hero honda - post demerger
DESCRIPTION
hiTRANSCRIPT
Study of post-demerger Impact on Hero Group
A Market Research Project – FINAL REPORT
Submitted to: Prof. N. B. Kanagal
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Prepared By:Group 1
Ayan Deb
Deeksha Narula
Harish Kumar
Prakash Singh Yadav
Sathappan S
Vivek Kumar Bhagbole
Table of ContentsExecutive Summary………………………………………………………………………………..….3
Mid-Term Study……………………………………………………………………………………….5
1. Refinement of the Problem 5
1.1 Marketing Research Decision 51.2 Management Research Problem 51.3 Process for developing MDP and MRP 6
2. Secondary Study 62.1 Qualitative Research 7
3. Research Design 93.1 Variables 93.2 Approach to collect Information 93.3 Scaling Techniques 93.4 Questionnaire Usage 10
4. Sampling Plan 105. Questionnaire Development 12 5.1 Information Checklist 12
Post Mid-Term Analysis......................................................................................................................136. Questionnaire Design……............................................................................................................13
7. Survey.............................................................................................................................................13
7.1 Survey Results – Key Statistics.................................................................................................147.2 Consumer Perception of Hero (pre and post-demerger)............................................................157.3 Consumer Perception of key competitors..................................................................................15
8. Data Analysis.................................................................................................................................17
8.1Factor Analysis...........................................................................................................................178.2 Multi-Dimensional Scaling.......................................................................................................198.3 Conjoint Analysis......................................................................................................................21
9. Hypothesis Testing.........................................................................................................................239.1 Consumer Perception................................................................................................................239.2 Consumer Attitude & Motivation.............................................................................................259.3 Consumer Decision Making Process........................................................................................269.4 Hero Ad-Campaign Effectiveness............................................................................................27
10. Inferences.......................................................................................................................................28
11. Recommendations..........................................................................................................................29
Appendices 31
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Executive Summary
‘Hero Honda’ – many of us who grew up in the early 1990’s would not have realized until recently
that Hero and Honda are two separate entities, when the news about their demerger broke out. Hero
brand was established in Ludhiana as Hero Cycles in the year 1956. The brand became well known
for its engineering capacity, strong distribution network, quality commitment and local field
knowledge. In the year 1984, the Japanese multination, Honda Motor Company reached out to Hero
group to set up a joint venture Hero Honda Motors (HHM), with each entity holding 26% stake. The
technical capabilities of Honda and deep penetration network of Hero group, helped HHM to establish
itself as a clear market leader in the bikes category.
However, over the years both the partners felt constrained in their approach due to their joint venture.
Honda realized the need to launch separately, given its technical capabilities and the growing Indian
motor cycle industry and the Hero group wished to expand its reach beyond the Indian market. In
March 2011, the demerger was announced and Hero has group has rechristened itself as Hero
MotoCorp.
As students of Marketing Research, we decided to study the impact of this demerger on the Hero
group – particularly the Hero brand. Specifically, we limited the scope of our research to a Brand
Image Study where we looked into whether and how (if yes) has the consumer perception of the
“Hero MotoCorp” brand changed post the demerger. We also looked into whether there is any change
in the decision-making process for consumers while buying a Hero bike in the future and finally
analysed the Ad-Campaign Effectiveness of the “Hero Group” campaign.
After establishing the Marketing Decision Problem and the corresponding research questions and
hypotheses, we proceeded to conduct a secondary study wherein we analysed company reports,
analyst reports as well as news releases regarding the demerger. The key findings from this study
were that the Hero group is expected to retain its strong brand equity, dealership network, large
consumer base and healthy cost-structure in the medium term. The share price of Hero stock gained
immensely renewing confidence in the brand, however there were concerns regarding sustained
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growth in the long-term. This is because Hero group will face increased competition from new
entrants and there were concerns regarding the technological capability of Hero without Honda.
We followed this by conducting qualitative research – primarily depth interviews and focus group
interviews. The key findings here were that even though consumers seemed upbeat about the new
“Hero” brand, there were huge concerns regarding the technological capabilities. The recent ad-
campaign launched by Hero received positive feedback.
In the next phase of our study, we designed the questionnaire which was used for conducting primary
research through an online survey. The results of the survey were used to conduct Factor Analysis,
Multi-dimensional Scaling (MDS) as well as Conjoint Analysis. We also tested the hypotheses
developed in the first phase using single sample z-tests as the sample size was larger than 30.
Economy (Mileage, Price etc), Reliability, Quality and Resale Value were the key factors consumers
keep in mind while buying a bike. On conducting the MDS, we found that the 2 dimensions on which
we could position Hero and its competitors were Brand Image and Style. We see that Hero Honda
ranked higher than Hero group on Brand Image which is an area of concern for Hero’s management
however Hero’s positioning on Style was found to be greater than that of Hero Honda.
The results from conjoint analysis were largely intuitive as Mileage (Economy) came out to be the
most important attribute.
Based on the results of the data analysis, we recommend that Hero group should focus on developing
their technical capabilities and quality standards in a big way. The consumers should be made aware
of their increased commitment to developing in-house R&D facilities post the demerger so that any
negative impact on the technology front can be mitigated.
Another key recommendation would be to increase brand equity of the models such as CBZ, Impulse
and disassociate them with “Hero Honda” brand as these models already have strong brand equity of
their own. Hero group should scale up their advertising and promotion activities since there is
inadequate awareness of the new “Hero” brand with the same ad-campaign as the campaign has
gotten rave reviews.
Lastly, Hero group should develop new models keeping Style and Quality in mind in order to attract
the growing youth segment of this country.
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Mid-Term Study
1. Refinement of the Problem
1.1 Marketing Research Decision
Considering the long term association with the Hero Honda brand; after the demerger customer’s
perception may change depending on attitude, beliefs and learning about the new brand HERO
GROUP. Hence management decision problem is to discover change in customer perception about
new brand, if any particularly on the quality and technical capability aspects.
1.2 Management Research Problem
As the Management decision problem is a symptom, so the management research problems will
address different probable areas which needs attention. Some of the probable and their corresponding
marketing research problems are as follows:
S.NO Research Problem Research Sub Problem Research Hypotheses1 Are there any signs of
positivity in terms of consumer perceptions
after demerger?
Are consumers having any kind of perceptual defence for hero brand?
H0 : There is positive change in the perception after demerger
Is there Halo Effect (Demerger doesn’t matter at all to customers as long as Hero Group maintain the low price- high quality combination ) for the brand Hero?
H0 : There is a Halo Effect for Hero Brand
Hero A global Indian brand – Does this changes the perception of customers
H0 : An Indian global brand has positive impact on customer perception
2 Is the attitude of the customers towards Hero brand has changed after
demerger?
