Equity "Most

Trusted Brand" 2011 serve

59

• Profile of target customer

Hero MotoCorp basically targets the every each and segments of the market. So there are

some products like splendor, CD- dawn (rs40000-50000) they made for lower segment of the

market and glamour, passion, CBZ, karizma (rs above 50000) for the upper segment of the

market. And now they are trying to target the young people of the market.

India’s Hero MotoCorp, the world’s largest producer of motorcycles and scooters, has

announced its intention to expand globally, with plans to sell vehicles on three continents and

nearly double its unit sales within five years. The company, whose family shareholders

bought out its former partner Honda Motor this year, said it would invest about $1bn to

expand internationally in south-east Asia, Africa, and Central and Latin America.

• Customer Relationship Activity

For making a better relationship with customer they always use genuine parts in their

product. And after selling they have the services and maintenances. Their constant endeavor

is to support the company's mandate of providing highest level of customer satisfaction by

taking good care of customer’s two-wheeler service and maintenance through their vast

network of more than 2100 committed dealers and service outlets spread across the country.

Apart from that hero motocorp focused on cleanliness and other aesthetics of the service

stations and add such air conditioned waiting area, internet surfing, coffee shops etc to

enhance the in house experience of the customers at those “customer touch point”. To ensure

that millions of customers in the rural area are not left waiting for adequate service as it is

impossible for the company to introduce service station at every nook and corner of the

country, mobile service stations are regularly arranged with prior intimation to public about

the rout that the mobile workshop would take when passing through that region so that

customers can come and get their two wheelers serviced. All these activities are aimed to

increase the customer loyalty and thus retaining customers.

Good life: Customer Loyalty Program

Good Life is a Customer Relationship Program introduced a decade ago, which Endeavour’s

to enhance customer satisfaction and initiate increased levels of member engagement.

60

The main objective of this Program is to make our customers our Brand Ambassadors to

generate referral sales and boost service visits.

The GoodLife Program has enabled the Company build a consolidated base of 10 million

plus loyal customers; in the process, a new distribution platform has emerged. GoodLife now

contributes a huge 14% to the Company’s overall sales (purely through referrals), in addition

to incremental sales. GoodLife has emerged as the largest Customer Relationship Program in

India, witnessing additions of 0.38 million members each month. During the year, the

Program’s member base shot up 16%, with new 4.51 million transactions being undertaken.

Besides aiming to increase the number of customers and volume of transactions, the Program

seeks to enhance revenue opportunities for dealers as well. Different levels of engagement

have been in-built into the Program with the aim of increasing its people engagement

initiatives. Some of these are: transaction-based rewards, exclusive event invites, personal

accidental insurance, service continuity bonus, transaction benefits on special occasions

(birthdays, anniversaries), quarterly newsletters and interaction through a program website.

The Program began with a member transaction booklet, a replica of the Passport Booklet,

which helps in engaging with customers. However, the Program has been e-enabled now to

improve its geographical reach and efficiency level. It runs on the backbone of a robust and

engaging front-end and a sound, solid and technical back-end. The Program includes

customized technology, combining a mix of Magnetic Swipe/Bar Code. Personalized

Membership Cards are shared with GoodLife members, which are easy to carry, transact and

earn/redeem rewards. Online member profiling and real-time customer feedback module (via

questionnaires) are some more salient features of the Program. During the year, GoodLife has

been the recipient of several accolades and awards on national and international platforms.

Some of these were:

‘Order of Merit’ in PMAA awards 2011 under ‘Best Activity Generating Short or

Long Term Brand Loyalty’ category

Colloquy Award under Innovation in Loyalty Marketing (International) category

Qualified as ECHO Finalist (5th place) in 2011 DMA International ECHO™ Awards

competition Loyalty Award under Auto Sector

OPERATION RAMP-UP

61

With demand for bikes recording a stupendous growth of 15% during the year under review,

the Company’s capacities were severely strained. This prompted it to augment its capacity at

its three plants – up from 5.4 million units to 6.35 million – during the year. This was made

possible through a number of de-bottlenecking measures. For example, the Company’s plants

were made leaner by outsourcing non-critical processes and operations.

