A STUDY ON CUSTOMER RELATIONSHIP MANAGEMENT AT HERO

MOTORS

ABSTRACT
In today’s highly competitive world, an increasing number of organizations have realized
the importance of becoming more customer-centric and invested a large amount of time and
resources in a Customer Relationship Management (CRM) system with the aim of better
managing their customers. A large number of CRM projects, however, end up failing or
struggling. While many studies have been conducted about methodologies, tools, and
theoretical conceptualizations of CRM, there is little, if any, emphasizing the critical steps
and key challenges to its successful implementation. This paper picks up on that challenge.
The emphasis of the discussion is not on the introduction of previously developed tools or
theoretical conceptualizations, but on issues relating to CRM project management. The road
map which this paper develops owes its origin to this author’s extensive experience as a
marketing and CRM consultant for large and medium enterprises in Thailand and Australia
for more than ten years.

1
 INDEX

CHAPTER PAGE NO

CHAPTER-1 03-11

INTRODUCTION
NEED OF THE STUDY
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
RESEARCH METHODOLOGY
LIMITATIONS OF THE STUDY

CHAPTER-1I 12-18

REVIEW OF THE LITERATURE

CHAPTER-1II 19-39

INDUSTRY & COMPANY PROFILE

CHAPTER-1V 40-55

DATA ANALYSIS AND

INTERPRETATION

CHAPTER-V 56-67`

FINDINGS
SUGGESTIONS
CONCLUSION
BIBLIOGRAPHY

2
 CHAPTER-I
INTRODUCTION

3
INTRODUCTION
Planning for the future to achieve the long-term objective is integral to the survival and
growth of every business. Strategic planning today has to take into cognizance the rapid
changes in technology, increased competitiveness and the turbulent business environment,
also with the world becoming one big global village. Strategy covers every aspect of
business from business reengineering, new business development, product development and
brand positioning to advertisements promotional campaigns, media and publicity. It is a
game of innovation. In fact, marketing people are involved in marketing 10 types of entities;
goods, services, experience, events, persons, places, properties, organizations, information
and ideas.

Marketing management is the art and science of choosing target markets and getting,
keeping and growing customers through creating, delivering and communicating superior
customer value. India is second largest manufacturer and producer of two-wheelers in the
world. It stands next to Japan and China in terms of the number of two wheelers produced
and domestic sales respectively. Indian two-wheelers industry made small beginning in early
50’s when Automobile products of India (API) started manufacturing scooter in India. Hero
was established on 13th of April 1984. The Indian two wheelers Industry can be broadly
classified as scooter, motorcycles and mopeds/scooterette. In last six years domestic two-
wheelers has seen structural charges. This can be seen from the change in composition of
two wheeler sales, where the motorcycles have gained market share from the scooter and
moped or scooterette segments.

The Hero group of companies in India merged with the Honda Motor Company of Japan in
creating a No.1 mantle in the making of the company Hero. Hero began operations with the
establishment of the Dharuhera plant in 1985. This fully automated plant is equipped with
state-of-the-art machinery, in-house R&D set up, and today it produces a bike every 30
seconds. To meet the growing demand, Hero opened another unit at Gurgaon, using FMS
technology. It is rated as one of the most modern motorcycle manufacturing plants in the
world. The plant produces 1,800 bikes every day.

The Indo-Japanese motorcycles segment dominated by Hero group, Bajaj and Escorts in
collaboration with Japanese vehicle manufacturers Honda, Kawasaki and Yamaha

4
 respectively. The primary reason for growth of two-wheelers market is attributed to the
fact that Indians, especially in the rural and semi urban areas retrying to change life style
and people in metropolitan cities are completely disappointed with the public transportation.

So, there is tremendous growth in the two-wheeler segment. Two wheeler segments of
automobiles started with bicycles and diversified into scooters and as the man started
looking for style, comfort, speed, power etc. Motor Cycles came into the picture. The
motorcycle market in the present world like any other market place is a crowded one, with
many sellers competing with each other to attract the same customer. Hero, the world’s
number .1 bikes have started in early 80’s. The brand image, quality maintenance, mileage
and the style of the vehicle attracted a large number of customers and thus made it as the
No.1 bike. The consumer is now faced with proliferation of brand models. Getting new
customers as well as retaining them is an important task of manufacturers. So service after
sales is very important. A satisfied customer brings in more name and goodwill to the
company, which is why Customer Relationship Management is given more importance in
today’s competitive world. A study on this aspect with Hero two-wheelers at Hero Moto
corp Ltd was made.

5
NEED OF THE STUDY

Marketing starts with identifying the needs of customers and ends in satisfying those wants.
The goal of marketing is to attract new customers by promising superior value and to keep
current customers by delivering satisfaction based on their preferences retaining them.

Without customer, no market exists. As the customers are regarded as the superiors in
today’s market, the level of satisfaction and their preferences should be keenly studied.

The two-wheeler industry has been expanding rapidly. Gone are the days when possessing
a two-wheeler was seen as a luxury. Now days, it is viewed as a mere necessity.

Prior, sale of two-wheelers was mainly confined to urban areas but lately in rural areas the
bicycles are being replaced by power driven two-wheelers such as scooters, motorcycles.

Not only this, this industry has also customers ranging from all demographic segments. It
has been common sights that even school going children are driving two-wheelers. The
women customers are also increasing due to increase in women literacy and employment.

Getting a new customer is difficult, than retaining a current customer is a more difficult one
and not only that it is estimated that the cost of attracting a new customer is five times the
cost of retaining current customer. It requires a great deal of effort to induce satisfied
customer to switch away from their current preference. Thus, Customer Relationship
Management is been given top priority in today’s competitive world.

Therefore, keeping the above stated objective in mind, this study was conducted to
ascertain the customer’s satisfaction towards Hero two-wheelers in Hero Motocorp Ltd. In
view of this, a detailed study of customer preferences, levels of satisfaction and their
complaints and suggestions was undertaken.

6
SCOPE OF THE STUDY

This study will provide an insight into the automobile sector and the steps being taken
by them to improve their relationship with their guests/customers.
From the study, one can infer the present scenario of the practices and programs being
followed by the leading players in this sector and the steps being followed by them to
enhance customer retention, customer satisfaction and in turn, leading to enhanced
profits and brand image in the minds of the customers.

7
OBJECTIVES OF THE STUDY

This study was conducted keeping the following objectives in mind.

1. To study the factors which influence the purchase of Hero two-wheelers?
2. To know the customer level of awareness of Hero two-wheelers.
3. To know the various factors, which influence customers in purchasing, they’re two -
wheelers?
4. To find the after sales service offered by Hero Motocorp Ltd.
5. To know the customer level of satisfaction of Hero two-wheelers with respect to
Hero Motocorp Ltd.
6. To find the profile of Hero two-wheeler customers.

8
METHODOLOGY OF THE STUDY

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

Primary Data:

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

The Data has been collected from 100 customers, through questionnaires, by using simple
random sampling. In addition interaction with the staff of Hero Motocorp Ltd has also
given some information.

Secondary Data:

Secondary Data comprises of information obtained from annual reports, brochures, manuals
websites etc.
Method of data collection:-
Secondary sources:-
It is the data which has already been collected by someone or an organization for some
other purpose or research study .The data for study has been collected from various
sources:
 Books

 Journals

 News pares & electronic media

 Internet sources

Statistical Tools Used & strategies applied

Simple tools like bar graphs, tabulation, line diagrams have been used.

TOOLS USED FOR ANALYSIS – TABULATION:

A Table is a systematic arrangement of statistical data in rows and columns. Rows are
horizontal arrangements whereas columns are vertical arrangements. Tabulation is a
systematic presentation of data in a form suitable for analysis and interpretation.

9
Presentation of data:
Statistical data can be effectively presented in the form of diagrams and graphs. The
diagrams used are as follows:
 Pie charts: The Pie charts are used to represent a component on a percentage basis.
Each part of a component is shown as the percentage of whole component. Pie
Charts are used to represent the percentage share of Equity, Debt & Money Market
components of Balanced Growth Fund.
 Bar diagrams: The Bar Diagrams are used specifically for categorical data series.
They consist of the group of equidistant rectangles, one for each group or category of
data in which the values of magnitudes are represented by length or height of
rectangles.
 The data that is considered for the Comparative analysis of various Mutual Funds
returns of Open-Ended EQUITY Growth Fund are only for a short period of one year
and performance during this period may not be same in future. Project period is only
45 days , so I have taken two months portfolios into consideration
 As the project period is limited, the long-term data of Mutual Funds are not taken into
consideration in analysis section.
 Mutual Funds of only Five organizations are taken into account for analyzing their
performance, because the time duration of the project is short and limited. The
performance of these funds since inception are not considered.
 This study on Mutual Funds is restricted to Open-Ended EQUITY Schemes only. The
core details are untouched.
 The data taken into account for analysis is very general. confidential data is ignored as
it is highly sensitive. As a result the information presented in the research report is
limited.