Analysis of impact on the attitude components: Affective, cognitive and conation
H0 : Attitude has been neutral after demerger
Is there any change in Motivational factor of the customer due to demerger
H0 : Motivation has not been affected by demerger
Customer value the Utilitarian and Value Expressive function most for motivation in 2 wheeler segment hence motivation is unaffected
3 Is there any change in customer decision
making process due to demerger?
Whether the brand associations with Hero Honda are stronger than associations with bike models such as CBZ/Impulse
H0 : Associations with bike models are stronger than brand Hero Honda
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Need for RecognitionPre-demerger Behaviour Vs Post Demerger BehaviourEvaluation of Alternatives, if required
Psychological FieldMotivationPerceptionLearningAttitudePersonality
Experience
Customer Decision Making Process:
4 Does Hero needs to invest in consolidating
new brand and enhancing customer
loyalty
Whether the latest brand communication launched by Hero group is having the intended effect
H0 : Recent brand communication is effective
1.3 Process for developing MDP & MRP
2. Secondary Study
Key Findings
The termination of the joint venture between Hero Group of India and Honda of Japan will be done
in a phased manner till 2014.
Under the joint venture Hero Group was restricted to Indian markets but the termination would give
Hero Group would give them the advantage to export.
Hero is working on setting up its own R&D centre with European company to become self-reliant.
The company has earmarked up to Rs 800 crore as capital expenditure for 2011-12 financial year,
mainly for setting up its fourth plant and also for R&D activities.
The share price Hero group has gone up from Rs 1502 from Mar 2011 to present price of Rs 1984
per share.
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Honda will continue transferring technology till 2014 for which its former Indian arm is expected to
pay 4-5% of annual sales as royalty till 2012. This could then go up to 8%, according to auto
industry sources.
In the last quarter, the company recorded a volume growth of 23.9% (YoY) in Q1 and the EBITA
margins were at 13.7%.
The market share has recorded sequential gains on monthly basis.
In the long-run, the competitive pressure is suspected to increase because of entry of new entrants,
frequent new product launches and technical limitations.
But in the medium run the company is expected to see the growth as the two wheeler industry itself
is expected to maintain a sales volume of CAGR of 10-12% over the period 2012-15.
Hero group will continue to own its strong brand equity, vast distribution network, established
supply chain and healthy cost structure.
Hero group is free to modify or use the platforms of all the existing products, including Splendor,
Passion, and CBZ to develop new models.
The CEO of Hero group, O P Munjal is focussing on new product development for expanding their
consumer base.
2.1 Qualitative ResearchWe have used the Focused Groups interviews and Depth Interviews for the qualitative analysis.
Focus Group Interview
Key Findings
Attribute Tested Findings
Typical Customer Profiling who prefers Hero
Most of the customers purchased Hero’s Bike as their first bike. Age Range: 18 to 32 years. Occupation : Student & Working Professionals (First Two years of career)
Key Attributes for purchase decision
Mileage, Price, Reliability, Low Maintenance & Resale Value are the most preferred attributes in deciding the purchase of a two wheeler.
Influencers for the decision
Family and Friends
Identification of Television Adds, Newspaper Add and Company Promotions are
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Awareness Media preferred mode of exposure for two wheeler segment
Add Campaign Effectiveness Measurement
Global Statements like “DESH KI DHADKAN” has major impact of customers, also celebrity endorsement and event sponsorship has made Hero as one of the preferred brand
Demerger Influence (if Any)
Customer still value Hero as one of the most strongest brand and as long as Hero maintains readability and price range, external factors like demerger has no effect on customers perception and attitude towards brand Hero
Depth Interviews
Key Findings
The major reasons for demerger according to the young professionals in the Medium Segment are
Honda wanting to establish itself in the Indian market separately
The most important factors which are considered while buying a bike in the Premium/Medium
segment are Performance – Engine Capacity, Mileage; Looks and lastly Price
Within a segment (usually defined by Engine Capacity, for instance 150cc – 200cc is a segment)
people are generally price-insensitive
Reasons for not choosing a Hero bike are Hero bikes are not good in Looks as well as not superior
technology like competitors Yamaha etc
The demerger is likely to have a negative impact on the brand perception of Hero bikes primarily
on the technology front. Hero is considered to be a bicycle maker by most people and they feel
Hero bikes will miss the Honda technology advantage in the future
Impulse (latest bike launched post demerger) has a good consumer feedback
Hero’s ad-campaign “Hum mein hai Hero” (AR Rehman) is received well by consumers as they
find the slogan unique and the logo is considered to be better than the “Hero Honda” logo prior to
demerger
The ad-campaign is found to be unique and appeals to the individual consumer whereas the earlier
“Desh ki Dhadkan” campaign had a feeling of patriotism and oneness
Although consumers are aware about the demerger, they feel Hero should campaign more in order
to create awareness about the new “Hero” brand and logo
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Focus should be on TV advertisements and Auto shows as these are the modes of communication
which are most important in building consumer perceptions about the brand
3. Research Design
3.1 Variables
As per the definition of Management Research Problem, we decided our hypothesis. These
hypotheses provide us on the variables which need to be studied in order to see the effect of demerger
on Hero Group. Following are the variables about which information is needed:
a) Consumer Perception
b) Price- Quality combination of Hero Group
c) Attitude and preferences of customers
d) Brand Recall
e) Brand Loyalty
f) Attributes considered by customers for selection of bikes
3.2 Approach to collect information
The approach that will be used for collection of information is through surveys. Surveys will be
floated through mails, telephonic interviews will be conducted. Hardcopy of surveys will also be used
as method of collecting information.
3.3 Scaling Techniques
Scaling is method of changing attributes (a series of qualitative facts) into variables (a quantitative
series). Scales to be used are rating scales, ranking scales, affirmative/denial options, and direct
answers.
Rating scales are used to rate a particular attribute from below average to excellent.
Ranking scales are used to rank particular options on a scale with higher number being better.
Some questions have simple yes/no options.
Direct answers demand the consumer to write a particular answer.
3.4 Questionnaire Usage
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The survey will be short and precisely to the point. Telephonic interviews will be of 5-10 minutes.
Survey examines consumer knowledge, beliefs, preferences, satisfaction and measures their
magnitudes in the population. Panels of consumers can also be identified who may be contacted by
telephone, personal interviews or by mail questionnaire.
4. Sampling Plan
Sampling plays a vital role in any survey. We are interested in selecting a sample in such a way that
represents the target population in the best possible manner and thus eliminate the chances of a
random sampling error, as the Hero Group has a wide range of products in the 2 wheelers segment
that are targeted at specific segments we would like to capture the customer perceptions and
perspectives in each of them in order to avoid any biases. Also the finding from the survey needs to be
extrapolated to a larger group to establish the effect of the demerger of Hero Motor Co. and Honda
Motor Co. Thus in order to accommodate all the above we would undertake “stratified random
sampling” under probability sampling techniques. The stratum would be in line with the various Hero
Group customer segments thus being mutually exhaustive and adding them up would make it
collectively exhaustive. The strata would be economy segment, mid level segment and high end
segment based on the product line of the Hero Motor Corp.
