Hero Honda

Introduction:

The Indian two-wheeler industry is experiencing a major shift in its shape and

structure. The established players in the industry are taking a hard look at their

portfolio of products and are in the process of reshuffling them to meet the

expectations of customers. The beneficiary is of course the consumer, who has

an increased array of products to choose from.

The last four-five years have brought about a great change in the consumer

preferences for two-wheelers. The market leaders of yesteryears are being

driven to maintain their leadership position in the forthcoming years. Those who

have had a great going in the last few years are fighting hard to retain their

new supremacy. The two-wheeler industry is perhaps the most happening place

in terms of new models launched, upgraded products and innovative marketing

techniques. Gone are the days of regulation when the production of scooters

and motorcycles was limited to two or three brands and the number of products

produced was decided by the Government; today the Indian two-wheeler

market is highly competitive with numerous players who offer anything and

everything a consumer demands and that too at affordable price. From a sellers

market where one had to wait for a scooter for 12 years to the days when you

can just walk into any showroom and drive out in the vehicle of your choice, the

market of two-wheelers in India has come a long way. But this is only the

beginning of the transformation.

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The Industry:

The Indian two-wheeler industry is dominated by three players, Bajaj, Hero

Honda and TVS Suzuki, who account for 80 percent of the total two-wheeler

market. The other players including Kinetic Engineering, LML and others

account for the remaining 20 percent of the market. The industry can be

divided into three broad segments: Scooters, motorcycles and mopeds. In the

scooters segment Bajaj is the market leader, Hero Honda is the market leader

in the motorcycles segment and in the segment of mopeds, TVS controls the

major chunk of the market.

Most Indian players in the two-wheeler industry had been into some kind of

strategic alliance, technical collaboration or joint venture with foreign players,

mainly Japanese firms. Hero-Honda, is a joint venture between the Munjal-

promoted Hero Group and Honda Motor Co. of Japan; TVS-Suzuki was an

alliance with TVS and Suzuki Motors (till September 2001); Bajaj-Kawasaki a

joint venture between Bajaj Motors and Kawasaki; and Yamaha-Escorts, a joint

venture between Escorts and Yamaha Motor Corp. (till June 2001).

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Hero Honda

The story of motorcycles in India is a good case study of how fortunes change

overnight. Motorcycles in India were hardly popular and Hero Honda was the

only player, which had carved a niche for motorcycles. Its market was small and

limited while scooters ruled the roost but today, it is one of the biggest success

stories. Its established presence in the motorcycle segment had stood it in good

stead in this phase of boom in motorcycle sales. The fact that no other player

commanded the brand name which Hero Honda enjoyed in motorcycle segment

also added up to its success. In addition most other players such as Bajaj, TVS,

LML etc., took time to assimilate the change in customer preferences and come

up with models to buck the trend. Meanwhile Hero-Honda's designs were ready

on the platter. Its R&D had been able to come up with models such as CBZ,

Passion etc., in the premium segment to capture the hot demand. Riding high

on the expectations of consumers, Hero Honda has successfully crossed over

the one million units mark in motorcycle sales. Its popular model Splendor is

the largest selling motorcycle in the world.

To give a boost to its youthful image the company has chosen Saurav Ganguly

and Hrithik Roshan as brand ambassadors. The company has also embarked on

in-film advertising in a forthcoming Hindi movie. In order to expand its reach to

rural areas, the company has recently launched a marketing initiative in towns

with a population of less than 50,000 in Uttar Pradesh. As a part of this

initiative, it started a mobile workshop and showroom, through which people

will be able to gather knowledge about the companies' vehicles and can also

buy them. These mobile marketing efforts are focused on Splendor and Joy.

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Executive summary

Hero Honda Motors Ltd is one of the leading companies in the two-wheeler

industry. At present, it is the market leader in the motorcycle segment with

around 47% the market share during FY 2000-01.During the year, the company

posted a 41.05% yoy rise in turnover to Rs.31,686.5mn in motorcycles which

was driven by a 35.17% yoy rise in motorcycle sales volumes. The company has

emerged as one of the most successful players, much ahead of its competitors

an account of its superior and reliable product quality complemented with

excellent marketing techniques . The company has been consistently

addressing the growing demand for motorcycles and has a cumulative

customer base of over 4 million customers which is expected to reach 5mln

mark with the rural and semi-urban segment being the new class of consumers.

The Indian two wheeler contributes the largest volumes 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's . The market primarily comprises five players

in the two-wheeler segment with most of the companies having foreign

collaborations with well-known Japanese firms earlier .But most of the

companies are now planning 100% subsidiaries in India.

In the last four to five years, the two-wheeler market has witnessed a marked

shift towards motorcycles at the expense of scooters. In the rural areas,

consumers have come to prefer sturdier bikes to withstand the bad road

conditions. In the process the share of motorcycle segment has grown from

48% to 58% , the share of scooters declined drastically from 33% to 25% , while

that of mopeds declined by 2% from 19% to 17% during the year 2000-01. The

Euro emission norms effective from April 2000 led to the existing players in the

two- stroke segment to install catalytic converters. All the new models are now

being replaced by 4-stroke motorcycles. Excise duty on motorcycles has been

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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.

Hero Honda has been an early-entrant in the 4 – stroke segment of the

two wheeler industry. With a right mix of product styling and pricing

the company helped garner a larger market chunk of the 4 – stroke

market as compared to Bajaj Auto. A shifting consumer preference

towards motorcycles also enabled the fast growth of the company in

the last few years. Of the total motorcycle sales , HHML has a maximum of

around 36.5% market share in the Western Zone and 28.6% in the Southern

Zone which has remained more or less consistent from FY2000 levels. In the

Eastern Zone Hero Honda has a market share 12%. The company has reported

a fall in sales volume to 3,29,900 units from 4,79,630 units in motorcycles for

half-year ended September 2001 accompanied by decline in net sales by 29.2%

to Rs10.38 mln from Rs14.67mn.

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 .

