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A Two Wheeler Sector Sub-Segmenting in the three Segments. 1. Motorcycle 2. Scooter 3. Mopeds
Breakup of the Industry by Segment
Scooters 12% Mopeds 5%
Motorcycles Scooters Mopeds
Segment-wise Analysis of Indian Two Wheeler Market Segment A1 Description share in 2001-02 Share in 2006CAGR 07 with 5% 0% 33.99%
Scooter engine capacity less than 75 cc Scooter with 5% engine capacity between 75-125 cc (Scooterette) Scooter engine capacity between 125-250 cc Motorcycle engine capacity between 75-125 cc Motorcycle engine capacity between 75-125 cc Motorcycle engine capacity between 75-125 cc Mopeds
Growth Prospects and Key Drivers of the Indian Two Wheelers Industry
the customer‟s capacity to own a two wheeler has improved. This has been part of the marketing strategy adopted by the manufacturers to gain volume. households belonging to the Income category of US$ 2. the Indian two wheeler market offers a huge potential for Growth.200–12. i. This growth is relevant in the light of the fact that 70 per cent of India‟s population is below the age of 35 Years and 150 million people will be added to the working Population in the next five years. India has the lowest Penetration of two wheelers as compared to countries like Taiwan. The operating expenses of leading manufacturers have declined by around 15 per cent in the last five years. Despite this spectacular growth rate. the two wheeler penetration (number of two wheelers per 1000 inhabitants) in India remains lower than other Asian countries. This fact provides an opportunity for continued growth in the market. Thailand. .e. An analysis of the price trends indicates that prices have more or less stagnated in the past. this will lead to the Growth of gearless scooters. Malaysia. The number of women in the urban work force is also increasing. growth in the two wheeler Industry will be driven by several factors: Rise in India’s Young Working Population With the rising levels of per capita income of people.200 per annum has already increased to over 50 per cent. Vietnam.The growth witnessed by the Indian two wheeler industry indicates the growing demand for low cost personal transportation solutions amongst the 300 million Indian middle class consumers. as well as conscious efforts adopted to bring down costs.. Greater Affordability of Vehicles The growth in two-wheeler sales in India has been driven by an increase in affordability of these vehicles. The penetration of motorcycles amongst rural households with income levels greater than US$ 2. The current target Segment for two wheelers. Indonesia and China. With greater avenues of financing.000 is expected to grow at a CAGR of 10 per cent. Rise of India’s Rural Economy and Growth in Middle Income Households The growth prospects of the Indian rural economy offer a significant opportunity for the motorcycle industry in India. In the present scenario.
It is estimated that close to 50 new products have been launched by manufacturers during this period. Rising Customer Expectations The growth witnessed by the Indian two wheeler industry has attracted a number of new entrants to the market and it is expected that the Indian industry will become more competitive in the future. The plethora of products introduced in the past has also raised customer expectations with respect to reliability. Challenges faced by the industry Despite the high growth achieved in the past and the high potential in the future. Another problem is the insufficient infrastructure for inspection to ensure adherence to emission norms. the twowheelers market faces some challenges. it is important to regulate the sale of used . This has increased the dependence on personal modes of transport and the two wheelers market has benefited from this infrastructure gap. Inadequate urban planning has meant that transport systems have not kept pace with the economic boom and the growing urban population. Environmental and Safety Concerns The increasing demand for two wheelers will need to be managed to address issues relating to overcrowding of roads. styling.Rapid Product Introduction and Shorter Product Life Cycle The last five years have witnessed a sharp increase in new product launches in the two-wheeler industry. Inadequate Public Transport Systems in most Urban Areas The economic boom witnessed in the country and the increased migration to urban areas have increased the traffic congestion in Indian cities and worsened the existing infrastructure bottlenecks. As the industry grows. performance and economy. filling up all price points and targeted at various consumer segments.
