MARKET RESEARCH

SEPTEMBER 2014

BACKGROUND

In order to support the plan and strategies require for Hero launching in Colombia market, its necessary to have a
proper understanding and a close knowledge of Colombian user, in accordance with that objective a research trough
personal interviews were done across the country.

OBJECTIVES
GENERAL
To have a clear understanding of Colombian users in terms of perception, preferences, habits and expectations in
order to support the strategy definition for Hero launching in Colombian market.

SPECIFIC

To define a demographic profile for the motorcycle user

To define which is the general perception of each competitor brand, in order to secure a clear brand
differentiation for Hero.

To understand what Colombian users consider important to take a purchasing decision.

To have a clear understanding about media require to catch motorcycle users attention.

To understand which is the expectation of users regarding to a new brand of motorcycles.

RESULT

OBJECTIVE

1. EXPECTED RESULTS BY OBJECTIVE

1

Demographic
profile

Competitors brand
perception

Decision making

Media Preferences

New brand
expectations

User descripcion

Brand
differenciation

Critical factors to
push decision
making

Media plan

Critical factors for

brand launching

METHODOLOGY
TECHNIC
Individual questionnaires
TARGET
Mens between 21 and 45 years with sport motorcycles of maximum 2010 model.

SAMPLE
CITY

CALI

BOGOTA

MEDELLIN

B/MANGA

PASTO

MONTERIA

B/QUILLA

PEREIRA

NEIVA

SAMPLE

25

27

23

19

13

20

24

27

16

TOTAL SAMPLE: 194 Interviews

1. DEMOGRAPHIC PROFILE

MARKET RESEARCH
USER
COLOMBIAN MARKET

In Colombia, the distribution of motorcycle users are 71% of men and 28% women. However, men's are primarily users of sport category. Women look
for easy driving motorcycles like scooters.

The top concentration of users are on socioeconomic levels E.2 and E.3, these are the people that uses more the public transportation and have the
conditions to access to credit. People on E.1 is very poor and they dont have options to access to a credit or save to buy a motorcycle. People on E.4 to
E.6 are looking for a car.

*People in Colombia is divided in socioeconomic levels depending of their house's location and infrastructure. People who lives in E.1 have the worst houses conditions and
are located in neighborhoods with a poor quality of life and absence of the main public services (water and energy). People who live in E.6 are the ones with the highest
incomes, their houses are located in neighborhoods where the quality of life is high and the public services are the better ones.

8%

> 45
mayor

EMPLOYEE / INDEPENDENT

58%

30%

7%

41-45

AGE

E.2* 41%
E.3* 43%

OCUPATION

92%

SOCIOECON. LEVEL

GENDER

DEMOGRAPHIC PROFILE - ACCORDING RESEARCH RESULTS

9%

36-40

15%

31-35

24%

26-30

20%

21-25

20%

< 21
Menor

5%
0%

5%

10%

15%

20%

25%

30%

MARKET RESEARCH
CURRENT MOTORCYCLE EXPERIENCE

Users in Colombia are looking primarily motorcycles for work. This is very coherent with the
growths presented by Sport I segment during the last years.

In the work segment exist two type of users:

o Rational: The user that takes its decision based on the premise that its motorcycle is
its business.
o Emotional: The user that needs his motorcycle for work, but take in consideration
features like design and additional specifications.

According to the feedback received during the questionnaires, the people in low income
cities (Monteria, Neiva, Barranquilla, Pereira, Cali) prefer 100CC's motorcycles. In Cities with
highest per capita incomes (Bogot, Medellin) people prefer 150CC's motorcycles.

The sport users generally had experience as motorcycle users. This fact made them more
critical about their decisions and opinions. During the interviews most of them tried to
demonstrate their knowledge.

First users are not very familiarized with motorcycles, some of them bought their
motorcycles because of the endorsement of the Brand, and the others, because of the
features and technologies of the products. According to their comments the unequal prices
between displacements made them entry to the category, with motorcycles over 100cc. The
premium segment of 100 cc is not anymore the only entry segment for users looking for a
motorcycle to commute.

Use
60%
50%
50%
41%
40%
30%
20%

8%

10%
1%

2%

Have Fun

Travel

0%
Commute

Work

Mototaxi

Type of user
First: Those who buy a
motorcycle for first time.

8%
Additional
First

32%

Not first

61%

Not first: Those who already have

a motorcycle and are looking for
a new one to replace it.
Additional: Those who already
have a motorcycle and buy
another one as an additional

MARKET RESEARCH
USER
USER DESCRIPTION - FINDINGS
In accordance with the feedback received during interviews the user of motorcycle can be divided in the following segments according to its ages, experience
and on socioeconomic level :

Design buyers: These are the users between 21-30 years old that are looking for a motorcycle with a good design regardless is going to be used for
working or commuting. For these users the way they are perceived by its social group is very important. Indifferently the socioeconomic level, they want
a motorcycle with a nice design which can help them to express their personality. They also can be first or current users.

