DHAK DHAK GO……HERO HONDA

SPLENDOR

MADE BY:

CHIRAG MAHESHWARI (24)

BHARAT KALRA (38)

 ABSTRACT

A Dream Turned into Reality…. We must do something for the community from
whose land we generate our wealth.

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.
India is the second largest producer and manufacturer of two-wheelers in the
world. Indian two-wheeler industry has got spectacular growth in the last few
years. Indian two-wheeler industry had a small beginning in the early 50's. Indian
companies are among the largest two-wheeler manufacturers in the world. Hero
Honda and Bajaj Auto are two of the Indian companies that top the list of world
companies manufacturing two-wheelers.
The two-wheeler market was opened to foreign companies in the mid 1980s. The
openness of Indian market to foreign companies leads to the arrival of new models
of two-wheelers into India. This leaded to the strong growth of Indian automobile
industry.
 KEY PLAYERS IN TWO WHEELERS INDUSTRY
After facing its worst recession during the early 1990s, the two-wheeler industry
bounced back with a 25% increase in volume sales in February 1995. The scooters
are considered as family vehicles. There are many two-wheeler manufacturers in
India. Major players in the 2-wheeler industry are Hero Honda Motors Ltd
(HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS).

The other key players in the two-wheeler industry are Kinetic Motor Company Ltd
(KMCL), Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India
Ltd (Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL) and
Honda Motorcycle & Scooter India (P) Ltd (HMSI).

Motorcycles in India:

Bikes comprise a major segment of Indian two wheeler industry.

Company : Bajaj Auto Ltd Company : HERO HONDA

* Hero Honda Achiever
* Hero Honda CD Dawn
* Bajaj Avenger
* Hero Honda CD Deluxe
* Bajaj CT 100
* Hero Honda Glamour
* Bajaj Platina
* Hero Honda Glamour-Fi
* Bajaj Discover DTSi
* Hero Honda Karizma
* Bajaj Pulsar DTSi
* Hero Honda Passion Plus
* Bajaj Wave
* Hero Honda Pleasure
* Bajaj Wind 125
* Hero Honda Super Splendor
* Sonic DTSi
* Hero Honda Splendor NXG
* Hero Honda CBZ Xtreme
Company : Kinetic Motor Company : TVS Company : Yamaha Motor
Company MOTOR India
* Kinetic Aquila
* Kinetic Boss * TVS Apache * Yamaha CruxS
* Kinetic Challenger * TVS Centra * Yamaha G5
* Kinetic Comet * TVS Fiero * Yamaha Gladiator
* Kinetic GF * TVS Star * Yamaha RX15
* Kinetic Stryker * TVS Victor * Yamaha Fazer
* Kinetic Velocity

INTRODUCTION

ABOUT THE COMPANY

1983 Joint Collaboration Agreement with

Honda Motor Co. Ltd. Japan signed

Shareholders Agreement signed

1984 Hero Honda Motors Ltd. incorporated
1985 First motorcycle "CD 100" rolled out
1987 100,000th motorcycle produced
1989 New motorcycle model - "Sleek"
introduced
1991 New motorcycle model - "CD 100 SS"
introduced

500,000th motorcycle produced

1992 Raman Munjal Vidya Mandir
inaugurated - A School in the memory
of founder Managing Director, Mr.
Raman Kant Munjal
1994 New motorcycle model - "Splendor"
introduced

1,000,000th motorcycle produced

1997 New motorcycle model - "Street"
introduced

Hero Honda's 2nd manufacturing plant

at Gurgaon inaugurated
1998 2,000,000th motorcycle produced
1999 New motorcycle model - "CBZ"
introduced

Environment Management System of

Dharuhera Plant certified with ISO-
14001 by DNV Holland

Raman Munjal Memorial Hospital

inaugurated - A Hospital in the memory
of founder Managing Director, Mr.
Raman Kant Munja
2000 4,000,000th motorcycle produced

