TWO-WHEELER AUTOMOBILE INDUSTRY IN INDIA

By group IX, MBA ‘Sec A’

Submitted to : Mrs. Smitha Nayak

Submitted by :
Anooj Balachandra Chandrakanti

Shatrudra Saurabh

ACKNOWLEDGEMENT
The satisfaction and joy that accompanies the successful completion of a task is incomplete without mentioning the name of the person who extended her help and support in making it a success. We are greatly indebted to

Mrs.

Smitha

Nayak

, our Project Guide and Mentor for devoting her valuable time and efforts towards our
project. We thank her for being a constant source of knowledge, inspiration and help during this period of making project.

GROUP IX
Anooj Balachandra Chandrakanti Shatrudra

Saurabh

TABLE OF CONTENT

 Objective of the project  Introduction to Indian automobile industry  BCG matrix representation of automobile sector among various sectors  Overview of two-wheeler sector  Fleet composition of all vehicles  Two-wheeler fleet composition in India
 Structure of two-wheeler industry

 Usage pattern of two-wheeler in India  Key players in two wheeler industry  Introduction & Product mix Hero Honda & Bajaj (competitor)  4 P’s of marketing of Hero Honda  Market segmentation, Targeting and Positioning of Hero Honda.  Porters five force model for Hero Honda  SWOT analysis of Hero Honda (Karizma)  SWOT analysis of Bajaj (Pulsar)  Comparison of advertising strategy of Hero Honda and Bajaj  Future challenges ,Plans and Suggestions

OBJECTIVE OF THE PROJECT:The main objectives of the Project study are:

Detailed analysis of Automobile industry which is gearing towards international standards.

To conduct market research with regard to two-wheeler automobile industry and understand its marketing strategies.


• •

Analyze the impact of qualitative factors on industry’s and company’s prospects Comparative analysis of major tough competitor. To understand the current trends in two-wheeler automobile industry.

INTRODUCTION TO INDIAN AUTOMOBILE INDUSTRY
Automobile is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognized as one of the drivers of economic growth. During the last decade, well directed efforts have been made to provide a new look to the automobile policy for realizing the sector's full potential for the economy. Aggressive marketing by the auto finance companies have also played a significant role in boosting automobile demand, especially from the population in the middle income group. A Nations economy is well known from its transport system. For instant and rapid growth in economy, a well-developed and well-networked transportation system is essential. As India's transport network is developing at a fast pace, Indian Automobile Industry is growing too. Also, the Automobile industry has strong backward and forward linkages and hence provides employment to a large section of the population. Thus the role of Automobile Industry is very essential in Indian economy. Various types of vehicles are manufactured by the Automobile Industry. Indian Automobile Industry includes the manufacturing of trucks, buses, passenger cars, defence vehicles, two-wheelers. The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc.

The automobile industry in the country is one of the key sectors of the economy in terms of the employment opportunities that it offers. The industry directly employs close to around 0.2 million people and indirectly employs around 10 million people. The prospects of the industry also has a bearing on the auto-component industry which is also a major sector in the Indian economy directly employing 0.25 million people.

BCG Matrix Representation of Automobile Sector among various Sectors:In an economy, different industries are present and different industries have different growth rate as compared to the growth of the economy. In an economy, there are a number of major industries and they all occupy different positions in the BCG matrix according to their growth and contribution towards the economy. In the Indian economy, some of the major sectors are FMCG, automobiles, banking and insurance, steel, telecom, software, pharmacology and retail sectors and these can be placed in the different positions in the matrix as shown below: INDUSTRY BCG MATRIX
Hig h M a r k e t G r o w t h R STA Banking & AUTOMOBIL ES Softwa re Retai l QUESTION Telecom

CASH FMC G

DO

Low Hig Relative market share Low

BCG matrix is used to determine the relative position of the companies of an industry or different SBU’s of any institution, in terms of the market growth rate and the market share of the company in the industry. In the Indian automobile sector, the major players are Maruti Suzuki Limited, General motors, Mahindra and Mahindra, Tata Motors, Hero Honda and Bajaj auto. In the BCG matrix, the companies are placed in one of the following four categories: Star, Cash Cows, Dogs and Question marks. In the Stars we place the companies with high market growth and high market share, cash cows are the companies who have low market growth rate and high relative market share, the category of the question marks include the companies with low relative market share and high market growth rate and dogs include the companies who have low relative market share and low market growth rate.