Besides this, a number of structural changes and alterations were made in its manufacturing

strategy to effectively implement its Sales Plan for 2012-13.

Major replacements were also executed in the paint and assembly shop, ensuring little or no

shutdown along the assembly line. Apart from the above measures, several innovative

technologies were inculcated to reduce operational costs. Some examples of these are:

A breakthrough technology for gear rolling was implemented for mass-

production

Fine blanking, an alternate process of hobbling, was introduced for sprocket

components

Advanced cam grinding was introduced to increase productivity and control

costs

The Company’s oldest plant at Dharuhera was in the limelight for two specific reasons:

Wage negotiations were concluded

Plant won TPM Excellence Award

The Company continues to set new industry benchmarks in the areas of energy conservation

and sustainability. Vapour absorption machines and heat recovery units were installed during

the year to utilize waste heat from Gas DGs for air-conditioning and pre-heating of hot water

generation. Other green initiatives included projects on waste water management, LED

lighting and solar power. These cost leadership and green projects yielded considerable

savings to the Company within a short period of time.

PORTFOLIO OF PRODUCTS

Hero MotoCorp offers wide range of two wheeler products that include motorcycles and

scooters, and has set the industry standards across all the market segments.

62

100cc

Bike category

SPLENDOR PLUS

SPLENDOR NXG

SPLENDOR PRO

PASSION PRO

PASSION XPRO

MAESTRO

PLEASURE

HF DAWN

HF DELUXE

125cc

Bike category

GLAMOUR

SUPER SPLENDOR

IGNITOR

Glamour PGM FI

150cc

Bike category

ACHIEVER

KARIZMA

KARIZMA ZMR

IMPULSE

HUNK

XTREME

63

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—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.

64

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.

65

Data Collection

1. Which type of Hero two wheeler model owned by you?

SPLENDOR 40%

GLAMOUR24%

KARIZMA 8%

MAESTRO8%

PLEASURE18%

IMPULSE2%

Using model

Interpretation:- From the above table it is inferred that, 40% of respondents are using

splendor and 24% of respondents using Glamour, 18% use pleasure ,8% use Karizma, 8% use

Maestro and only 2% of respondents use Impulse.

66

Number Model Respondents

1 SPLENDOR 20

2 GLAMOUR 12

2 KARIZMA 4

3 MAESTRO 4

4 PLEASURE 9

5 IMPULSE 1

Total 50

2. What is the source from which you found the advertisements about Hero Motors

NO Source Respondents

1 Television 20

2 Newspapers 12

3 Radio 6

4 Hoardings 12

Total 50

Television Newspapers Radio Hoardings0

2

4

6

8

10

12

14

16

18

20

Advertisements

Advertisements

Interpretation:

From the above table it is very clear that most of the respondents watched the

advertisements of Hero in Televisions i.e 40% and newspapers, Hoardings combinely

48% and radio is very less i.e 12%.

3. Who influenced you to make the purchase of Hero Motors.

A) Friends B) Family C)Sales People

67

Influencers Response

Friends 21

Family 18

Sales People 11

Total 50

Friends Family Sales People0

5

10

15

20

25

Series1

Interpretation:

From the above interpretation it is observed that the purchase is mostly influenced by

friends 42% , family 36% and by sales people is just 22% which is the least of the others.

4.What is your preferred capacity and color about your motor cycle.

A) 100cc B) 125cc C)150cc D)200cc

A) Red B) Black C)Blue D)Other

68

Capacity Response Colour Response

100cc 5 Red 12

125cc 14 Black 22

150cc 20 Blue 10

200cc 11 Others 6

Total 50 Total 50

100cc 125cc 150cc 200cc0

5

10

15

20

25

preference

preference

Red Black Blue Others0

5

10

15

20

25

Preferred color

Preferred color

Interpretation:

69

Capacity:

From above table it is observed that most of the two wheeler users are interested in 150cc

bikes i.e 40%, 125cc is 28%, 200 cc is 22%,100cc is just 10%

Colour:

Maximum people prefer black colour 44% followed by red 24% , blue and the others

5. Are you satisfied with the delivery time of your motor cycle.

A) Yes B) No

Response

Yes 36

No 13

Total 50

70

Yes No 0

5

10

15

20

25

30

35

40

delivery time

delivery time

Interpretation:

From the above table it is very clear that maximum respondents are satisfied with the

delivery time of the motorcycle i.e 72% and the remaining 28% were not satisfied by the

delivery time.