Environment Management System of

Gurgaon Plant certified ISO-14001 by
DNV Holland

Splendor declared 'World No. 1' -

largest selling single two-wheeler
model

"Hero Honda Passport Programme" -

CRM Programme launched
2001 New motorcycle model - "Passion"
introduced

One million production in one single

year

New motorcycle model - "Joy"

introduced

5,000,000th motorcycle produced

2002 New motorcycle model - "Dawn"
 introduced

New motorcycle model - "Ambition"

introduced

Appointed Virender Sehwag,

Mohammad Kaif, Yuvraj Singh,
Harbhajan Singh and Zaheer Khan as
Brand Ambassadors
2003 Becomes the first Indian Company to
cross the cumulative 7 million sales
mark

Splendor has emerged as the World's

largest selling model for the third
calendar year in a row (2000, 2001,
2002)

New motorcycle model - "CD Dawn"

introduced

New motorcycle model - "Splendor +"

introduced

New motorcycle model - "Passion Plus"

introduced

New motorcycle model - "Karizma"

introduced
2004 New motorcycle model - "Ambition
135" introduced

Hero Honda became the World No. 1

Company for the third consecutive year.

Crossed sales of over 2 million units in a

single year, a global record.

Splendor - World's largest selling

motorcycle crossed the 5 million mark
 New motorcycle model - "CBZ*"
introduced

Joint Technical Agreement renewed

Total sales crossed a record of 10

million motorcycles
2005 Hero Honda is the World No. 1 for the
4th year in a row

New motorcycle model - "Super

Splendor" introduced

New motorcycle model - "CD Deluxe"

introduced

New motorcycle model - "Glamour"

introduced

New motorcycle model - "Achiever"

introduced

First Scooter model from Hero Honda -

"Pleasure" introduced
2006 Hero Honda is the World No. 1 for the
5th year in a row

15 million production milestone

achieved
2007 Hero Honda is the World No. 1 for the
6th year in a row

New 'Splendor NXG' launched

New 'CD Deluxe' launched

New 'Passion Plus' launched

New motorcycle model 'Hunk' launched

 20 million production milestone
achieved
2008
Hero Honda Haridwar Plant
inauguration

New 'Pleasure' launched

Splendor NXG lauched with power

start feature

New motorcycle model 'Passion Pro'

launched

New 'CBZ Xtreme' launched

25 million production milestone

achieved

CD Deluxe launched with power start

feature

New 'Glamour' launched

New 'Glamour Fi' launched

2009 Hero Honda Good Life Program
launched

Hunk' (Limited Edition) launched

Splendor completed 11 million

production landmark

New motorcycle model 'Karizma -

ZMR' launched

Silver jubilee celebrations

 INDIAN RURAL MARKET AT A GLIMPSE

Large and Scattered market The rural market of India consists of

Major income from agriculture
Low standard of living
Traditional Outlook
Diverse socio-economic backwardness
Infrastructure Facilities
over 63 crores consumers from
5,70,000 villages
60 % of the rural income is from
agriculture
Low literacy, low per capita income,
social backwardness, low savings, etc.
The rural consumer values old customs
and tradition. They do not prefer
changes.
Diverse socio-economic backwardness
is different in different parts of
the country.
Physical distribution becomes costly due
to inadequate Infrastructure facilities
like roads, warehouses,
communication system, financial
facilities