OVERVIEW OF TWO WHEELER SECTOR
Two Wheeler Industry Indian two -wheeler contributes the largest volumes amongst all the segments in automobile industry. This segment can be broadly categorized into 3 sub-segments viz.; scooters, motorcycles and mopeds. In the last four to five years, the two-wheeler market has witnessed

a marked 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 2008-09. The Euro emission norms effective from April 2000 led to the existing players in the two- stroke segment to install catalytic converters. All the new models are now being replaced by 4-stroke motorcycles. Excise duty on motorcycles has been reduced from 32% to 24%, resulting in price reduction, which has aided in propelling the demand for motorcycles. Within the two-wheeler industry, motorcycle segment grew at a phenomenally high rate of 35% as against a deceleration of 3% for scooters and 27% for mopeds. In fact, motorcycle has been taking away the share of scooters and mopeds in a 4.3 million two-wheeler market and surging ahead with its market share of 68%. The increasing demand from semi-urban and rural segments may have caused this positive shift towards motorcycles. Also, easy credit coupled with low interest rate regime, constrained personal transport, increasing income levels in middle class and higher aspirations of young people all seem to be the factors responsible for such high growth in two-wheelers. The growth in two-wheelers has been robust enough to counter the slowdown and other factors constraining the overall business activity in the country. Also, rationalization of excise duty in the Union Budget 2002-03 had a positive impact on the demand for motorcycles. We also expect the motorcycles to continue to lead the two-wheeler segment like in all other Asian countries. Available forecasts suggest that this trend would continue for another couple of years and the industry would record nearly double-digit average annual growth up to 2006. During the year, there have been important developments in two-wheeler industry. The competition has strengthened though there are hardly any new entrants into the industry. There is an increasing emphasis on price and this has led to cost cutting efforts all across the industry, thereby, making the customer an ultimate beneficiary. The trend also saw introduction of new motorcycles with capacity ranging from 100 to 180cc bikes. We anticipate that many more new models will be launched during the year and provide customers plenty of choice at competitive prices.

Businesses cannot consistently grow at 25-30 per cent. Each business has a tendency to taper and plateau after attaining a particular size. An annual growth rate of 10-12 per cent over a period of time is extremely healthy. The TCS study rankings are conducted at the motorcycle segment-level to provide comparisons among similar groups of motorcycles. Motorcycles ranking highest in their respective segments for TCS are: Hero Honda CD100 SS (best standard motorcycle segment); Hero Honda Splendor (best executive motorcycle segment); Bajaj Pulsar (best premium motorcycle segment); and Royal Enfield Bullet Electra (best cruiser motorcycle segment). The feeling of freedom and being one with the Nature comes only from riding a two wheeler. Indians prefer the two wheelers because of their small manageable size, low maintenance, and pricing and easy loan repayments. Indian streets are full of people of all age groups riding a two wheeler. Motorized two wheelers are seen as a symbol of status by the populace. Two wheelers in India are the second largest producer and manufacturer of two-wheelers in the world. It stands next only to Japan and China in terms of the number of two-wheelers produced and domestic sales respectively. Indian two-wheeler industry has got spectacular growth in the last few years. Indian two-wheeler industry had a small beginning in the early 50's. The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. In the initial stages, the scooter segment was dominated by API; it was later overtaken by Bajaj Auto. Although various government and private enterprises entered the fray for scooters, the only new player that has lasted till today is LML. The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts 175cc bike. The two-wheeler market was opened to foreign competition in the mid-80s. And the then market leaders - Escorts and Enfield - were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With the availability of fuel efficient low power bikes, demand swelled, resulting in Hero Honda - then the only producer of four stroke bikes (100cc category), gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TVS 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 90s 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 50s, 60s and 70s when the Government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mn vehicles in 1990. In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a decline of 15% in 1991 and 8% in 1992, resulting in a 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 prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing. Factors like increased production in 1992, due to new entrants coupled with the recession in the industry resulted in company either reporting losses or a fall in profits.