HHML, a part of the Hero group, is a reputed name in the two-wheeler sector

and the management has a rich experience in the business. HHML is a joint

venture with Honda Corporation , Japan and over the years has been the most

successful Indo-Japanese venture in two-wheelers. The company has invested in

capex, in the past three years to cater to the increasing demand. The company

has been cash –rich and has been effectively utilizing its surplus resources

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combined with prudent working capital management. Hero Honda has set a

target of 20% volume growth and 25% turnover growth for the fiscal 2001-02 .

The company has also set a turnover target of Rs. 200 mln from spare parts

business in fiscal 2001-02 up from Rs.145 mln in 2000-01 and the business is

expected grow faster than bike sales for the next 5 yrs . It has planned to bring

in operational efficiencies with special focus on distribution, dealerships and

pricing and the sucessful implementation of SAP R/3 ( ERP- Program-" Project

Synergy " ) has enabled proper planning and company wide efficiency

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The legend of Hero Honda

What started out as a Joint Venture between Hero Group, the world's largest

bicycle manufacturers and the Honda Motor Company of Japan, has today

become the World's single largest two wheeler Company. Coming into

existence on January 19, 1984, Hero Honda Motors Limited gave India nothing

less than a revolution on two-wheels, made even more famous by the 'Fill it -

Shut it - Forget it ' campaign. Driven by the trust of over 5 million customers,

the Hero Honda product range today commands a market share of 48% making

it a veritable giant in the industry. Add to that technological excellence, an

expansive dealer network, and reliable after sales service, and you have one of

the most customer- friendly companies.

This is proved by the company's sales over the years :

1985-86 43,000 units

1989-90 96,200 units

1998-99 5,30,600 units

1999-00 7,61,210 units

2000-01 10,29,555 units

2001-02 14,25,195 units

Customer satisfaction, a high quality product, the strength of Honda technology

and the Hero group's dynamism have helped HHML scale new frontiers and

exceed limits.

In the words of Mr. Brijmohan Lall Munjal, the Chairman and Managing Director,

"We will continue to make every effort required for the development of the

motorcycle industry, through new product development, technological

innovation, investment in equipment and facilities and through and through

efficient management."

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Hero Honda

History Of Company

1984

- The Company was Incorporated on 19th January, at New Delhi. The Company

Manufacture motor cycles upto 100 cc capacity. The Company was promoted

by Hero Cycles (P) Ltd. (HCPL).

- The Company entered into a technical-cum-financial collaboration agreement

with Honda Motor Co. Ltd., Japan (HML). As per this collaboration agreement,

HML was to furnish complete technical information and know-how and trade

secrets and other relevant data.

- Hero Honda CD-100 is the first four stroke motorcycle to be introduced in India

in 100cc range. Its most attractive features are fuel efficiency and its light

weight. CD-100 will be equipped with electronic ignition system, illuminated

speedometer, 4 speed gear box, neutral and flasher indicators, etc.

- 15 No. of equity shares subscribed for by the promoters, etc. In November,

119,99,985 No. of equity shares issued at par of which 71,99,985 shares

reserved for allotment as under:

- (i) 31,19,998 shares to Hero Cycles (P) Ltd., Hero Investments (P) Ltd., and

Bahadur Chand Investments (P) Ltd.

- (ii) 31,20,000 shares to Honda Motor Co. Ltd., Japan and

- (iii) 9,59,987 shares to friends and association of promoters. Out of the

balance 48,00,000 shares, 2,40,000 shares were reserved for subscription by

the employees of the Company and 96,000 shares by business associates. The

remaining 44,64,000 shares were offered at par for public subscription during

November.

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1985

- The Company embarked on its 2nd phase of expansion of increasing its

installed capacity from 1,20,000 to 1,50,000 vehicles per annum by the addition

of several critical aliminium and steel components.

1986

- 36,00,000 rights equity shares issued at par in prop. 3:10.

1987

- The Company offered 6,00,000 - 15% secured redeemable non-convertible

debentures of Rs 100 each for cash at par on rights basis in the proportion 1

debenture: 18 equity shares.

- Another 3,00,000 - 15% debentures were allotted to retain oversubscription.

The debentures were to be redeemed at a premium of Rs 5 per debenture on

the expiry of the 7th year from the date of allotment of the debentures.

- 3,75,000 rights equity shares issued at par in prop. 3:10.

1989

- The Company introduced a new model "Sleek" during July.

- 850 No. of equity shares forfeited.

1990

- The Company was planning to launch a new model motor cycle-CD 100 SS

sutiable to semi-rural conditions. In the domestic market the Company was

reported to have a market share of 46%.

- 850 forfeited shares reissued.

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1994

- The Company proposed to expand the capacity of existing plant at Dharuhera

to 2,40,000 nos. per annum. Another plant with an installed capacity of

1,50,000 nos. per annum at Gurgaon Industrial Estate was being set up.

- The Company issued 39,79,500 bonus shares to the existing shareholders in

the ratio of 1:4. The Company also issued 28,557 number of fractional coupons

representing 14,250 shares against which shares shall be allotted to presenting

the same for consolidation and allotment.

- The Company's production and turnover increased to 1,83,490 motorcycles

and Rs.483.85 crores respectively due to growth in demand for two wheelers

and declining inflation.

1995

- 14,420 bonus shares issued by way of consolidation of fractional coupons. - A

new Technical Collaboration Agreement has been signed with Honda Motor Co.

Ltd., Japan for the period upto the year 2004 which includes technology related

to models of higher Engine displacement.

- The Company alloted 39,79,500 No. of Equity Shares of Rs. 10/- each as Bonus

shares on 7th February, by way of capitalisation of General Reserves.

- The Company had issued 28557 No. of Fractional Coupons representing

14.250 shares against which the Shares shall be alloted on presenting the same

for consolidation and allotment.

1997

- Hero Honda Motors has launched its newest motorcycle, the Street, a 100 cc

bike designed for use in congested urban traffic conditions.

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- Hero Honda Motors Ltd (HHML) has set up a new motorcycle plant in Gurgaon,

near Delhi for the manufacture of the Honda Super Cub 100 cc stepthro bike.