10
LIMITATIONS OF THE STUDY

I have observed the following limitations in the course of my study.

1. The areas which were selected were limited only to Hyderabad i.e., the findings are
regional and do not represent the state or country.

2. Time constraints hampered the study.

3. Since the study involved in gathering information was from upper to higher-middle class
people, interaction with them became difficult.

4. There may be respondent’s bias.

5. Even though utmost care has been taken in conducting the survey, the findings may
sometimes differ from the population.

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 CHAPTER-II
LITERATURE REVIEW

12
MARKETING AND ITS CONCEPTS
Marketing is more than any other business function that deals with customers. Creating
customer value and satisfaction are at the very heart of modern marketing thinking and
practice. The Marketing discipline is undergoing fresh reappraisal in the light of the vast
global, technological, economic, and social challenges facing today’s companies. Mass
markets are fragmenting into micro markets, multi-distribution channels are replacing single
channels; customers are buying directly through catalogues, telemarketing, and home video
shopping; price discounting and sales promotion are rampant and are eroding brand loyalty;
conventional advertising media are delivering less and costing more. The marketing
discipline is redeveloping its assumptions, concepts, skills, tools and systems for making
sound business decisions. Marketing is the delivery of Customer Relationship Management
of a profit. The goal of marketing is to attract new customers by promising superior value,
and to keep current customers by delivering satisfaction. Today, marketing must be
understood not in the old sense of making a sale “telling and selling” but in the new sense of
satisfying customer needs.

Peter drucker, a leading management thinker has put it in this way. The aim of marketing is
to make selling super flows. The aim is to know and understand the customer so that the
product or service fits and sells it.

Marketing is a social and managerial process by which individuals and groups obtain what
they need and want through creating, offering and exchanging product and value with
others.

CONSUMER BEHAVIOUR:

The term consumer behavior refers to the behaviour that consumer display in searching for
purchasing, using, evaluating, and disposing of products and services that they expect will
satisfy their needs. The study of consumer behaviour is the study of how individuals make
decision to spend their available resource (time, money, effort) on consumption related
items. It they buy it, where they buy it, how often they buy it, and how often they use it.

Thus, a successful marketer must have a proper understanding of consumer behaviour in

order to attract and retain the customers. It enables him to think logically and device

13
 strategy that would help him to close the gap between customers and company. One
such imp. Aspect that influences a consumer’s purchase decision is the consumer’s decision-
making process.

CUSTOMER DECISION MAKING PROCESS

EXTERNAL INFLUENCES
CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR

Cultural Social Personal Psychological

Culture Reference group Age & life cycle stage Motivation
Sub culture Family Occupation Perception Learning
Social class Roles & status Economic Situation life Belief & attitudes
cycle

CUSTOMER RELATIONSHIP MANAGEMENT

Every company’s first task is “to create customers” towards this end it strives. But on the
other hand, customers face a vast array of products and brand choices, prices and suppliers.
It therefore becomes a major task for customers to opt for the right seller.

It is believed that customers estimate which offer will deliver the most value. Customers are
value maximizes, within bounds of search costs and limited knowledge, mobility & income.
They form an expectation of value and act on it. Whichever or not the offer lives up to the
value expectation affects both satisfaction & repurchase probability.

Customer perceived value:

Our premise is that customers will buy from the firm that they see as offering the highest
perceived value (CPV) is the difference between the prospective customer’s evaluation of all
the benefits and all the costs of an offering and the perceived alternatives. Total customer
value is the perceived monetary value of the bundle of economic, functional, and
psychological benefits customers expect from a given market offering. Total customer cost
is the bundle of costs customers expect to incur in evaluating, obtaining, using, and
disposing of the given market offering.

14
Delivering customer value and satisfaction:

In a hyper competitive economy with increasingly rational buyers, a company can only win
by creating and delivering superior value. This involves the following five capabilities:
understanding customer value; delivering customer value; capturing customer value; and
sustaining customer value. To succeed, a company needs to use the concepts of a value
chain and a value – delivery network.
Value Chain:

Michael Porter of Harvard proposed the value chain as a tool for identifying ways to create
more customer value. Every firm is a synthesis of activities that are performed to design,
produce, and market, deliver and support its product. The value chain identifies nine
strategically relevant activities that create value and cost in a specific business. These nine
value-creating activities consist of five primary activities and four support activities.

The firm’s task is to examine its costs and performance in each value-creating activity and
to look for ways to improve it. The firm should estimate its competitor’s cost and
performances as benchmarks against which to compare its own costs and performances. It
should go further and study the “best of class” practices of the world’s best companies. The
firm’s success depends not only on how well each department performs its work, but also on
how well the various departmental activities are coordinated.

15
 Customer
Delivered
value

Total customer Total customer

Value Cost

Product Monetary
Value Cost

Services Time
Value Cost

Personal Energy
Value Cost

Image Psychic
Value Cost

16
 Attracting and retaining customers:

Today companies are intent on developing stronger bond with their customers called
relationship management (CRM). This is the process of managing detailed information
about individual customers and carefully managing all the customer “touch points” with the
aim of maximizing customer loyalty.

Attracting Customers

Today’s customers are becoming harder to please. They are smarter, many more
competitors with equal or better offers approach more price conscious, more demanding,
less forgiving, and them. The challenge, according to Jeffrey Gitomer, is to induce and
delight loyal customers.

It is not enough to be skillful in attracting new customers; the company must keep them and
increase their business. Too many companies suffer from high Customer churns namely,
high customer defection.

There are steps a company can take to reduce the defection rate. First, the company must
define and measure its retention rate. For a magazine the renewal rate is a good measure of
retention. Second, the company must distinguish the causes of customer’s attrition and
identify those that can be managed better.

Third, the company needs to estimate how much profit it loses when it loses customers. In
the case of an individual customer, the lost profits is equal to the customer’s Lifetime
value—that is, the present value of the profit stream that the company would have realized if
the customer had not defected prematurely.

Fourth, the company needs to figure out how much it would cost to reduce the defection
rate. As long as the cost is less than the lost profit, the company should spend the money.

Customer retention:

Most marketing theory and practice centers on the art of attracting new customers rather
than on retaining and cultivating existing ones. The emphasis traditionally has been on
making sales rather than building relationships; on preselling and selling rather than caring
for the customer afterward. A company would be wise to measure Customer Relationship

17
 Management regularly, because the key to customer retention is Customer Relationship
Management.

A highly satisfied customer stays loyal longer, buys more as the company introduces new
products and upgrades existing products, talks favorably about the company and its
products, pays less attention to competing brands and is less sensitive to price, offers
product or service ideas to the company, and cost less to serve than new customers because
transactions are routine.

Today, more companies are recognizing the importance of satisfying and retaining
customers. Satisfied customers constitute the company’s relationship capital. If the
company were to be sold, the acquiring company would have to pay not only for the plant
and equipment and the brand name, but also for the delivered customer base, namely, the
number and value of the customers who would do business with the new firm.

Total Customer Relationship Management:

In general, satisfaction is a person’s feelings of pleasure or disappointment resulting from

comparing a product’s perceived performance (or outcome) in relation to his or her
expectations. If the performance matches the expectations, the customer is satisfied. If the
performance exceeds expectations, the customer is highly satisfied or delighted. At a very
low level of Customer Relationship Management (level one), customers are likely to
abandon the company.

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 CHAPTER-III
COMPANY & INDUSTRY PROFILE

19
INDUSTRY PROFILE

The Indian two-wheeler contributes the largest volume amongst all the segments in
automobile industry. Though the segment can be broadly categorized into 3 sub-segments
viz. scooters, motorcycles and mopeds; some categories introduced in the market are a
combination of two or more segments e.g. scooterettes and step-thru. The market primarily
comprises five players in the two-wheelers segment with the most of the companies having
foreign collaboration with well-known Japanese firms earlier. But most of the companies are
now planning 100% subsidiaries in India. Two Wheeler & its role in Indian Context:

As the cities grow & suburbs expand, transportation needs becoming more & more acute,
with mounting pressure on its public transportation for which two wheelers are ideal.The
two-wheeler Industry today has a significant role in the Indian economy, with an annual
turnover of Rs. 9000 crores and compounded average growth of 10%. In recent years, it is
of the few industrial sectors in the growth phase today considers personal transportation as
one of the basic needs. The two-wheeler industry basically comprises mopeds, scooters,
scooterettes and motorcycles. Mopeds are basic entry-level products aimed at lower/middle
income groups, offering company. This category dominated by TVS SUZUKI, which has a
market share of 50% today. The other major players in this segment include KINETIC
ENGG., HERO MOTOCORP and BAJAJ AUTO.