Creation of Distribution Infrastructure Leading companies need to ensure that on one hand they build adequate infrastructure in terms of dealerships and servicing stations in the urban areas and on the other ensure that their distribution infrastructure also reaches the rural areas COMPANY PROFILE Hero Cycles and Honda Motor Company of Japan linked their joint venture in India in April 1984.two wheelers in a more organised manner for which a mechanism needs to be evolved. especially in the rural areas. are likely to create issues related to emissions and safety of vehicles. internationally. In a little over two decades. Unregulated sale of two wheelers. few could have imagined that the two would go on to create history and become the subject of a case study at business schools. But that's the Hero Honda saga. the world's largest manufacturer of bicycles and the global leader in motorcycles have created not only the world's single largest .
comprising a mix of dealers. In the 1980s. Vendors and Employees.Forget it' CAMPAIGN captured the imagination of commuters across India. Today. In this period. Hero Honda has set up over 2400 customer touch points. a fully-equipped R&D centre has consistently created best practices in designing. and Hero Honda sold millions of bikes purely on the commitment of increased mileage.motorcycle company but also the most endearing and successful joint venture for Honda Motor Company worldwide.1 for years in succession. for example. Hero Honda was also one of India's first automotive companies to get close to the customer. As Brijmohan Lall Munjal. Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana that now churn out over 3 million bikes per year. besides placing strong emphasis on road safety and ride quality. We'll do all it takes to reach there. and it's our responsibility now to take the industry to the next level. Hero Honda Motors succinctly puts it. This emphasis has helped Hero Honda build products that are ahead of their time.Reach. A legendary 'Fill it Shut it . Hero Honda has relied on 3 R's-. service centres and stockists across rural and urban India. Research and Reliability as its basic building blocks. "We pioneered India's motorcycle industry. These relationships have helped the company hold on to the mantle of World No. including Investors.'' Key Highlights . Dealers. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. Using feedback from the market. Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. the Chairman. every second motorcycle sold in the country is a Hero Honda. In two decades. The company has sold over 15 million motorcycles and has consistently grown at double digits since its inception and today. Hero Honda is an amalgam of winning networks and relationships with internal and external stakeholders. testing and harmonization.
the mini-motorcycle designed by Ferdinand Porsche combined the power (4. Hero Honda enjoys a significant brand premium. Hero Honda will continue to be an attractive dividend yield play as the company continues to generate significant free cash flows as its capital requirements are limited Marketing MIX PRODUCT Product Range and New Models The Company's product range includes "Splendour" which is the largest selling motorcycle brand in the world with over 6. Its aggressive pricing strategy to take on the competition has helped it in volume growth.9 lakhs vehicles sold in 2000-01. A cumulative over 5 million customers are the real foundation of the company's strength. CASE STUDY OF HERO HONDA HUNK . Hero Puch was born which marked a new chapter in the two-wheeler scenario of the country. which has also rejuvenated its product range. The company has started logging good volume growth after the launch of Passion Plus and Splendor Plus as well as the CD-Dawn.15 bhp) and ease of a motorcycle and at 91 km/hr. Aggressive cost controls and significant economies of scale are expected to aid Hero Honda in retaining margins.Hero Puch and Hero Winner. Volumes should improve further. Variant launches in each of Splendor and Passion has helped in stemming the loss in market share in the face of the competition. When Hero Motors entered into a technical collaboration with Styr Daimler Puch of Austria. due to the base effect and improved rural sentiment on the back of higher farm incomes. The identity of Hero Motors in the market has been established through two of its leading international products . Hero Honda now plans to launch two new models in the 100cc segment in FY05 on a new platform. the economy of a moped. Hero Puch.