- Hero Honda has set up a new state-of-the-art plant, heralding a new phase of

development of motorcycle industry in India, to provide the most modern and

technologically advanced production facilities.

- Hero Motors of the Rs.1,600 crore Hero group, as part of its globalisation plan,

has set up a plant in Brazil for manufacturing hero winner scooters.

- A new step thru model `Street-100' with unique feature was launched on 24th

January.

1998

- The company proposes to increase the share capital to 5 crore equity shares

of Rs. 10 each, 4 lakh cumulative redeemable preference shares of Rs. 100

each and 4 lakh cumulative convertible preference shares of Rs. 100 each with

power to increase or reduce it from time to time.

- The company further proposes to capitalise Rs. 19,96,87,500 from general

reserve to share capital through issue and allotment of bonus shares.

Altogether, 1,99,68,750 fully paid bonus shares will be allotted and distributed

to members of the company holding equity shares of the company in the

proportion of one bonus share for every fully paid equity shares of Rs.10 each.

- Motorcycles major Hero Honda is considering entry into scooters in

collaboration with partners, Honda Motors, after the Japanese company decided

to walk out of Kinetic Honda, their scooter venture with the Firodias of Pune.

- Honda Motors recently pulled out of its joint venture with the Firodias in which

it held a 51 per cent equity stake.

- Honda Motor Company Ltd of Japan (Honda) and Kinetic Honda Motor Ltd

(KHML) have signed a five-year licence and technical assistance agreement

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under which KHML will continue to receive the technical knowhow, critical

vehicle parts and access to Honda's markets even after the sale of Honda stake

in KHML to Kinetic Engineering Ltd (KEL).

- The Company changed the paradigm in two-wheelers by launching the most

powerful and fast bike- CBZ with a unique feature of Transient Power Fuel

Control (TPEC) system.

- 23,962,500 bonus shares issued in prop. 1:1.

1999

- Hero Honda Motors Ltd (HHML) and 20th Century Finance Corporation Ltd

have signed a Memorandum of Understanding (MoU) for financing of Hero

Honda motorcycles.

- The company, a joint venture between Honda Motor Company of Japan and

Hero group of India to produce four-stroke motorcycles, also aims to increase

its share by 1 per cent to 38.6 per cent during the current fiscal.

- Leading two-wheelers manufacturer Hero Motors has formed a joint venture

with Briggs Stratton of US to develop and manufacture four-stroke engines for

mopeds and scooters in India, a top company.

- Honda Motor Company of Japan has decided to re-enter the scooter market in

India as also foray into three-wheelers in a joint initiative with its existing joint

venture company Hero Honda Motors Ltd.

2000

- Hero Honda Motors Ltd. and Tata Finance Ltd. have signed a national tie-up

agreement. The Company is the largest manufacturer of motorcycles in the

country.

- The Company will relaunch its stepthru Stree Smart on Baisakhi 13th April.

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- Hero Honda Motors Ltd (HHML), has launched an upgraded version of the

existing step-through motorcycle - the Hero Honda Street.

- The Company was ranked as the 9th Highest Value Creator among 12 industry

groups within the Bombay Stock Exchange top 100 companies over a five year

period (1994-99).

2001

- Hero Honda Motors Ltd. has launched a new 100cc motorcycle named

`Passion'.

- The Company has secured shareholders' approval for splitting one equity

share of Rs 10 each into five equity shares of Rs 2 each in the ratio of 1:5.

- Hero Honda Motors Ltd. has become the largest seller of motorcycles amongst

all Honda companies and ventures in the world by selling one million

motorcycles during the current financial year.

- Credit rating Agency Crisil has reaffirmed outstanding `AAA' rating assigned to

the proposed Rs 15 crore non-convertible debenture issue, Rs 16 crore

commercial paper programme and fixed deposit programme of Hero Honda

Motors.

- Promoter-Chairman of the country's largest motorcycle manufacturing

company, Hero Honda Ltd, Brijmohan Lall Munjal has bagged the prestigious

Ernst & Young Entrepreneur of the Year (EOY) award here on September 27.

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BusinessHero Honda is the largest player in the motorcycle segment. Focused on

contemporary design and style, the company has a comprehensive range of

bikes in its stable viz; CD-100DX , CD-100SS , Splendor , Street Smart , Sleek ,

CBZ , Passion . However ‘ Street ‘ failed to evoke market fancy while sporty ‘

CBZ ‘ dropped down the popularity chart. Hence the company continues to rely

on urban – centric ‘ Splendor ‘; its primary revenue spinner with the USP of fuel

– efficiency, which accounts for over 60-70%of its sales. The " Passion "

launched in mid -Jan 2001has had a resounding success contributing to 26% of

total volumes and has not cannibalized the volumes of ‘ Splendor ‘. With the

sale of over 1mn motorcycles in 2000-01 , the company has also become the

largest volume seller among all Honda Companies and ventures in the world .

The company has now shifted its focus towards launch of new products. HHML

launched a 100cc motorcycle ‘ Joy ‘ in FY2001delivering 65 to 70 km per litre in

city driving conditions. The company hopes to achieve a sales of 8,000 to

10,000 units of Joy per month. The company is also planning to launch

motorcycles in 200cc –300 cc category and is looking at the possibility of

introducing a " luxury motorcycle " in the same category. HHML has planned an

additional capacity of 1.5mln units pa at Dharuhera plant by investing Rs3bn

($65mn) to meet the huge and increasing demand for motorcycles.

The Honda Motor Corporation of Japan has set the annual sales target of 1.75

mln 2-wheelers (25% of worldwide target) for 2003 in India, to be contributed to

the extent of 1.5 mln by HHML and the balance by its wholly owned subsidiary

Honda Motorcycles & Scooters India Pvt. Ltd. HMSI launched ‘ Activa ‘ the 4

stroke automatic medium-sized , 102-cc scooter in July 2001 and is looking at

volumes of about 50,000 from its first product. It also plans to launch another

scooter next year are also in the offing in order to increase the sales volumes to

1 lakh units .