Two wheeler fleet composition in India:-

STRUCTURE OF TWO WHEELER INDUSTRY

Mopeds:-

Over the last 15 years, moped’s contribution in overall 2-wheelers has declined significantly and now it remains a marginal category with just one manufacturer for the product. Its contribution in the 2-wheelers industry now stands at 5% and we expect that this segment will continue to be marginalised. The only player in this segment is TVS Motor.

Scooters:-

Advent of fuel efficient motorcycles in the Indian 2-wheelers industry led to decline of Scooters. However, over the last five years, it has made a recovery and is emerging as a niche segment targeted towards women commuters. One of the reasons for this is the increasing need of mobility for the women commuters especially in the urban areas is due to higher

number of college going girls and greater participation of women in urban work force. The product itself has gone for a complete revamp and now this category mainly consists of gearless products. This segment is now dominated by Japanese manufacturers with HMSI having the leadership. HH, which is a late entrant in this segment, has also cornered a sizeable market share in the scooter segment. Another development in this segment is the launch of battery operated scooters. However, given the high replacement cost for the batteries, this has remained a marginal segment.

Motor cycles and bikes:-

✔ Executive Segment
Executive segment is the largest motorcycle segment and this is the stronghold of market leader HH. Competitors have tried to challenge HH in this segment, however all such challenges have fizzled out over time. With higher growth in economy segment, the contribution of this segment had come below 50% in FY06. However over the last three years, it has made a strong come back and now accounts for almost 60% of the motorcycle share.

✔ Premium Segment
This segment was creation of HH with 'CBZ' And ‘KARIZMA’; however major boost to the segment was given by BAJAJ through 'Pulsar' which has dominated the segment. HH has remained a marginal player in this segment and one of the reasons for this is presence of HMSI in this segment. This segment remains a small segment in the Indian market with contribution of around 23% to the motorcycle industry. This is the performance segment and customers pay a premium for the novelty. Hence constant upgradation in the product is a requisite for success in this segment.

Usage Pattern of two-wheelers in India
Is quite different from other countries  Initial cost and fuel economy are highest priority.  Low maintenance costs are desired.  Small entrepreneurs and farmers conduct their business carrying loads.  Very limited usage for sports bike.  Indians prefer the two wheelers because of their small manageable size, low maintenance, and pricing and easy loan repayments.

Key players in the Two-wheeler industry:
➢ Hero Honda motors ltd. ➢ Bajaj auto ltd. ➢ TVS motors company ltd. ➢ Yamaha motors India ➢ Honda motorcycle and scooters India

Motorcycles in India: Bikes comprise a major segment of Indian two wheeler industry.

Companies :

Hero Honda Motors Ltd (HHML )

Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company. And created the world's single largest two wheeler company and also one of the most successful joint ventures worldwide. During the 80s, Hero Honda became the first company in India. Over 19 million Hero Honda two wheelers running on Indian roads today.

* Hero Honda CD Dawn * Hero Honda CD Deluxe * Hero Honda Glamour * Hero Honda Glamour-Fi * Hero Honda Karizma * Hero Honda Passion Plus * Hero Honda Pleasure * Hero Honda Super Splendor * Hero Honda Splendor NXG * Hero Honda CBZ X-Treme

Bajaj Auto Ltd Company :

Bajaj is the first Indian two wheeler automobile company in the market since 1945 with the name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj trading corporation private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains license from the Government of India to manufacture two- and three-wheelers vehicles in 1959.