managing director Pawan Kant Munjal said the company has put in place a strategy to retain its leadership in the Rs 33.000 crore two-wheeler markets. quicker throttle response and Fuel efficiency Unique "Anti-Kick back" device prevents Kick back during starting . which is exiting the 100cc segment. the Hunk comes with never before features and looks:Product highlights: 150cc Engine.” Munjal told FE in an exclusive interview.80 Nm @ even at a low RPM of 6500 Unmatched super acceleration of 0-60 Km ph in flat 5 seconds New Generation "Advanced Tumble Flow Induction" (ATFI) Technology engine which delivers the best balance of Fuel efficiency and Power Advanced Microprocessor Ignition System -"AMI" with Multi Mapping Digital CDI along with "Carburettor controlled Variable Ignition" delivers the optimum Power.Hero Honda new Bike hunk launched with a new features after the study of market research by company A sure-shot head-turner. He said the company is developing new engines that will deliver superior performance in the 100cc bikes in future. That includes developing new high-performance engines in 100cc. if needed.convenient. we are confident of retaining our leadership and growing our lead. “As confident as they are of upstaging us. Reiterating that unlike Bajaj.2 BHP @ 8500 RPM and a torque of 12. . PRICE Faced with an uncomfortable scenario of Bajaj Auto closing in on Hero Honda Motors in monthly unit sales. delivering raw power of 14. expanding capacity to beyond 5 million units and reducing the price of 100cc bikes. Munjal said Hero Honda intends to strengthen its offerings in the segment. safe and effortless kick start.
There are more than 1000 committed dealers & service outlets spread across the country. Possibly it may be the reason for Bajaj Auto leaving the segment. turnover. ensures convenient access to the Group's products across the country. pneumatic tools & a team of highly trained service technicians. Sales agents from Hero travels to all the corners of the country. 350 dealers for mopeds and 225 franchise holders for motorcycles. visiting dealers and send back daily postcards with information on the stock position that day. anticipated demand and also competitor action in the region. Having your motorcycle serviced at an authorized workshop ensures highest standards of service quality and reliability . 2005 to 37. A nation-wide dealer network comprising of over 3. Bajaj Auto plans to exit the entry-level motorcycle market by August-September next year and offer higher capacity bikes in the 100cc price range of Rs 34. Strong dealer company relationship with a deep sense of belonging to the Hero fraternity.” Munjal told FE.500 bicycle dealers. the Group's dealer network has catalyzed growth and acted as a strong bridge between the customers and the Group. The authorized workshop have well laid out standards for motorcycle servicing supported by fully equipped infrastructure in terms of quality precision instruments. Munjal said Hero Honda could reduce prices of its 100cc bikes to nullify Bajaj‟s strategy. 2006 PLACE DEALER NETWORK At Hero essentially they have a completely customer-driven approach.206 in September.To counter Bajaj‟s move to offer 125cc bikes at the price of 100cc bikes. fresh purchases.000 to Rs 42. The gap between Hero Honda and Bajaj Auto has narrowed from 92. “We have dominated the 100cc segment for many years and will continue to dominate.833 in September.000.
in which HHML also contributes to help dealer promote the dealership in the local area. Zaheer Khan and Sourav Ganguly as Brand Ambassadors. the captain of Indian cricket team. Mohammad Kaif.PROMOTION HHML is an organization. Hritik Roshan and other famous personalities as their brand ambassadors. which is known for its innovative & Aggressive Marketing. attend corporate and brand events and help promote its "We Care" campaign comprising safety riding. . magazines. etc. its advertising strategy was not up to the mark. Rs. Since the inception of hero Honda. They also have their bikes featured in various TV programs like top drive on star news and others which act as a strong reference. Superstar Hrithik Roshan is also a Brand Ambassador for Hero Honda Company. Those players are Virender Sehwag. advertising is done at a local level by dealers. HHML has print ads that the customer gets to see almost every day in newspapers. This has increased the brand recall by a significant number. Though it had a vast range of mobikes. environment and friendliness Also. HHML also promotes sports in the country. hero Honda has been spending huge amounts on its publicity. the company has been using television as a major role for its publicity. For its publicity hero Honda has been using many famous celebrities like Saurav Ganguly. It is also the sponsor of the ICC world Cup 2003 and half of the Indian team represents Hero Honda. Though hero Honda was dominant in sales it lacked the skills of creating a spectacular ad till now.V & hoardings. ADVERTISING STRATEGY Hero Honda is currently the number one company in terms of sales and has been dominant in the two-wheeler segment since the past decade. All the mediums are used extensively. Thus.120 crores was the Annual budget for market for the financial year 2002-2003. be it print or mass media like T. Yuvraj Singh. They will endorse the company products. Harbhajan Singh.