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The current mix of Hero Honda’s urban to rural sales is about 40:60 and is

estimated to remain at the same level in the future too.

SWOT Analysis

Strengths:        

Technological support from Honda Motors, Japan.

The company has a deeply penetrated dealer network.

The company provides good after sales service through its well established

dealer network.

The company enjoys a huge market share and well established brands like

Splendor, CD100, CBZ, etc.

Weaknesses:            

Hero Honda depends on Honda for new products and this is a big weakness

considering it from the post 2005 point of view. The reason being that the

technological tie-up between Hero Honda and Honda Motors of Japan will cease

to exist.

The company doesn't have a product catering to Rs. 25,000 - Rs. 30,000

segment, and the company might suffer on account of this as the imported

motorcycles and foreign players' motorcycles are expected to cater to this

particular segment of the market. This can result in fall in the market share of

the company.

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The company imports about 31% of its spares requirements. This makes the

company vulnerable to the import policies of the government. it also exposes

them to the exchange rate risk.

Opportunities:            

The motorcycle segment is growing at the rate of 33%, which provides a great

opportunity for the company to cash on. Also it is experiencing a shift in the

customer preference from 4-stroke mobikes to 2-stroke mobikes. This again

provides an excellent opportunity to Hero Honda to leverage its market share

and market leadership for sustained profitability.

Threats:                     

The technical collaboration with Honda is valid only till 2005 and this is a

serious threat as they have been dependant on Honda for technology. Also

Honda has set up its 100% subsidiary in India which shall start producing

motorcycles from 2004. This will further increase the competition.

The company has plans to foray into the scooter segment, which can also be a

major threat for the future prospects of the company. The reason being that the

consumers are shifting from scooters to motorcycles and at this hour moving

from motorcycles to scooters doesn't sound logical.

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Mission Statement

IN PURSUIT OF EXCELLENCE

"We, at Hero Honda, are continuously striving for

synergy between technology, systems, and human

resources to provide products and services that meet

the quality, performance, and price aspirations of our

customers. While doing so, we maintain the highest

standards of ethics and societal responsibilities,

constantly innovate products and processes, and

develop teams that keep the momentum going to take

the company to excellence in the new millennium".

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Hero Honda Policies

Some of the policies followed by Hero Honda are: -

Environment Policy :

“We at Hero Honda 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;

We shall communicate this policy to all our employees and would make it

available to interested parties.”

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Quality Policy

Excellence in quality is the core value of Hero Honda'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 & responsibility.

The policy shall be applied equally, fairly & without exception.

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Board of Directors

The Board of Directors of The Hero Honda Group Comprises of : -

Mr. Brijmohan Lall Munjal Chairman

Mr. Pawan Munjal Managing Director

Mr. Akio Kazausa Joint Managing Director

Mr. Kazumi Yanagida Director

Mr. Satyanand Munjal Director

Mr. Om Prakash Munjal Director

Mr. M P Wadhawan Director

Mr. S P Virmani Director

Mr. O P Gupta Director

Mr. M. Sudo Director

Mr. S Toshida Director

Mr. N N Vohara Director

Mr. Pradeep Dinodia Director

Gen. ( Retd.) V P Malik Director

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The Hero Honda Stable:

Hero Honda company has a comprehensive range of bikes in its stable viz; CD-

100, CD-100SS , Splendor , Street Smart , Sleek , CBZ , Passion.

CD100

Features:The Original Fill it, Shut it,

Forget it Bike

India's first 4-Stroke bike is still

India's foremost. And the reasons

for its popularity are apparent.

Economy. Reliability. And the

capability to go on and on, year

after year.

The 4-Stroke Engine : The CD100's 4-stroke engine is derived from Honda's

tough Econo series range of engines, which have proved their mettle for the

last 35 years. Worldwide.

Phenomenal Fuel Efficiency : A marvel of 4-stroke technology, ensuring

complete combustion of fuel. Giving you an unbelievable average of 80

kms/litre.

Economical & Easy to Maintain : Optimal oil utilization of 50 ml for every

1000 kms. And separate oil circulation in the engine, instead of it being burnt

with petrol. Hence, no carbon deposits on piston rings, spark plug and silencer

to worry about.

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Built For Strength and Endurance : The CD100 is the only Indian bike using

a T-bone frame of high quality pressed tensile steel. Moreover, having less

welded joints and fewer stress points, it emerges unrivalled in terms of

strength, durability and safety.

Smokeless Exhaust : CD100 is the only 100cc bike, which satisfies pollution

limits and is well within the stipulated carbon monoxide emission levels.

Nationwide Service Support : Backing the technological excellence of the

CD 100 is an extensive and well-equipped sales and service network, well

spread out across the country.

Other Thoughtful Features : An improved, easy-to-read, illuminated

speedometer. With a colour-marked 'Economy Zone' indicating cruising range.

Pillion-step mounted on chassis frame for pillion rider's comfort. Double tube

rear shock absorbers for better riding comfort. A range of exciting colours.

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Hero Honda

CD100SS

Features:Tough And Rugged

Wider tyres. Higher ground clearance. A special

engine guard. This bike any way you look at it

represents toughness. And the ability to handle

even off road, dirt track conditions with ease.

All this with the economy and comfort you

have always associated Hero Honda with.

Extra Strength. Matchless Fuel Economy: Say goodbye to your commuting

troubles. And get ready to take on the toughest riding conditions, while

continuing to enjoy the legendary fuel economy. The CDlOOSS adds a new

dimension of strength to Hero Honda's world famous 4-stroke technology, the

CD100 SS adds a new dimension of strength. Special modifications have been

incorporated to prepare the bike for the rough and the tough.

Larger reinforced shock absorbers: To soak up bumps on unkind roads. To

protect your bike, and insulate you from discomfort.

Wider tyres: To grip the road, no matter in what condition. Improved

cornering stability and safety.

Heavier body weight: To ensure balance and strength. The 103 kilo dry

weight makes the ride exceptionally stable.

Engine guard: To protect your engines from the assault of sand, mud and

stones. Therefore improving performance.