Scooters, which found largest segment in the industry (37 percent) is dominated by BAJAJ
AUTO. It is however facing stiff competition from LML, which offers better style and
technology to the Indian customers. However, dominance of this category has been
declining because of shift in the customer preferences.

Major part of the growth in the two-wheeler industry has come from motorcycle especially,
the Indo-Japanese 100cc motorcycles, which are considered fuel efficient, reliable and
suited for rough roads. Scooterettes also growing at a fast phase and are being increasingly
perceived as a better option providing convenience and motor style, by urban customers. In
this category, TVS Scooty holds a dominant market share.

20
 With sales of over three million vehicles, India is the second largest two-wheeler
market in the world. Vehicle has become a necessity for day-to-day busy life, with the
accelerated industrial and business activity in a liberalized environment. However, given
the limited purchasing power and to high cost of cars, majority of the middle class vehicle
users prefer two wheelers. With sales of over million vehicles, India is the second largest
two-wheelers market in the world. China is the market leader with around 51 percent of the
Asia Market, India, Thailand; Indonesia & Taiwan are the other key markets for two-
wheelers with market share of 19 percent, 10 percent, 9 percent and 5 percent respectively.

In the last four to five years, the two-wheeler market has witnessed a market shift towards
motorcycles at the expense of scooters. In the rural areas, consumers have come to prefer
sturdier bikes to withstand the bad road conditions. In the process the share of motorcycle
segment has grown from 48% to 58%, the share of scooters declined drastically from 33% to
25%, while that of mopeds declined by 2% from 19% to 17% during the year 2000-01. The
Euro emission norms effective from April 2000 led to the existing players in the two-stroke
segment to install catalytic converters. 4-stroke motorcycles are now replacing all the new
models. Excise duty on motorcycles has been reduced from 32% to 24%, resulting in price
reduction, which has aided in propelling the demand for motorcycles. Fierce competition
has also forced players to cut prices of certain models.

Competition has intensified over the last couple of years altering the dynamics in the
motorcycle segment with various companies planning to cash in on this spurt in demand by
calling off their JVs like Suzuki Motors planning to break off with TVS. Recently, Honda
Corporation of Japan announced its intentions to set up a 100% subsidiary to manufacture
scooters and motorcycles. Other players in the two-wheeler industry include Bajaj Auto
Ltd., Kinetic Motor Co.Ltd. LML and Escorts Yamaha. Low interest regime has helped in
reducing cost of loans, which will help in boosting sales of 2-wheelers, since 80% of the
two-wheelers are credit –stimulated.

The two-wheeler industry is passing through a critical but interesting phase. For
many years, it was growing continuously but the turning point came in 1996=97 when it
started slowing down. The impact was really (MI) felt in the next year when the overall
growth was hardly two percent. This was also possible only because the motorcycle segment
showed a healthy growth of 15 percent. The scooter segment went down by 3 percent and
mopeds by 6 percent.

21
 Another highlights are that the motorcycle sales have surpassed the scooter sales for the
first time in 1998-99. Until then, motorcycle sales were always trailing behind.

The net result is that motorcycles now account for 41 percent of the two-wheeler market,
while scooters account for 36 percent. Mopeds have been able to hold their own at about 21
percent.

GROWTH MOTORCYCLES
It is therefore not surprising that every major player is trying to get into the Motorcycle
market to have a piece of the cake.

Hero is indisputable the leader with 38 percent share followed by Bajaj with 27 percent
(includes M-80), TVS at 19 percent and Escorts at 13 percent. Now LML and Kinetic have
announced their plans to manufacture motorcycles, which are likely to come in the market
by next year. The battle is expected to be fierce but the consumer will be the greater
beneficiary.

The growth in motorcycles is slowly losing its hold. It is considered a family vehicle but
perhaps there is competition from the second hand car markets where prices have fallen
down rapidly. A1992 Maruti 800 is now available for just 70,000.

The scooter manufactures have to watch this phenomenon and bring our many new product
variants in the right price slots to sustain their shares in the market. The moped market has
been steady with an average growth of 3 percent. It is dominated by TVS which holds 48
percent market share followed by Kinetic and Majestic Auto at 23 percent and 18 percent
respectively.

In each segment, there is a wide gap between the first two contenders, which makes their
products positioning and marketing strategies most interesting. The two wheelers market
seems to be maturing. There are the usual their conventional segment of scooters, mopeds
and motorcycles. Two new segments are being created.

NEW SEGMENTS
A Step is through segment like Kinetic K4-100, Honda Street, Bajaj M-80, which is quite
close to the motorcycle segment. The other segment is scooterettes or mini scooters in which
vehicles such as Kinetic SX/Style, TVS Scooty, Hero Winner, Bajaaj Sunny/Sprite/Saffire

22
 and LML trendy can be considered. These are vehicles under 75 cc and largely targeted
at the youth market such as college students, young boys and girls and new couples. They
get the advantage of lower excise duty at 16 percent as compared to 24 percent applicable
over 75 cc. The trend is towards push button start vehicles.
Among the majors in the two-wheeler industry, first quarter figure for the current year of
some players have been encouraging. The company sold 313,303 units last month as
compared to 325,360 units in the same month last year. With this, BAL has recorded as 87
percent growth in the motorcycle segment in the first quarter with sales of 130,577 units
(93,631 units in the corresponding period last year) BAL estimates market share of the first
quarter-Geared scooters 75.9%, unguarded scooters- 16.5%, Step-thrus-72.3% and
motorcycle-20.5%.

In the scooterettes segment, sales of Bajaj Sunny and Bajaj Spirit increased by 170 percent
to 7,876 units. First quarter sales registered an impressive 78 percent growth with sales of
19,562 (10,995 units). The overall sales grew by 9.3 percent in the quarter when the
company sold 3.24 lakh vehicles.

BAL however reported a decline in sales of scooters by 15.6 percent in the first quarter. The
company hopes to increase the share of motorcycle in its product basket from 18 percent last
year to 30 percent by 2003-04.

Hero (HHL) enjoys tremendous brand equity in the motorcycle segment.

Kinetic Motors, another important player, managed to grow in 1999-2000, when the
scooters segments a whole slipped by around 5 percent. TVS Suzuki, a motor two-wheeler
market, has reported a growth of 13 percent in the first quarter period and sold 2.19 lakh
units. Sales of motorcycles and scooters were up by 18 percent and that of mopeds by 8
percent over the same period last year.

The current year therefore promises to be a testing time for the two-wheeler industry.
Industry pundits feel that an overall growth rate of 5 percent should be possible as against 9
percent projected earlier. The sales volume therefore is expected to be around 3.8 million in
2000-2001.

23
DRAMATIC CHANGES:

The new products have contributed to 25 percent of the growth and helped the producers
improve their bottom line. The year 1998-99 was a year of dramatic management changes.
Singhanias have taken overall control of LML with the withdrawal of piaggio. Another
corporate history was created with Kinetic tasking over the management control from its
Japanese partner-Honda Motor company LTD in Kinetic Honda Motors.

The coming years will see increasing competition due to the parity in products and price.
The only differentiators will be technology, quality, product range and service. Imaginative
marketing will emphasize relationship building, Customer Relationship Management and
relationship. All is exploring new techniques such as direct marketing and institutional sales.
Some of them are taking the vehicle actually to the customers doorstep. Now the customer is
the king.

HISTORICAL DEVELOPMENT OF TWO WHEELER INDUSTRY

India is the second largest manufacturer and producer of two-wheelers in the world. It
stands next to Japan and China in terms of the number of two-wheelers produced and
domestic sales respectively. This distinction was achieved due to variety of reasons as if
respective policy followed by the Government of India towards the passenger car industry,
rising demand for personal transport, inefficiency in the public transportation system etc.,

In Indian two-wheeler, industry made a small beginning in the early 50s when Automobile
Products of India (API) started manufacturing scooters in the country. Until 1958, API and
Enfield were the sole producers.

In 1948, Bajaj Auto began trading in imported Vespa scooters and three wheelers. Finally,
in 1980, it setup a shop to manufacture them in technical collaboration with Piaggio of Italy.
The agreement expired in 1971.

In the initial stages, API it was later overtaken by Bajaj Auto dominating the scooter
segment. Although various Government and Private enterprises entered the fray for scooters,
the only new player that has lasted until today is LML.

24
 Under the regulated regime, foreign companies were not allowed to operate in India. It
was a complete seller market with the waiting period for getting a scooter from Bajaj Auto
being as high as 12 years.

The motorcycles segment was no different, with only three manufacturers via Enfield, Ideal
Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were
two-stroke bikes. Enfield 350cc bikes and Escorts 175cc bike initially dominated the
motorcycle segment.