Print adds Glamour .
Stardust Hero Honda Millennium Honours Award. This show become the key factor in promoting the bike karizma between the youngster . It is the one of the most popular Show among youngster. 20th Cinema Express Award. First Indian Television Academy Award 2003 8th Cricket World Cup in South Africa. They ride HERO HONDA KARIZMA. Masters Golf Championship. HERO HONDA ROADIES To attract young generation Hero Honda sponsored MTV Roadies. Masters Golf Championship.Some of the Events Sponsored During the Years 2000 NKP Salve Challenger Trophy. 2002 India-England Women's Cricket Series. Second Indian Television Academy Award. A Live reality show in which some group of people travel across the country on the bike. 21st Cinema Express Award.
To capture this young generation. HERO HONDA SA RA GA MA PA CHALLANGE . Hero Honda is organizing Campus Rock Idols every year at all over major cities in India.HERO HONDA CAMPUS ROCK IDIOLS In today scenario in India rock culture is becoming very popular among youngster.
signifying their respective desires to lead the way Hero Honda. hopes to communicate the brand identity to its customers in a language and appeal that is well identified and comprehended by them. The 'Team Ambition' has many similarities in personality with the Hero Honda brand. through the advertisements. . 'passion to excel' and 'ambition to win'.Brand Ambassadors CRICKETERS Hero Honda promotes his cricketers brand ambassadors as a „Team Ambition‟ in 2003 World Cup. such as 'splendor of performance'.
The company is very much confident that young Mahesh Babu brings them up in their sale figure and at the same time Mahesh Babu„s fan following will be utilized for brand image of Hero Honda. Now this big company is roping Mahesh Babu as their Brand ambassador for AP. The customised all-chrome Karizma.FILM STAR Hero Honda signed bollywood star Hrithik Roshan for his premium bike Karizma. a very stylish bike that truly befits his brand ambassador and style icon Hrithik Roshan BOLLYWOOD STAR HRITHIK ROSHAN HERO HONDA SIGNED MAHESH BABU A SUPERSTAR IN ANDHRA PRADESH TO CAPTURE MARKET IN AP Hero Honda -India„s number one two wheeler in sales. HERO HONDA KARIZMA .
S.8 heart-stopping seconds.T.W.Hero Honda Karizma was the first real sports bike in India. Sporty position of the seat. The bike is based on power and styling. Company Stroke Maximum Power Displacement Hero Honda Motors India Ltd. 3. ANALYSIS OF KARIZMA STRENGTH . It stands on its feet even at speeds reaching up to 130 kmph. It has 17 ps power thrust and picks up 0-60 in 3.8 bhp @ 7000 rpm 232 cc Striking Features: 1. Style 2.O. The bike addresses to those who have a passion for speed and styling and head-turning looks. 4-Stroke 16. Disc brakes and Mag wheels makes Karizma the safest jet on the road.
3kpl in city and 42. • Karizma is the First bike in India launched under Sports Bike Segment. • After Sales Service: Till today. comfort. Karizma has been successful in building up a good and loyal base among its customers.• It has a good speed and sporty look . The brand Karizma has given a good platform to this product in the Sports Bike Segment. • Loyal Customer Base: In the past four years. • Less Promotion: the promotions and ads of Karizma are very less as compared to its competitors. • Fuel Efficiency: The pulsar 200cc offers an impressive mileage of 38.4kpl in highway against the Karizma offers only 30kpl in city and a decent figure of 45kpl in highway. customers are satisfied with the after sales service provided by Hero Honda for this particular product. • Brand Recall: the name Karizma itself is a metaphor to its success. great handling and that much-sought-after big bike feel are all available on the Karizma. WEAKNESS • High Maintenance: The maintenance of Karizma is high as compared to its biggest competitor Bajaj Pulsar 200cc and 220cc. OPPORTUNITIES . • Refinement.