We would like to collect samples from various locations in order to eliminate any regional bias and
non sampling errors, various survey methods like electronic interviewing (e-mail/internet), personal
interviewing and telephonic interviewing would be undertaken to get the desired number of samples.
We conducted a pilot survey involving 10 person in each of the three segments, the dominaint
attribute that came forward vide the focused groups were mileage for economy segment, reliability for
mid level segment and style for high end segment, mileage as an attribute was open ended thus
everyone gave their expected level of mileage on the other hand reliability and style were rated in a
scale of 1-7.
Details of the calculations for the sample size have been provided below:
Sampling Technique - Stratified sampling
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Sample Site - Samples from the four regions in India would be collected to get an unbiased sample.
Sampling Unit - In this case the sampling unit is basically all the potential customers, it will include
people who have used Hero Honda bikes and scooters as well as others.
Sample Size - It is the minimum number of sample that is required to statistically extrapolate the
results obtained vide the survey, we use a confidence level of 95% which pertains to a Z value of 1.96
i.e. .95 times of the actual number we will get results as per our predictions. We predict the standard
deviation and D value (difference between sample mean and population mean) from the observations
in the pilot survey.
The formula used is detailed below:
n = z^2 * ^2 / D^2
n: sample size, z: value associated with confidence level
: Standard deviation, D: difference between sample mean and population mean
The results are detailed below:
Segment Economy Segment
Mid Level Segment
High End Segment
Dominating Attrbute Mileage Reliability StylePilot Survey Values Scale (1-7) Scale (1-7)Sample Mean 77 5.2 3.5Sample S.D. 10.1 1.0 1.1Pop. Mean 83 6 4D (Sample – Pop. Mean) 6 .8 .5
Table 1 (pilot survey results)
The details of the pilot survey observations are given in Appendix C.
In all we would require a total sample of 35, 11from Economy Segment, 6 from Mid Level Segment
and 18 from High End Segment.
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5. Questionnaire Development
5.1 Information Checklist
In order to evaluate/ further analyze the Hypothesis generated above, we need information which we
plan to obtain through a questionnaire (survey). The type of information needed along with the type of
interviewing method or source through which we would obtain this information is given below.
Specification of the Information Needed
Information Obtained (Y/N)
If yes, source of Information/Type of Interviewing method
If no, expected source of information/Type of Interviewing method
Reasons for Demerger Y Secondary Data & Depth Interview with Hero dealership owner
Status of Hero Group post Demerger
Y Secondary Data
Market Share and Market Price post demerger
Y Secondary Data
Buyer Behaviour for Hero bikes
Y Secondary Data & Qualitative Research
Exhaustive list of features & Attributes valued by customers
Y Focus Groups & Depth Interviews
Pruned list of features and Attributes from Exhaustive list
Y Sample survey
Impact of demerger on consumer perception of Hero Brand
N Primary-Questionnaire
Impact of demerger on customer decision-making
N Primary- Questionnaire
Brand Image Check of Hero post demerger
N Primary- Questionnaire
Awareness and recognition with new brand logo and campaign
N Primary-Questionnaire
Effectiveness of Hero’s recent ad-campaign
N Primary- Questionnaire
Post Mid-Term Analysis
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6. Questionnaire Design
Based on the Secondary study and exploratory research conducted, we identified key areas of
information which we would require for data analysis and hypothesis testing in the final phase of our
report (as given in Information Check-list shown above).
Using this information, we developed a questionnaire as shown in Appendix A, which was to be
floated through an online survey.
In our questionnaire, we have used mainly structured questions with dichotomous, multiple-choice or
scale responses. We have also maintained the flow of the questionnaire from generic to specific so
that the respondent understands the context well before he proceeds to answer pointed questions.
7. Survey
We conducted an online survey ( Link : https://qasiatrial.asia.qualtrics.com/SE/?
SID=SV_eDpX9aMYo9jwdvK ) and received a total of 53 responses.
The scope of the survey was limited mostly to students – graduate and post-graduate and all 53
responses were obtained in an excel sheet which was used for analysis purposes.
7.1 Survey Results – Key Statistics
Age profile
Gender Profile
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Income profile
7.2 Consumer Perception of Hero (pre and post-demerger)
Ratings given to Hero Honda before demerger on the basis of attributes
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Ratings given to Hero Group after demerger on the basis of attributes
7.3 Consumer Perception of Key Competitors
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Ratings of Bajaj Bikes as per attributes
Rating of Yamaha bikes as per attributes
Rating of TVS bikes as per attributes
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8. Data Analysis
8.1 Factor Analysis
In order to understand the underlying factors which influence buying decisions of consumers with
respect to a bike, we decided to conduct a Common Factor Analysis. However, since the number of
variables which we have considered (13) is fairly large, we decided to use Principal Component
Factor Analysis as the results in both cases were the same.
The variables which we used are shown as follows:-
Variables Set
Mileage
Price
Low Maintenance
Easy Loan Facility
High Resale Value
Style / Looks
Brand Image
Technical Innovation
Reliability / Durability
Quality
Dealership Network
After Sales Service
Warranty Terms
First we conducted the Bartlett’s Test of sphericity to check whether the variables are uncorrelated in
the population. The chi-square test statistic was significant which allowed us to not reject the
hypothesis that the variables are uncorrelated (Appendix B). Next was the Kaiser-Meyer-Olkin
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(KMO) measure of sampling adequacy to examine the appropriateness of the factor analysis. As the
KMO measure = 0.683 (>0.5) implies that the factor analysis is appropriate and can be used.
Based on the Initial Eigenvalues table obtained in Appendix B, we see that the first 4 components
were significant with Eigenvalues >1. These factors explain 71.945% of the Total Variance and
therefore can be considered as the principal factors. Another way of deciding the number of factors
would be to look at the Scree plot (shown below) which shows a distinct break after 4 signifying that
the top 4 factors are of greater importance.
Now after orthogonally rotating the factors using Varimax procedure, we get significant, non-zero
correlations of each variable with at most one factor. This enabled us to map the variables to factors
and name them appropriately as follows:-
Factor No. Name of the Factor Variables Associated with the Factor
1 Reliability Low Maintenance, Reliability
2 Quality Quality, After-Sales Service, Warranty
3 Economy Mileage, Price, Brand, Style
4 Resale Value High Resale Value, Easy Loan facility
Inference
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Thus, we can summarize that consumers consider broadly 4 factors while purchasing a bike:
Reliability - How long the bike can survive without breaking down for the first time and
accordingly whether it requires a high level of maintenance or not
Quality – Whether the bike conforms to the quality and safety norms and also how good is
the after-sales service
Economy – Mileage (Fuel efficiency) and Price
Resale Value – Consumers are concerned with High Resale Value as they might consider
upgrading to a 4-wheeler in the future and therefore would want to buy a bike which
compensates them accordingly
8.2 Multi-Dimensional Scaling
The information provided by the MDS will help us determine the current image of Hero Moto vis a
vis other automobile (2 wheeler) brands, positioning Hero in the right space to target the groups of
customers with relatively homogeneous perceptions, and in a way, compare brand image of Hero vis a
vis other automobile (2 wheeler) brands in the market.