Functional buyers: These are the users between 31-35 years that are looking for a motorcycle to fulfill all their needs. They need a vehicle that can be use
for work, commute, pleasure, etc. The higher socioeconomic prefers options with this specs, and are willing to pay for options with better design. This
type of users is mostly not first buyer.

Status Buyers: These are the users between 31-35 years that buys a motorcycle expecting to exalt a positive moment of life. The motorcycle is the way to
show people the goals they have achieved during its life. Belong to socioeconomic level 3. Not first users.

Workers: These are the users between 36-40 years that buy a motorcycle as a working tool. They think in their primary need (to have a tool for work) and
the way to generate an income to their houses. Belong to socioeconomic level 2. Mostly are not first buyers.

FUNCTIONAL BUYERS

STATUS BUYERS

WORKER BUYERS

DESIGN BUYERS

MARKET RESEARCH
USER

2. COMPETITORS BRAND PERCEPTION

MARKET RESEARCH
MARKET PERCEPTION
Top of Mind
35%

33%

30%

In Colombia the traditional brands still have the highest remembrance between users.

There is not a direct relation between sales and brand remembrance, which show us
an important opportunity to Hero as a new brand.

Despite the high remembrance of traditional brands as Honda and Suzuki, the
absence of innovative products don't allow them to have a higher sales level. Yamaha
is a positive sample , because its a strong brand in terms of remembrance, it's the only
one between traditional ones with a permanent innovation and as a consequence it
have a high sales level.

Despite Bajaj is the most selling brand, it isn't one the most remembered, due to the
work done by Auteco, positioning it self as a brand, not just as assembler.

Users in an spontaneous way easily can identify many brands , which is positive
because show us that market is open and there is not a unique domain of one or two
brands.

Another important fact, is that currently Bajaj's brands are easily recognized by users
as additional brands from Auteco: Pulsar and Boxer are the most strongest.

Despite AKT is one of the most selling brands, it is not one of the most remembered,
probably because its price strategy is critical in the final decision but it is not an
aspirational brand, that people desire to buy as the first option.

27%

25%
20%

15%
15%
8%

10%

6%

6%
3%

5%

1%

1%

0%

TVS

Hero

Kymco

0%
Yamaha Honda Suzuki Auteco

Bajaj

Others

AKT

Helped remember
25%
20%

22%

20%

19%

17%

15%
10%
6%
5%
0%

5%
3%

2%

2%

1%

1%

1%

1%

0%

0%

MARKET RESEARCH
CURRENT BRANDS POSITIONING
Honda

Bajaj

Yamaha

Suzuki

Kymco

AKT

TVS

60%

50%

40%

30%

20%

10%

0%

Quality

Boring

Price/
quality

Innovative

Endorsement

Design

Modern

For you

Showrooms

Popular

Technology

Resale

Mileage

MARKET RESEARCH
CURRENT BRANDS POSITIONING

Quality
Boring
Price/Quality
Innovative
Endorsement
Design
Modern
For you
Showrooms
Popular
Technology
Resale
Mileage

Most
Honda
AKT
Yamaha
Yamaha
Yamaha
Yamaha
Yamaha
Yamaha
Yamaha
Yamaha
Yamaha
Yamaha
Bajaj

Second most
Yamaha
Suzuki
Bajaj
Bajaj
Honda
Honda
Bajaj
Honda
Bajaj
Honda
Honda
Honda
Honda

Less
AKT
Yamaha
TVS
TVS
AKT
TVS
TVS
TVS
TVS
AKT
AKT
TVS
TVS

The most strong image: YAMAHA

The most weak image: AKT
TVS is a new brand which is in process to be recognized, due to this its image is not too strong.

MARKET RESEARCH
CURRENT BRANDS POSITIONING

Honda is a very strong

brand. Users recognize
the quality of their
motorcycles that gives
them a strong image of
endorsement. This facts
and the stable Price
policy of Fanalca helps
the motorcycles to
maintain
its
value
through time.
Users also recognize
Honda as a good
mileage brand, this fact
is attributable to the Eco
Deluxe from Hero.

Yamaha is the brand with

the most positive image.
The strong image of a good
quality traditional brand has
been complemented with
good design product's and
innovation in their most
representative models. This
combination has helped
them to become an
aspirational brand that
every user dreams to have.
Yamaha is more focused on
the commuting segment.

