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Study of post-demerger Impact on Hero Group

A Market Research Project FINAL REPORT


Submitted to: Prof. N. B. Kanagal

Prepared By: Group 1 Ayan Deb Deeksha Narula Harish Kumar Prakash Singh Yadav Sathappan S 1 Vivek Kumar Bhagbole

Table of Contents
Executive Summary...3 Mid-Term Study.5 1. Refinement of the Problem ............................................................................................................ 5 1.1 Marketing Research Decision ....................................................................................................... 5 1.2 Management Research Problem ................................................................................................... 5 1.3 Process for developing MDP and MRP........................................................................................ 6 2. Secondary Study ............................................................................................................................. 6 2.1 Qualitative Research ..................................................................................................................... 7 3. Research Design .............................................................................................................................. 9 3.1 Variables ....................................................................................................................................... 9 3.2 Approach to collect Information ................................................................................................... 9 3.3 Scaling Techniques ....................................................................................................................... 9 3.4 Questionnaire Usage ................................................................................................................... 10 4. Sampling Plan.................................................................................................................................. 10 5. Questionnaire Development ........................................................................................................... 12 5.1 Information Checklist ................................................................................................................ 12 Post Mid-Term Analysis......................................................................................................................13 6. Questionnaire Design............................................................................................................13 7. Survey.............................................................................................................................................13 7.1 Survey Results Key Statistics.................................................................................................14 7.2 Consumer Perception of Hero (pre and post-demerger)............................................................15 7.3 Consumer Perception of key competitors..................................................................................15 8. Data Analysis.................................................................................................................................17 8.1Factor Analysis...........................................................................................................................17 8.2 Multi-Dimensional Scaling.......................................................................................................19 8.3 Conjoint Analysis......................................................................................................................21 9. Hypothesis Testing.........................................................................................................................23 9.1 Consumer Perception................................................................................................................23 9.2 Consumer Attitude & Motivation.............................................................................................25 9.3 Consumer Decision Making Process........................................................................................26 9.4 Hero Ad-Campaign Effectiveness............................................................................................27 10. Inferences.......................................................................................................................................28 11. Recommendations..........................................................................................................................29 Appendices ........................................................................................................................................... 31

Executive Summary
Hero Honda many of us who grew up in the early 1990s would not have realized until recently that Hero and Honda are two separate entities, when the news about their demerger broke out. Hero brand was established in Ludhiana as Hero Cycles in the year 1956. The brand became well known for its engineering capacity, strong distribution network, quality commitment and local field knowledge. In the year 1984, the Japanese multination, Honda Motor Company reached out to Hero group to set up a joint venture Hero Honda Motors (HHM), with each entity holding 26% stake. The technical capabilities of Honda and deep penetration network of Hero group, helped HHM to establish itself as a clear market leader in the bikes category. However, over the years both the partners felt constrained in their approach due to their joint venture. Honda realized the need to launch separately, given its technical capabilities and the growing Indian motor cycle industry and the Hero group wished to expand its reach beyond the Indian market. In March 2011, the demerger was announced and Hero has group has rechristened itself as Hero MotoCorp. As students of Marketing Research, we decided to study the impact of this demerger on the Hero group particularly the Hero brand. Specifically, we limited the scope of our research to a Brand Image Study where we looked into whether and how (if yes) has the consumer perception of the Hero MotoCorp brand changed post the demerger. We also looked into whether there is any change in the decision-making process for consumers while buying a Hero bike in the future and finally analysed the Ad-Campaign Effectiveness of the Hero Group campaign. After establishing the Marketing Decision Problem and the corresponding research questions and hypotheses, we proceeded to conduct a secondary study wherein we analysed company reports, analyst reports as well as news releases regarding the demerger. The key findings from this study were that the Hero group is expected to retain its strong brand equity, dealership network, large consumer base and healthy cost-structure in the medium term. The share price of Hero stock gained immensely renewing confidence in the brand, however there were concerns regarding sustained

growth in the long-term. This is because Hero group will face increased competition from new entrants and there were concerns regarding the technological capability of Hero without Honda. We followed this by conducting qualitative research primarily depth interviews and focus group interviews. The key findings here were that even though consumers seemed upbeat about the new Hero brand, there were huge concerns regarding the technological capabilities. The recent adcampaign launched by Hero received positive feedback. In the next phase of our study, we designed the questionnaire which was used for conducting primary research through an online survey. The results of the survey were used to conduct Factor Analysis, Multi-dimensional Scaling (MDS) as well as Conjoint Analysis. We also tested the hypotheses developed in the first phase using single sample z-tests as the sample size was larger than 30. Economy (Mileage, Price etc), Reliability, Quality and Resale Value were the key factors consumers keep in mind while buying a bike. On conducting the MDS, we found that the 2 dimensions on which we could position Hero and its competitors were Brand Image and Style. We see that Hero Honda ranked higher than Hero group on Brand Image which is an area of concern for Heros management however Heros positioning on Style was found to be greater than that of Hero Honda. The results from conjoint analysis were largely intuitive as Mileage (Economy) came out to be the most important attribute. Based on the results of the data analysis, we recommend that Hero group should focus on developing their technical capabilities and quality standards in a big way. The consumers should be made aware of their increased commitment to developing in-house R&D facilities post the demerger so that any negative impact on the technology front can be mitigated. Another key recommendation would be to increase brand equity of the models such as CBZ, Impulse and disassociate them with Hero Honda brand as these models already have strong brand equity of their own. Hero group should scale up their advertising and promotion activities since there is inadequate awareness of the new Hero brand with the same ad-campaign as the campaign has gotten rave reviews. Lastly, Hero group should develop new models keeping Style and Quality in mind in order to attract the growing youth segment of this country. 4

Mid-Term Study
1. Refinement of the Problem
1.1 Marketing Research Decision Considering the long term association with the Hero Honda brand; after the demerger customers perception may change depending on attitude, beliefs and learning about the new brand HERO GROUP. Hence management decision problem is to discover change in customer perception about new brand, if any particularly on the quality and technical capability aspects. 1.2 Management Research Problem As the Management decision problem is a symptom, so the management research problems will address different probable areas which needs attention. Some of the probable and their corresponding marketing research problems are as follows: S.NO 1 Research Problem Are there any signs of positivity in terms of consumer perceptions after demerger? Research Sub Problem Are consumers having any kind of perceptual defence for hero brand? Is there Halo Effect (Demerger doesnt matter at all to customers as long as Hero Group maintain the low price- high quality combination ) for the brand Hero? Hero A global Indian brand Does this changes the perception of customers Analysis of impact on the attitude components: Affective, cognitive and conation Is there any change in Motivational factor of the customer due to demerger Customer value the Utilitarian and Value Expressive function most for motivation in 2 wheeler segment hence motivation is unaffected Whether the brand associations with Hero Honda are stronger than associations with bike models such as CBZ/Impulse Research Hypotheses H0 : There is positive change in the perception after demerger H0 : There is a Halo Effect for Hero Brand

Is the attitude of the customers towards Hero brand has changed after demerger?