6. How do you think is the reliability of the hero vehicles.

A) Excellent B) Good C) Average D)poor

Response

Excellent 20

Good 22

Average 6

Poor 2

Total 50

71

ExcellentGood

AveragePoor

0

5

10

15

20

25

Reliability

Reliability

Interpretation:

From the above table it is very clear that maximum respondents feel that reliability of

hero Vehicles is excellent and good i.e 40% and 44% and 12% feel average and only 4%

of respondents feel its poor. Hero motors can take measures to improve reliability of its

vehicles to attract more customers and to satisfy the existing customers.

7. What is your level of satisfaction of service with Hero Motors

A) Excellent B) Good C) Average D)poor

Response

Excellent 20

Good 22

Average 6

Poor 2

Total 50

72

Excellent Good Average Poor0

5

10

15

20

25

service

service

Interpretation:

From the above table it is very clear that maximum respondents feel that they were

satisfied with the service offered by Hero Motors is excellent and good i.e. 40% and 44%

and 12% feel average and only 4% of respondents feel its poor. Hero motors can take

measures to improve the service to its customers for maintaining the maximum satisfied

customers which will bring in more customers and good word of mouth for Hero Motors.

8. What is the reason for your preference of Hero.

A) Quality B) Fuel Efficiency C) Economic D) Good service

Preferences Responses

Quality 10

Fuel efficiency 20

Economic 8

Good Service 12

Total 50

73

Quality Fuel efficiency Economic Good Service 0

5

10

15

20

25

Reason for preference

Reason for preference

Interpretation:

From the above table it can be concluded that maximum respondents prefer hero vehicles

as they were satisfied with the service offered by Hero Motors is excellent and good i.e.

40% and 44% and 12% feel average and only 4% of respondents feel its poor. Hero

motors can take measures to improve the service to its customers for maintaining the

maximum satisfied customers which will bring in more customers and good word of

mouth for Hero Motors.

9. From how long are you using the Hero vehicle.

A) <6months B) 6-9 months C)9-12 months D)more than year

Usage Responses

Less than 6 months 5

6-9 months 10

9-12 months 13

More that year 22

Total 50

74

Less than 6 months 6-9 months 9-12 months More that year0

5

10

15

20

25

usage period

usage period

Interpretation:

From the above table it can be concluded that maximum respondents i.e 44% using Hero

vehicles for more than a year and 26% of respondents using from 9-12 months, 20%

using from 6-9 moths and 10% are the new customers.

From this we can conclude that most of the hero vehicles users are using from long

period . so if hero motors concentrate on providing better service after the purchase to the

customers they will keep using the Hero vehicles for longer period.

10. How do you think Hero can improve on customer service .

A) Service in time B)well trained mechanics C)Less labor cost

Preference ResponseService in time 15Well trained mechanics 24Less labor cost 11Total 50

75

Service in time Well trained mechanics Less labor cost0

5

10

15

20

25

30

Improving serivce

Improving serivce

Interpretation:

48% of respondents feel that the customer service at hero motors can be improved by training the mechanics and 30% feel by doing service in time, 22% feel it by providing the service for lesser costs.

Providing the satisfying service is very essential for any company to keep its customers satisfied. Hero must take care of all the three as they were important to increase service.

11.Which age group do you belong.

A)20-25 B)25-35 C) 35-45 D) above 45

Age group Responses20-25 years 525-35 1635-45 21Above 45 8Total 50

76

20-25 years10%

25-3532%

35-4542%

Above 4516%

Age groups

Interpretation:

The maximum users of the hero vehicles belong to the age group of 35-45 followed by 25-35, 42% belong to age group of 35-45 and 32% belong to 25-35, 10 % of respondents are between 20-25 years of age and 16 % are above 45.