We have chosen 5 brands (Hero Honda, Bajaj Auto, Yamaha, TVS, Hero-Post Demerger) that
represent different bands in the market. Including more brands might have diluted our overall findings
since some brands are not as prevalent in India (e.g. Harley Davidson).
The input for MDS was obtained from the responses to Question No. 7 & 11 in the Questionnaire (see
Appendix C). The data on all possible pairs, called similarity judgments, are used to perform a no
metric MDS procedure, which assumes that the input data are ordinal. The distances in the spatial
map can be assumed to be interval scaled. This procedure finds map whose rank orders of estimated
distances between brands best preserve or reproduce the input rank orders.
In order to determine the number of dimensions to be used for our spatial map, we used the stress
measures in the summary tables (see Appendix C). These stress measures help determine the level of
fit of the data. The lower the stress levels, the better the fit. The indicative stress measures are below
0.2, indicating that the two-dimensional spatial map best fits the input data. We can use more
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dimensions, which increase the overall, but for purposes of our research, two dimensions are most
appropriate.
Now that we have chosen these two dimensions, we have to label them. Labeling dimensions requires
subjective judgment based on a number of guidelines. The ratings of the brands on a number of
attributes, as described in our factor analysis, can serve as a basis for determining the dimensions of
each axis.
Based on a subjective analysis, the two dimensions were labeled as “Style” on the vertical dimension
to “Brand Image” on the horizontal axis. The spatial map is shown below, along with the distances
between each of the brands in the spatial map.
V2 Hero Honda
V3 Bajaj Auto
V4 Yamaha
V5 TVS Motor
V6 Hero-Post Demerger
Inference
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Brand Image
Style
Bajaj
Hero Honda
Hero Motocorp
Yamaha
TVS
Post demerger the Brand Image of Hero group has reduced considerably probably due to concerns
on the technical capabilities and quality of Hero bikes without the expertise of Honda
However, on Style dimension, Hero brand has gained positively after the split from Honda. This
can be explained by the fact that consumers perceive Impulse (bike launched post demerger) to be
far more stylish than the earlier models such as CBZ.
Looking at competitors, Bajaj is the strongest competitor for Hero group in the years to come as
according to consumer perceptions, it ranks very highly on both the Brand Image as well as Style
aspects
Yamaha on the other hand scores very highly on the Style dimension and will be the strongest
competitor for Hero in the premium segment
8.3 Conjoint Analysis
A conjoint analysis was conducted to determine the relative importance that consumers attach to key
attributes while buying a bike. This method helps us in finding out the most preferred attribute level
mix for each of the key attributes identified which can then allow us to infer the gaps in Hero’s
current strategy.
The three key attributes identified along with their levels are shown as follows:-
Bike Attributes and Levels
Attribute Level No. Description
Mileage 1 High (above 50 Kms/litre)
2 Low (Below 50 Kms/Litre)
Reliability 1 High
2 Low
Style 1 Superior
2 Moderate
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An orthogonal design was created with 23 = 8 profiles and the respondents were asked to rank these in
order of preference. The results of the conjoint analysis are shown in Appendix D and the relative
importance of the attributes is as follows:-
Mileage; 46.67%
Reliability; 33.33%
Style; 20.00%
Relative Importance of Attributes
In order to assess the reliability of the conjoint analysis results, we checked the R-square value =
0.988 which is considerably high signifying a good fit of multiple regression.
Inference
The results of the conjoint analysis proved to be highly intuitive as Mileage (Fuel efficiency) which is
an Economy-related attribute proved to be the most important with Reliability and Style aspects as
second and third. An interesting observation is that even though Style is the least important attribute,
it does constitute for 20% implying that there might be a growing segment of consumers paying more
attention to Style (further analysis would be required to justify this). This implies that Hero bikes,
which have always been fuel-efficient (high mileage) and reliable do not score very highly on the
Style quotient and thus could consider expanding their presence in this space.
Limitations of this Analysis
Our conjoint analysis is based on the assumption that the 3 attributes identified above are the most
important (as reflected in the Pilot survey conducted in the Mid-term report). However, this may not
be the case as there may be more important attributes which have been missed out and thus is a major
limitation of this analysis.
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The other assumptions made are the part-worth utilities are not unique and that the consumers
evaluate the profiles in terms of these attributes and make trade-offs.
9. Hypothesis Testing
We have tried to look at look at various possible issues concerning the Hero brand post demerger;
they are the consumer perception, attitude, motivation after the split of Honda group Hero and the
strength of associations related to Hero brand viz a viz the associations with bike models and finally
the effectiveness of recent Hero communications and campaigns.
9.1 Consumer Perception
1) Whether there is positive change in the consumer perception post demerger?
If more than 50% of population thinks that the demerger the Hero group would have a positive impact
there would be a favourable change in consumer perception towards Hero Group
H0: π = 0 .5 i.e. there is no positive change in consumer perception post demerger
H1: π > 0.5 i.e. there is a positive change in consumer perception post demerger
For testing the null hypothesis we floated a question probing whether the consumers think that there is
in fact a positive change post the Hero demerger.
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
P (sample proportion) = .42
σ (standard deviation) = .07
t statistic = -1.04
p value = .15
For a single tailed test at 95% confidence we get a p value of 15% which is unable to reject the
hypothesis.
Thus we conclude that there has been no positive impact after the demerger at 95% level of
significance.
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2) Whether there is halo effect for brand Hero?
If more than 50% of population think that the demerger won’t have any significance till the price and
quality of the product is constant i.e. the brand equity remains constant or increases
H0: π = 0.5
H1: π < 0.5
For testing the null hypothesis we floated a question probing whether the demerger from Honda
would impact Brand Equity of Hero bikes or not.
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
P (sample proportion) = .47
σ (standard deviation) = .07
t statistic = -.40
p value = .34
For a single tailed test at 95% confidence we get a p value of 34% which is unable to reject the
hypothesis.
Thus, there is no halo effect for the Hero brand at 95% level of significance.
3) Whether a global Indian brand has positive impact on customer perception?
If more than 50% of population think that after becoming a global brand Hero would have a positive
impact on consumer perception.
H0: π = 0.5 i.e. there will be no impact on consumer perception if Hero becomes a global brand
H1: π > 0.5 i.e. there will be positive impact on consumer perception if Hero becomes a global brand
For testing the null hypothesis we floated a question probing whether after the demerger as Hero
would be able to sell products across the globe, it would have a positive impact on consumer
perception.
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
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P (sample proportion) = .80
σ (standard deviation) = .07
t statistic = 4.02
p value = .0001
For a single tailed test at 95% confidence we get a p value of .01% , thus the null hypothesis can be
rejected.