* Bajaj Avenger * Bajaj CT 100 * Bajaj Platina * Bajaj Discover DTSi * Bajaj Pulsar DTSi * Bajaj Wave * Bajaj Wind 125 * Sonic DTSi

TVS Motor Company :

TVS Motors is the third largest company in the two-wheeler industry with a market share of 16%. Infect, it is the only Indian company without a foreign collaboration in the two-wheeler industry. When the company opted out of the collaboration with Suzuki in 2002, many believed that TVS was headed towards extinction. But the company proved the doomsayers wrong and came out with a very successful `TVS Victor'. TVS Motors Ltd. originally

incorporated in 1982 to manufacture two-wheelers in collaboration with Suzuki Motors of Japan, TVS was one of the leaders in two-wheeler industry. * TVS Apache * TVS Centra * TVS Fiero * TVS Star * TVS Victor

Yamaha Motor India:

Yamaha Motor Corporation is the auto mobile company of Japan (1953) which works in India since 1955 and providing latest technology in India from last two decades. Yamaha Motor India was incorporated in august 2001 as a 100% subsidiary of Yamaha motor corporation, Japan

* Yamaha CruxS * Yamaha G5 * Yamaha Gladiator * Yamaha FZ 16 * Yamaha R15 * Yamaha Fazer

Honda motor:

Honda motors of Japan is not a new name in the two wheeler scenario in the country, they were in a tie up with the Firodias owned Kinetic group. However in the late 90s they parted ways after problems arose over issues like introduction of new models, advertising expenditure, marketing strategies and other related issues. In the mid 80 Honda motors of Japan joined hands with the largest bicycle maker of India the Hero cycles to create Hero Honda which in a couple of decades or so have gone on to become the single largest motorcycle company in the world. Though Honda has come on its own on the Indian market yet it will be providing technological support to Hero Honda for the next ten years. Thus presenting a unique situation in which the company will be in direct competition with the company which it has been associated for nearly two decades. Honda Motorcycles and Scooters India limited, a 100% subsidiary of Honda motor company Japan eventually entered the Indian market with Honda Unicorn in 2004. * Honda Unicorn * Honda activa

Market share of tw o w heeler automobile sector
Hero Honda

35.60%

27.50%

Bajaj M otors T VS M otors Yamaha M otors Honda M otors Others

9.50% 4% 7%

16%

Now further the marketing strategies of HERO HONDA and its competitor BAJAJ will be analyzed.

HERO HONDA

➢ The Company was Incorporated on 19th January,1984

at New Delhi as a joint

venture. ➢ Today Hero Honda is the largest two-wheeler manufacturer in the world producing more than 3 million units of two-wheeler per year. ➢ The company's most popular model is the Hero Honda Splendour, which is the world's largest-selling motorcycle. ➢ Over 19 million Hero Honda two wheelers are on Indian roads today. ➢ Hero Honda CD-100 is the first four stroke motorcycle to be introduced in India in 100cc range. ➢ During the fiscal year 2008-09, the company has sold 3.28 million bikes.

PRODUCT MIX

SCOOTER

BIKE 100CC

125CC

150CC

220CC

PLEASURE

CD 100 SPLENDOR SPLENDOR+ PASSION PASSION+

AMBITION GLAMOR

CBZ CBZ XTREME

KARIZMA

BAJAJ (COMPETITOR)
➢ Established in 1945. ➢ Started production of scooters in 1961 and became first two wheeler manufacturing company of India. ➢ Bajaj Auto, is ranked as the world's fourth largest two and three- wheeler manufacturer. ➢ Bajaj Auto is India’s largest exporter of two wheelers. ➢ During 2008-09, the company exported 772,519 two and three-wheelers recording a growth of 25 percent over 2007-08. ➢ Exports now constitute 37 per cent in volume terms and 35 per cent IN value of net sales.