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Splendor:

Features:Designed to Excel

The Hero Honda Splendor is an excellent example of the term. Designed with

your comfort in mind, with a contoured low-slung seat, specially designed

handle-bar and a strong double-cradled tubular frame. This bike epitomises

riding pleasure. Truly, the limousine of Indian two Wheelers.

The 4-stroke, 100 cc driving machine from Hero Honda. A bike that will stop you

right in your tracks. Both by its look and performance. True to its Honda

lineage. Consider its newly designed engine that gives you unprecedented fuel

efficiency. While still delivering a punchy 7.5 PS. Next, feel the ergonomics of it

as you cruise along. A well-cushioned low-slung seat helps you rest and ride at

the same time. Not to mention the suspension, that works so well that probably

you'll never find out what happens between the tyres and that bumpy road.

Needless to add, owning a Splendor means a lot of other things too. Like getting

all the admiring looks. Or the pride you feel in riding a bike that meets the

pollution control standards of the next decade, today.

That's Splendor, a bike that will be called a turning point in motorcycling. So

check it out. Tomorrow has arrived, in style!

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STREET SMART

Features of Street Smart:City Riding Made Easy

Another example of technology coming up with

brilliant solutions to frustrating, everyday problems.

The Street Smart is the ideal city bike. With a unique

'City Clutch' and Rotary Gears, it is specially equipped to let you handle stop-

start city traffic with ease.

Presenting Hero Honda Street Smart. A bike from the world's favourite Honda

Cub family. This 4-stroke, 100cc bike from Hero Honda delivers great pick-up,

with remarkable economy. Rotary gears and Auto-clutch make it amazingly

maneuverable. So you can smile your way in and out of crowded traffic. From

zipping down to the bazaar, to going on picnics, the sheer convenience of riding

makes Street Smart the smartest choice for the entire family. Choose one

today, and join the world's largest and happiest family of riders.

Stylish Front Shield: The Street Smart comes with trendy front shield,

making it sturdier, safer and smarter.

Storage Box: There's enough space in here for whatever you'll need to carry.

From Sunday shopping to office lunch.  

Rotary Gears: Specially designed to take you from the fourth to neutral by

simply avoiding the third, second and the first. Perfect for today's stop-and-go

traffic.

Unique 'City Clutch': A unique in-built auto-clutch. Hence, no clutch levers

making gear changing a simple foot-tapping affair.

Automatic Decompression: Easy start is yet another unique feature. One

gentle nudge and the engine comes alive. Self-start model also available, which

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helps reduce load on the battery and enhances its life.

Dawn

Features of dawn:

Hero Honda 'Dawn' comes with

a special Rough Road Package

Control (TPFC) system: Tough track suspension : 'Dawn' is provided with a

unique double-acting suspension that soaks up bumps on rough roads. This

gives much better riding comfort.

Double tubular frame : Its tubular double-cradle frame imparts extra stability

and strength to the bike.

Broad rear tyre: 'Dawn' has a broad rear tyre, which gives you better grip and

stability on all kind of roads. Whatever the terrain, it is always 'ready for the

rough'.

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CBZ

Features:

Transient Power Fuel Control (TPFC)

system: For quick acceleration, providing a

sudden surge when required. A feature which

is used in some of the most advanced cars.

Tachometer and Tripmeter: Tachometer

displays the engine rotation speed. And a first

time feature the Tripmeter measures the distance traveled in a trip.

Dynamic vibration dampers: The dampers incorporated in the

handlebar, ensure that your ride is smooth and easy.

Air injection system: Injects fresh air into the exhaust port, to meet the

emission norms.

Gear Box: Equipped with five gears and a 156cc engine that generates

12.5 bhp power. Enough to take it from 0 - 60kmph in just five seconds

and touch the top speed of 100kmph.

Unique Trapezoidal Headlight: Gives the CBZ a distinctly stylish look.

Provided with 35 watts of power these headlights help give you a clear

view of the road, even in the darkest of nights.

Zero Crank Case Evaporative Emission: An advanced pollution

control feature which is the first of its kind in India. Keeping alive the Hero

Honda tradition of environment friendly bikes.

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Multi Lever Locking Seat: Provides storage space It also doubles as an

anti theft mechanism for the CDI unit, RR unit and the battery, by allowing

the side covers to be opened only after unlocking the seat.

Adjustable Rear-Shock absorbers: They have been provided for extra

comfort, and can be easily adjusted into five positions.

Hydraulic Vibration Dampers: The hydraulic dampers have been

incorporated into the handlebars to ensure that your ride is smooth and

steady.

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PASSION

Features of Passion:

DESIGN

Contoured Fuel Tank

Multi- reflector Trapezoidal Headlight

and Tail- light

Streamlined Side Cowl

SAFETY

Position Lamp

Side Reflector

Wider Wheel Base

COMFORT

Adjustable Rear Cushion

Wide & Comfortable Seat

Broad Rear Tyre

Double Cradle Tubular frame

CONVENIENCE

Large Storage Space with Locking Facility

Helmet Holder

Lockable Seat

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RURAL MARKETING- CHALLENGES AND

OPPORTUNITIES

The Indian rural market with its vast size and demand base offers great

opportunities to marketers. Two-thirds of countries consumers live in rural

areas and almost half of the national income is generated here. It is only

natural that rural markets form an important part of the total market of India.

Our nation is classified in around 450 districts, and approximately 630000

villages which can be sorted in different parameters such as literacy levels,

accessibility, income levels, penetration, distances from nearest towns, etc.

The success of a brand in the Indian rural market is as unpredictable as rain. It

has always been difficult to gauge the rural market. Many brands, which should

have been successful, have failed miserably. More often than not, people

attribute rural market success to luck. Therefore, marketers need to understand

the social dynamics and attitude variations within each village though

nationally it follows a consistent pattern.

While the rural market certainly offers a big attraction to marketers, it would be

naive to think that any company can easily enter the market and walk away

with sizable share. Actually the market bristles with variety of problems. The

main problems in rural marketing are:

Physical Distribution

Channel Management

Promotion and Marketing Communication

The problems of physical distribution and channel management adversely

affect the service as well as the cost aspect. The existent market structure

consists of primary rural market and retail sales outlet. The structure involves

stock points in feeder towns to service these retail outlets at the village levels.