This implies that by becoming a global player Hero would be able to install a positive perception
amongst its consumers at 95% level of significance.
9.2 Consumer Attitude& Motivation
Whether the consumer attitude post demerger towards the brand has been neutral?
If more than 50% of the population have seen and liked the new hero ad and think that it is creative
and increases brand equity then we can deduct that the consumers have a positive attitude towards the
ad and thus the brand and thus the post demerger effect is neutral.
H0: π = 0.5 i.e. the consumer attitude post demerger has been neutral
H1: π not equal to 0.5 i.e. the consumer attitude post demerger has changed.
For testing the null hypothesis we floated 3 questions:
“I have seen the recent AR Rehman - Hero ad-campaign”
“I like the “Hum mein hai Hero” slogan of Hero brand”
“Hero campaign is creative and increases brand equity”
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
P (sample proportion) = .69
σ (standard deviation) = .07
t statistic = 2.53
p value = .01
For a single tailed test at 95% confidence we get a p value of 1%, thus we can reject the null
hypothesis.
25
This implies that post demerger, the consumer attitude towards the brand has undergone
change.
Whether consumer motivation has been affected by demerger or not?
If more than 50% of population indicate that they would be interested in purchasing a Hero bike post
demerger, this reiterates the fact that the consumer motivation has not been affected by the demerger.
H0: π > = 0.5 i.e. consumer motivation towards purchasing a Hero bike has not changed
H1: π < .5 i.e. consumer motivation has been affected due to the demerger
For testing the null hypothesis we floated the question:
“Would the demerger from Honda affect your purchase decision of a Hero bike”
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
P (sample proportion) = .44
σ (standard deviation) = .07
t statistic = -.75
p value = .23
For a single tailed test at 95% confidence we get a p value of 23% which is unable to reject the
hypothesis thus consumers might be still motivated to purchase a Hero bike.
Thus, we can say that consumer motivation to buying a Hero bike in the future has not been
significantly impacted (at 95% level of significance) due to the demerger from Honda.
9.3 Consumer decision making process
Whether Brand associations are independent of demerger?
If 50% or more of population indicate that the brand equity of bikes, CBZ/Impulse for instance is
greater than the brand Hero Honda, then we can conclude that brand associations are independent of
demerger.
H0: π >= 0.5
H1: π < .5
For testing the null hypothesis we floated the question:
26
“Brand Equity of models – CBZ, Impulse is greater than Brand Equity of Hero Honda brand”
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
P (sample proportion) = .44
σ (standard deviation) = .07
t statistic = .745
p value = .23
For a single tailed test at 95% confidence we get a p value of 23% which is unable to reject the
hypothesis.
Thus, we can conclude that associations with models of bikes (CBZ, Impulse etc) are more as
compared to the brand and these associations are independent of the demerger i.e. have not
been impacted by the demerger at 95% level of significance.
9.4 Hero Ad-Campaign Effectiveness
Whether recent Hero brand communications have been effective?
If more than 50% of the population have seen and found the recent advertisements to be effective then
we can conclude that the Hero brand communication is not having their intended effect.
H0: π = 0.5
H1: π > 0.5
For testing the null hypothesis we floated 2 questions:
“I have seen the recent AR Rehman - Hero ad-campaign”
“Hero campaign is creative and increases brand equity”
The details of the response and statistic test are detailed below:
N (no of respondents) = 45
P (sample proportion) = .67
σ (standard deviation) = .07
t statistic = 2.37
p value = .01
27
For a single tailed test at 95% confidence we get a p value of 1%, thus we can reject the null
hypothesis.
This implies that the recent Hero communications has been having the necessary effect intended
and the Ad-Campaign is effective.
10. Inferences
On the basis of the hypothesis results inferences can be drawn on the effects of demerger. As seen
above hypothesis relating to positive change in perception was rejected thus nullifying any positive
change. Similarly, hypothesis relating to Halo effect was rejected and positive impact on consumer
perception by building a global brand was accepted. This concludes the absence of positive impact
without a global brand. Later, it is seen that hypothesis relating to neutral impact on consumers was
also rejected. Taking all these hypothesis results in consideration it can be said that there is some
negative impact on consumer perception due to demerger. In the next hypothesis, impact on
motivation has been rejected and therefore people still seem to be motivated to buy Hero bike. This
means that due to negative impact on consumer perception, those consumers who have been
contemplating to buy a bike may not prefer Hero bike. On the other hand, those who have decided
already to buy a Hero bike will not change their decision. This is inferred from the point that
motivation has not been affected. With our next hypothesis, regarding association with bike models
rather than Hero brand it was inferred that people are more connected to bike models than brand.
Therefore, impact due to demerger is lessened because existing models are not going to change.
Lastly, it is seen that already existent ad campaigns are effective by having the intended effect on
consumers. So here, Hero group needs to increase its promotion effects using the same campaign as
the consumers are receiving the ad-campaign positively.
11. Recommendations
28
Development of technology – It is clear from the factor analysis that quality and technology
are the major attributes that play a vital role in the decision among of consumers. Actually
quality and technology are closely related and quality infact is derived from usage of superior
technology in bikes. Also Bajaj the biggest competitor for Hero Group is rated very high on
quality, so Hero group needs to communicate to the consumers that it has been developing in-
house technology post demerger with Honda and is lowering its dependency on a third party
for technology input. Thus Hero group needs to include more information on the features
(affective component) in its brand communication so that the information requirement of
consumers in a durable category like motorbikes is sufficiently met. This will be helpful in
establishing the brand image of Hero.
Global Expansion - Being a global player translates into a positive consumer perception
about the brand, thus Hero should try to expand its operations in other markets, and this needs
to be communicated to the end users. This will have a impact on the way they evaluate the
brand and thus improve the brand image of Hero.
Drop Honda inscription - As the associations with the bike models are more stronger than
the brand Hero Honda, the company can look to slowly remove the name Hero Honda from
the bikes and bring in Hero while maintaining bike brand like Splender, Karizma and CBZ
etc. This will have a dual benefit because all the recent communications include the name of
Hero, and if any associations are formed with the Hero brand like style which is clearly the
case as derived from the MDS analysis, thus models will endow the brand personality formed
in conjugation with Hero which is relevant for the target segment category.
Introduction of new models - Introduction of new models like Impulse will be helpful in
capturing the attention of youth which forms a major chunk of the target segment in the 2
wheelers market, the existing association with style for Hero group will be instrumental in
capturing the youth segment and improve sales.
Increase information (cognitive component) - The attitude towards the ad has been
favourable but the attitude toward the brand and consumer motivation (purchase intention)
29
has not increased, one of the reasons could be more focus on building emotional connect vide
tagline like “hum mein hain hero” (affective component) in a category like durables where
the affective component is of prime importance thus Hero needs to lay emphasis on features
and technology used in the development of bikes. As per the learn-feel-do model, the
consumers need the necessary knowledge of the brand in the category before they make a
connect with it and finally undertake a purchase.