H0 : An Indian global brand has positive impact on customer perception H0 : Attitude has been neutral after demerger H0 : Motivation has not been affected by demerger

Is there any change in customer decision making process due to demerger?

H0 : Associations with bike models are stronger than brand Hero Honda 5

Does Hero needs to invest in consolidating new brand and enhancing customer loyalty

Whether the latest brand communication launched by Hero group is having the intended effect

H0 : Recent brand communication is effective

1.3 Process for developing MDP & MRP Customer Decision Making Process: Need for Recognition Pre-demerger Behaviour Vs Post Demerger Behaviour Evaluation of Alternatives, if required Psychological Field 1. Motivation 2. Perception 3. Learning 4. Attitude 5. Personality

Experience

2. Secondary Study
Key Findings The termination of the joint venture between Hero Group of India and Honda of Japan will be done in a phased manner till 2014. Under the joint venture Hero Group was restricted to Indian markets but the termination would give Hero Group would give them the advantage to export. Hero is working on setting up its own R&D centre with European company to become self-reliant. The company has earmarked up to Rs 800 crore as capital expenditure for 2011-12 financial year, mainly for setting up its fourth plant and also for R&D activities. The share price Hero group has gone up from Rs 1502 from Mar 2011 to present price of Rs 1984 per share.

Honda will continue transferring technology till 2014 for which its former Indian arm is expected to pay 4-5% of annual sales as royalty till 2012. This could then go up to 8%, according to auto industry sources. In the last quarter, the company recorded a volume growth of 23.9% (YoY) in Q1 and the EBITA margins were at 13.7%. The market share has recorded sequential gains on monthly basis. In the long-run, the competitive pressure is suspected to increase because of entry of new entrants, frequent new product launches and technical limitations. But in the medium run the company is expected to see the growth as the two wheeler industry itself is expected to maintain a sales volume of CAGR of 10-12% over the period 2012-15. Hero group will continue to own its strong brand equity, vast distribution network, established supply chain and healthy cost structure. Hero group is free to modify or use the platforms of all the existing products, including Splendor, Passion, and CBZ to develop new models. The CEO of Hero group, O P Munjal is focussing on new product development for expanding their consumer base.

2.1 Qualitative Research


We have used the Focused Groups interviews and Depth Interviews for the qualitative analysis. Focus Group Interview Key Findings Attribute Tested Typical Customer Profiling who prefers Hero Findings Most of the customers purchased Heros Bike as their first bike. Age Range: 18 to 32 years. Occupation : Student & Working Professionals (First Two years of career) Mileage, Price, Reliability, Low Maintenance & Resale Value are the most preferred attributes in deciding the purchase of a two wheeler. Family and Friends Television Adds, Newspaper Add and Company Promotions are 7

Key Attributes for purchase decision Influencers for the decision Identification of

Awareness Media Add Campaign Effectiveness Measurement Demerger Influence (if Any)

preferred mode of exposure for two wheeler segment Global Statements like DESH KI DHADKAN has major impact of customers, also celebrity endorsement and event sponsorship has made Hero as one of the preferred brand Customer still value Hero as one of the most strongest brand and as long as Hero maintains readability and price range, external factors like demerger has no effect on customers perception and attitude towards brand Hero

Depth Interviews Key Findings The major reasons for demerger according to the young professionals in the Medium Segment are Honda wanting to establish itself in the Indian market separately The most important factors which are considered while buying a bike in the Premium/Medium segment are Performance Engine Capacity, Mileage; Looks and lastly Price Within a segment (usually defined by Engine Capacity, for instance 150cc 200cc is a segment) people are generally price-insensitive Reasons for not choosing a Hero bike are Hero bikes are not good in Looks as well as not superior technology like competitors Yamaha etc The demerger is likely to have a negative impact on the brand perception of Hero bikes primarily on the technology front. Hero is considered to be a bicycle maker by most people and they feel Hero bikes will miss the Honda technology advantage in the future Impulse (latest bike launched post demerger) has a good consumer feedback Heros ad-campaign Hum mein hai Hero (AR Rehman) is received well by consumers as they find the slogan unique and the logo is considered to be better than the Hero Honda logo prior to demerger The ad-campaign is found to be unique and appeals to the individual consumer whereas the earlier Desh ki Dhadkan campaign had a feeling of patriotism and oneness

Although consumers are aware about the demerger, they feel Hero should campaign more in order to create awareness about the new Hero brand and logo

Focus should be on TV advertisements and Auto shows as these are the modes of communication which are most important in building consumer perceptions about the brand

3. Research Design
3.1 Variables As per the definition of Management Research Problem, we decided our hypothesis. These hypotheses provide us on the variables which need to be studied in order to see the effect of demerger on Hero Group. Following are the variables about which information is needed: a) Consumer Perception b) Price- Quality combination of Hero Group c) Attitude and preferences of customers d) Brand Recall e) Brand Loyalty f) Attributes considered by customers for selection of bikes 3.2 Approach to collect information The approach that will be used for collection of information is through surveys. Surveys will be floated through mails, telephonic interviews will be conducted. Hardcopy of surveys will also be used as method of collecting information. 3.3 Scaling Techniques Scaling is method of changing attributes (a series of qualitative facts) into variables (a quantitative series). Scales to be used are rating scales, ranking scales, affirmative/denial options, and direct answers. Rating scales are used to rate a particular attribute from below average to excellent. Ranking scales are used to rank particular options on a scale with higher number being better. Some questions have simple yes/no options.

Direct answers demand the consumer to write a particular answer. 3.4 Questionnaire Usage The survey will be short and precisely to the point. Telephonic interviews will be of 5-10 minutes. Survey examines consumer knowledge, beliefs, preferences, satisfaction and measures their magnitudes in the population. Panels of consumers can also be identified who may be contacted by telephone, personal interviews or by mail questionnaire.