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But it becomes difficult maintaining the required service level in the delivery of

the product at retail level.

One of the way could be using company delivery vans which can serve two

purposes- it can take the products to the customers in every nook and corner of

the market and it also enables the firm to establish direct contact with them

and thereby facilitate sales promotion. However, only the bigwigs can adopt

this channel. The companies with relatively fewer resources can go in for

syndicated distribution where a tie-up between non-competitive marketers can

be established to facilitate distribution.

As a general rule, rural marketing involves more intensive personal selling

efforts compared to urban marketing. Marketers need to understand the psyche

of the rural consumers and then act accordingly. To effectively tap the rural

market a brand must associate itself with the same things the rural folks do.

This can be done by utilizing the various rural folk media to reach them in their

own language and in large numbers so that the brand can be associated with

the myriad rituals, celebrations, festivals, melas and other activities where they

assemble.

One very fine example can be quoted of Escorts where they focussed on deeper

penetration .In September-98 they established rural marketing sales. They did

not rely on T.V or press advertisements rather concentrated on focussed

approach depending on geographical and market parameters like fares, melas

etc. Looking at the ‘kuchha’ roads of village they positioned their mobike as

tough vehicle. Their advertisements showed Dharmendra riding Escort with the

punchline ‘Jandar Sawari, Shandar Sawari’. Thus, they achieved whopping sales

of 95000 vehicles annually.

One more example, which can be quoted in this regard, is of HLL. A year back

HLL started ‘Operation Bharat’ to tap the rural markets. Under this operation it

passed out low–priced sample packets of its toothpaste, fairness cream, Clinic

plus shampoo, and Ponds cream to twenty million households.

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Thus looking at the challenges and the opportunities which rural markets offer

to the marketers it can be said that the future is very promising for those who

can understand the dynamics of rural markets and exploit them to their best

advantage.

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Marketing In Rural India:

The Indian society is a complex social system with different castes, classes,

creeds and tribes. The high rate of illiteracy added to the inadequacy of mass

media impedes reach almost to 80% of India's population who reside in village.

Mass media is too glamorous, interpersonal and unreliable in contrast with the

familiar performance of traditional artist whom the villager could not only see

and hear, but even touch. Besides this villagers are more conservative buyers

then their urban counterparts. Their desire to innovate with new product is

restricted.

Traditional media can be used to reach these people in the marketing of new

concept. The traditional media with its effective reach, powerful input and

personalized communication system will help in realizing the goal. Besides this

when the advertisement is couched in entertainment it goes down easily with

the villager.

Advantages of traditional media:-The accessibility is high.

Involves more then one sense.

Interest arousal capability is high.

Less operational liability ¨ Minimum cost.

Disadvantages of traditional media:-Range of mode choice is narrow.

Potential for cognitive gain retention is possible but restricted.

Depends on the skill of the performer But for optimum effect all elements in the

rural communication system will have to be orcheastered into a united whole.

Companies like Bajaj, Rajdoot, HLL, Nirma are the few companies which have

used these methods to the fullest extent.

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Few companies which have used traditional media effectively & the strategy

behind it are :-

The Strategy: Dabur address the rural marketing for its Gripewater to both

men and women.

The Lesson: Rural women make the decisions .Its the men who buy.

The Strategy: Reckitt and Colemen uses NGO's in rural areas to educate

customers about product benefits.

The Lesson: Establishes one to one communication channels.

The Strategy: BBLIL markets its rural brands through magic shows and skits.

The Lesson:  Use local idioms to convey your message in a meaningful

context.

The Strategy: Hero Honda has established mobile service centers to take

care of rural customers. 

The Lesson: Reinforce product quality through service indicators. 

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Types of Traditional Media:

Some of the available options in the traditional media are Puppetry, Folk

Theater & Song, Wall Painting, Demonstration, Posters, Agricultural Games,

Post Cards etc.

Puppetry:

Puppetry is the indigenous theatre of India. From time immortal it has been the

most popular form and well-appreciated form of entertainment available to the

village people. It is an inexpensive activity. The manipulator uses the puppets

as a medium to express and communicate ideas, values and social messages.

Puppet theaters in India :-

1. String puppets or Kathputlis of Rajasthan -Contents - Heroic deeds of Vikramaditya, Prithviraj Chouhan, Amar Singh Rathore

2. String puppets of Orissa - Contents - Radha-Krishna

3. Rod puppets from Bengal:-Contents -Mahabharat, Manas , Radha-Krishna

4. String and Rod puppets of the south (Tanjavur, Madras and Andhra):-Contents - Kathakali

5. Shadow puppets of (a)Orissa (b) Kerala (c)Andhra (d) Karnataka:- Contents - Ramayana.

Thus in rural India puppetry is a source of livelihood, avenue for entertainment

and creative expression which is ritually sacred and meaningful as a means of

social communication and vehicle of social transformation.

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Song and Drama Division of the Government Of India makes wide use of

puppets in its campaigns to promote various government projects. Several

other organizations, government, semi-government and private, have also used

puppets in support of individual schemes.

Life Insurance Corporation of India used puppets to educate rural masses about

Life Insurance; enlisting the help of the literacy house in Lucknow. These plays

were shown to the audience in villages in UP, Bihar, & MP. The number of

inquires at local Life Insurance Companies during the period immediately

following the performance was compared with normal frequency and found to

be considerable higher. The field staff of the corporation also reported a definite

impact on the business.

Indian Institute of mass communication, New Delhi made a study of

comparative impact of puppetry and documentary films, in two villages near

Delhi. People in both the villages responded more favorably to the puppet

shows then the films.

Folk Theater :

Folk theaters are mainly short and rhythmic in form. The simple tunes help in

informing and educating the people in informal and interesting manner. It has

been used as an effective medium for social protest against injustice,

exploitation and oppression.