PRODUCT MIX

100CC

125CC

135CC

150CC

180CC

200CC

220CC

BAJAJ CT 100, BAJAJ PLTINIA, BAJAJ WAVE

DISCOVE R, BAJAJ WIND, BAJAJ XCD

PULSAR135

PULSAR150

PULSAR180, AVENGER

PULSAR200

PULSAR220

4 P’s OF MARKETING OF HERO HONDA :-

PRODUCT Hero Honda, which has a technology tie-up with Japan's Honda Motors, was currently discussing the feasibility of manufacturing scooters for the Indian market, Mr. Munjal said. However, the company has a binding clause with Honda's scooter manufacturing Indian subsidiary, preventing it from making scooters till 2004. Hero Honda Motors, India's largest motorcycle company, has launched the premium segment 223cc motorcycle Karizma priced at Rs 79,000 (ex-showroom, Delhi). Many of the products which the company has started with have been phased off. Now the existing products are Karizma, Ambition, CBZ, Splendor, Splendor+, Passion, Passion Plus, CD 100 SS, CD 100 and CD Dawn. The TCS study examines customer evaluations at three distinct ownership periods: 1 to 6 months, 7 to 18 months, and 25 to 36 months. This helps in understanding the differences in satisfaction during initial ownership, in-warranty and post-warranty ownership periods. Satisfaction ratings decline as the length of vehicle ownership increases. However, Hero

Honda Splendor is among the few models to maintain consistency across the three ownership periods. PRICING Pricing is a important component of marketing mix of the firm. Determining the prices of different products of a firm is very difficult task of the marketing manager. Price denotes money value of a product. If represent the amount of money for which a product can be exchange. In other words, prices represents the money which the buyer pays to the seller for a product price represent the exchange value of goods and services in terms of money. Price is all around. Price factor has very well been touched by the manufacturers. The pricing strategy of the company is very set. They price their product according to the cost of production and also by keeping an eye on the price of the competitors of that segment and demand of the product in the market. A pricing strategy that ensured an average manufacturer margin that game dealer an adequate return and created a reputation with consumers like “a company selling a good quality product at a reasonable price. Industry focus themselves the low cost producer with good quality and aimed to maintain the price advantage in every market of two wheelers. Hero Honda group ensures an easily affordable pricing through excellent transportation to common man. It fixes customer centric pricing that provide customer total satisfaction. Hero Honda’s pricing objectives are: List price, Discount, Financing schemes, Credit terms, and Maximize profits Hero Honda group ensures an easily affordable pricing through excellent transportation to common man. It fixes customer centric pricing that provides the customer with total satisfaction.

PLACE

CHANNELS OF DISTRIBUTION:

As a company, dealers play a major role in serving customers, while growing and sustaining markets. Hero Honda has a network of more than 3500 strong and dedicated Authorized dealers. A network that has helped Hero Honda’s name and its promise of reliable quality to every part of the country. The power of this highly efficient and motivated network goes a long way to create goodwill for Hero Honda brand among countless consumers besides creating availability and after sales services. The channel of distribution is a direct dealer network. A direct dealer is a dealer who is authorized to purchase the product directly from the company and sell.

PHYSICAL DISTRIBUTION:

Hero Honda has more than 3500 showrooms in India. Some of the Authorized dealers of Hero Honda Karizma, in and around Bombay, are: • Max Motors (Bombay) • F. P. Motors (Bombay) • Axis Motors (Thane) • Ranjeet Motors (Thane) • Ahir Motors (Kalyan) • Spectra Motors (New Bombay)

• H. M. Motors (Panvel)

PROMOTION

Promotional tools
1. ADVERTISING: It is defined as a paid non-personal communication with a target

(usually mass) market. It is cost effective and can reach a large number of people. It can also be used for long term or short term objectives.

There are various forms or mediums through which can advertise. A. Broadcast Media:

• • •

Television Radio Cinema

B. Print media:

• •

Newspapers Magazines

Leaflets

C. Outdoor media:

Posters and billboards.