4. Sampling Plan
Sampling plays a vital role in any survey. We are interested in selecting a sample in such a way that represents the target population in the best possible manner and thus eliminate the chances of a random sampling error, as the Hero Group has a wide range of products in the 2 wheelers segment that are targeted at specific segments we would like to capture the customer perceptions and perspectives in each of them in order to avoid any biases. Also the finding from the survey needs to be extrapolated to a larger group to establish the effect of the demerger of Hero Motor Co. and Honda Motor Co. Thus in order to accommodate all the above we would undertake stratified random sampling under probability sampling techniques. The stratum would be in line with the various Hero Group customer segments thus being mutually exhaustive and adding them up would make it collectively exhaustive. The strata would be economy segment, mid level segment and high end segment based on the product line of the Hero Motor Corp. We would like to collect samples from various locations in order to eliminate any regional bias and non sampling errors, various survey methods like electronic interviewing (e-mail/internet), personal interviewing and telephonic interviewing would be undertaken to get the desired number of samples. We conducted a pilot survey involving 10 person in each of the three segments, the dominaint attribute that came forward vide the focused groups were mileage for economy segment, reliability for mid level segment and style for high end segment, mileage as an attribute was open ended thus everyone gave their expected level of mileage on the other hand reliability and style were rated in a scale of 1-7. 10

Details of the calculations for the sample size have been provided below: Sampling Technique - Stratified sampling Sample Site - Samples from the four regions in India would be collected to get an unbiased sample. Sampling Unit - In this case the sampling unit is basically all the potential customers, it will include people who have used Hero Honda bikes and scooters as well as others. Sample Size - It is the minimum number of sample that is required to statistically extrapolate the results obtained vide the survey, we use a confidence level of 95% which pertains to a Z value of 1.96 i.e. .95 times of the actual number we will get results as per our predictions. We predict the standard deviation and D value (difference between sample mean and population mean) from the observations in the pilot survey. The formula used is detailed below:

n = z^2 * ^2 / D^2
n: sample size, z: value associated with confidence level : Standard deviation, D: difference between sample mean and population mean The results are detailed below: Segment Dominating Attrbute Pilot Survey Sample Mean Sample S.D. Pop. Mean D (Sample Pop. Mean) Economy Mid Level Segment Segment Reliability Mileage Scale (1-7) Values 77 5.2 1.0 10.1 6 83 .8 6 Table 1 (pilot survey results) High End Segment Style Scale (1-7) 3.5 1.1 4 .5

The details of the pilot survey observations are given in Appendix C.

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In all we would require a total sample of 35, 11from Economy Segment, 6 from Mid Level Segment and 18 from High End Segment.

5. Questionnaire Development
5.1 Information Checklist In order to evaluate/ further analyze the Hypothesis generated above, we need information which we plan to obtain through a questionnaire (survey). The type of information needed along with the type of interviewing method or source through which we would obtain this information is given below.

Specification of Information Needed Reasons for Demerger

the Information Obtained (Y/N) Y

Status of Hero Group post Demerger Market Share and Market Price post demerger Buyer Behaviour for Hero bikes Exhaustive list of features & Attributes valued by customers Pruned list of features and Attributes from Exhaustive list Impact of demerger on consumer perception of Hero Brand Impact of demerger on customer decision-making Brand Image Check of Hero post demerger Awareness and recognition with new brand logo and campaign Effectiveness of Heros recent ad-campaign

Y Y Y Y

If yes, source of If no, expected source Information/Type of of information/Type of Interviewing method Interviewing method Secondary Data & Depth Interview with Hero dealership owner Secondary Data Secondary Data Secondary Data & Qualitative Research Focus Groups & Depth Interviews Sample survey

Primary-Questionnaire

N N N

Primary- Questionnaire Primary- Questionnaire Primary-Questionnaire

Primary- Questionnaire

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Post Mid-Term Analysis


6. Questionnaire Design
Based on the Secondary study and exploratory research conducted, we identified key areas of information which we would require for data analysis and hypothesis testing in the final phase of our report (as given in Information Check-list shown above). Using this information, we developed a questionnaire as shown in Appendix A, which was to be floated through an online survey. In our questionnaire, we have used mainly structured questions with dichotomous, multiple-choice or scale responses. We have also maintained the flow of the questionnaire from generic to specific so that the respondent understands the context well before he proceeds to answer pointed questions.

7. Survey
We conducted an online survey ( Link : https://qasiatrial.asia.qualtrics.com/SE/?SID=SV_eDpX9aMYo9jwdvK ) and received a total of 53 responses. The scope of the survey was limited mostly to students graduate and post-graduate and all 53 responses were obtained in an excel sheet which was used for analysis purposes.

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7.1 Survey Results Key Statistics


Age profile

Gender Profile

Income profile

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7.2 Consumer Perception of Hero (pre and post-demerger)


Ratings given to Hero Honda before demerger on the basis of attributes

Ratings given to Hero Group after demerger on the basis of attributes

7.3 Consumer Perception of Key Competitors

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Ratings of Bajaj Bikes as per attributes

Rating of Yamaha bikes as per attributes

Rating of TVS bikes as per attributes

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8. Data Analysis
8.1 Factor Analysis
In order to understand the underlying factors which influence buying decisions of consumers with respect to a bike, we decided to conduct a Common Factor Analysis. However, since the number of variables which we have considered (13) is fairly large, we decided to use Principal Component Factor Analysis as the results in both cases were the same. The variables which we used are shown as follows:Variables Set Mileage Price Low Maintenance Easy Loan Facility High Resale Value Style / Looks Brand Image Technical Innovation Reliability / Durability Quality Dealership Network After Sales Service Warranty Terms

First we conducted the Bartletts Test of sphericity to check whether the variables are uncorrelated in the population. The chi-square test statistic was significant which allowed us to not reject the hypothesis that the variables are uncorrelated (Appendix B). Next was the Kaiser-Meyer-Olkin

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(KMO) measure of sampling adequacy to examine the appropriateness of the factor analysis. As the KMO measure = 0.683 (>0.5) implies that the factor analysis is appropriate and can be used. Based on the Initial Eigenvalues table obtained in Appendix B, we see that the first 4 components were significant with Eigenvalues >1. These factors explain 71.945% of the Total Variance and therefore can be considered as the principal factors. Another way of deciding the number of factors would be to look at the Scree plot (shown below) which shows a distinct break after 4 signifying that the top 4 factors are of greater importance.