• Karizma‟s strong competitors Bajaj and TVS. soft touch handle bar and digital speedometer. • The competitor Pulsar 200cc has already come up with oil cooled engine which delivers maximum power. who has always been the market leader in the 150 plus segment with 60% market share.W. already posses certain features like self-controlling indicators. like self cancelling indicators. This is again a major threat to Karizma. in 150 cc plus segment. ANALYSIS OF COMPETITOR . S. • If they are able to improvise the fuel efficiency of Karizma.T.• If Hero Honda comes up with the idea of changing some features of Karizma. THREATS • The major threat faced by Hero Honda Karizma is from Bajaj Pulsar. soft touch handle bar which Karizma lacks.O. it will help them to boost up the sales of Karizma. it will be a golden opportunity to take over the market.
WEAKNESS • Style and Design: PULSAR 200cc and 220cc derives their styling from there previous version Pulsar 150 Dts-i and 180 Dts-i. • New Pulsar also provides Digital Speedometer.2 kmpl in city as compared to Karizma which delivers 30 kmpl in city. Self Cancelling Indicators which is for the First time in this segment in India.(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. • Customer Base: In past decade Bajaj has established a strong base amongst its customers. • Fuel efficiency: Pulsar 220cc delivers an impressive mileage of 38. • Pricing. Bajaj 220cc (Rs 82449 basic price) is costlier than karizma (Rs 78000 basic price) OPPORTUNITIES .
It's a new space they have created and there's a completed. • 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. It's the retail experience a dedicated biker feels when he or she steps into a Probiking outlet. Avenger. Through his Definitely Male Campaign they shows behave of a young guys. Pulsar 180 etc. THREATS • The biggest threat is faced from the goodwill of Karizma in this segment who is the “FourStroke Two Wheeler Ruler” of the Indian bike market. BAJAJ’s Pro Bike Showroom The Bajaj Prebaking showrooms will definitely be one of the integral elements in his overall brand strategy to reinforce the image of Bajaj being a manufacturer of quality performance motorcycles in the country.• 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. Brand Image create By Bajaj Brand image create by Bajaj through his pro bike showroom which display his premium bikes range such as pulsar 220. This Advertisement helped lot Bajaj to create brand positioning. . lot of work to be BAJAJ PULSAR ‘DEFINATELY MALE’ Bajaj pulsar make an image of that there bike is only for guys.
.. three girls Walk by a line of motorbikes.. . .. The logo. She pulls it away Slowly to reveal. definitely male MARKET MIX OF KARIZMA PRODUCT .... One's dupatta skims over the bikes and then gets stuck.making her turn in Consternation.Chatting merrily.. MVO: Bajaj Pulsar. "Pulsar".
the tailpiece. BRANDING: BRAND NAME: KARIZMA In Hindi. it is probably both. the front indicators. In English. ENGINEERING AND INTERIORS Hero Honda has taken a lot of styling cues for this bike from Honda‟s old model VFR 800. . The amber backlighting for instruments is exciting. One cannot help but think that the steering column section of the bike looks crude and empty just below the handlebar mounts. Being connected directly to the battery. Even the way Hero Honda has painted parts of the side panels silver to look like exposed aluminium frame sections. Fit and finish is excellent and no less than the high standards we have come to respect Hero Honda for. reminds one of the genuine thing on the VFR. “CHARISMA” (pronounced Karizma) means “the ability to inspire followers with devotion and enthusiasm”. and grafted an aircraft-type fuel filler cap onto the tank. the fairing. the silencer unit. seat. “KARISHMA” means “something inexplicably magical”. The company has kept with the times. the Japanese giant‟s legendary and largest selling superbike.DESIGN. The monogram of Karizma itself is very attractive and eye catchy because of the colour. The way this bike has turned out to be. all lights and instruments work independently of the rpm of the engine. panel shapes and instrument binnacle. Similarities are visible in the alloy diecast wheels. The tank recesses easily accommodated the legs of our tallest testers. and are a boon at night.