The rural bazaar is booming beyond everyone’s expectation. an estimated

induction of Rs 140 billion in the rural sector through the government’s rural
development schemes in the Seventh Plan and about Rs 300 billion in the Eighth
Plan is also believed to have significantly contributed to the rapid growth in
demand. The high incomes combined with low cost of living in the villages have
meant more money to spend. And with the market providing those options, tastes
are also changing.
 PROBLEMS WITH RURAL MARKET
Underdeveloped People
Underdeveloped Markets
Lack of Proper Physical 50% of the villages in the country do not
Communication Facilities
Media for Rural Communication
Many Languages and Dialects
Dispersed Market
Low Per Capita Income
Low Levels of Literacy
Prevalence of spurious brands and a multitude of ‘local variants’, which are
seasonal demand
Different way of thinking
and The number of people below poverty
line has not decreased in any
appreciable manner. Vast majorities of
the rural people are tradition bound,
fatalistic and believe in old customs,
traditions, habits, taboos and practices.
have all weather roads.
Radio, television and cinemas are
potential medium for communication.
Rural areas account for hardly 2000 to
3500 mobile theatres which are far less
then no. of villages.
Number of recognized languages is only
16, the dialects are estimated to be
around 850. The messages have to be
delivered in the local languages and
dialects.
Scattered and impossible to ensure the
availability of a brand all over the
country. 7 Indian states account for 76%
of the country’s rural retail outlets, the
total number of which is placed at
around 3.7 million.
33-35% of GDP is generated in the rural
areas and is shared by 74% of the
population.
Leads to problem of communication for
promotion purposes.
cheaper, therefore, more desirable to
villagers
Fairly simple thinking and usually has 2
or 3 brands to choose.
 STORY BEHIND THE WALL

GROWTH OF TWO WHEELER INDUSTRY IN RURAL MARKET

Two wheeler industry in India has shown a good jump. In the last 4-5 years, two
wheeler industry has shown average growth of 8.5%, having an overall segregation
among: motorbikes (8%), scooters (12%) and mopeds (10%); all thanks to a steady
revival in economic activity, low excise duties, low interest rates and relatively
higher disposable incomes that enabled the demand pull.

Major players: Hero Honda, Bajaj, TVS Motors, Honda Motorcycles & Scooters,
Yamaha, Mahindra & Mahindra (new player) have captured the market
significantly in urban sectors and are foraying to go deep into the interiors of the
country.

With cars like Tata Nano being introduced for Rs 1.5 lakhs for Indian roads along
with various other schemes introduced by car companies to lure customers, 2
wheelers future lies in semi-urban and rural regions.

IMMENSE POTENTIAL IN RURAL INDIA

According to research, with an estimated market for 2 wheelers in FY 11 as Rs 535
billion in India and 92 million potential buyers, the rural market accounts for 40%
of the size which cannot be ignored.

Reduced debts by government, farm loan waivers, (MSP-Minimum Support Price),

low interest rates, more financial institutions offering credit, government agri-
credit programmes, schemes of NREGA(National Rural Employment Guarantee
Act) Mahatma Gandhi Rural Employment Scheme-all these factors have added
impetus to the purchasing power and disposable income of the local consumers in
these regions.
DIFFERENCE BETWEEN RURAL AND URBAN CONSUMER

While buying a product Rural customer:

 looks for maximum needs being satisfied in a product. Also the customer
should have 4 A’s—Awareness, Affordability, Availability and Acceptance.
These customers are in particular distinguished as buyers of ‘Value for
Money’.

 Rural customers need a sturdy transport product which could be used for
multi-purposes- carry luggage, cross the undeveloped roads, go to mundi,
milk carriage etc.
Unlike urban, the customer here is not educated so there is indispensable need to
educate them verbally. Further, there is great impact of reference sale or ‘Word of
mouth’ publicity to increase sale.

The other exclusive marketing activities being carried out to make the product
more popular are participation in local melas, rural games, rural financing and
local mechanics to avoid bad publicity of the product.

WIDE SPREAD DISTRIBUTION NETWORK OF HERHONDA MOTORS

Hero Honda which has a consolidating position in the urban sector is not far
behind to take up rural vertical all the more seriously. The company’s contribution
is a massive 58% of the total country's two wheeler sale, 42% of their total sales
business is from rural segment. These impressive sale figures are a result of many
rural initiatives with the vision “Har Gaon Har Angan”, (Every Village Every
Household), undertaken by Hero Honda.