Now after orthogonally rotating the factors using Varimax procedure, we get significant, non-zero correlations of each variable with at most one factor. This enabled us to map the variables to factors and name them appropriately as follows:Factor No. 1 2 3 4 Name of the Factor Reliability Quality Economy Resale Value Variables Associated with the Factor Low Maintenance, Reliability Quality, After-Sales Service, Warranty Mileage, Price, Brand, Style High Resale Value, Easy Loan facility

Inference 18

Thus, we can summarize that consumers consider broadly 4 factors while purchasing a bike: Reliability - How long the bike can survive without breaking down for the first time and accordingly whether it requires a high level of maintenance or not Quality Whether the bike conforms to the quality and safety norms and also how good is the after-sales service Economy Mileage (Fuel efficiency) and Price Resale Value Consumers are concerned with High Resale Value as they might consider upgrading to a 4-wheeler in the future and therefore would want to buy a bike which compensates them accordingly

8.2 Multi-Dimensional Scaling


The information provided by the MDS will help us determine the current image of Hero Moto vis a vis other automobile (2 wheeler) brands, positioning Hero in the right space to target the groups of customers with relatively homogeneous perceptions, and in a way, compare brand image of Hero vis a vis other automobile (2 wheeler) brands in the market. We have chosen 5 brands (Hero Honda, Bajaj Auto, Yamaha, TVS, Hero-Post Demerger) that represent different bands in the market. Including more brands might have diluted our overall findings since some brands are not as prevalent in India (e.g. Harley Davidson). The input for MDS was obtained from the responses to Question No. 7 & 11 in the Questionnaire (see Appendix C). The data on all possible pairs, called similarity judgments, are used to perform a no metric MDS procedure, which assumes that the input data are ordinal. The distances in the spatial map can be assumed to be interval scaled. This procedure finds map whose rank orders of estimated distances between brands best preserve or reproduce the input rank orders. In order to determine the number of dimensions to be used for our spatial map, we used the stress measures in the summary tables (see Appendix C). These stress measures help determine the level of fit of the data. The lower the stress levels, the better the fit. The indicative stress measures are below 0.2, indicating that the two-dimensional spatial map best fits the input data. We can use more

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dimensions, which increase the overall, but for purposes of our research, two dimensions are most appropriate. Now that we have chosen these two dimensions, we have to label them. Labeling dimensions requires subjective judgment based on a number of guidelines. The ratings of the brands on a number of attributes, as described in our factor analysis, can serve as a basis for determining the dimensions of each axis. Based on a subjective analysis, the two dimensions were labeled as Style on the vertical dimension to Brand Image on the horizontal axis. The spatial map is shown below, along with the distances between each of the brands in the spatial map.

S t y l e

Bajaj Yamaha

TVS

Hero Motocorp Hero Honda

Brand Image

V2 V3 V4 V5 V6 Inference

Hero Honda Bajaj Auto Yamaha TVS Motor Hero-Post Demerger

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Post demerger the Brand Image of Hero group has reduced considerably probably due to concerns on the technical capabilities and quality of Hero bikes without the expertise of Honda

However, on Style dimension, Hero brand has gained positively after the split from Honda. This can be explained by the fact that consumers perceive Impulse (bike launched post demerger) to be far more stylish than the earlier models such as CBZ.

Looking at competitors, Bajaj is the strongest competitor for Hero group in the years to come as according to consumer perceptions, it ranks very highly on both the Brand Image as well as Style aspects

Yamaha on the other hand scores very highly on the Style dimension and will be the strongest competitor for Hero in the premium segment

8.3 Conjoint Analysis


A conjoint analysis was conducted to determine the relative importance that consumers attach to key attributes while buying a bike. This method helps us in finding out the most preferred attribute level mix for each of the key attributes identified which can then allow us to infer the gaps in Heros current strategy. The three key attributes identified along with their levels are shown as follows:Bike Attributes and Levels Attribute Mileage Level No. 1 2 Reliability 1 2 Style 1 2 Description High (above 50 Kms/litre) Low (Below 50 Kms/Litre) High Low Superior Moderate

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An orthogonal design was created with 23 = 8 profiles and the respondents were asked to rank these in order of preference. The results of the conjoint analysis are shown in Appendix D and the relative importance of the attributes is as follows:-

Relative Importance of Attributes


Style, 20.00% Mileage, 46.67% Reliability, 33.33%

In order to assess the reliability of the conjoint analysis results, we checked the R-square value = 0.988 which is considerably high signifying a good fit of multiple regression. Inference The results of the conjoint analysis proved to be highly intuitive as Mileage (Fuel efficiency) which is an Economy-related attribute proved to be the most important with Reliability and Style aspects as second and third. An interesting observation is that even though Style is the least important attribute, it does constitute for 20% implying that there might be a growing segment of consumers paying more attention to Style (further analysis would be required to justify this). This implies that Hero bikes, which have always been fuel-efficient (high mileage) and reliable do not score very highly on the Style quotient and thus could consider expanding their presence in this space. Limitations of this Analysis Our conjoint analysis is based on the assumption that the 3 attributes identified above are the most important (as reflected in the Pilot survey conducted in the Mid-term report). However, this may not be the case as there may be more important attributes which have been missed out and thus is a major limitation of this analysis.

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The other assumptions made are the part-worth utilities are not unique and that the consumers evaluate the profiles in terms of these attributes and make trade-offs.

9. Hypothesis Testing
We have tried to look at look at various possible issues concerning the Hero brand post demerger; they are the consumer perception, attitude, motivation after the split of Honda group Hero and the strength of associations related to Hero brand viz a viz the associations with bike models and finally the effectiveness of recent Hero communications and campaigns.

9.1

Consumer Perception

1) Whether there is positive change in the consumer perception post demerger? If more than 50% of population thinks that the demerger the Hero group would have a positive impact there would be a favourable change in consumer perception towards Hero Group H0: = 0 .5 i.e. there is no positive change in consumer perception post demerger H1: > 0.5 i.e. there is a positive change in consumer perception post demerger For testing the null hypothesis we floated a question probing whether the consumers think that there is in fact a positive change post the Hero demerger. The details of the response and statistic test are detailed below: N (no of respondents) = 45 P (sample proportion) = .42 (standard deviation) = .07 t statistic = -1.04 p value = .15

For a single tailed test at 95% confidence we get a p value of 15% which is unable to reject the hypothesis. Thus we conclude that there has been no positive impact after the demerger at 95% level of significance.

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2) Whether there is halo effect for brand Hero? If more than 50% of population think that the demerger wont have any significance till the price and quality of the product is constant i.e. the brand equity remains constant or increases H0: = 0.5 H1: < 0.5 For testing the null hypothesis we floated a question probing whether the demerger from Honda would impact Brand Equity of Hero bikes or not. The details of the response and statistic test are detailed below: N (no of respondents) = 45 P (sample proportion) = .47 (standard deviation) = .07 t statistic = -.40 p value = .34

For a single tailed test at 95% confidence we get a p value of 34% which is unable to reject the hypothesis. Thus, there is no halo effect for the Hero brand at 95% level of significance. 3) Whether a global Indian brand has positive impact on customer perception? If more than 50% of population think that after becoming a global brand Hero would have a positive impact on consumer perception. H0: = 0.5 i.e. there will be no impact on consumer perception if Hero becomes a global brand H1: > 0.5 i.e. there will be positive impact on consumer perception if Hero becomes a global brand For testing the null hypothesis we floated a question probing whether after the demerger as Hero would be able to sell products across the globe, it would have a positive impact on consumer perception. The details of the response and statistic test are detailed below: N (no of respondents) = 45 24

P (sample proportion) = .80 (standard deviation) = .07 t statistic = 4.02 p value = .0001

For a single tailed test at 95% confidence we get a p value of .01% , thus the null hypothesis can be rejected. This implies that by becoming a global player Hero would be able to install a positive perception amongst its consumers at 95% level of significance.