Folk Theater / Songs Forms In India:

Andhra Pradesh : Veethi Natakam, Kuchupudi, Burratatha

Bihar: Bidesia, Serikela Chhau, Jat-Jatni Bidpada, Ramkhelia

Haryana : Swang, Naqqal

Assam : Ankiya Nat, Kirtania Natak, Ojapali

Gujarat : Bhavai

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Jammu & Kashmir: Bhand Pathar or Bhand Jashna, Vetal Dhamali

Himachal Pradesh: Kariyala, Bhagat, Ras, Jhanki, Harnatra Haran or Harin.

Kerala: Kodiyattam,Mudiattam,Therayattam,Chavittu Natakam,

Chakiyar Kooth, Kathakali

Karnataka: Yakshagan, Sanata, Doddata-Bayalata, Tala Maddle or

Prasang,Dasarata, Radhna.

Madhya Pradesh : Maanch, Nacha

Orissa: Pala Jatra, Daskathia, Chhau Mayurbhanj, Mangal Ras,

Sowang,

Rajasthan: Khyal, Rasdhari, Rammat, Turra Kilangi, Gauri, Nautanki,

Jhamtara

Uttar Pradesh : Ram Leela, Ras Leela, Nautanki, Bhagat, Sang-Swang,

Naqqual

Maharashtra : Tamasha, Lalit Bharud, Gondha, Dashavatar

Punjab: Nautanki, Naqaal, Swang.

Tamilnadu : Therukuttu, Veethi Natakam, Bhagwat Mela Natakam,

Kurvaanji, Pagal Vasham, Kavadi Chindu

Goa, Daman &

Diu:

Dashavatar, Tiyatra.

Folk songs have been effectively used during revolts of Telangana and

Naxalbari and now a days it's best exploiters are Political Parties.

Government has used this media for popularizing improved variety of seeds,

agricultural implements, fertilizer etc. Punjab Agricultural University produced

Two Audio Cassettes.

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A) Balliye Kanak Biye - Wheat Cultivation.

B) Khiran Kepah Narme - Cotton Cultivation.

Both were well received by farmers.

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Demonstration:

"Direct Contact" is a face to face relationship with people individually and with

groups such as the Panchayats and other village groups. Such contact helps in

arousing the villager's interest in their own problem and motivating them

towards self-development.

Demonstration may be:

A. i. Method demonstration

ii. Result demonstration

B. i. Simple Demonstration

ii. Composite Demonstration

The five steps to make any demonstration effective are below:

Information about people

Objectives to be accomplished

Demonstration plan & Execution of the plan

Evaluation of the demonstration

Reconsideration after evaluation.

In result demonstration, help of audio -visual media can add value. Asian Paints

launched Utsav range by painting Mukhiya's house or Post office to

demonstrate that paint does not peel off.

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Haats & Melas:

The countries oldest tradition holds the key to solving these problems. The

mobile supermarkets of rural India.

Facts & Figures:-

Over 47,000 haats and 25,000 melas are held annually.

The average daily sale at a Haat is about Rs.2.25 Lacs.

Annual sales at melas amount to Rs.3,500 crore.

Over half the shoppers at haats have shopping lists.

More than 10,000 melas draw visitors from all over India.

Nearly half the outlets at melas are for manufactured goods.

Haats is a better opportunity for promotion after brand building has been

done at Mela.

Melas are organized after harvest season,so the villager has enough

money which he will be ready to spend.

Demonstration at Haat is essential to convert customers at haats since their

atitude is far more utilitarian than that of visitors to a fair.

Wall Paintings:

Wall Paintings are an effective and economical medium for advertising in rural

areas. They are silent unlike traditional theatre .A speech or film comes to an

end, but wall painting stays as long as the weather allows it to.

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Retailer normally welcomes paintings of their shops, walls, name boards. Since

it makes the shop look cleaner and better. Their shops look alluring and stand

out among other outlets. Besides rural households shopkeepers and panchayats

do not except any payment, for their wall to be painted with product messages.

To get one's wall painted with the product messages is seemed as a status

symbol. The greatest advantage of the medium is the power of the picture

completed with its local touch. The images used have a strong emotional

association with the surrounding, a feat impossible for even a moving visual

medium like television which must use general image to cater to greatest

number of viewers.

A good wall painting must meet some criteria to generate awareness and

remind consumer about the brand. The wall should:

The most frequented shops can be painted from inside also one feet

above the ground level.

It is courteous to take the verbal permission of owner .The permission is

normally given. However by taking the permission of the rural retailers or

house owners, one gets the owner morally committed to taking care of

wall painting.

The message should be simple, direct and clear .

A definite way of arresting is to use bright colors and these do not fade

away easily. A good paint will survive the ravages of dust, sand and

rainstorms for about three years.

Paintings must be taken after rainfall.

It should be peaked up during the festival and post harvest season. To

derive maximum mileage their usage needs to be planned meticulously.

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Hero Honda in the Rural Market.

In the rural market, consumers prefer motorcycles for their sturdiness and

ability to sustain bad road conditions. The stricter environment norms such as

the euro emission norms are forcing companies to install catalytic converters in

the existing vehicles or go in for four-stroke engines to reduce pollution. This

has added up to the costs of scooters while most motorcycles are in tandem

with these new norms.

The success of the motorcycle is more of a rural phenomenon. According to

analysts, the entire age profile of the consumer has undergone a change and

the buyers / target consumers are now younger. ``So, in effect, the entire

demographics now are in favour of the motorcycle segment. It is not unusual

that a large chunk of motorcycle sales are from the rural areas. Hero Honda,

derives 60 per cent of its sales from the rural segment.”

In order to promote its brand in the rural market, Hero Honda has recently

launched a marketing initiative in towns with a population of less than 50,000 in

Uttar Pradesh. The initiative would involve a mobile showroom and workshop,

through which people will be able to gather knowledge about the vehicles and

also buy them. The concentration will be mainly on promoting the company's

two major brands: Splendor and Joy.