1. PUBLIC RELATIONS AN PUBLICITY:

Public relations are an umbrella term and refer to the totality of the organization’s behavior with respect to the society in which it operates. The maybe regarded as good or bad and is reflected in the company’s reputation and image.

2. SPONSORSHIP:

Sponsorship can be seen as a part of public relations and it is certainly the case that some sponsorship goes on to generate positive publicity for the organization. The company has not left any stone untamed in sponsoring the major events both globally and domestically. The biggest of all is the sponsorship of the “WORLD CUP” for which Hero Honda has the credit of being the only two-wheeler company in the world to do so. Recently they are sponsoring the Hockey World cup. Besides this, the company has also sponsored events like “Master Golf”, television academy awards, etc,

Thus the company has gained a lot of reputation by doing so.

3. DISCOUNTS/OFFERS: The company has started giving discounts and other offers to the customers on the purchase of a new bike, for instance, with the World Cup offer, in which the consumer was to get a 1 gm gold coin with every purchase. But after all these schemes and benefits may be because of cut-throat competition in the segment with heavyweight competition such as Bajaj, kinetic, Yamaha, and TVS the company (HERO HONDA) officially says: “Our aim is to proactively and consistently deliver value to the customer. We are giving back to the customer after becoming successful. Most companies give discounts only when their products are not doing well in the market. There is lost of competition in the segment, especially from Bajaj. But the reason for Hero Honda’s success it that we are consumerfocused while other companies such as Bajaj tends to be more competitor-focused.

4. Test ride and Road show

PROMOTION POLICY:

➢ Company gives advertisement in different media vehicles time to time. Like in TV.

Magazines, newspaper, etc. ➢ Hero Honda also organizes free service camps every year. ➢ Hero Honda also takes art in trade fair.

➢ Hero Honda with the help of ICICI Bank provides loan to the customers & also provide easy monthly installment scheme to customers. ➢ Hero Honda gives huge commission to their dealers.

Advertisement, local events sponsorship and promotions and inviting a prominent personality for the inaugural or first like delivery function would contribute effectively in generating a wider local interest and attention. Hero Honda’s latest DKD –2 commercial its two brand starring its Ambassador and India’s heart throbs, Hritik Roshan and Sourav Ganguly, truly reflects the multi fact roles that today’s new generation plays. The commercial reflecting the charisma and vibrancy of these two stars, takes Desh Ki Dhadkan to dazzling new heights. It is young, colorful and vibrant and represents the icons of contemporary times. And it will go a long way in strengthening the leadership status of the product by the mile. The new commercial is powerful film repeat with an impressive storyline. The effort to pack the story, drama and impact in just 60 seconds was phenomenal challenge itself. The idea was born itself. The idea was born out of the very essence of “Hero and Stars”. Keeping in mind would cause on the drama and impact it would cause on the audience. It is a commercial packed with action where today’s heart throbs, Hritik and saurav, are seen tackling new roles. The story being in a field adjoining a hill with two cool men, Hritik and Sourav on Hero Honda bikes and Passion respectively. Both Sameer and Aditya win lifetime opportunity act with Hritik and Sourav, the two star heartthrobs of millions in India and all four will be seen in action in the new commercial DKD-2.

These are some of the Slogan for every product (Bike) and these are following:CD-100 CD100SS : : Fill it, shut it, Forget it. Tough and Rugged.

Splendor Street Smart Passion CBZ

: : : :

Designed to Excel. License to enjoy. When style matters, Bike born in studio not in factory. Motorcycling Unplugged.

MARKET SEGMENTATION OF HERO HONDA

➢ Demographic Segmentation

 Income: HERO HONDA products are offered to the public taking into

consideration all the income groups in the society.
 Age: The main segmented group for the motorcycle are 18 years and

above.
 Occupation:

All kinds of people are taken into account.

Students,

professionals, Govt. Servants, etc.

➢ Geographic Segmentation

: The potential customers are basically

from every regions of India.
➢ Psychographic segmentation

:

People purchasing bikes are very

economical, quality, brand conscious and loyality.