9.2

Consumer Attitude& Motivation


Whether the consumer attitude post demerger towards the brand has been neutral?

If more than 50% of the population have seen and liked the new hero ad and think that it is creative and increases brand equity then we can deduct that the consumers have a positive attitude towards the ad and thus the brand and thus the post demerger effect is neutral. H0: = 0.5 i.e. the consumer attitude post demerger has been neutral H1: not equal to 0.5 i.e. the consumer attitude post demerger has changed. For testing the null hypothesis we floated 3 questions: I have seen the recent AR Rehman - Hero ad-campaign I like the Hum mein hai Hero slogan of Hero brand Hero campaign is creative and increases brand equity The details of the response and statistic test are detailed below: N (no of respondents) = 45 P (sample proportion) = .69 (standard deviation) = .07 t statistic = 2.53 p value = .01

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For a single tailed test at 95% confidence we get a p value of 1%, thus we can reject the null hypothesis. This implies that post demerger, the consumer attitude towards the brand has undergone change. Whether consumer motivation has been affected by demerger or not?

If more than 50% of population indicate that they would be interested in purchasing a Hero bike post demerger, this reiterates the fact that the consumer motivation has not been affected by the demerger. H0: > = 0.5 i.e. consumer motivation towards purchasing a Hero bike has not changed H1: < .5 i.e. consumer motivation has been affected due to the demerger For testing the null hypothesis we floated the question: Would the demerger from Honda affect your purchase decision of a Hero bike The details of the response and statistic test are detailed below: N (no of respondents) = 45 P (sample proportion) = .44 (standard deviation) = .07 t statistic = -.75 p value = .23

For a single tailed test at 95% confidence we get a p value of 23% which is unable to reject the hypothesis thus consumers might be still motivated to purchase a Hero bike. Thus, we can say that consumer motivation to buying a Hero bike in the future has not been significantly impacted (at 95% level of significance) due to the demerger from Honda.

9.3

Consumer decision making process

Whether Brand associations are independent of demerger?

If 50% or more of population indicate that the brand equity of bikes, CBZ/Impulse for instance is greater than the brand Hero Honda, then we can conclude that brand associations are independent of demerger.

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H0: >= 0.5 H1: < .5 For testing the null hypothesis we floated the question: Brand Equity of models CBZ, Impulse is greater than Brand Equity of Hero Honda brand The details of the response and statistic test are detailed below: N (no of respondents) = 45 P (sample proportion) = .44 (standard deviation) = .07 t statistic = .745 p value = .23

For a single tailed test at 95% confidence we get a p value of 23% which is unable to reject the hypothesis. Thus, we can conclude that associations with models of bikes (CBZ, Impulse etc) are more as compared to the brand and these associations are independent of the demerger i.e. have not been impacted by the demerger at 95% level of significance.

9.4

Hero Ad-Campaign Effectiveness

Whether recent Hero brand communications have been effective?

If more than 50% of the population have seen and found the recent advertisements to be effective then we can conclude that the Hero brand communication is not having their intended effect. H0: = 0.5 H1: > 0.5 For testing the null hypothesis we floated 2 questions: I have seen the recent AR Rehman - Hero ad-campaign Hero campaign is creative and increases brand equity The details of the response and statistic test are detailed below: N (no of respondents) = 45

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P (sample proportion) = .67 (standard deviation) = .07 t statistic = 2.37 p value = .01

For a single tailed test at 95% confidence we get a p value of 1%, thus we can reject the null hypothesis. This implies that the recent Hero communications has been having the necessary effect intended and the Ad-Campaign is effective.

10.

Inferences

On the basis of the hypothesis results inferences can be drawn on the effects of demerger. As seen above hypothesis relating to positive change in perception was rejected thus nullifying any positive change. Similarly, hypothesis relating to Halo effect was rejected and positive impact on consumer perception by building a global brand was accepted. This concludes the absence of positive impact without a global brand. Later, it is seen that hypothesis relating to neutral impact on consumers was also rejected. Taking all these hypothesis results in consideration it can be said that there is some negative impact on consumer perception due to demerger. In the next hypothesis, impact on motivation has been rejected and therefore people still seem to be motivated to buy Hero bike. This means that due to negative impact on consumer perception, those consumers who have been contemplating to buy a bike may not prefer Hero bike. On the other hand, those who have decided already to buy a Hero bike will not change their decision. This is inferred from the point that motivation has not been affected. With our next hypothesis, regarding association with bike models rather than Hero brand it was inferred that people are more connected to bike models than brand. Therefore, impact due to demerger is lessened because existing models are not going to change. Lastly, it is seen that already existent ad campaigns are effective by having the intended effect on consumers. So here, Hero group needs to increase its promotion effects using the same campaign as the consumers are receiving the ad-campaign positively. 28

11.

Recommendations
Development of technology It is clear from the factor analysis that quality and technology are the major attributes that play a vital role in the decision among of consumers. Actually quality and technology are closely related and quality infact is derived from usage of superior technology in bikes. Also Bajaj the biggest competitor for Hero Group is rated very high on quality, so Hero group needs to communicate to the consumers that it has been developing inhouse technology post demerger with Honda and is lowering its dependency on a third party for technology input. Thus Hero group needs to include more information on the features (affective component) in its brand communication so that the information requirement of consumers in a durable category like motorbikes is sufficiently met. This will be helpful in establishing the brand image of Hero.

Global Expansion - Being a global player translates into a positive consumer perception about the brand, thus Hero should try to expand its operations in other markets, and this needs to be communicated to the end users. This will have a impact on the way they evaluate the brand and thus improve the brand image of Hero.

Drop Honda inscription - As the associations with the bike models are more stronger than the brand Hero Honda, the company can look to slowly remove the name Hero Honda from the bikes and bring in Hero while maintaining bike brand like Splender, Karizma and CBZ etc. This will have a dual benefit because all the recent communications include the name of Hero, and if any associations are formed with the Hero brand like style which is clearly the case as derived from the MDS analysis, thus models will endow the brand personality formed in conjugation with Hero which is relevant for the target segment category.

Introduction of new models - Introduction of new models like Impulse will be helpful in capturing the attention of youth which forms a major chunk of the target segment in the 2 wheelers market, the existing association with style for Hero group will be instrumental in capturing the youth segment and improve sales.