The two-wheeler market was opened to foreign competition in the mid 80’s. And then
the market leaders-E5corts and Enfield- were caught unaware by the onslaught of the 100 cc
bikes of the four IndoJapanese joint ventures. With the availability of fuel-efficiency low
power bikes, demand swelled resulting in Hero — the only producer of four-stroke bikes
(100cc category), gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TYS Suzuki and
Hero brought in the first two-stroke and four-stroke engine motorcycles respectively. These
two players initially started with assembly of CKD kits, and later on progressed to
indigenous manufacturing. In the 90’s the major growth for motorcycle segment was
brought in by Japanese motorcycles, which grew at a rate Of nearly 25% CAGR in the last
five years.The industry had a smooth ride in the 50’s, 60’s and70’s when the government
prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden
growth in the 80’s. The industry witnessed a steady growth of 14% leading to a peak volume
of 1.9mm vehicles in 1990.The entry of Kinetic Honda in mid-eighties with a variometric
scooter helped in providing ease of use to the scooter owners. This helped in inducing
youngsters and working women towards buying scooters, who were earlier inclined towards
moped purchases. In line with this, the scooter segment has consistently lost its part of the
market share in the two~whee1er market.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a
decline of 15% in 1991 and 8% in1992, resulting in the production loss of 0.4mn vehicles.
Barring Hero, all the major producers suffered from recession in FY93 and FY94. Hero
showed a marginal decline in 1992.The reasons for recession in the sector were the incessant
rise in fuel price, high input costs and reduced purchasing power due to significant rise in
general price level and credit crunch in consumer financing. Factors as if increased

25
 production in 1992, due to new entrants coupled with the recession in the industry
resulted in either company reporting losses or fail in profits.India is one of the very few
countries manufacturing three wheelers in the world. It is the world’s largest manufacturer
and seller of three wheelers. Bajaj Auto commands a monopoly in the domestic market with
a market share of above 80%; Bajaj Tempo, Greaves Ltd and Scooters in India share the
rest.The total number of registered two-wheelers and three-wheelers on road in India, as on
March 1998 was 27.9nm and 1 .7nin respectively. The two-wheeler population has almost
doubled in 1996 from a base of 12.6mn in 1990.

PENETRATION OF TWO-WHEELERS:

On a base of around 28mn vehicles on Indian roads and around 175mn households, there
were only 160 motorized two-wheelers per thousand households in FY98. This compares
poorly with countries like Thailand where it is around 600 per thousand households. Also
with a household size of 5.5 persons and more than one wage earner in about 60% of the
households, the potential for a second vehicle demand is also good.

The number of households in the low-income group has fallen since FY86 and has been
more pronounced in the post-reform period. On the other hand, the number of households in
the middle, upper middle and high-income groups that form the consumer base for two-
wheelers, have increased. Their share of the total number of households has increased from
10.6% in FY88 to 20.5% inFY96. This rising income profile however, has, been more
pronounced in the urban areas as average annual growth in industry surpassed that of
agriculture in the period FY93 to FY96.

26
COMPANY PROFILE

When Hero Cycles and Honda Motor Company of Japan inked their joint venture in India in
April 1984, few could have imagined that the two would go on to create history and become
the subject of a case study at business schools, internationally.

But that's the Hero saga for you. In a little over two decades, the world's largest
manufacturer of bicycles and the global leader in motorcycles have created not only the
world's single largest motorcycle company but also the most endearing and successful joint
venture for Honda Motor Company worldwide. The company has sold over 15 million
motorcycles and has consistently grown at double digits since its inception and today, every
second motorcycle sold in the country is a Hero.

In two decades, Hero has built two world-class manufacturing facilities at Dharuhera and
Gurgaon in Haryana that now churn out over 3 million bikes per year.In this period, Hero
has set up over 2400 customer touch points, comprising a mix of dealers, service centres and
stockists across rural and urban India. Today, Hero is an amalgam of winning networks and
relationships with internal and external stakeholders, including Investors, Dealers, Vendors
and Employees. These relationships have helped the company hold on to the mantle of
World No.1 for years in succession.

What makes Hero well, Hero, is synergy. The two partners, leaders in their respective
domains, have been able to consistently draw on each other's strengths. The Hero Group's
deep domain knowledge of the Indian market and its supplier network has meshed with
Honda's mastery over four-stroke engine technology to create modern and fuel-efficient
machines at affordable prices for India 's 250-300 million strong middle class.

Progressively through the 1980s, the 1990s and now in the 2000s, Hero has relied on 3 R's--
Reach, Research and Reliability as its basic building blocks. Using feedback from the
market, a fully-equipped R&D center has consistently created best practices in designing,
testing and harmonization, besides placing strong emphasis on road safety and ride quality.
This emphasis has helped Hero build products that are ahead of their time.

27
 In the 1980s, for example, Hero became the first company in India to prove that it was
possible to drive a vehicle without polluting the roads. The company introduced new
generation motorcycles that set industry benchmarks for fuel thrift and low emission. A
legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters
across India, and Hero sold millions of bikes purely on the commitment of increased
mileage.

Hero was also one of India's first automotive companies to get close to the customer. Over
the years, feedback has flowed back and forth seamlessly through a unique CRM program -
the Hero Passport Program which now has over 2.5 million members on its roster. The
program has not only helped Hero understand its customers and deliver value at different
price points, but has also created a loyal community of brand ambassadors.

The best is yet to come. Hero is powering its way through a market that is still to unleash its
true potential, as barely two per cent of the population has been penetrated so far!

It isn't surprising that the company is in no mood to take its hand off the throttle. As
Brijmohan Lall Munjal, the Chairman, Hero Motocorp succinctly puts it, "We pioneered
India's motorcycle industry, and it's our responsibility now to take the industry to the next
level. We'll do all it takes to reach there.''

HERO VALUES

Hero’s mission is to strive for synergy between technology, systems and human resources,
to produce products and services that meet the quality, performance and price aspirations of
its customers. At the same time maintain the highest standards of ethics and social
responsibilities.

This mission is what drives Hero to new heights in excellence and helps the organization
forge a unique and mutually beneficial relationship with all its stake holders.

HERO MANDATE

Hero is a world leader because of its excellent manpower, proven management, extensive
dealer network, efficient supply chain and world-class products with cutting edge

28
 technology from Honda Motor Company, Japan. The teamwork and commitment are
manifested in the highest level of Customer Relationship Management, and this goes a long
way towards reinforcing its leadership status.
VISION

 Responsive
 Trustworthy
 Creative
 Courageous

MISSION

 Participation:- Focusing on attractive, growing markets where we can leverage our

relationships and expertise
 Competitive positioning:- Combining global capability, deep local knowledge and
creativity to outperform our competitors
 Management Discipline:- Continuously improving the way we work, balancing the
pursuit of growth with firm control of costs and risks Commitment to stakeholders

 Customers:- Passionate about our customers' success, delighting them with the
quality of our service
 Our People:- Helping our people to grow, enabling individuals to make a difference
and teams to win
 Communities:- Trusted and caring, dedicated to making a difference
 Investors:- A distinctive investment delivering outstanding performance and superior
returns
 Regulators: - Exemplary governance and ethics wherever we are.

FROM THE CHAIRMAN'S DESK - LEADING WITH A DREAM

We had a dream. The dream of making motorcycles that would touch and transform the
lives of our customers by giving them a mode of transport that was fuel-efficient,
comfortable and environment friendly. One that would enhance their efficiency at work,

29
 enable them to share moments of joy with their families and add up to a better quality
of life.

In a scenario where the customer had a few choices, our vision was to offer the highest
quality at a reasonable price, to meet our customer’s expectations, and to exceed them.
Behind the success of Hero, is the saga of team-work. We would like to acknowledge the
role played by our JV partners, Honda Motor Company, Japan, and all our business
associates, shareholders and employees. In the new millennium, we stand committed to
innovation, to change, to achieving breakthroughs… to moving forward in the new century,
while retaining the values that have been like a beacon in this journey thus far.
Brijmohan Lall Chairman

ABOUT THE CHAIRMAN

Brijmohan Lall Munjal – Seeding a Dream

Don't dream if you can't fulfill your dreams,'' Brijmohan Lall Munjal is often fond of saying.
The founder and patriarch of the $ 2.8 billion Hero Group is your classic first generation
entrepreneur. He is a man who started small, dreamt big and used a combination of grit and
perseverance to create one of the country's largest corporate groups and the World's No.1
Two Wheeler Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual start in life. Around the
time when the freedom movement in India was taking shape in the late 1920s, he walked
into a newly opened Gurukul (Indian heritage school) near his home in Kamalia (now in
Pakistan ). He was only six years old then.