 No. of Villages Covered: Under the rural initiative, over 100,000 villages
have already been covered. All non-metro dealerships conduct Opinion
Leader Contact Programs (OLCP), Loan Melas and Exchange Camps on a
regular basis in up-country and rural markets.
  Service Har Jagah (SHJ): Hero Honda dealerships across the country are
conducting Service Har Jagah (SHJ) camps in village locations, on the same
specified day of every month, thereby enabling customers to get their bikes
serviced in their own villages, rather than travelling several miles to nearby
towns and cities for the same.

HERO HONDA IN RURAL MARKET

REASON TO CHOOSE RURAL MARKET

 To strengthen retail financing to support the initiative that could lead to

setting up of its own finance arm.

 Looking at new growth areas to maintain sales momentum in a shrinking

market.

 Plans to cover 100,000 of the600,000 villages in the country by the end of

this financial year under a campaign aimed Har Gaon, Har Aangan (every
village, every household).

 Created a special ‘rural vertical' to push growth started. Under this,

collecting a lot of data at rural touch point. Many of dealers are now meeting
Sarpanches, Headmasters, Aanganwadi workers and other opinion makers to
understand the rural consumer better.

RURAL MARKETING

During the year, Hero Honda's ambitious rural connect program Har Gaon, Har
Aangan program rolled out across most states of the country.

It was also a year in which Hero Honda cascaded its unique rural connect program
Service Har Jagah. After successfully testing this grassroots rural connect
program in some states, Hero Honda went national in October 2009.
At the moment, there is a network of more than 2,000 rural sales channel partners
working on the rural vertical through the Har Gaon Har Aangan and Its
extensions such as Service Har Jagah program.

There is a plan to substantially boost this number in the coming years by spreading
to villages that have a population of even less than 5,000,

Apart from meeting opinion leaders, the rural sales executives are also tasked with
organizing free checkup bike camps, loan melas, test ride camps, conducting Ride
Safe Programs to educate customers on "Safety" and "Maintenance" and
conducting other awareness camps on various value added features such as
Genuine Spare Parts, Good Life Program, Hero Honda Advantage and other
services offered by the Company.

The idea is not just to increase awareness about the two wheeler industry but also
to increase buy-in for Hero Honda products.

To improve its rural presence, Hero Honda is relying heavily on information

technology and during the year, the Company made specific efforts to capture
details of sales in the rural market. It gave the marketing team a much better idea
of the customer mix and demand forecast and simultaneously, enhanced
coordination between the channel partners and HeroHonda.

The Company has placed brand displays in various DCM Hariyali Kisaan Bazaar
Centres, spanning across many states namely Uttar Pradesh, Uttaranchal, Madhya
Pradesh, Haryana and Punjab. These premises were also used for conducting free
check up camps and education camps on Safety Riding skills, such camps were
also held in association with Monsanto, Godrej Aadhar, IFFCO and various other
fertilizer and seed companies in many parts of the country.
 PLAN HAR GAON HAR AANGAN

STRATEGY: Hero Honda has established mobile service centres to take care of
rural customers.

THE LESSON: Reinforce product quality through service indicators.

Hero Honda was quick to realize that there was a huge opportunity waiting to be
tapped. A rural vertical was set up sometime in 2007. Five hundred sales
representatives were taken on board for the mission Har Gaon, Har Aangan
(every village, every courtyard.)

These representatives have been given work tasks and not sale targets - they need
to meet potential customers and opinion leaders in villages. So far, Hero Honda has
mounted three two-month long "waves" through these men. Each wave has
resulted in additional sale of 15,000-16,000 motorcycles.

Farmers, Hero Honda knows, have money in their pockets twice a year when they
harvest their crop - once around May and June and then around October and
November. These "waves" are mounted just before the harvest so that Hero Honda
is on their radar screen when they have cash in hand.

It also realised that one reason customers in these markets choose Hero Honda over
others is the easy availability of spares and authorised mechanics. As a result, in
the resale market, it commands a premium over rivals. This makes Hero Honda
preferred brand.