Appendices
30
Appendix AQuestionnaire floated through Online Survey
Study of post demerger impact on Hero Group Study
1 Name(Optional)
2 Age
< 25 years (1) 25-40 years (2) above 40 years (3)
3 Gender
Male (1) Female (2)
4 Income Group
Less than 5 lakhs per annum (1) 5-10 lakhs per annum (2) 10 lakhs & above per annum (3)
5 Where do you stay?(City)
6 Rate the following ECONOMY related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Mileage (1) Price (3)
Low Maintenance
(5)
Easy Loan Facility (7)
High Resale Value (9)
31
Rate the following PERFORMANCE related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Style / Looks (1)
Brand Image (2)
Technical Innovatio
n (3)
Rate the following RELIABILITY related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Reliability /
Durability (1)
Quality (2)
32
Rate the following SERVICE related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Dealership Network
(1)
After Sales
Service (2)
Warranty Terms (3)
Easy Loan Facility
(4)
33
7 How did you rate Hero Honda bikes (prior to demerger) according to the following attributes: (1-Poor, 9-Excellent)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Performance – Mileage
(1)
Quality (2) Value for Money (3)
Style/ Looks (4)
After Sales Service (5)
Brand Image (6)
Reliability (7)
Technology (8)
8 How do you rate Bajaj bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Performance – Mileage
(1)
Quality (2) Value for Money (3)
Style/ Looks (4)
After Sales Service (5)
Brand Image (6)
Reliability (7)
Technology (8)
34
9 How do you rate Yamaha bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Performance – Mileage
(1)
Quality (2) Value for Money (3)
Style/ Looks (4)
After Sales Service (5)
Brand Image (6)
Reliability (7)
Technology (8)
10 How do you rate TVS bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Performance – Mileage
(1)
Quality (2) Value for Money (3)
Style/ Looks (4)
After Sales Service (5)
Brand Image (6)
Reliability (7)
Technology (8)
35
11 Post the demerger how do you rate Hero bikes according to the following attributes: (1-Poor, 9-Excellent)
1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)
Performance – Mileage
(1)
Quality (2) Value for Money (3)
Style/ Looks (4)
After Sales Service (5)
Brand Image (6)
Reliability (7)
Technology (8)
36
12 Few more questions specific to Hero Group:
1. Would you buy a Hero bike in the future? (1)
Agree (1) Disagree (2)
2. Would the demerger from Honda affect your purchase decision of a Hero bike? (2)
Agree (1) Disagree (2)
3. Would this impact be positive? (3)
Agree (1) Disagree (2)
4. Post demerger Hero bikes would be sold across the globe ,
this would positively impact Hero’s brand (4)
Agree (1) Disagree (2)
5. Brand Equity of models – CBZ, Impulse is greater than Brand Equity of Hero Honda
brand (5)
Agree (1) Disagree (2)
6. Hero brand for bikes will be confused with Hero Brand for
bicycles (6) Agree (1) Disagree (2)
7. Demerger from Honda would not impact Brand Equity of
Hero bikes (7) Agree (1) Disagree (2)
8. New Hero logo is better than earlier Hero Honda logo (8)
Agree (1) Disagree (2)
9.There is adequate awareness of Hero Brand post demerger
(9) Agree (1) Disagree (2)
10. I have seen the recent AR Rehman - Hero ad-campaign
(10) Agree (1) Disagree (2)
11. I like the “Hum mein hai Hero” slogan of Hero brand
(11) Agree (1) Disagree (2)
12. I prefer the earlier “Desh ki Dhadkan” campaign (12)
Agree (1) Disagree (2)
13. Hero’s TV ads do not compare with those of
competitors (13) Agree (1) Disagree (2)
14. Hero campaign is creative and increases brand equity (14)
Agree (1) Disagree (2)
37
13 Please rank the following bikes in order of preference: (1-most preferred, 8-least preferred)
______ High Mileage, High Reliability, Superior Style (1)______ High Mileage, High Reliability, Moderate Style (2)______ High Mileage, Low Reliability, Superior Style (3)______ High Mileage, Low Reliability, Moderate Style (4)______ Low Mileage, High Reliability, Superior Style (5)______ Low Mileage, High Reliability, Moderate Style (6)______ Low Mileage, Low Reliability, Superior Style (7)______ Low Mileage, Low Reliability, Moderate Style (8)
Appendix B
Factor Analysis Results (SPSS)
Correlation Matrix
V1 V2 V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13
Correlatio
n
V1 1.00
0.445 .295 .082 .169 .512 .501 .129 .204 .450 .115 .495 .429
V2 .445 1.000 .237 .001 .100 .259 .354 .321 .255 .103 .071 -.082 .018
V3.295 .237
1.00
0.127 .135 .111 .113 .548 .654 .197 .601 .240 .345
V4 .082 .001 .127 1.000 .739 .150 .252 .099 .053 .106 .169 .292 .367
V5 .169 .100 .135 .739 1.000 .304 .371 .286 .044 .000 .169 .379 .209
V6.512 .259 .111 .150 .304
1.00
0.550 .209 .154 .349 .002 .395 .361
V7 .501 .354 .113 .252 .371 .550 1.000 .226 .063 .244 -.005 .338 .174
V8.129 .321 .548 .099 .286 .209 .226
1.00
0.621 .144 .354 .129 .279
V9 .204 .255 .654 .053 .044 .154 .063 .621 1.000 .373 .637 .234 .356
V10.450 .103 .197 .106 .000 .349 .244 .144 .373
1.00
0.225 .448 .456
V11 .115 .071 .601 .169 .169 .002 -.005 .354 .637 .225 1.000 .271 .278
V12.495 -.082 .240 .292 .379 .395 .338 .129 .234 .448 .271
1.00
0.444
V13 .429 .018 .345 .367 .209 .361 .174 .279 .356 .456 .278 .444 1.000
38
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .683
Bartlett's Test of Sphericity Approx. Chi-Square 207.263
Df 78
Sig. .000
Communalities
Initial Extraction
V1 1.000 .739
V2 1.000 .750
V3 1.000 .722
V4 1.000 .813
V5 1.000 .888
V6 1.000 .631
V7 1.000 .689
V8 1.000 .671
V9 1.000 .817
V10 1.000 .663
V11 1.000 .682
V12 1.000 .684
V13 1.000 .604
Extraction Method: Principal
Component Analysis.
Total Variance Explained
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
%
1 4.281 32.930 32.930 4.281 32.930 32.930 2.806 21.586 21.586
2 2.092 16.092 49.021 2.092 16.092 49.021 2.439 18.762 40.348
3 1.602 12.321 61.342 1.602 12.321 61.342 2.146 16.505 56.853
4 1.378 10.603 71.945 1.378 10.603 71.945 1.962 15.092 71.945
5 .680 5.234 77.179
39
6 .668 5.135 82.314
7 .554 4.265 86.579
8 .443 3.407 89.986
9 .410 3.155 93.141
10 .315 2.421 95.562
11 .246 1.890 97.453
12 .204 1.572 99.024
13 .127 .976 100.000
Extraction Method: Principal Component
Analysis.