Thus began an extraordinary tale of courage and perseverance. Brijmohan began his
business story after partition in 1947, when he and his brothers relocated to Ludhiana. The
family set up a company that provided poor people with basic transport (cycles). Three
decades later, as India evolved, he added a second crucial chapter - which visualized
affordable and technologically superior transport to millions of middle class Indians. The
rest is history.

Building Relationships

30
 When Brijmohan and his brothers started out, there was no concept of organized dealer
networks. Companies just produced, and most dealers functioned like traders. Brijmohan
changed the rules of the business by trusting his gut instincts; introducing business norms
that were ahead of their time, and by investing in strategic relationships. Brijmohan built a
series of bonds and networks with hundreds of family members, vendors, dealers and
employees. Much like the Japanese keiretsu system, these networks are now the glue that
holds the Hero Group together.

"Thanks to the relationships that we have nurtured so passionately in the Hero Family, the
younger generations of some of our bicycle dealers have become dealers of Hero. These
relationships have survived through generations - through bad times and good times,'' the
patriarch now reminiscences. Besides bonding with his vendors and dealers, Brijmohan has
been personally responsible for kindling a spirit of entrepreneurship amongst his
employees,and today, 40 of his former employees are successful entrepreneurs.
Staying Ahead

Though not technically qualified in the conventional sense, few of his contemporaries have
understood the dynamics of technology better than Brijmohan Lall has. He could always
visualize the applicability of technology before others could. For example, in the 1980s,
when all two-wheeler companies in India opted for two-stroke engine technology,
Brijmohan preferred a four-stroke engine - a technology that dramatically increased fuel
efficiency and reduced maintenance costs. This technology was one of the biggest reasons
for Hero's stupendous success.

Time and again, Brijmohan managed to steal a march over his industry peers. For example,
when Honda Motors of Japan was looking for a collaborator in the 1980s, the Hero Group
was not high up the pecking order initially as there were other more eligible and established
suitors.

Yet it didn't take long for the astute Japanese to realize that the Hero Group and Honda had
much more in common than earlier perceived; there a sharp focus on financial and raw
material management, and employee turnover was low. Honda officials were also amazed to
find that the Munjals were already practicing "Just-in-time-inventory" at the time (JIT). It
turned out that Brijmohan Lall's aspiration to provide cheap transportation to India 's poor

31
 by default ensured lean and cost-effective operations. This in turn increased vendor
efficiency and led to near-zero inventories.

A Corporate Citizen

A frugal upbringing and a value system modeled on the famous Gurukul system - which
stresses the sanctity of the teacher-pupil relationship - imbibed in Brijmohan a strong sense
of social commitment and responsibility.

There is a special place in his heart for Ludhiana , the city where he took roots. Today,
Ludhiana is a modern, bustling city, but Brijmohan has played no mean role in its evolution.
Several schools and educational institutions in Ludhiana owe their existence to the Munjal
family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's vision as does the
Ludhiana Flying Club. He's also set up the not-for-profit Dayanand Medical College and

Hospital-an institute now rated as one of the best medical colleges in India , in terms of
infrastructure, quality of staff and alumni profile.

In and around Dharuhera, near the first Hero plant, Brijmohan and his family have left their
stamp of philanthropy. The Raman Kant Munjal Foundation - which Brijmohan set up in
memory of his eldest son, today runs a higher secondary school and a very modern and well-
equipped 100-bed hospital at Dharuhera. The group has also adopted numerous villages and
provides education, vocational training, drinking water, roads, streetlights and sewerage.

PROMINENT AWARDS AND ACCOLADES TO THE CHAIRMAN

Year Awards and Accolades

2006 'Lifetime Achievement Award' for Translating Excellence in Corporate Governance

32
 into Reality by The Institute of Company Secretaries of India
2005 Indian Automotive Hall of Pride by Overdrive
CNBC TV18

Commendation of Business Leadership displaying extraordinary Corporate

Leadership and Entrepreneurial Spirit

Padma Bhushan' by Government of India

Doctor of Letters (Honoris Causa) by Hemwati Nandan Bahuguna Garhwal
University , Srinagar Garhwal

Lifetime Achievement Award' by ET Awards for Corporate Excellence

2004 Life Time Achievement Award for Management by All India Management
Association

D. Litt. (Honoris Causa) by Banaras Hindu University

Lifetime Achievement Award by Amity Business School
Lifetime Achievement Award by HT Power Jobs
2002 Entrepreneur of the Year Award by Business Standard Giants International Award to
the Chairman in the field of Business & Industry
Business Leadership Award by Madras Management Association
2001 Entrepreneur of the Year Award by Ernst & Young
2000 Sir Jehangir Ghandy Medal for Industrial Peace - by XLRI, Jamshedpur
1998 Business Leader of the Year by Business Baron
1997 Distinguished Entrepreneurship Award by PHD Chambers of Commerce & Industry
1995 National Award for outstanding contribution to the Development of Indian Small
Scale Industry (NSIC Award - Presented by President of India)
1994 Businessman of the Year by Business India Group of Publications
1992 Honorary Membership - Indian Institution of Industrial Engineering Award

BOARD OF DIRECTORS

No. Name of the Directors Designation

1 Mr. Brijmohan Lall Munjal Chairman & Whole-time Director
2 Mr. Pawan Munjal Managing Director
3 Mr. Toshiaki Nakagawa Jt. Managing Director

33
 4 Mr. Takao Eguchi Whole-time Director
5 Mr. Satyanand Munjal Non-executive Director
6 Mr. Om Prakash Munjal Non-executive Director
7 Mr. Tatsuhiro Oyama Non-executive Director
8 Mr. Masahiro Takedagawa Non-executive Director
9 Mr. Narinder Nath Vohra Non-executive & Independent
Director
10 Mr. Pradeep Dinodia Non-executive & Independent
Director
11 Gen.(Retd.) Ved Prakash Non-executive & Independent
Malik Director
12 Mr. Analjit Singh Non-executive & Independent
Director
13 Dr. Pritam Singh Non-executive & Independent
Director
14 Ms. Shobhana Bhartia Non-executive & Independent
Director
15 Dr. Vijay Laxman Kelkar Non-executive & Independent
Director
16 Mr. Sunil Bharti Mittal Non-executive & Independent
Director

KEY MILESTONES OF HERO - PROMINENT AWARDS TO THE CHAIRMAN

Year Awards and Accolades

34
2016 'Lifetime Achievement Award' for Translating Excellence in
Corporate Governance into Reality by The Institute of Company
Secretaries of India

2015 Indian Automotive Hall of Pride by Overdrive

CNBC TV18 Commendation of Business Leadership displaying

extraordinary Corporate Leadership and Entrepreneurial Spirit

Padma Bhushan' by Government of India

Doctor of Letters (Honoris Causa) by Hemwati Nandan Bahuguna

Garhwal University, Srinagar Garhwal

Lifetime Achievement Award' by ET Awards for Corporate

Excellence

2014 Life Time Achievement Award for Management by All India

Management Association

D. Litt. (Honoris Causa) by Banaras Hindu University

Lifetime Achievement Award by Amity Business School

Lifetime Achievement Award by HT Power Jobs

2012 Entrepreneur of the Year Award by Business Standard

Giants International Award to the Chairman in the field of Business &

Industry

Business Leadership Award by Madras Management Association

2011 Entrepreneur of the Year Award by Ernst & Young

2010 Sir Jehangir Ghandy Medal for Industrial Peace - by XLRI,

Jamshedpur

2008 Business Leader of the Year by Business Baron

2007 Distinguished Entrepreneurship Award by PHD Chambers of

35
 Commerce & Industry

2005 National Award for outstanding contribution to the Development of

Indian Small Scale Industry (NSIC Award - Presented by President of
India)

2004 Businessman of the Year by Business India Group of Publications

2002 Honorary Membership - Indian Institution of Industrial Engineering

Award

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Hero Moto corp takes considerable pride in its stakeholder relationships, especially ones
developed at the grassroots. The Company believes it has managed to bring an economically
and socially backward region in Dharuhera, Haryana, into the national economic
mainstream.

An Integrated Rural Development Centre has been set up on 40 acres of land along the
Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and
education facilities for both adults and children-now nurtures a vibrant, educated and
healthy community.

The Foundation has adopted various villages located within vicinity of the Hero factory at
Dharuhera for integrated rural development. This includes:

 Installation of deep bore hand pumps to provide clean drinking water.

 Constructing metalled roads and connecting these villages to the National Highway
(NH -8).
 Renovating primary school buildings and providing hygienic water and toilet
facilities.
 Ensuring a proper drainage system at each of these villages to prevent water-logging.

 Promoting non-conventional sources of energy by providing a 50 per cent subsidy on

biogas plants.