From this is clear that the mid aged people are using the hero vehicles mostly. It has to produce different models for younger population.

12. Problems faced at the time of service.

A) High spare parts cost B)Low quality C) Delay in service D)No Problems

Problem faced ResponseHigh spare parts cost 10Low quality 10Delay in service 14No problems 16Total 50

77

High spare parts cost

Low quality Delay in service No problems0

2

4

6

8

10

12

14

16

18

customer issues

customer issues

Interpretation:

It was very good that 32% customers not facing any problems with the service with the hero but there were some problems faced by the customers which should mostly concentrate. 20% feel the spare parts cost is high and 20% that the quality of service is low, 28% feel that the service is slow.

13. Will you recommend Hero Motors to others.

A) Yes B) No

Recommendation ResponseYes 41No 9Total 50

78

Yes82%

No18%

Recommendation to others

Interpretation:

From the above responses from the customers it is clear that 82% of the respondents would like to recommend Hero to others and only 18% don’t want to recommend which is less percentage but hero should have to take measures to convert the unsatisfied as satisfied customers who inturn recommend hero products to others.

14. Are you satisfied with the overall service of Hero.

A) Yes B) No

Recommendation ResponseYes 40No 10Total 50

79

Yes No0

5

10

15

20

25

30

35

40

overall satisfaction

overall satisfaction

Interpretation:

From the above responses from the customers it is clear that 80% of the respondents were satisfied with the overall service of the Hero motors and 20% were not satisfied hero should have to take measures to convert the unsatisfied as satisfied customers.

80

DATA ANALYSIS AND

INTERPRETATION

81

DATA ANALYSIS AND INTERPRETATIONS

PURCHASE OF 2-STROKE AND 4-STROKE BIKES:

Bikes No. of Consumers % age

2-strokes 76 27%

4-strokes 206 73%

TOTAL 282

2-strokes27%

4-strokes73%

2-strokes 4-strokes

INTERPRETATION:

Most of the consumers i.e. 73% want to purchase a 4-strokes bike.

82

Whereas, 27% consumers want to purchase a 2-strokes bike.

INFLUENCING FACTORS:

Factors No. of consumers %age

Advertisement 70 25

Sales Team 50 18

Friends 110 39

Family 52 18

TOTAL 282

Adverti

semen

t

Sales T

eam

Friends

Family

0

5

10

15

20

25

30

35

40

45

25

18

39

18

RESP

OND

ENTS

INTERPRETATION:

Most of the consumers i.e. 39% are influenced by the friends.

25% consumers out of 282 respondents are influenced by advertisement.

18% consumers out of 282 respondents are influenced by the family.

Whereas, rest of the consumers i.e. 18% are influenced by sales team while making the purchase

decision.

RESPONSE OF THE CONSUMERS REGADING MODELS AND COLOURS:

83

Company No. of models & colours %age

Hero Honda 40 14%

Bajaj 140 50%

LML 40 14%

TVS 30 11%

Yamaha 32 11%

TOTAL 282

0

10

20

30

40

50

60

70

80

20

70

2015 16

HERO HONDA BAJAJ LML TVS YAMAHA

NO

. O

F R

ES

PO

ND

EN

TS

INTERPRETATION:

Most of the consumers i.e. 50% like colours and models of Bajaj motorcycles.

Whereas, equal 14% consumers like colours and models of Hero Honda and LML

motorcycles.

Moreover, rest equal 11% consumers like colours and models of TVS and YAMAHA

motorcycles.

84

PREFERENCE FACTOR:

Features of bikes No. of consumers % age

Power 136 48%

Mileage 112 40%

Low maintenance 34 12%

Total 282

48%

40%

12%

Power Mileage Low Maintenance

INTERPRETATION:

40 % consumers prefer mileage in their bike.

48 % consumers prefer power in their bike.

12 % consumers prefer low maintenance in their bike.