Component Matrixa
Component
1 2 3 4
V1 .664 .312 -.439 -.085
V2 .382 -.008 -.489 .605
V3 .638 -.552 .036 .092
V4 .425 .329 .711 .133
V5 .488 .379 .617 .355
V6 .590 .455 -.272 .033
V7 .547 .502 -.208 .308
V8 .587 -.416 .024 .391
V9 .647 -.629 -.055 -.009
V10 .574 .059 -.260 -.513
V11 .532 -.574 .244 -.095
V12 .640 .274 .143 -.424
V13 .660 .041 .116 -.392
Extraction Method: Principal Component Analysis.
a. 4 components extracted.
Rotated Component Matrixa
Component
1 2 3 4
V1 .086 .583 .625 -.031
40
V2 .290 -.183 .789 -.098
V3 .826 .161 .103 .049
V4 .072 .160 -.016 .884
V5 .099 .051 .210 .912
V6 -.035 .469 .617 .169
V7 -.044 .241 .733 .302
V8 .739 -.059 .308 .161
V9 .867 .233 .073 -.080
V10 .175 .770 .143 -.139
V11 .768 .213 -.178 .120
V12 .095 .754 .074 .318
V13 .294 .685 .025 .220
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.
Component Transformation Matrix
Compo
nent 1 2 3 4
1 .581 .590 .449 .335
2 -.791 .257 .389 .398
3 .088 -.106 -.576 .806
4 .172 -.758 .562 .283
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Component Score Coefficient Matrix
Component
1 2 3 4
V1 -.063 .206 .251 -.127
V2 .104 -.249 .461 -.093
V3 .309 -.033 -.011 -.018
V4 -.011 -.021 -.096 .481
V5 .001 -.122 .044 .493
41
V6 -.102 .137 .258 .003
V7 -.088 -.018 .351 .097
V8 .287 -.187 .135 .059
V9 .321 .020 -.033 -.098
V10 -.023 .385 -.044 -.180
V11 .291 .039 -.177 .036
V12 -.062 .345 -.106 .087
V13 .032 .304 -.125 .037
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Appendix C
Multi-Dimensional Scaling
Similarity Table
Hero
Honda Bajaj Yamaha TVS HeroHero
Honda 0 1.9 3 3.7 1.3Bajaj 1.9 0 2.2 3.9 1.6
Yamaha 3.0 2.2 0 2.2 2TVS 3.7 3.9 2.2 0 2.7
Hero 1.3 1.6 2.0 2.7 0
Attributes Table
Mileage QualityValue for
money StyleAfter sales
serviceBrand Image
Reliability
Technology
Hero Honda 7.5 7.2 7.5 6.1 6.9 7.5 7.5 6.7Bajaj 6.9 7.2 7.0 7.5 6.8 7.5 7.0 7.5
Yamaha 5.9 6.7 5.9 6.9 5.9 6.7 6.3 6.9TVS 6.5 5.9 5.9 5.8 5.7 5.6 5.8 5.8
Hero 7.2 6.9 6.8 6.6 6.8 6.8 6.8 6.4
Output of MDS (SPSS)
Raw (unscaled) Data for Subject 1
1 2 3 4 5
1 .000 2 1.912 .000 3 3.047 2.221 .000
42
4 3.734 3.882 2.246 .000 5 1.341 1.607 2.006 2.686 .000
Iteration history for the 2 dimensional solution (in squared distances)
Young's S-stress formula 1 is used.
Iteration S-stress Improvement
1 .01594 2 .01255 .00340 3 .01215 .00040
Iterations stopped because S-stress improvement is less than .001000
Stress and squared correlation (RSQ) in distances RSQ values are the proportion of variance of the scaled data (disparities) in the partition (row, matrix, or entire data) which is accounted for by their corresponding distances.
Stress values are Kruskal's stress formula 1.
For matrix Stress = .01069 RSQ = .99900
Configuration derived in 2 dimensions
Stimulus Coordinates
Dimension
Stimulus Stimulus 1 2 Number Name
1 V2 1.2294 -.8624 2 V3 1.1698 .7247 3 V4 -.7076 .9451 4 V5 -2.0064 -.4602 5 V6 .3147 -.3472 Optimally scaled data (disparities) for subject 1
1 2 3 4 5
1 .000 2 1.605 .000 3 2.637 1.885 .000 4 3.262 3.396 1.908 .000
5 1.086 1.327 1.690 2.309 .000
43
Appendix D
Orthogonal Design for Conjoint Analysis
ProfilesPreference
High Mileage
Low Mileage
High Reliability
Low Reliability
Superior Style
Moderate Style
High Mileage, High Reliability, Superior Style 8 1 0 1 0 1 0High Mileage, High Reliability, Moderate Style 7 1 0 1 0 0 1High Mileage, Low Reliability, Superior Style 6 1 0 0 1 1 0High Mileage, Low Reliability, Moderate Style 4 1 0 0 1 0 1Low Mileage, High Reliability, Superior Style 5 0 1 1 0 1 0Low Mileage, High Reliability, Moderate Style 3 0 1 1 0 0 1Low Mileage, Low 2 0 1 0 1 1 0
44
Reliability, Superior StyleLow Mileage, Low Reliability, Moderate Style 1 0 1 0 1 0 1
Results of Conjoint Analysis in Excel
AttributeAverage Desirability
Deviation
Regression Coefficient
Relative Importance
Mileage 3.5 46.67%High 6.25 1.75
Low 2.75 -1.75Reliability
2.5 33.33%High 5.75 1.25Low 3.25 -1.25
Style 1.5 20.00%Superior 5.25 0.75
Moderate 3.75 -0.75
SUMMARY OUTPUT
Regression Statistics
Multiple R0.9940
3
R Square0.9880
95Adjusted R Square
0.229167
Standard Error
0.353553
Observations 8
ANOVA
df SS MS FSignifica
nce F
Regression 6 41.56.916
667110.66
66670.07263
6523Residual 4 0.5 0.125Total 10 42
Coeffici
entsStandard
Error t Stat P-valueLower 95%
Upper 95%
Lower 95.0%
Upper 95.0%
Intercept 4.25 0.25 177.0211
E-053.55588
87244.94411
1283.55588
87244.94411
128X Variable 1 0 0 65535 #NUM! 0 0 0 0X Variable 2 -3.5 0.25 -14 0.0001
5101-
4.19411-
2.80588-
4.19411-
2.80588
45
128 872 128 872
X Variable 3 2.5 0.25 100.0005
621.80588
87243.19411
1281.80588
87243.19411
128X Variable 4 0 0 65535 #NUM! 0 0 0 0
X Variable 5 1.5 0.25 60.0038
82540.80588
87242.19411
1280.80588
87242.19411
128X Variable 6 0 0 65535 #NUM! 0 0 0 0
Appendix E
Focus Group Discussion Transcript
The Focus Group has the following participants:
Participant 1 Arnab Biswas
Participant 2 Abhishek Kundan
Participant 3 Sheeti Kanth Das
Participant 4 Vamsi Goutam
Participant 5 Ajay Singh
Moderators Group-1 RMD (2011-13)
MODERATOR: The purpose of today’s discussion is to understand the perception and attitude of customers towards new brand Hero. We would like to know about your choice criteria and what makes you decide that Hero is the right choice. We would also like to understand the effect of demerger on your preference choices.