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Increase information (cognitive component) - The attitude towards the ad has been favourable but the attitude toward the brand and consumer motivation (purchase intention) has not increased, one of the reasons could be more focus on building emotional connect vide tagline like hum mein hain hero (affective component) in a category like durables where the affective component is of prime importance thus Hero needs to lay emphasis on features and technology used in the development of bikes. As per the learn-feel-do model, the consumers need the necessary knowledge of the brand in the category before they make a connect with it and finally undertake a purchase.

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Appendices
Appendix A
Questionnaire floated through Online Survey Study of post demerger impact on Hero Group Study 1 Name(Optional) 2 Age < 25 years (1) 25-40 years (2) above 40 years (3) 3 Gender Male (1) Female (2) 4 Income Group Less than 5 lakhs per annum (1) 5-10 lakhs per annum (2) 10 lakhs & above per annum (3) 5 Where do you stay?(City) 6 Rate the following ECONOMY related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) Mileage (1) Price (3) Low Maintenance (5) Easy Loan Facility (7) High Resale Value (9) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

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Rate the following PERFORMANCE related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) Style / Looks (1) Brand Image (2) Technical Innovation (3) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

Rate the following RELIABILITY related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) Reliability / Durability (1) Quality (2) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

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Rate the following SERVICE related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) Dealership Network (1) After Sales Service (2) Warranty Terms (3) Easy Loan Facility (4) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

7 How did you rate Hero Honda bikes (prior to demerger) according to the following attributes: (1-Poor, 9-Excellent)
1 (1) Performance Mileage (1) Quality (2) Value for Money (3) Style/ Looks (4) After Sales Service (5) Brand Image (6) Reliability (7) Technology (8) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

8 How do you rate Bajaj bikes according to the following attributes:


1 (1) Performance Mileage (1) Quality (2) Value for Money (3) Style/ Looks (4) After Sales Service (5) Brand Image (6) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6)

(1-Poor, 9-Excellent)
7 (7) 8 (8) 9 (9)

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Reliability (7) Technology (8)

9 How do you rate Yamaha bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) Performance Mileage (1) Quality (2) Value for Money (3) Style/ Looks (4) After Sales Service (5) Brand Image (6) Reliability (7) Technology (8) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

10 How do you rate TVS bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) Performance Mileage (1) Quality (2) Value for Money (3) Style/ Looks (4) After Sales Service (5) Brand Image (6) Reliability (7) Technology (8) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

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11 Post the demerger how do you rate Hero bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) Performance Mileage (1) Quality (2) Value for Money (3) Style/ Looks (4) After Sales Service (5) Brand Image (6) Reliability (7) Technology (8) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

12 Few more questions specific to Hero Group:

1. Would you buy a Hero bike in the future? (1) 2. Would the demerger from Honda affect your purchase decision of a Hero bike? (2) 3. Would this impact be positive? (3) 4. Post demerger Hero bikes would be sold across the globe , this would positively impact Heros brand (4) 5. Brand Equity of models CBZ, Impulse is greater than Brand Equity of Hero Honda brand (5) 6. Hero brand for bikes will be confused with Hero Brand for bicycles (6) 7. Demerger from Honda would not impact Brand Equity of Hero bikes (7) 8. New Hero logo is better than earlier Hero Honda logo (8) 9.There is adequate awareness of Hero Brand post demerger (9) 10. I have seen the recent AR Rehman - Hero ad-campaign (10) 11. I like the Hum mein hai Hero slogan of Hero brand (11)

Agree (1) Agree (1) Agree (1)

Disagree (2) Disagree (2) Disagree (2)

Agree (1)

Disagree (2)

Agree (1)

Disagree (2)

Agree (1)

Disagree (2)

Agree (1) Agree (1) Agree (1) Agree (1) Agree (1)

Disagree (2) Disagree (2) Disagree (2) Disagree (2) Disagree (2)

35

12. I prefer the earlier Desh ki Dhadkan campaign (12) 13. Heros TV ads do not compare with those of competitors (13) 14. Hero campaign is creative and increases brand equity (14)

Agree (1) Agree (1) Agree (1)

Disagree (2) Disagree (2) Disagree (2)

13 Please rank the following bikes in order of preference: (1-most preferred, 8-least preferred) ______ High Mileage, High Reliability, Superior Style (1) ______ High Mileage, High Reliability, Moderate Style (2) ______ High Mileage, Low Reliability, Superior Style (3) ______ High Mileage, Low Reliability, Moderate Style (4) ______ Low Mileage, High Reliability, Superior Style (5) ______ Low Mileage, High Reliability, Moderate Style (6) ______ Low Mileage, Low Reliability, Superior Style (7) ______ Low Mileage, Low Reliability, Moderate Style (8)

Appendix B
Factor Analysis Results (SPSS)
Correlation Matrix V1 V2 V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13

Correlation V1 1.000 .445 .295 .082 .169 .512 .501 .129 .204 .450 .115 .495 .429 V2 V3 V4 V5 V6 V7 V8 V9 .445 1.000 .237 .001 .100 .259 .354 .321 .255 .103 .071 -.082 .018 .295 .237 1.000 .127 .135 .111 .113 .548 .654 .197 .601 .240 .345 .082 .001 .127 1.000 .739 .150 .252 .099 .053 .106 .169 .292 .367 .169 .100 .135 .739 1.000 .304 .371 .286 .044 .000 .169 .379 .209 .512 .259 .111 .150 .304 1.000 .550 .209 .154 .349 .002 .395 .361 .501 .354 .113 .252 .371 .550 1.000 .226 .063 .244 -.005 .338 .174 .129 .321 .548 .099 .286 .209 .226 1.000 .621 .144 .354 .129 .279 .204 .255 .654 .053 .044 .154 .063 .621 1.000 .373 .637 .234 .356

V10 .450 .103 .197 .106 .000 .349 .244 .144 .373 1.000 .225 .448 .456 V11 .115 .071 .601 .169 .169 .002 -.005 .354 .637 .225 1.000 .271 .278 V12 .495 -.082 .240 .292 .379 .395 .338 .129 .234 .448 .271 1.000 .444 V13 .429 .018 .345 .367 .209 .361 .174 .279 .356 .456 .278 .444 1.000

KMO and Bartlett's Test

36

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Df Sig.

.683 207.263 78 .000

Communalities Initial V1 V2 V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .739 .750 .722 .813 .888 .631 .689 .671 .817 .663 .682 .684 .604

Extraction Method: Principal Component Analysis.