➢ Behavioral segmentation

:

This segmentation is done considering

user status, benefit wise.

TARGETING AND POSITIONING OF HERO HONDA

TARGETING

The proposed targeting people in the age group of 18 years and above with a average monthly income of approximately Rs. 10,000 and above, who are brand loyal and who are either students or retired individuals or may be employed as professionals, government servants or having their own business, but mostly male i.e on the different stratas of the population.

POSITIONING

The image that Hero Honda creates in the mind of the customers is the faith. T add shown by it says “Desh ki Dhadkan”. That means it’s a member of the Indian family. It represents the Indian culture and society.

he

The objectives can be achieved through the implementation of suitable marketing strategy by the organisation. It is the marketing logic that is formulated keeping in mind the needs of the consumers and also strategies of the competitors.

Porters five force model for Hero Honda:-

Bargaining Power of suppliers: Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.

Bargaining Power of Buyer: Buyers in automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent.

Competitive rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players.

Threat of substitute Products: There is no perfect substitute to this industry. Also, if there is any substitute to a twowheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a two-wheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential. Threat of new entrants Here the threat of new depends on the economies of scale of the cost of production , and customer switching costs, access to industry distribution channels.

S.W.O.T. ANALYSIS OF HERO HONDA (KARIZMA):STRENGTH: • It has a good speed and sporty look • Karizma is the First bike in India launched under Sports Bike Segment. • Loyal Customer Base: In the past four years, Karizma has been successful in building up a good and loyal base among its customers. • After Sales Service: Till today, customers are satisfied with the after sales service provided by Hero Honda for this particular product. • Refinement, comfort, great handling and that much-sought-after big bike feel are all available on the Karizma. • Brand Recall: the name Karizma itself is a metaphor to its success. The brand Karizma has given a good platform to this product in the Sports Bike Segment.

WEAKNESS:

• High Maintenance: The maintenance of Karizma is high as compared to its biggest competitor Bajaj Pulsar 200cc and 220cc. • Fuel Efficiency: The pulsar 200cc offers an impressive mileage of 38.3kpl in city and 42.4kpl in highway against the Karizma offers only 30kpl in city and a decent figure of 45kpl in highway. • Less Promotion: the promotions and ads of Karizma are very less as compared to its competitors.

OPPORTUNITIES: • If Hero Honda comes up with the idea of changing some features of Karizma, like self cancelling indicators, soft touch handle bar and digital speedometer, it will help them to boost up the sales of Karizma. • If they are able to improvise the fuel efficiency of Karizma, it will be a golden opportunity to take over the market. THREATS:

• The major threat faced by Hero Honda Karizma is from Bajaj Pulsar, who has always been the market leader in the 150 plus segment with 60% market share. • Karizma’s strong competitors Bajaj and TVS, in 150 cc plus segment, already posses certain features like self-controlling indicators, soft touch handle bar which Karizma lacks. • The competitor Pulsar 200cc has already come up with oil cooled engine which delivers maximum power. This is again a major threat to Karizma.

S.W.O.T. ANALYSIS OF BAJAJ (PULSAR 220cc) STRENGTHS:
• Pulsar 220cc features India’s First Oil Cooled Engine which delivers maximum power making it most powerful engine offered by Bajaj. • New Pulsar also provides Digital Speedometer, Self Canceling Indicators which is for the First time in this segment in India. • Fuel efficiency: Pulsar 220cc delivers an impressive mileage of 38.2 kmpl in city as compared to Karizma which delivers 30 kmpl in city. • Customer Base: In past decade Bajaj has established a strong base amongst its customers.