Suzuki is one of the top

remembered
brands.
Despite this, its current
image is not positive. Most
of the people recognized
the
quality
of
the
motorcycles but perceive
the current moment of the
brand as bored.
The absence of novelties
caused a deterioration of
the brand that has been
obliged to defend it self
with price / promotion
strategies.

AKT is a very curious

case. Most of the users
thinks the brand is
boring,
non
technological, with bad
endorsement,
bad
quality , etc. However,
despite all this bad
qualifications, users has
understood that buying
an AKT means getting a
low quality product for a
fair Price, and they feel
comfortable with this.

Recently Auteco has worked

to position individual brands
as part of the assembler,
however most of the people
is not aware of the existence
of Bajaj. However its
important to mention that
people links the Boxer CT
100 and its superior mileage
with Bajaj.
Bajaj with its Pulsar 200 NS
and Discover 125 ST also has
created a strong image as an
innovative and modern
brand.

3. DECISION MAKING

MARKET RESEARCH
DECISION MAKING

Low cost
C. Agree
S. Agree
Neither Agr. or Dis.
S. Disagree
C. Disagree

92%
4%
2%
1%
1%

Make me
look better
81%
7%
5%
2%
6%

Reliable

Easy

Improve life

Rugged

Accessories

Pleasant

99%
1%
0%
0%
0%

85%
10%
2%
2%
1%

81%
9%
3%
2%
5%

40%
10%
7%
6%
38%

57%
11%
7%
5%
20%

93%
1%
1%
1%
3%

Leader Different
63%
11%
3%
3%
20%

76%
8%
4%
1%
10%

Grand
63%
9%
7%
4%
16%

Savings Economic
88%
7%
2%
0%
3%

91%
5%
1%
1%
3%

Despite security is not a very profitable approach for a brand, users unconsciously prefer a motorcycle that make them feel
safe. Due to that, associations with quality, endorsement and reliability are critical for the decision making process.

People are looking for a better quality of life by the buying of a motorcycle, in line with that, brands should offer options
with affordable prices, easier and pleasant to drive and with a high perception of save in consumption and maintenance

Despite the market trend for customized motorcycles, this is something that should be an user choice, because according
to research results not all the potential users want a striking bike, which look costly or rugged.

Another important fact, critical for the decision making process, is that motorcycle should make user feel like they look
better, which evidence the importance of design for Colombia market.

MARKET RESEARCH
DECISION MAKING

Users in Colombia compare several brands before taking their purchase decision.

Most of the users during the interviews manifest they quoted motorcycles above their
Budget. That means that good design motorcycle's generates traffic to the show
rooms.

The fact that users compare motorcycle through visits to the showrooms,
demonstrate the need to be located on the motorcycles clusters in each city.

The user consider the show rooms as a place that talks about the brand endorsement.
For them a well structured distribution network means that the brand is solid and had
the Budget to produce good quality products.

For users, their friend's opinions are really valuable, however, aspects like warranty,
distribution network and strong media presence, had a big influence on their
purchase decision.

Lots of users arrive to the show room with no idea of the type of motorcycle that they
want, the salesman must be very well trained in how to identify the real need of the
customer in order to close as much deals as they can.

Visited ShowRooms
35%
30%

27%

28%

29%

25%
20%

16%

15%
10%
5%

0%

0%

AKT

Others

0%
Auteco

Honda

Yamaha

Suzuki

MARKET RESEARCH
DECISION MAKING

For Colombian user, design is one of its

main considerations at the moment of
buying a motorcycle.

At the end, the rational evaluation of

mileage and price are the main facts that
every motorcycle user considers for the
final decision.

The user of motorcycles is divided in two,

the one who is looking for a motorcycle
that fits to his Budget, and the one who
is looking for some specifications and
design and then try to adjust it in his
budget.

In Colombia as we saw in a previous

slide, the traditional brands are very
important, however, there is a big
portion that is willing to prove new
brands if they feel they are receiving a
good offer in terms of design, price and
specifications.

Key Aspects on a motorcycle (1-very important . 5- less important)

1
2
3
4
5

Design
28%
17%
23%
19%
13%

Displacement
17%
20%
20%
27%
17%

Power
15%
31%
12%
17%
25%

Milleage
19%
27%
33%
16%
6%

Price
26%
17%
16%
18%
23%

Brand
20%
22%
15%
18%
26%

Aftersales Financiation
14%
31%
14%
31%
27%
8%
14%
0%
32%
31%

Resale
5%
5%
18%
45%
27%

Durability
18%
10%
16%
22%
34%

Key Aspects on a motorcycle

18%
16%
14%

16%

16%

16%
14%
13%

12%
10%

9%

8%

8%
6%
4%
2%
0%

3%

2%

2%

MARKET RESEARCH
DECISION MAKING
Funding plan importance

13%

Important

87%

Most of Colombian users recognize the important to have an alternative of

funding plan for purchase process.