Total Variance Explained Extraction Sums of Squared Initial Eigenvalues % of Component Total 1 2 3 4 5 6 4.281 2.092 1.602 1.378 .680 .668 Variance 32.930 16.092 12.321 10.603 5.234 5.135 Cumulative % Total Loadings % of Variance 32.930 16.092 12.321 10.603 Cumulative % Total Rotation Sums of Squared Loadings % of Variance 21.586 18.762 16.505 15.092 Cumulative % 21.586 40.348 56.853 71.945

32.930 4.281 49.021 2.092 61.342 1.602 71.945 1.378 77.179 82.314

32.930 2.806 49.021 2.439 61.342 2.146 71.945 1.962

37

7 8 9 10 11 12 13

.554 .443 .410 .315 .246 .204 .127

4.265 3.407 3.155 2.421 1.890 1.572 .976

86.579 89.986 93.141 95.562 97.453 99.024 100.000

Extraction Method: Principal Component Analysis.

Component Matrix

Component 1 V1 V2 V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13 .664 .382 .638 .425 .488 .590 .547 .587 .647 .574 .532 .640 .660 2 .312 -.008 -.552 .329 .379 .455 .502 -.416 -.629 .059 -.574 .274 .041 3 -.439 -.489 .036 .711 .617 -.272 -.208 .024 -.055 -.260 .244 .143 .116 4 -.085 .605 .092 .133 .355 .033 .308 .391 -.009 -.513 -.095 -.424 -.392

Extraction Method: Principal Component Analysis. a. 4 components extracted.

Rotated Component Matrix Component 1 V1 V2 .086 .290 2 .583 -.183 3

4 .625 .789 -.031 -.098

38

V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13

.826 .072 .099 -.035 -.044 .739 .867 .175 .768 .095 .294

.161 .160 .051 .469 .241 -.059 .233 .770 .213 .754 .685

.103 -.016 .210 .617 .733 .308 .073 .143 -.178 .074 .025

.049 .884 .912 .169 .302 .161 -.080 -.139 .120 .318 .220

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 5 iterations.

Component Transformation Matrix Compo nent 1 2 3 4 1 .581 -.791 .088 .172 2 .590 .257 -.106 -.758 3 .449 .389 -.576 .562 4 .335 .398 .806 .283

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Component Score Coefficient Matrix Component 1 V1 V2 V3 V4 V5 V6 V7 -.063 .104 .309 -.011 .001 -.102 -.088 2 .206 -.249 -.033 -.021 -.122 .137 -.018 3 .251 .461 -.011 -.096 .044 .258 .351 4 -.127 -.093 -.018 .481 .493 .003 .097

39

V8 V9 V10 V11 V12 V13

.287 .321 -.023 .291 -.062 .032

-.187 .020 .385 .039 .345 .304

.135 -.033 -.044 -.177 -.106 -.125

.059 -.098 -.180 .036 .087 .037

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Appendix C
Multi-Dimensional Scaling Similarity Table Hero Honda Hero Honda Bajaj Yamaha TVS Hero Attributes Table
Mileage Quality Value for money Style After sales service Brand Image Reliabil ity Technol ogy

Bajaj 1.9 0 2.2 3.9 1.6

Yamaha 3 2.2 0 2.2 2.0

TVS 3.7 3.9 2.2 0 2.7

Hero 1.3 1.6 2 2.7 0

0 1.9 3.0 3.7 1.3

Hero Honda Bajaj Yamaha TVS Hero

7.5 6.9 5.9 6.5 7.2

7.2 7.2 6.7 5.9 6.9

7.5 7.0 5.9 5.9 6.8

6.1 7.5 6.9 5.8 6.6

6.9 6.8 5.9 5.7 6.8

7.5 7.5 6.7 5.6 6.8

7.5 7.0 6.3 5.8 6.8

6.7 7.5 6.9 5.8 6.4

Output of MDS (SPSS)


Raw (unscaled) Data for Subject 1 1 1 2 3 4 5 .000 1.912 3.047 3.734 1.341 2 .000 2.221 3.882 1.607 3 4 5

.000 2.246 2.006

.000 2.686

.000

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Iteration history for the 2 dimensional solution (in squared distances) Young's S-stress formula 1 is used. Iteration 1 2 3 S-stress .01594 .01255 .01215 Improvement .00340 .00040 .001000

Iterations stopped because S-stress improvement is less than

Stress and squared correlation (RSQ) in distances RSQ values are the proportion of variance of the scaled data (disparities) in the partition (row, matrix, or entire data) which is accounted for by their corresponding distances. Stress values are Kruskal's stress formula 1. Stress = For matrix .01069 RSQ = .99900

Configuration derived in 2 dimensions Stimulus Coordinates Dimension Stimulus Number 1 2 3 4 5 Stimulus Name V2 V3 V4 V5 V6 1 1.2294 1.1698 -.7076 -2.0064 .3147 2 -.8624 .7247 .9451 -.4602 -.3472 1 4 5

Optimally scaled data (disparities) for subject 1 1 2 3 4 5 .000 1.605 2.637 3.262 1.086 2 .000 1.885 3.396 1.327 3

.000 1.908 1.690

.000 2.309 .000

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Appendix D
Orthogonal Design for Conjoint Analysis

Profiles High Mileage, High Reliability, Superior Style High Mileage, High Reliability, Moderate Style High Mileage, Low Reliability, Superior Style High Mileage, Low Reliability, Moderate Style Low Mileage, High Reliability, Superior Style Low Mileage, High Reliability, Moderate Style Low Mileage, Low

Prefer ence

High Mileage

Low Mileage

High Reliabili ty

Low Reliabili ty

Superior Style

Modera te Style

8 7 6 4 5 3 2

1 1 1 1 0 0 0

0 0 0 0 1 1 1

1 1 0 0 1 1 0

0 0 1 1 0 0 1

1 0 1 0 1 0 1

0 1 0 1 0 1 0 42

Reliability, Superior Style Low Mileage, Low Reliability, Moderate Style

Results of Conjoint Analysis in Excel


Attribute Mileage High Low Reliability High Low Style Superior Moderate Average Desirability Deviation Regression Coefficient Relative Importance 6.25 2.75 5.75 3.25 5.25 3.75 1.75 -1.75 1.25 -1.25 0.75 -0.75 3.5 46.67%

2.5

33.33%

1.5

20.00%

SUMMARY OUTPUT Regression Statistics 0.9940 Multiple R 3 0.9880 R Square 95 Adjusted R 0.2291 Square 67 Standard 0.3535 Error 53 Observation s 8

ANOVA df Regression Residual Total 6 4 10 Coeffici ents Intercept X Variable 1 X Variable 2 4.25 0 -3.5 SS 41.5 0.5 42 Standard Error 0.25 0 0.25 MS 6.916 667 0.125 Significa F nce F 110.666 0.072636 667 523

t Stat 17 65535 -14

Lower P-value 95% 7.0211E 3.555888 -05 724 #NUM! 0 0.00015 101 4.194111

Upper 95% 4.94411 128 0 2.80588

Lower 95.0% 3.55588 8724 0 4.19411

Upper 95.0% 4.94411 128 0 2.80588 43

X Variable 3 X Variable 4 X Variable 5 X Variable 6

2.5 0 1.5 0

0.25 0 0.25 0

10 65535 6 65535

0.00056 2 #NUM! 0.00388 254 #NUM!