36
 OTHER KEY PROJECTS TAKEN UP BY THE FOUNDATION INCLUDE

RAMAN MUNJAL VIDYA MANDIR

The Raman Munjal Vidya Mandir began with three classes (up to class II) and 55
students from nearby areas. It has now grown into a modern Senior Secondary, CBSE
affiliated co-educational school with over 1200 students and 61 teachers. The school has a
spacious playground, an ultra-modern laboratory, a well-equipped audio visual room, an
activity room, a well-stocked library and a computer centre.

RAMAN MUNJAL MEMORIAL HOSPITAL

Multi-specialty hospital equipped with the latest diagnostic and surgical technology.
The Raman Munjal Memorial Hospital provides healthcare to the rural population in and
around Dharuhera, and also caters to accident and trauma victims driving along the Delhi-
Jaipur highway.

RAMAN MUNJAL SPORTS COMPLEX

The Raman Munjal Sports Complex has basketball courts, volleyball courts, and hockey and
football grounds are used by the local villagers. In the near future, sports academies are
planned for volley ball and basket ball, in collaboration with National Sports Authority of
India

VOCATIONAL TRAINING CENTRE

In order to help local rural people, especially women, Hero has set up a Vocational Training
Centre. So far 26 batches comprising of nearly 625 women have been trained in tailoring,
embroidery and knitting. The Company has helped women trained at this center to set up a
production unit to stitch uniforms for Hero employees. Interestingly, most of the women are
now self-employed.

ADULT LITERACY MISSION

37
 This Scheme was launched on 21st September, 1999 , covering the nearby villages of
Malpura, Kapriwas and Sidhrawali. The project started with a modest enrollment of 36
adults. Hero is now in the process of imparting Adult Literacy Capsules to another 100
adults by getting village heads and other prominent villagers to motivate illiterate adults.

MARRIAGES OF UNDERPRIVILEGED GIRLS

Marriages are organized from time to time, particularly for girls from backward classes, by
the Foundation by providing financial help and other support to the families.

RURAL HEALTH CARE

Besides setting up a modern hospital, the Foundation also regularly provides doorstep health
care services to the local community. Free health care and medical camps are now a regular
feature in the Hero Group's community outreach program.

KEY POLICIES

AN ENVIRONMENTALLY AND SOCIALLY, AWARE COMPANY

At Hero, our goal is not only to sell you a bike, but also to help you every step of the way in
making your world a better place to live in. Besides its will to provide a high-quality service
to all of its customers, Hero takes a stand as a socially responsible enterprise respectful of its
environment and respectful of the important issues.

Hero has been strongly committed not only to environmental conservation programmes but
also expresses the increasingly inseparable balance between the economic concerns and the
environmental and social issues faced by a business. A business must not grow at the
expense of mankind and man's future but rather must serve mankind.
"We must do something for the community from whose land we generate our wealth."

A famous quote from our Worth Chairman Mr.Brijmohan Lall Munjal

ENVIRONMENT POLICY

38
 We at Hero are committed to demonstrate excellence in our environmental
performance on a continual basis, as an intrinsic element of our corporate philosophy.

To achieve this we commit ourselves to:

 Integrate environmental attributes and cleaner production in all our business

processes and practices with specific consideration to substitution of hazardous
chemicals, where viable and strengthen the greening of supply chain.
 Continue product innovations to improve environmental compatibility.
 Comply with all applicable environmental legislation and also controlling our
environmental discharges through the principles of "alara" (as low as reasonably
achievable).
 Institutionalise resource conservation, in particular, in the areas of oil, water,
electrical energy, paints and chemicals.
 Enhance environmental awareness of our employees and dealers / vendors, while
promoting their involvement in ensuring sound environmental management.
 Quality Policy

EXCELLENCE IN QUALITY IS THE CORE VALUE OF HERO'S PHILOSOPHY.

We are committed at all levels to achieve high quality in whatever we do, particularly in our
products and services which will meet and exceed customer's growing aspirations through:

 Innovation in products, processes and services.

 Continuous improvement in our total quality management systems.
 Teamwork and responsibility.

SAFETY POLICY

Hero is committed to safety and health of its employees and other persons who may be
affected by its operations. We believe that the safe work practices lead to better business
performance, motivated workforce and higher productivity.

WE SHALL CREATE A SAFETY CULTURE IN THE ORGANIZATION BY:

39
  Integrating safety and health matters in all our activities.
 Ensuring compliance with all applicable legislative requirements.
 Empowering employees to ensure safety in their respective work places.
 Promoting safety and health awareness amongst employees, suppliers and
contractors.

Continuous improvements in safety performance through precautions besides

participation and training of employees.

SALES PERFORMANCE

2014-15 2015-16 FY 2016-17 FY 2017-18

Total Sales 230053 235315 917617 1068006

Exports (incl in above) 6900 10575 36441 39970

40
 CHAPTER-IV
DATA ANALYSIS AND INTERPRETATION

41
 1. Name and Gender:

Exhibit 5.1 Respondents Gender

Gender No. Of Respondents Percentage

Male 92 92%
Female 8 8%
Total 100 100%

INTERPRETATION:
From the above table, we can infer that 92% of the respondents were males and only 8% of
respondents were females. From the above findings, we can analyze that majority of the
respondents were males. The reason, for majority of respondents being males is that most of
the Hero vehicles are suitable only for men.

92%

100%
90%
80%
70%
60%
50%
40%
30% 8%
20%
10%
0%
Male Female

Graph – 1

42
 2. Age

RESPONDENTS AGE
AGE GROUP NO. OF RESPONDENTS PERCENTAGE
18-29 42 42%
30-49 33 33%
50-59 18 18%
Above 60 7 7%
TOTAL 100 100%

INTERPRETATION:

From the above table, we can infer that 42% of the respondents belong to age group of 18-
29, 33% of the respondents belongs to age group of 30-49, 18% of the respondents belong to
age group of 50-59 and 7% of the respondents belong to age group of above 60 years.
The reason for the majority of respondents belonging to the age group of 18-29 is; the age
group 18-29 is an appropriate age, where people have been using for their enjoyment and
easy mobilization.
The reason why only 7% of the respondents belonging to the age group above 60 have
purchased it is, because it is difficult to drive a two-wheeler at that age, which is impossible
at that age.

RESPONDENTS AGE

42%
45%
33%
40%
35%
30%
25% 18%

20%
15% 7%
10%
5%
0%
18-29 30-49 50-59 Above 60

Graph No: 2

43
3. Education
RESPONDENTS EDUCATION

QUALIFICATION NO. OF RESPONDENTS PERCENTAGE

Graduation 48 48%
Post graduation 31 31%
Under graduation 16 16%
Others 5 5%
TOTAL 100 100%

INTERPRETATION:
From the above table, we can infer that 48% of respondents were graduates, 31% of
respondents were postgraduates, 16% of respondents were under graduates and others count
up to 5%.. From the above table, we can analyses that majority of the respondents were post
graduates (31%) and only 16% of the respondents were under graduates.
The reason for majority of the respondents being graduates may be firstly, minimum
educational qualifications in India being graduation, many respondents were graduates.
Secondly, most of the respondents were employees.

QUALIFICATION
48%
50%

40% 31%

30%
16%
20%
5%
10%

0%
Graduation
Post graduation
Under graduation
Others

Graph No: 3

44
4. Occupation:

RESPONDENTS OCCUPATIONS

OCCUPATION NO. OF RESPONDENTS PERCENTAGE

Student 31 31%
Employed 49 49%
Business 13 13%
Others 7 7%
TOTAL 100 100%

INTERPRETATION:
From the above table, we can infer that 31% of respondents were students, 49% of the
respondents were employed, 13% of the respondents were business people and 7% of the
respondents include others.From the above table, we can analyze that, majority of the
respondents were employees, and only 13% of the respondents were business people.
The reason for the majority of the respondents being employees is that it is easy to transport.
The remaining categories such as business people, others occupy least share in purchasing
the two-wheelers.

RESPONDENTS OCCUPATION
49%
50%

40% 31%

30%
13%
20%
7%
10%

0%
Student Employed Business Others

Graph No: 4

45
5. Annual Income (in Rs.)

Exhibit No 5.5 RESPONDENTS ANNUAL INCOME

INCOME NO. OF PERCENTAGE

RESPONDENTS
Below 50,000 14 14%
50,000 - 1,00,000 47 47%
1,00,000 - 1,500,000 26 26%
Above 1,50,000 13 13%
TOTAL 100 100%

INTERPRETATION:
From the above table we can infer that 14% of the respondents income was below 50,000
(per annum), 47% of respondents income was between 30,000- 1,00,000 (per annum), 26%
of respondents income was between 1,00,000 – 1,50,000 and above occupy a large share in
purchase of two-wheelers and only 13% of respondents income was below 50,000.
The reason for the majority of the respondents earning above
1,00,000 purchase more two-wheelers due to their high disposable income.