With these initiatives, Hero Honda is targeting sales of 1.3 million two-wheelers

this fiscal. The festival season has also showed an improvement in sales for

Hero Honda despite the current downtrend. A factor driving sales could be the

company's offering of a two-year warranty (for which it claims to spend

approximately Rs 10-15 crore annually) and its hugely successful consumer

loyalty programme.

Hero Honda, makes practically nothing at its plant. The only operation done at

its Dharuhera works other than the assembly of motorcycles is engine

assembly.

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Hero Honda has an enormous advantage as in it has a product for each of the

market segments. The CD 100 is the basic no-frills model with fuel efficiency

and reliability as USP; the CD 100 SS is the upgraded durable model positioned

in the rural market; Sleek the glamorous bike for the urban youth and the

Splendor is the premium product with better features and targeted at the urban

market.

Analysts believe that the biggest advantage Hero Honda enjoys is its brand

image as a fuel-efficient bike. The company expects to leverage on the strong

brand image when its earliest customers start looking for replacements.

A recent research report says that on the back of large volumes, Hero Honda

has developed strong vendors like Munjal Showa, Hi-Tech Gears, International

Instruments and others from whom it sources more than 80 per cent of its

components. This has also helped the company to lower its import content.

Hero Honda, makes practically nothing at its plant. The only operation done at

its Dharuhera works other than the assembly of motorcycles is engine

assembly.

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A Dream Turned into Reality

“Quote”

We must do something for the community from whose

land we generate our wealth.

“Unquote”

This famous quote of Hero Honda’s CMD, Mr.Brijmohan Lall Munjal set the

ball rolling for the Rural Development of the area around Dharuhera

(Haryana) in the year 1990 and 10 years later, the dream, the vision has

turned into reality.

   

It can be said with all the humility & modesty that Hero Honda Motors Ltd is

perhaps the only Corporate House who have genuinely contributed to its share

of Social Service & Community Development of a backward region in almost all

the spheres, be it Infrastructure (Roads, Water Supply Scheme,

Community Hall, School Buildings), Education, Health ,Sports, Adult

Education and Vocational Training and turned in into a Vibrant,

Educated and Healthy community with all the modern amenities available

to it in a modern society.

 

Setting up of an Integrated Rural Development Centre called “Raman Kant

Munjal Foundation” in 40 acres land along Delhi Jaipur Highway (NH-5) near

Dharuhera. This Nodal Agency was set up in 1992 and is responsible for

initiating and undertaking all the activities & project related to Rural

Development & for the Uplift of the Community.

 

Some of the salient features of their Social & Community Development

Projects which have been undertaken since the last seven years are listed

below :-

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Raman Munjal Vidya Mandir : Raman Munjal Vidya Mandir of Raman Kant

Munjal foundation was started in 1992 with three classes (UKG,I& II) and 55

students with the aim to impart education that is holistic in approach especially

to the students of rural area. Today it has grown into a Senior Secondary, CBSE

affiliated co-educational, English Medium School with 1050 students and 51

teachers having complete & most modern infrastructure. The school provides a

confluence of modern educational facilities like full fledged ultra-modern

laboratory, well equipped Audio Visual Room, Indoor Games, Activity Room,

well stocked Library and ultra modern Computer Laboratory

 

The platform is one of interaction amongst the teachers and the taught thereby

fostering a conducive education environment. The school aims to involve

parents as prime factors in the child’s learning process. No stone is left

unturned to encourage the students to develop well integrated personalities.

Self learning is a part of our curriculum. Varied co-curricular activities make our

students receptive to art, culture and language skills. The school has a large

spacious playground and sports is encouraged to the core.

 

Raman Munjal Memorial Hospital : A multi specialty 30 bed hospital, to be

upgraded to 100 bed unit having state of the art equipment providing quality

health care to the rural population of the catchment area of 20 KM around

Dharuhera, apart from providing immediate life saving medical aid to the

Accident & Trauma victims of National highway No-8 .

 

Raman Munjal Sports Complex : A modern sports complex primarily to

promote rural sports is likely to be planned in near future with sports academies

in Volley ball and Basket ball, in collaboration with National Sports Authority

of India. Out door Basket ball & Volley ball courts in addition to Hockey &

Football playgrounds are already being utilized by the local population.

 

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Vocational Training Centre : In order to help local rural people, specially

women, the Company has set up a Vocational Training Centre. So far 13

batches comprising of nearly 150 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 its employees thus creating

income generation opportunities for them. Most of the women are now self

employed.

 

Adult Literacy Mission : This Scheme was launched on 21st

September, 1999 covering the nearby villages of Malpura, Kapriwas &

Sidhrawali wherein 36 adults were enrolled. We are now in the process of

imparting Adult Literacy Capsules to another 100 adults by involving

Village Heads and other prominent villagers to motivate the illiterate

adults. The program is a regular feature, only village keeps changing.

 

Marriages of Under Privileged Girls, particularly from backward classes

have been organized as per the local customs from time to time by providing

financial help and other support to the respective families.

 

Rural Health Care : Besides setting up a modern hospital as mentioned

above, the company has provided extensive health care services to the local

community at their door step. A series of Free Health Care & Medical Camps

have been organized in the last 7 years or so and has now become a regular

feature.

 

Adoption of Village for Integrated Development : The Company has

adopted 10 villages located within 10 km radius of our factory for integrated

rural development. Some of the developmental activities undertaken in these

villages are as under :

 

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Drinking Water : Southern Haryana being water scarce area, the Company

has installed 75 deep bore hand pumps in the adjoining villages to provide

clean drinking water.

 

Construction of Roads : The Company has constructed approx. 5 km of

metalled roads and connected these villages to the National Highway (NH –8).

 

Renovation of Govt. School Building : Four Primary School Buildings have

been renovated including provision of Sulabh toilets and drinking water.

 

Construction of Drainage : Most of these villages do not have proper

drainage causing water logging in the heart of these villages. The Company has

constructed proper drainage system in these villages.

 

Promotion of Non-Conventional Energy : In order to promote non-

conventional sources of energy the Company has been subsidizing

installation of bio-gas plants by 50 percent. 15 such plants are currently

operational.

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