000-80. PRICING the new Karizma will also continue to be priced at almost the same level as the previous version. which represents the bike‟s cutting edge imagery of being racy. The special edition variant with red mag-wheels will be costlier by about Rs 1. the company has tried to attract the customers by changing the graphics of Karizma i. with on-road prices for the regular variant working out to Rs 79. New Delhi). the . an attractive new logo. the pilot dives in for a closer look.e. PROMOTION ADVERTISEMENT: Hero Honda Karizma Agency: A fighter plane is on a regular sortie when the pilot notices a moving object. Bajaj has launched 52 Prebaking outlets – which will house only high performance bikes. Reaching the air-base. International styling graphics with a pronounced `R‟ on the tank and an asymmetrical one on the visor in keeping with the latest international trend.65. Pulsar 200cc would be available at such Probiking showrooms at select locations across the country for an attractive price of Rs.In order to overcome the competition faced from its biggest competitor bajaj220 dts-I. Informing the control tower. The bike gathers speed and enters a tunnel to beat the fighter aircraft. 497 (ex showroom.000.000. he captures a bike cruising at high speed. Zooming his camera.
HERO HONDA MTV ROADIES In mtv roadies the all competent use only the Hero Honda karizma bike from the last six years." The all-new-Karizma has been created by the Hero Honda‟s research and development team to mark the company‟s highest-ever sales of over 3... . of the motorcycle. ..03 lakh units in May 2006. by sponsoring the show hero Honda promoting their brand karizma among the youngster. two-wheeler major Hero Honda. as Hero Honda Managing Director Pawan Munjal handed over the keys to the star. So. “This super bike will surely match my super hero image. presented a tailor-made „all-chrome Karizma‟ motorcycle to Bollywood star Hrithik Roshan.. MVO: "Hero Honda Karizma. Celebrating its milestone of rolling out 15 million bikes. Jet Set Go.” Hero Honda brand ambassador Hrithik said. unaware that its owner is amidst them.rider meshes with the staff as they examine the images.
” Mr Pawan Munjal said.The Hero Honda family is elated to have achieved the landmark figure of 15 million motorcycles in the shortest ever time-span. celebrities help in promoting the product. The customized all-chrome Karizma truly befits our brand ambassador and style icon Hrithik Roshan. Though. while growing and sustaining markets. Group Chairman Brijmohan Lall Munjal said. they are not physically involved in sales. 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. A network that has helps Hero Honda‟s name and its promise of reliable quality to every part of the country. dealers play a major role in serving customers. . entertainment and sports are everyone‟s favourites. he said. PLACE CHANNELS OF DISTRIBUTION As a company. Hero Honda has a network of more than 3500 strong and dedicated Authorized dealers.
A network that has helps Hero Honda‟s name and its promise of reliable quality to every part of the country. A direct dealer is a dealer who is authorized to purchase the product directly from the company and sell. This is the way to preserve our low cost. KMPMG firm reveals that the Indian auto component manufacturers are increasingly becoming skeptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising. A survey conducted by the research. This is not about tax rates it is just about unnecessary complexity. dealers play a major role in serving customers. In the longer term. India taxation remains a big disadvantage. The survey said many executives believe that India‟s cost advantage is grinding down fast as labour costs are constantly increasing and retaining employees is becoming more and more difficult. PHYSICAL DISTRIBUTION: As a company. while growing and sustaining markets. cost advantage will only be retained if Indian capital can be used to develop low-cost automation in manufacturing. CONCLUSION India‟s expedition to become a global auto manufacturing hub could be seriously challenged by its inability to uphold its low-cost production base. Global auto majors are also cynical about India‟s low cost manufacturing base. Hero Honda has a network of more than 3500 strong and dedicated Authorized dealers. 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. Increased presence of global automotive companies in the country was cited as one of the reasons for the high erosion rate.The channel of distribution is a direct dealer network. . Indian auto businesses will only flourish if they boost investments in automation. But some companies also believe there is scope for reducing the cost of doing business.
In spite of this there are opportunities to exploit lower costs right across the board. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. The company said Indian industry has till now relied on very labour intensive model but it would have to switch to a more capital intensive model . Low-cost base can never last long. It‟s true that labour costs are definitely increasing but they are still five per cent of the total operational costs.
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