ANNUAL INCOME

47%
50%

40%
26%
30%
14% 13%
20%

10%

0%
Below 50,00050,000 - 1,00,000
1,00,000 - 1,500,000
Above 1,50,000

Graph No: 5

46
6. Please specify the model of your Hero Two-Wheelers?
RESPONDENTS MODEL

BRAND NAME NO. OF RESPONDENTS PERCENTAGE

Splendor 28 28%
Passion 12 12%
CD 100 13 13%
CD 100ss 11 11%
Ambition 8 8%
CD – Dawn 12 12%
CBZ 12 12%
Street 4 4%
TOTAL 100 100%

INTERPRETATION:
When an enquiry was made as to which brand of two-wheeler was owned by the respondent,
it was revealed that maximum of 28% has Hero Splendor, 13% have CD 100, and 12% of
Passion, CD-Dawn and CBZ, 11% of respondents were using the CD 100ss. And 8% of
respondents were using Ambition and only 4% of respondents were using Street. In this
maximum Splendor users were employees and students.

MODELS

30%
28%

25%

20%

15%
12% 13% 12% 12%
10% 11%
8%

5%
4%

0%
Splender Passion CD 100 CD 100ss Ambition CD – Dawn CBZ Street

Graph No: 6

47
 7. Since how long are you using these particular two-wheelers?

Exhibit No. 5.7 RESPONDENTS DURATION HAVE USING TWO-WHEELERS

NO. OF YEARS NO. OF RESPONDENTS PERCENTAGE

< 1 Year 32 32%
1 –2 Years 36 36%
2– 5Years 19 19%
And Above 13 13%
TOTAL 100 100%

INTERPRETATION:
The response of the question “since how long they were using the particular two-wheelers”
shows that 36% of respondents were using since two years 32% of respondents were using
since one year, 19% of the customers were using since five years and the remaining
respondents (13%) were using them from five years.

DURATION OF USING

36%
40%
32%
35%
30%
25% 19%
20% 13%
15%
10%
5%
0%
< 1 Year 1 –2 Years 2– 5Years And Above

Graph No: 7

48
8. How did you gain awareness about this bike?

Exhibit No. 5.8 RESPONDENTS AWARENESS ABOUT THIS BIKE

PREFERENCE NO. OF RESPONDENTS PERCENTAGE

Paper Advertisement 5 5%
TV Advertisement 25 25%
Bill board and display 5 5%
Friends and relatives 65 65%
TOTAL 100 100%

INTERPRETATION:
The above table shows that 5% of the customers have gained awareness about their bike
through paper advertisement, 25% through T.V advertisement, 5% through Billboards
displays and 65% of them gained awareness through friends and relatives.

65%
70%

60%

50%

40%

25%
30%

20%

5% 5%
10%

0%
Paper TV Advertisement Bill board and Friends and
Advertisement display relatives

Graph -8

49
9. Why did you prefer the particular Brand?
Exhibit No. 5.9 REASON FOR PREFERENCE

PREFERENCE NO. OF RESPONDENTS PERCENTAGE

Quality 24 24%
Price 10 10%
Brand Image 22 22%
Fuel efficiency 28 28%
Resale value 16 16%
TOTAL 100 100%

INTERPRETATION:
From the above table we can infer that 24% of the respondents gave preference to quality,
20% of respondents gave preference to brand image and 20% of the respondents gave
preference to the service networks, 10%, of the respondents gave to fuel efficiency.
From the above findings, we can analyze that 40% of respondents were more quality
conscious and only 10% respondents gave preference to price and fuel efficiency.
The reasons are even though people are price conscious to some extent; the consumers are
more quality conscious than price conscious because they have enough income to buy two-
wheelerThey are ready to spend a little more to get good quality product and also they felt
that goods they purchase should reflect their personal image.

PREFERENCE
28%
30% 24%
22%
25%

20% 16%

15% 10%

10%

5%

0%
Quality Price Brand Image
Fuel efficiency
Resale value

Graph No: 9

50
10. What factors influenced you to purchase your Two-Wheeler?

Exhibit No.5.10. FACTORS INFLUENCING PURCHASE

FACTORS NO. OF RESPONDENTS PERCENTAGE

Sales Executives 50 50%
Family Members 20 20%
Friends 20 20%
Relatives 10 10%
TOTAL 100 100%

INTERPRETATION:
From the above table we can infer that 50% of the Respondents were influenced by sales
executives, 20% of the respondents were influenced by their family members, 20% of the
respondents were influenced by their friends and only 10% of the respondents were
influenced by their relatives, while purchasing two wheelers.
From the above findings we can analyze that sales executives influenced 50% of
respondents, and relatives influenced only 10% of respondents.
The reason for majority of the respondents being, mostly influenced by sales executives
while purchasing was firstly, sales executives give more technical description about the
product and attract customers to purchase two wheelers by using their effective
communication skills.The reason why only 10% of respondents were influenced by relatives
is that they may not possess more knowledge about the products like two wheelers.
Graph No: 10

FACTORS
50%
50%
40%
20% 20%
30%
10%
20%
10%
0%
Sales Executives
Family Members
Friends Relatives

51
11. Are you satisfied with your vehicle?

RESPONDENTS OPINION ON SATISFACTION

OPINION NO. OF RESPONDENTS PERCENTAGE

Yes 95 95%
No 5 5%
TOTAL 100 100%

INTERPRETATION:
The response to the question “Are you satisfied with the vehicle” reveals that as high as 95%
of them were satisfied and 22% of them dissatisfied.The people were asked as to why they
were dissatisfied with their Hero two-wheeler. They responded that in splendor there is a
problem with weak battery, and cbz’s look is very good but the mileage is very low, each
and every model is having some problem and some servicing centers also disappointed
them. But 95% of the respondents are very much satisfied with their two-wheeler.

95%

100%
90%
80%
70%
60%
50%
40%
30% 5%
20%
10%
0%
Yes No

Graph No: 11

52
 12. What is your opinion on the “Service provided by the Dealers”?

RESPONDENTS OPINION ON SERVICE

RATING NO. OF RESPONDENTS PERCENTAGE

Excellent 40 40%
Good 46 46%
Average 12 12%
Poor 2 2%
TOTAL 100 100%

INTERPRETATION:
The respondents replied about the service offered by Hero Motocorp Ltd. The maximum
number of customers of Hero Motocorp Ltd was very much satisfied. 40% of respondents
are rated as excellent, 46% of respondents rated as good, 12% of respondents rated as
average and only 2% of respondents rated as poor.
This shows that Hero Motocorp Ltd Ltd takes more care about the customers during their
servicing time.

OPINION ON SERVICE

46%
50%
40%
40%

30%

20% 12%

10% 2%

0%
Excellent Good Average Poor

Graph No: 12

53
13. How would you rate the cleanliness and appearance of the workshop?

CLEANLINESS AND APPEARANCE HAVE THE WORKSHOP

RATING NO. OF RESPONDENTS PERCENTAGE

Excellent 2 2%
Good 87 87%
Fair 8 8%
Poor 3 3%
TOTAL 100 100%

INTERPRETATION

From the above table we can infer that 2% of the respondents rate the cleanliness and
appearance of the workshop as Excellent, 87% of the respondents rate it as Good, 8% of
them rate it as fair and the remaining 3% rate it as poor.
This shows that a majority of the customers were happy with the cleanliness and appearance
of the workshop

87%
90%
80%
70%
60%
50%
40%
30%
20% 8%
3%
2%
10%
0%
Excellent Good Fair Poor

Graph No: 13

54
 14. What is your opinion on the after sales service and replacement of spare parts
offered by Hero Moto corp Ltd?

Exhibit No. 5.14 REPLACEMENT OF SPARE PARTS

RATING NO. OF RESPONDENTS PERCENTAGE

With intimation 87 87%
Without intimation 13 13%
Total 100 100%

INTERPRETATION

The table reveals that 87% of the customers were satisfied with the after sales service and
replacement of spare parts offered by Hero Motocorp Ltd the remaining were dissatisfied.
From this we can infer that most of the customers were satisfied with the services offered by
the dealers.

87%

90%
80%
70%
60%
50%
40%
13%
30%
20%
10%
0%
With intimation Without intimation

Graph – 14

55
15. How do you rate the attitude of the frontline staff?

ATTITUDE HAVE THE FRONT LINE STAFF

RATING NO. OF RESPONDENTS PERCENTAGE

Formal 29 29%
Friendly 70 70%
Informal 1 1%
Total 100 100%

INTERPRETATION:

When questioned about the attitude of the frontline staff, 29% of the respondents rated it as
formal, 70% of the respondents rated it as friendly, and the remaining 1% rated it as
informal.