WEAKNESS:
• Style and Design: PULSAR 200cc and 220cc derives their styling from there previous version Pulsar 150 Dts-i and 180 Dts-i. • Pricing; Bajaj 220cc (Rs 82449 basic price) is costlier than karizma(Rs 78000 basic price)

OPPORTUNITIES:

• If they derive new styling, shape, design for pulsar 200cc and 220cc then they can attract more customers. • Taking into consideration the reviews of the customers regarding the “fairing” of 220cc and making the needful changes will be an opportunity to capture an even larger share of the 200cc+ segment

THREATS:
• The biggest threat is faced from the goodwill of Karizma in this segment who is the “Four-Stroke Two Wheeler Ruler” of the Indian bike market. • Certain technical faults in the bike design which are potentially dangerous to the rider’s safety can be disastrous to the image of the bike.

COMPARISION OF ADVERTISING STRATEY OF HERO HONDA AND BAJAJ

ADVERTISING STRATEGY OF HERO HONDA:-

Currently the number one company in terms of sales and has been dominant in the twowheeler segment since the past decade. Since the inception of hero Honda, the company has been using television as a major role for its publicity. Though hero Honda was dominant in sales it lacked the skills of creating a spectacular ad till now. Though it had a vast range of mobiles, its advertising strategy was not up to the mark. For its publicity hero Honda has been using many famous celebrities like Saurav Ganguly, the captain of Indian cricket team, Hritik Roshan and other famous personalities as their brand ambassadors. Thus, hero Honda has been spending huge amounts on its publicity. The biggest of all is the sponsorship of the “WORLD CUP” for which Hero Honda has the credit of being the only two-wheeler company in the world to do so. Presently they have tried to gain publicity by sponsoring the hockey world cup event which is the national game of India. There by creating a sense oneness and Nationalism through providing publicity and encouragement to the game by various ad’s.

ADVERTISING STRATEGY OF BAJAJ:Bajaj is always known for its outstanding ads over the period of time. Since its inception, Bajaj has come out with variety of ads and were always successful in their advertisements. Scooters were well known by the brand name of Bajaj. Be it any scooter, one used to recognize it by the brand name Bajaj. This was the identity a decade ago which the Bajaj has still maintained. Bajaj is always known for its ads without well-known brand ambassadors which is again a plus point to its cart as it saves a huge cost in terms of brand ambassadors unlike Hero Honda and TVS. Prior, Bajaj used to convey the feeling of ‘Indianness’ in its ads. With a punch line ‘Hamara Bajaj’ Bajaj drove into everybody’s hearts and the title song of ‘Naye Bharat Ki Naye Tasveer’ added a great value to its mobikes and scooters.

A couple of years back, Bajaj had introduced an advertisement which promoted all the different ranges it had, wherein they had shown each product they had with a feeling of Indianness. Example: Eliminator passes-by a rangoli and drives slowly sideways without disturbing it. People on boxer pass-by a temple and bend their head to give a little offering. Such ads had revealing Indian culture had a great effect on Indians and Bajaj was successful in most of its ads. But recently, Bajaj had changed its brand logo along with its punch line i.e. ‘Hamara Bajaj’ got converted to ‘Inspiring Confidence’. The reason for this change as told by the company officials was to keep pace with the new technologies in the fast moving world. Even though it had changed its punch line, it didn’t have much effect on its brand image.

A year back, Bajaj introduced DTSi technology upgrading its always successful PULSAR 150cc and 180cc. Though Bajaj had changed its identity it still dominates for its creativity in ads.

Future Challenges and Plans:• • • • • Sustaining the growth rate. Need for innovation – low cost/ hybrid vehicles. Upgrading Indian two-wheeler products. Taking the products to the global market. Capturing Indian as well as global market.

Suggestions:• • • • • Encourage exports. Provide various two-wheeler financing schemes among manufacturers. Open R&D centers. Pressurize government to reduce taxes and duties. Collaborate with global players.

Conclusion :The outlook for India’s automotive sector is highly promising. In view of current growth trends and prospect of continuous economic growth of over 6 per cent, all segments of the auto industry are likely to see continued growth. Large infrastructure development projects underway in India combined with favourable government policies will also drive automotive growth in the next few years.

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