85

PREFERENCE OF BIKE REGARDING CC:

Prefer CC of bikes by consumers No. of consumers % age

Under 100cc 0 0%

100-125cc 84 30%

125-150cc 144 51%

150cc & above 54 19%

Total 282

30%

51%

19%

Under 100cc 100-125cc 125-150cc 150cc & above

INTERPRETATION:

Most of the consumers i.e. 51% like to purchase the bike in between 125 cc and 150 cc.

86

And 30% of consumers like to purchase the bike in between 100 cc and 125 cc.

Whereas, rest 19% of consumers like to purchase the bike in 150 cc and above.

FACTORS AFFECTING CONSUMER BUYING BEHAVIOUR:

Factors No. of Respondents %age

Price 22 8%

Average 36 13%

Looks 90 31%

Brand Image 22 8%

Power 20 7%

Pick up 56 20%

Low Maintenance 20 7%

After Sales Service 16 8%

Total 282

87

05

101520253035404550

11

18

45

11 10

28

10 8

Price Average Looks Brand Image Power

Pick up Low Maintenance After Sales Service

RESP

OND

ANTS

INTERPRETATION:

31% consumers out of 282 are influenced by Looks Factors (Most Influencing Factor).

20% consumers out of 282 are influenced by pick up factor.

13% consumers out of 282 are influenced by mileage.

COMPARATIVE ANALYSIS:

Brand Name No. of consumers %age

Yamaha 20 7

Hero Honda 116 41

Bajaj 76 27

TVS 36 13

LML 20 7

Others 14 5

TOTAL 282

88

Yamaha Hero Honda Bajaj TVS LML Others0

5

10

15

20

25

30

35

40

45

CONS

UMER

S (in

%)

INTERPRETATION:

41% respondents out of 282 consumers like to purchase Hero Honda (Surva Guna

Smpana).

27% respondents out of 282 consumers like to purchase Bajaj.

13% respondents out of 282 consumers like to purchase TVS.

7 –7 % respondents out of 282 consumers like to purchase LML and YAMAHA.

POST PURCHASE ANALYSIS:

Post Purchase Behavior No. of consumers %age

Full Satisfied 42 14.89

Satisfied 160 56.74

Dissatisfied 80 28.37

TOTAL 282

89

15%

57%

28%

Full Satisfied Satisfied Dissatisfied

INTERPRETATION:

Only 15% consumers are full satisfied with their bike.

Whereas 57% and 28% consumers are satisfied and dissatisfied with their bike

respectively.

90

SUMMARY OF FINDINGS

1. The Hero MotoCorp is leading the market. The difference is too big to cope up with,

for any manufacturer in short span. With proven products and many people having

faith in brand, it is quite a difficult task for others to take the Hero’s number one

position.

2. Ability to understand customer’s needs and wants, maintenance cost is low.

3. Passion Pro, Splendor Plus, are the two models that Hero MotoCorp selling a big

number

4. The TV promotions are more influence the customer behavior of two wheeler sector.

5. The purchase desiccations of consumers are influence by friends and family.

6. Blue, Red, Black color bike with 150 cc to 200cc is fast moving.

7. Most of the despondences are agree that the bikes are delivering proper time.

8. The service provide by Hero MotoCorp is satisfied by more than 70% of customers.

9. Brand name of Hero is still good in market after split with Honda

10. Quality, price, Brand image, Fuel efficiency is getting equal importance in satisfaction

11. The research showing that consumer want to get more service satisfaction.

12. Maximum of the customer likes to recommend Hero two wheeler to their friends, its

shows they are satisfied with the bike.

13.Hero MotoCorp wrapped up with sales of 6.25 million bikes and scooters,

considerably ahead of its former Japanese partner’s tally of 3.72 million units

91

SUGGESTIONS AND RECOMMENDATIONS

It is very hard to hold the pulse of a customer in the market. Customer’s satisfaction is

different for different people at different situations;

Majority of the respondents were still unaware about different versions of Hero bikes.

Therefore I suggest the company personals should take initiative to create awareness

about these versions.