Company decided to ramp up rapidly its touch points with customers -showrooms,
service centres and so on. From 2,000 in 2006, the number has risen to 3,500 now.
The plan is to add at least 500 every year. Most of these will be service points.

Customers can travel over long distances to buy a motorcycle but not for service. A
customer can take his motorcycle for servicing four or five times a year. Many of
these touch points can start as a service centre and over time become a sale centre.
 PROMOTION POLICY:

➢ Company gives advertisement in different media vehicles time to time. Like

in TV. Magazines, newspaper, etc.

➢ Hero Honda also organizes free service camps every year.

➢ Hero Honda also takes art in trade fair.
➢ Hero Honda with the help of ICICI Bank provides loan to the customers &
also provide easy monthly installment scheme to customers.

➢ Hero Honda gives huge commission to their dealers.

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.

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.
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.

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.
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.

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.
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.
 FUTURE PLANS OF HERO HONDA FOR RURAL INDIA

Hero Honda Motors is accelerating efforts to tap rural markets as it gears up to sell
a whopping five million units in 2010-11. Already, four out of 10 Hero Honda
bikes sell in rural markets and in the next three years, one out of every two (50%)
will be selling in the hinterland.

No wonder then that the country’s largest two-wheeler maker has decided to begin
a door-to-door service facility for rural customers.

Called ‘Service Har Jagah’, this network will be based on specially customised
bikes which are fitted with necessary equipment to provide service on wheels in
the interiors. Hero Honda managing director Pawan Munjal said 600 fresh rural
support executives are being recruited for this purpose and this programme will
support the company’s successful ‘Har Gaon Har Aangan’ drive where village
elders, sarpanchs, headmasters and aanganwadi workers were contacted to enhance
bike sales.

More than 7,500 villages will be covered every month under the rural service
initiative on a regular basis and will attend to over 70,000 customers. So far, 1,100
customised bikes for servicing remote areas have been introduced.
Munjal said that though the two-wheeler market has shown good volume growth
even during the recent months of global slowdown, penetration levels leave a lot of
scope for further growth.
“Even today rural penetration for motorcycles is just 7% and in the urban areas
between 21% and 25%. This gives us immense opportunity for growth.”
The number of touch points (dealerships plus sales and service outlets) are already
up by 50% to 3,000 and another 500 would be added by March.
A majority among the new touch points would be coming up in the hinterland, tier-
II and tier-III towns and suburbs of larger towns, indicating a subtle yet extensive
shift in the company’s strategy towards addressing newer two-wheeler consumer.

Munjal said that some years back, Hero Honda had customised some CD 100 bikes
to suit rural road conditions but now that the road infrastructure is improving there
is no longer any need to deliver any specialised products for the rural markets.
To a question on capacity expansion, Munjal said that Hero Honda’s three
manufacturing facilities (two in Haryana and one in Uttaranchal) are being used
almost fully now so there was the need for setting up another manufacturing plant.

“Our teams have begun assessment forsetting up the fourth greenfield facility…at
present, we look at optimum capacity addition of 2,000 units per day…we did
show interest in setting up a facility in Rajasthan even before the Uttaranchal plant
was set up, but possession of land posed a challenge. We still don’t have the land,”
Munjal said.

Plans ‘Nano’ bike

Hero Honda Motors has already begun tapping suppliers for developing a low-cost
motorcycle. Managing director Pawan Munjal says that the joint venture partners
have begun research on this project which, if implemented, would generate large
volumes and come at a “breakthrough” price.

“It must be a win-win for all stakeholders, the company, suppliers and buyers. We
will take a call on this project in the next 10-12 months.”

Dispatch

To streamline its supply chain, especially at the front end. Hero Honda introduced
a finished goods dispatch automation (FNGD) system. This system has enabled
real-time inventory management with the use of barcodes to identify and track
motorcycles and scooters. This level of minute tracking is expected to facilitate
cost effective and scientific dispatch and encourage lean production.

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