Lots of Colombians has bought its motorcycle through funding plans, however,
the understanding of the interest rate has made that users prefer short
periods of financing.

Users wants funding options with easier process , less requirements and low
rates.

Each user requires an special funding plan according to its credit profile, due to
this is important to have different alternatives of financing to offer in the
moment of the purchase.

People find that financing with a grace period is very attractive due to the
possibility of save for the first payment.

Not important

Launching funding plan:

Buy now, pay later (2 months grace period)
Attractive

17%

Not Attractive

83%

MARKET RESEARCH
DECISION MAKING

1%

6%

3%

The most negative barrier is the financing process, its crucial for the
final decision making.

Most of the users that experience problems with their credits, decide to
buy an other brand of motorcycle, which offers them an easy credit
option.

The sales process in most of the brands and showrooms is still

unsatisfactory for an important part of the potential buyers.

Adequate showrooms location and proper training sales force is critical

to secure the positive purchase closing.

Barriers
No barrier

15%

Lack of financing
Any other
Family support
Lack of information
Lack of Show rooms

58%
18%

4. MEDIA PREFERENCES

MARKET RESEARCH
DECISION MAKING

Colombians still believing in TV as the main media, what they see on

TV must be good, because is very expensive to be there.

For users, their friend's opinions are really valuable and is the most
reliability source for start and to finish the decision making process.

As was already mentioned, the proper showrooms in terms of

location and image are crucial to be included as part of the
alternatives for decision making process.

In terms of media, all the channels related to internet access are

becoming in the second most important to be in direct contact with
users. Web site, social networks , SEO and SEM strategy are definitive
for the proper understanding and communication with potential
users.

Newspaper should be understood as a regional tool to communicate

relevant news for local context. Showroom opening, special
promotions or special activities.

Source of information

5%

5%

8%
32%

Friend
Show room
TV
Internet

18%

Newspaper
Member of family

30%

5. NEW BRAND EXPECTATIONS

GENERAL CONCLUSIONS

MARKET RESEARCH
NEW BRAND EXPECTATIONS

Colombian users are willing to consider a new brand for the purchase decision process, if the new
brand:

Understand and offer options according to their requirements in terms of usage, price, design and
specifications
Offers a image of quality and endorsement equal to traditional brands
Present novelties in terms of design and technology
Offer low fuel consumption and low cost maintenance
Located showrooms in the motorcycle areas of their own cities.
Gives the proper attention / information on showrooms
Offers easier credit options
Show their brand and motorcycles on national TV
Information trough on line media is available
Respect users knowledge and experience and talk them accordingly

MARKET RESEARCH
GENERAL CONCLUSIONS
USER

The Colombian user already know about

motorcycles, they have learned for previous
experiences with Chinese brands the
importance of support. Thats why they are
so critical at the moment of deciding which
motorcycle to buy.
Users are proud of their knowledge of
motorcycles.
By brand support user understand the
summation of: Distribution network, after
sales network, presence in massive media
and positive word of mouth.
For users, warranty means confidence.
Design is fundamental to convince users of
proving a new brand.
Colombian user needs financing to buy a
motorcycle, according to their credit needs
and cash flow expectations.
Colombians still believing in TV. They link the
presence in TV with good quality.
Each day Colombians have more information
of motorcycles thanks to the Internet.

BRANDS

MARKET

Traditional brands are passing through a

hard time. The absence of novelties of
Honda and Suzuki has obliged the user to
consider other brands as options to buy a
motorcycle
The brands had had a big issue in terms of
sales process. Users are not 100%
comfortable by the way they have been
treated.
Yamaha is the only brand that is taking
advantage of their position as traditional
brand. Is the most aspirational brand in the
market.
The user has understood that AKT is a low
quality brand that offers good design
products at a fair Price.
Auteco has done an excellent job building a
strong assembler brand, but its brand are
not strong for themself, due to this, and in
line with Bajaj strategy, they are starting the
process to build brands like Pulsar and Boxer.
Auteco with its promotional pricing strategy
has created a bad image of resale.

Users are looking for 100cc displacement

motorcycles due to the fuel consumption,
low maintenance cost and low taxes.
The current low prices of some 125cc's and
150cc's motorcycles, transformed these
segments on the entry of first users.
The 150cc segment represent a big
opportunity due to the knowledge and
experience of Colombian market.
The financing is becoming each day in one of
the most important tools of the sales
process.
Each zone of Colombia have different
behaviors in terms of sales, but users thinks
in a very similar way about brands and
purchasing process.

THANK YOU!