Participant 1 Hero Honda Karizma ZMR
Participant 2 Hero Honda Splendor
Participant 3 Hero Honda Splendor
Participant 4 Hero Honda Passion Pro
Participant 5 Hero Honda CBZ Star
Note: All participant chosen was having Hero Group bikes as we are evaluating perception changes for hero Brand
A few excerpts of the focus group interviews are as follows (Edited):
Moderator: When did you purchased your first bike and was it a Hero group’s bike?
P1: I purchased it in the first year of graduation and yes it was Hero Honda Karizma ZMR
P2: I also purchased Hero Honda’s bike and it was Splender
46
P3: It was a repeat purchase for me as I already had a Hero bike in my family and it was our satisfaction level which influenced us to go for Hero Honda again.
Similar answers were given by other panel members
Moderator: Ok, coming on to the second question, what are the key attributes you look for while selecting a bike?
P1: For me style quotient with affordable price is most important as I believe bike is a status symbol in student’s category.
P4: I am a mileage man, for me most important is mileage and service, with Hero Honda it’s easy to find both.
Moderator: Who are influencers in your decision?
P2: My dad and other family member.
P5: My core friend group and to an extent some involvement of family.
Moderator: From where do you get news and new offerings of Hero group?
P1: Mostly from television advertisement and sometimes friends also tell new thing about bikes as they get expose to a medium which i am not.
P2: At all service dates I visit dealer’s service department and get news about new promotional scheme also newspaper gives good information about new bikes and features.
Moderator: According to you how effective is Hero Group advertisement campaign (Advertisement video was shown on laptop to all members http://www.youtube.com/watch?v=qezk3QDURXg)
P3: I am aware about these add as it feature Mr. A R Rehman and it was shown on television number of times.
P5: i am aware about this one and also that punch line “Hero Honda- Desh Ki Dhadkan”.
Moderator: Are you aware of Hero Honda demerger and does it influences your preference?
P2: Yes I am aware but it does not make any difference to me as long as they maintain their core competencies (Interrupted by moderator)
What core competencies you are talking about
P2: I mean Low price and high reliability
P5: For me also it does not matter as Hero is capable enough to carry its legacy in terms of providing bike which suits Indian consumers, in fact I am happy that Hero is independent and now a Global brand.
Appendix F
Depth Interview Transcripts
47
#Transcript 1
The candidate is Arnab Biswas, who is currently pursuing his MBA at IIM Bangalore.
a) Are you aware of the Hero Honda demerger?
Yes
b) Why do you think the demerger happened?
It was part of the deal when Honda entered the market (3-4 yr deal)
c) Which factors did you consider while buying your bike?
Power – Engine Capacity, Looks. Within a segment not very price-sensitive (segment defined on
the basis of engine capacity)
d) How important is brand identity/brand image while buying a bike?
Very important
e) Which bike are you using currently?
Yamaha R15
f) If not Hero then why?
I am fond of new technology, Yamaha etc making premium bikes since many years. Assurance of
quality
g) Do you think the demerger would impact your decision of buying a Hero bike in the future?
How?
Yes coz Honda stands for superior technology in foreign markets. After demerger perception of
technology would decline.
h) Are there any concerns which you may have with the Hero brand post demerger?
Hero started with making cycles so consumers may have that impression still. They don’t know
how to make bikes, they are good with dealership so reach to consumers is good.
i) What do you think about the latest Hero Impulse recently launched?
Impulse is very good for interior of India. Good bike.
j) Have you seen the recent AR Rehman - Hero advertisement campaign?
Yes, it is unique. I like it.
k) Do you like the new Hero logo?
Yes it is different. Better than “Hero Honda” logo.
l) How would you compare the current “Hum main hain Hero” slogan with the earlier “Desh ki
Dhadkan”?
Desh ki Dhadkan was much better caught up with World Cup fever
m) Do you think Hero needs to campaign more to increase awareness about the new brand and logo?
Yes focus more on TV advertisements. Viewers’ first impression is created through tv ads. Focus
on auto shows, go for reviews.
48
# Transcript 2
Interviewed Syed Azhar, Sales Manager of Sri Sai Ram Motors, a Hero dealership at Bannerghatta
Road, Bangalore.
a) What were the reasons for the demerger?
Hero not getting approval from Honda to expand abroad, introduce new models etc
Hero Honda was No. 1 producer in India however exporting only to Sri Lanka and Bangladesh
b) What has been the post demerger impact on Hero?
No impact on sales, in fact growth has increased to 11%
Share price gained substantially post demerger
Technology contract with Honda till 2014 so impact would be limited till then
c) How has Hero tried to create brand awareness of Hero brand?
Aggressive campaigning, creative modes – roped in AR Rehman, 10 billion hearts etc
They are trying to develop brand equity of individual models such as CBZ, Impulse. Trying to
delink Hero Honda brand from the models so that models sell by themselves
d) Any concerns consumers have expressed post demerger?
Worried about quality and technology since Hero is known to have originally been a bicycle
producer
Technology was all Honda’s so unless Hero develops in-house R&D and technology this concern
may remain
Appendix G
49
Calculation of Sample Size using Pilot Survey
References
http://heromotocorp.com/
http://motoroids.com/news/honda-to-exit-hero-honda-by-march-2011.html
http://en.wikipedia.org/wiki/Hero_MotoCorp
http://www.thehindubusinessline.com/companies/article2304663.ece
http://heromotocorp.com/impulse
http://trak.in/tags/business/2011/03/18/hero-honda-rebranding-new-logo/
http://trak.in/tags/business/2010/12/18/hero-honda-divorce-brand-identity/
http://www.wheelosphere.org/hero-motocorp-logo-maestro-impulse-1251/
http://www.carblogindia.com/hero-group-brand-identity-budget-100-crore/
http://www.moneycontrol.com/news/business/jv-termination-experts-predict-hero-groups-
future_505636.html
50
http://blogs.hindustantimes.com/car-nama/2011/08/18/hero-honda-%E2%89%A0-hero-
motocorp/
http://www.iitk.ac.in/ime/MBA_IITK/avantgarde/?p=344
51