80% 70%

70%
60%
50%
40% 29%

30%
20%
1%
10%
0%
Formal Friendly Informal

GRAPH15

56
 CHAPTER-V
FINDINGS
SUGGESTIONS
CONCLUSION

57
FINDINGS

 The study reveals that majority of the customers age was between 18 years to 29 years.
 The target customers were mainly in middle class as well as upper middle class income
group.
 Most of the customers of Hero Two-Wheelers were students and employees.
 Most of the customers were employees followed by students.
 Out of total customers 40% of the customers were graduates and only few customers
were under graduates.
 Splendor, Passion, CD Dawn, CD 100, CD 100ss, CBZ, Street and Karizma are the
brands mostly preferred by Hero Motocorp Ltd.
 The Hero Two-Wheelers are mainly preferred because of the look & style fuel efficiency
and brand image.
 Majority of the customers were self-influenced to purchase Hero Two-Wheelers.The
main reason to choose Hero Motocorp Ltd to buy their two-wheeler was due to their
excellence service.
 Most of the customers of Hero Motocorp Ltd were satisfied with their two-wheeler.
 Some people were not satisfied because spare parts costs are very high and price of
vehicle is also very high.
 Majority of customers rated good for service offered by the Hero Motocorp Ltd.
 Majority of the customers of Hero Motocorp Ltd stated that the future of the two-wheeler
industry would be good.

58
 SUGGESTIONS

It is very hard to hold the pulse of a customer in the market. Customer’s satisfaction is
different for different people at different situations; the following were some of the
suggestions given to the Hero Motocorp Ltd to improve the sales of Hero Two –Wheelers.

 The cost of accessories & spare parts of Hero Two-wheelers should be reduced.
 As a promotional measure, Hero Motocorp Ltd may go for free service camps. This will
increase the customer’s loyalty.
 Cost of the Two-Wheelers is little bit high as compared to others.
 The sales have to be motivated by providing better incentives.
 Direct contact with potential customer and explaining the strengths and advantages by
using their products will help in increasing the sales of the company.
 As the location of the show room is ideally located with middle class population, Hero
Motors Ltd should try to give more advertisements in news paper, bill boards in that area
to enable easy recall of the people for Hero Motocorp Ltd.
 It should conduct road shows in colleges.
 Hero Motocorp Ltd. should constantly keep in touch with its customers and inform them
about the latest models/ finance schemes.
 It should employ Marketing Executives to go and tap the Industrial belt employees rather
than wait for customers to come to Hero; Hero should go to prospective customers with
the help of integrated market efforts.
 Hero Motocorp Ltd. should track the movement of spare-parts and stock spare parts in
advance otherwise the fake parts would become popular.
 Hero Motocorp Ltd. should setup sub dealers in remote localities in the area. Hero should
conduct road shows in nearby districts.

59
CONCLUSION

A study of Customer Relationship Management at Hero Motocorp Ltd was done with the
sample size of 100 respondents. The data is mainly divided into two types i.e. primary data
& secondary data. Primary data was collected through Questionnaire & Personal interview;
secondary data was collected from Journals, magazines, dailies, websites & industrial
survey.
To ascertain the customer preference towards Hero two-wheelers in Hero Motocorp Ltd, a
detailed study of Customer Relationship Management, attitudes and level of satisfaction and
their complaints & suggestions, was under taken the study also includes assessing the future
prospects of two-wheeler industry.
India is the second largest manufacturer & producer of two-wheelers in the world. The two-
wheeler industry made a small beginning in the early 50’s when Automobile products of
India (API) started manufacturing scooters in the country.
The industry has a smooth ride in 50’s, 60’s, 70’s when government prohibited new entries
and strictly controlled capacity expansion. The industry saw a sudden growth in the 80’s.
The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mm vehicles
in 1990. In the 90’s the trend was reversed. There is a decline of 15% in 1991 and 8% in
1992, resulting in a production loss of 0.4mm vehicles. Barring Hero, all showed major
producers suffered from recession in FY93 and FY 94 Hero 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. The two-wheeler population has almost doubled in 1996 from a base of
12.6mm in 1990.
The Indian two-wheeler industry can be broadly classified as scooters, motorcycles and
mopeds. The Indian motorcycle industry can be broadly categorized in to Indian
motorcycles and Indo-Japanese motorcycles. Hero group, Bajaj and Escorts dominate the
indo-Japanese motorcycle segment in collaboration with Japanese vehicle manufacturers

60
 Honda, Kawasaki and Yamaha respectively. The Indian motorcycles segment is
dominated by Hero two-wheelers.
The Hero was established on the 13th of April 1984. The Hero group of companies in India
merged with the Honda Motors Company of Japan in creating a no. 1 mantle in the making
of the company Hero.

Hero begins operations with the establishment of the dharuhera plant in 1985. This is fully
automated plant is equipped with state-of-the-art machinery, an in-house R & D set up, and
today it produces a bike every 30 seconds. To meet the growing demand, Hero opened
another unit at gurgaon, using FMS technology. It is rated as one of the most modern
motorcycle manufacturing plants in the world. The plant produces 1,800 bikes every day.

The essence of the marketing concept is that organizations must adopt customer-oriented
features and focuses their attention on building programs, offerings and strategies that
satisfy customer needs and wants. Many organizations maintain their focus on operations or
product or sales efforts and thereby get dislocated by mistaking the means for the end.
Customer Relationship Management plays an important role in marketing. It depends upon t
he products performance relative to a buyers expectation customer might experience various
degree of satisfaction. If the products performance falls short of expectations the customer
is dissatisfied and if matches the customer is satisfied. Customer value and satisfaction are
important ingredients in the marketer’s formula for success.

61
BIBILIOGRAPHY

62
BOOKS

 FINANCIAL MANAGEMENT - PRASANNA CHANDRA

 COST ACCOUNTING - S. N. MAHESHWARI
 COST ACCOUNTING - VARSHINI & SAXENA
 INVENTORY MANAGEMENT - BHAGIRATH SINGH.

WEBSITES

 www.heromotocorp.com
 www.google.com
 www.scribd.com

JOURNALS

1. International Journal of Electronic Customer Relationship

2. International Journal of Business and Social Science. Vol. 2 No. 10
3. Journal of the Academy of Marketing Science, 28 (1)
4. International Journal of Customer Relationship Marketing and Management ( IJCRMM):
1947-9247, 1947-9255: Business IS&T Journals.
5. International Journal of Computer Science and Network Security, 10(12)

63
QUESTIONNAIRE

1. Name and Gender:

Gender
Male
Female
Total

2. Age
AGE GROUP
18-29
30-49
50-59
Above 60
TOTAL

3. Education

QUALIFICATION
Graduation
Post graduation
Under graduation
Others
TOTAL

4. Occupation:

OCCUPATION
Student
Employed

64
 Business
Others
TOTAL

5. Annual Income (in Rs.)

INCOME
Below 50,000
50,000 - 1,00,000
1,00,000 - 1,500,000
Above 1,50,000
TOTAL

6. Please specify the model of your Hero Two-Wheelers?

BRAND NAME
Splendor
Passion
CD 100
CD 100ss
Ambition
CD – Dawn
CBZ
Street
TOTAL

7. Since how long are you using these particular two-wheelers?

NO. OF YEARS
< 1 Year
1 –2 Years
2– 5Years
And Above
TOTAL

8. How did you gain awareness about this bike?

PREFERENCE NO. OF RESPONDENTS PERCENTAGE

Paper Advertisement
TV Advertisement

65
 Bill board and display
Friends and relatives
TOTAL

9. Why did you prefer the particular Brand?

PREFERENCE NO. OF RESPONDENTS PERCENTAGE

Quality
Price
Brand Image
Fuel efficiency
Resale value
TOTAL

10. What factors influenced you to purchase your Two-Wheeler?

FACTORS NO. OF RESPONDENTS PERCENTAGE

Sales Executives
Family Members
Friends
Relatives
TOTAL

11. Are you satisfied with your vehicle?

OPINION
Yes
No
TOTAL

12. What is your opinion on the “Service provided by the Dealers”?

RESPONDENTS OPINION ON SERVICE

RATING NO. OF RESPONDENTS PERCENTAGE

Excellent
Good
Average

66
 Poor
TOTAL

13. How would you rate the cleanliness and appearance of the workshop?

RATING NO. OF RESPONDENTS PERCENTAGE

Excellent
Good
Fair
Poor
TOTAL

14. What is your opinion on the after sales service and replacement of spare parts offered by
Hero Moto corp Ltd?

RATING NO. OF RESPONDENTS PERCENTAGE

With intimation
Without intimation
Total

15. How do you rate the attitude of the frontline staff?

RATING NO. OF RESPONDENTS PERCENTAGE

Formal
Friendly
Informal
Total

67