Few of the customers expressed concern over frequency of the maintenance & service

problems faced by their vehicle and expressed ‘high satisfaction’ over it. Therefore, I

suggest them to re look at the vehicle & re-develop in order to stop the frequency of

these problems.

Hero MotoCorp want to give more importance in there service part its include timely

service, and quality of service

Hero want to develop more promotion for there some models like sports bike and gear

less scooter

Hero bikes can concentrate to increase their export market

Hero MotoCorp Ltd should try to give more advertisements in news paper, bill boards

in that area to enable easy recall of the people for Hero MotoCorp Ltd.

Hero Motors can also increase models attracting the Indian youth.

92

CONCLUSION

Customer satisfaction is a marketing tool and a definite value added benefit. It is often

perceived by customers as important as the primary product or service your organization

offers.

For making a better relationship with customer they always use genuine parts in their

product. And after selling they have the services and maintenances. Their constant endeavor

is to support the company's mandate of providing highest level of customer satisfaction by

taking good care of customer’s two-wheeler service and maintenance through their vast

network of more than 2100 committed dealers and service outlets spread across the country.

Apart from that hero MotoCorp Ltd focused on cleanliness and other aesthetics of the service

stations and add such air conditioned waiting area, internet surfing, coffee shops etc to

enhance the in house experience of the customers at those “customer touch point”. To ensure

that millions of customers in the rural area are not left waiting for adequate service as it is

impossible for the company to introduce service station at every nook and corner of the

country, mobile service stations are regularly arranged with prior intimation to public about

the rout that the mobile workshop would take when passing through that region so that

customers can come and get their two wheelers serviced. All these activities are aimed to

increase the customer loyalty and thus retaining customers.

93

7

Questionnaire

1.Which type of Hero two wheeler model owned by you?

A) Splendor B)Glamour c)Passion D)Karizma

E) Impulse F)Maestro G) Pleasure

2. What is the source from which you found the advertisements about Hero Motors

A) Television B)Newspapers C)Radio D)Hoardings

3. Who influenced you to make the purchase of Hero Motors.

A) Friends B) Family C)Sales People

4. What is your preferred capacity and color about your motor cycle.

A) 100cc B) 125cc C)150cc D)200cc

A) Red B) Black C)Blue D)Other

5. Are you satisfied with the delivery time of your motor cycle.

A) Yes B) No

6. How do you think is the reliability of the hero vehicles.

A) Excellent B) Good C)Average D)poor

7. What is your level of satisfaction of service with Hero Motors

A) Excellent B) Good C) Average D)poor

8. What is the reason for yout preference of Hero.

A) Quality B) Fuel Efficiency C) Economic

9. From how long are you using the Hero vehicle.

A) <6months B) 6-9 months C) 9-12 months D) more than year

94

10. How do you think Hero can improve on customer service?

A) Service in time B) well trained mechanics C) Less labor cost

11. Which age group do you belong?

A) 20-25 B) 25-35 C) 35-45 D) above 45

12. Problems faced at the time of service.

A) High spare parts cost B) Low quality C) Delay in service D) No Problems

13. Will you recommend Hero Motors to others?

A) Yes B) No

14. Are you satisfied with the overall service of Hero?

A) Yes B) No

REFERENCES

In this project while finalizing and for analyzing quality problem in detail the following

books, magazines and websites have been referred.

95

Books Consulted:

Marketing Management – Philip Kotler

Research Methodology – Kothari

Business Statistics – S.P. Gupta

Magazines Consulted:

Indian Journal of Marketing

IBAT Journal of Management

Journal of Indian Management & Strategy

Auto Expo of India

Newspapers:

Hindustan times

Times of India

The Hindu

Financial Express

Economics times

Websites Consulted:

www.bajajauto.com

www.herohonda.com

www.lml.com

www.yamaha.com

www.google.com

96

BIBILOGRAPHY

http://www.ibef.org/industry/india-automobiles.aspx

http://en.wikipedia.org/wiki/Hero_MotoCorp

http://www.heromotocorp.com/en-in/

97