28 1.805888 724 0 0.805888 724 0

872 3.19411 128 0 2.19411 128 0

128 1.80588 8724 0 0.80588 8724 0

872 3.19411 128 0 2.19411 128 0

Appendix E
Focus Group Discussion Transcript The Focus Group has the following participants: Participant 1 Participant 2 Participant 3 Participant 4 Participant 5 Moderators Arnab Biswas Abhishek Kundan Sheeti Kanth Das Vamsi Goutam Ajay Singh Group-1 RMD (2011-13)

MODERATOR: The purpose of todays discussion is to understand the perception and attitude of customers towards new brand Hero. We would like to know about your choice criteria and what makes you decide that Hero is the right choice. We would also like to understand the effect of demerger on your preference choices. Participant 1 Participant 2 Participant 3 Participant 4 Participant 5 Hero Honda Karizma ZMR Hero Honda Splendor Hero Honda Splendor Hero Honda Passion Pro Hero Honda CBZ Star

Note: All participant chosen was having Hero Group bikes as we are evaluating perception changes for hero Brand A few excerpts of the focus group interviews are as follows (Edited): Moderator: When did you purchased your first bike and was it a Hero groups bike? P1: I purchased it in the first year of graduation and yes it was Hero Honda Karizma ZMR P2: I also purchased Hero Hondas bike and it was Splender 44

P3: It was a repeat purchase for me as I already had a Hero bike in my family and it was our satisfaction level which influenced us to go for Hero Honda again. Similar answers were given by other panel members Moderator: Ok, coming on to the second question, what are the key attributes you look for while selecting a bike? P1: For me style quotient with affordable price is most important as I believe bike is a status symbol in students category. P4: I am a mileage man, for me most important is mileage and service, with Hero Honda its easy to find both. Moderator: Who are influencers in your decision? P2: My dad and other family member. P5: My core friend group and to an extent some involvement of family. Moderator: From where do you get news and new offerings of Hero group? P1: Mostly from television advertisement and sometimes friends also tell new thing about bikes as they get expose to a medium which i am not. P2: At all service dates I visit dealers service department and get news about new promotional scheme also newspaper gives good information about new bikes and features. Moderator: According to you how effective is Hero Group advertisement campaign (Advertisement video was shown on laptop to all members http://www.youtube.com/watch?v=qezk3QDURXg) P3: I am aware about these add as it feature Mr. A R Rehman and it was shown on television number of times. P5: i am aware about this one and also that punch line Hero Honda- Desh Ki Dhadkan. Moderator: Are you aware of Hero Honda demerger and does it influences your preference? P2: Yes I am aware but it does not make any difference to me as long as they maintain their core competencies (Interrupted by moderator) What core competencies you are talking about P2: I mean Low price and high reliability P5: For me also it does not matter as Hero is capable enough to carry its legacy in terms of providing bike which suits Indian consumers, in fact I am happy that Hero is independent and now a Global brand.

Appendix F
Depth Interview Transcripts 45

#Transcript 1 The candidate is Arnab Biswas, who is currently pursuing his MBA at IIM Bangalore. a) Are you aware of the Hero Honda demerger? Yes b) Why do you think the demerger happened? It was part of the deal when Honda entered the market (3-4 yr deal) c) Which factors did you consider while buying your bike? Power Engine Capacity, Looks. Within a segment not very price-sensitive (segment defined on the basis of engine capacity) d) How important is brand identity/brand image while buying a bike? Very important e) Which bike are you using currently? Yamaha R15 f) If not Hero then why? I am fond of new technology, Yamaha etc making premium bikes since many years. Assurance of quality g) Do you think the demerger would impact your decision of buying a Hero bike in the future? How? Yes coz Honda stands for superior technology in foreign markets. After demerger perception of technology would decline. h) Are there any concerns which you may have with the Hero brand post demerger? Hero started with making cycles so consumers may have that impression still. They dont know how to make bikes, they are good with dealership so reach to consumers is good. i) What do you think about the latest Hero Impulse recently launched? Impulse is very good for interior of India. Good bike. j) Have you seen the recent AR Rehman - Hero advertisement campaign? Yes, it is unique. I like it. k) Do you like the new Hero logo? Yes it is different. Better than Hero Honda logo. l) How would you compare the current Hum main hain Hero slogan with the earlier Desh ki Dhadkan? Desh ki Dhadkan was much better caught up with World Cup fever m) Do you think Hero needs to campaign more to increase awareness about the new brand and logo? Yes focus more on TV advertisements. Viewers first impression is created through tv ads. Focus on auto shows, go for reviews.

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# Transcript 2 Interviewed Syed Azhar, Sales Manager of Sri Sai Ram Motors, a Hero dealership at Bannerghatta Road, Bangalore. a) What were the reasons for the demerger? Hero not getting approval from Honda to expand abroad, introduce new models etc Hero Honda was No. 1 producer in India however exporting only to Sri Lanka and Bangladesh

b) What has been the post demerger impact on Hero? No impact on sales, in fact growth has increased to 11% Share price gained substantially post demerger Technology contract with Honda till 2014 so impact would be limited till then

c) How has Hero tried to create brand awareness of Hero brand? Aggressive campaigning, creative modes roped in AR Rehman, 10 billion hearts etc They are trying to develop brand equity of individual models such as CBZ, Impulse. Trying to delink Hero Honda brand from the models so that models sell by themselves d) Any concerns consumers have expressed post demerger? Worried about quality and technology since Hero is known to have originally been a bicycle producer Technology was all Hondas so unless Hero develops in-house R&D and technology this concern may remain

Appendix G

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Calculation of Sample Size using Pilot Survey

References
48

http://heromotocorp.com/ http://motoroids.com/news/honda-to-exit-hero-honda-by-march-2011.html http://en.wikipedia.org/wiki/Hero_MotoCorp http://www.thehindubusinessline.com/companies/article2304663.ece http://heromotocorp.com/impulse http://trak.in/tags/business/2011/03/18/hero-honda-rebranding-new-logo/ http://trak.in/tags/business/2010/12/18/hero-honda-divorce-brand-identity/ http://www.wheelosphere.org/hero-motocorp-logo-maestro-impulse-1251/ http://www.carblogindia.com/hero-group-brand-identity-budget-100-crore/ http://www.moneycontrol.com/news/business/jv-termination-experts-predict-hero-groupsfuture_505636.html http://blogs.hindustantimes.com/car-nama/2011/08/18/hero-honda-%E2%89%A0-heromotocorp/ http://www.iitk.ac.in/ime/MBA_IITK/avantgarde/?p=344

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