Suresh Reserch Report

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MARKET ANALYSIS OF HERO HONDAMARKET ANALYSIS OF HERO HONDA

MOTORS LIMITED.MOTORS LIMITED.

A Project Report submitted inA Project Report submitted in

partial fulfillment of the requirements forpartial fulfillment of the requirements for

SUBMITTED BYSUBMITTED BYSUBMITTED TOSUBMITTED TO


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ACKNOWLEDGEMENT

A project cannot be said to be the work of an individual. A

project is a combination of views and ides, suggestions and

contributions of many people. I am extremely thankful to my

project guide who gave me an opportunity to do this project

report as a part of the curriculum.

I wish to express my sincere gratitude to Hero Honda Company

Staff & dealers whose valuable information throughout my

project work.

Also I wish to thank all the respondents who gave me some of

their valuable time to fill up the questionnaires, without which

the project study wouldnt have been a success.

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TABLE OF CONTENTS

OBJECTIVES OF THE PROJECT

SCOPE OF THE PROJECT

INTRODUCTION

AUTO INDUSTRY- A REVIEW

COMPANY PROFILE

VISION

ACHIEVEMENTS

METHODOLOGY

MARKETING STRATEGIES

MARKETING COMMUNICATION

ADVERTISEMENT

SALES PROMOTION

PUBLICITY

COMPARATIVE MARKETING STRATEGIES

AUTO MOBILE SALES FIGURE

ANALYSIS

RESULTS

RESOURCE LED STRATEGIC DEVELOPMENT

CORE COMPETENCIES

SWOT ANALYSIS

CONCLUSION

LIMITATIONS

RECOMMENDATIONS

BIBLIOGRAPHY

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QUESTIONNAIRE

OBJECTIVES

To study the marketing mix of Hero Honda Company

To study its life cycle initial stage, growth and maturity.

To study various promotional strategies and know about the

current strategies keeping in mind the cut throat competition

and arrival of Honda Company in India.

To focus on comparative study of different products of Hero

Honda company

Different range of Products; their success and failure.

To study overall financial performance of Hero Honda

Company.

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SCOPE OF THE PROJECT

The project involves, the study of the segmentation,

targeting & positioning of Hero Honda two-wheeler in the

market. And what people think about it.

Hero Honda. It includes carrying out a survey among

customers & the industry people as well as the retailers. It

also involves the devising of repositioning of the existing

brand by some modifications; advertisement should be so

made that the targeted segment comes to know what the

bike is. How is it better from others. So, that in near future

this bike becomes a grand success. Information regarding the

market share, cost factors, the marketing and promotional

strategies etc was collected from primary data sources.

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INTRODUCTION

HISTORY

ABOUT THE CHAIRMAN

Brijmohan Lall Munjal Seeding a Dream

"Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is

often fond of saying. The founder and patriarch of the $ 2.8 billion

Hero Group is your classic first generation entrepreneur. He is a man

who started small, dreamt big and used a combination of grit and

perseverance to create one of the country's largest corporate groups

and the World's No.1 Two Wheeler Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual

start in life. Around the time when the freedom movement in India

was taking shape in the late 1920s, he walked into a newly

opened Gurukul (Indian heritage school) near his home in Kamalia

(now in Pakistan). He was only six years old then.

Thus began an extraordinary tale of courage and perseverance.Brijmohan began his business story after partition in 1947, when he

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and his brothers relocated to Ludhiana. The family set up a company

that provided poor people with basic transport (cycles). Three

decades later, as India evolved, he added a second crucial chapter -

which visualized affordable and technologically superior transport to

millions of middle class Indians. The rest is history.

Building Relationships

When Brijmohan and his brothers started out, there was no concept

of organized dealer networks. Companies just produced, and most

dealers functioned like traders. Brijmohan changed the rules of the

business by trusting his gut instincts; introducing business norms

that were ahead of their time, and by investing in strategic

relationships.

Brijmohan built a series of bonds and networks with hundreds of

family members, vendors, dealers and employees. Much like the

Japanese keiretsu system, these networks are now the glue that

holds the Hero Group together.

"Thanks to the relationships that we have nurtured so passionately inthe Hero Family, the younger generations of some of our bicycle

dealers have become dealers of Hero Honda. These relationships

have survived through generations - through bad times and good

times'' the patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been

personally responsible for kindling a spirit of entrepreneurshipamongst his employees, and today, 40 of his former employees are

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successful entrepreneurs.

Staying Ahead

Though not technically qualified in the conventional sense, few of his

contemporaries have understood the dynamics of technology better

than Brijmohan Lall has. He could always visualize the applicability of

technology before others could. For example, in the 1980s, when all

two-wheeler companies in India opted for two-stroke engine

technology, Brijmohan preferred a four-stoke engine - a technology

that dramatically increased fuel efficiency and reduced maintenance

costs. This technology was one of the biggest reasons for Hero

Honda's stupendous success.

Time and again, Brijmohan managed to steal a march over his

industry peers. For example, when Honda Motors of Japan was

looking for a collaborator in the 1980s, the Hero Group was not high

up the pecking order initially as there were other more eligible and

established suitors.

Yet it didn't take long for the astute Japanese to realize that the Hero

Group and Honda had much more in common than earlier perceived;

there a sharp focus on financial and raw material management, and

employee turnover was low. Honda officials were also amazed to findthat the Munjals were already practicing "Just-in-time-inventory" at

the time (JIT). It turned out that Brijmohan Lall's aspiration to provide

cheap transportation to India's poor by default ensured lean and cost-

effective operations. This in turn increased vendor efficiency and led

to near-zero inventories.

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A Corporate Citizen

A frugal upbringing and a value system modeled on the famous

Gurukul system - which stresses the sanctity of the teacher-pupil

relationship - imbibed in Brijmohan a strong sense of social

commitment and responsibility.

There is a special place in his heart for Ludhiana, the city where he

took roots. Today, Ludhiana is a modern, bustling city, but Brijmohan

has played no mean role in its evolution. Several schools and

educational institutions in Ludhiana owe their existence to the Munjal

family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's

vision as does the Ludhiana Flying Club. He's also set up the not-for-

profit Dayanand Medical College and Hospital-an institute now rated

as one of the best medical colleges in India, in terms of

infrastructure, quality of staff and alumni profile.

In and around Dharuhera, near the first Hero Honda plant, Brijmohan

and his family have left their stamp of philanthropy. The Raman Kant

Munjal Foundation - which Brijmohan set up in memory of his eldest

son, today runs a higher secondary school and a very modern and

well-equipped 100-bed hospital at Dharuhera. The group has also

adopted numerous villages and provides education, vocational

training, drinking water, roads, streetlights and sewerage.

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AUTO INDUSTRY- A REVIEW

INTRODUCTION

The Rs. 5500 crore Indian two wheeler segment is the second largest

market fin the world after China. Indias two wheeler production is

the third largest in the world after Japan and China. India has a well-

developed two wheeler market with around 25 million households

owning two-wheeler.

The Indian two wheeler industry made a modest beginning in the

early 1950 when Automobile Product of India ( API ) started

manufacturing scooter in India. Until 1958. API and

Enfield( motorcycle) were the only two in production. In 1948, Bajaj

auto began trading in imported Vespa scooter and the three

wheeler- finally, in 1960s. it set up shop to manufacturer them in

technical collaboration with piggaio of Italy. The agreement expired

in 1971. In the initial stages, the scooters segment was regulated

regime, foreign company was not allowed to operate in India, and

waiting time for getting Bajaj scooters was as high as 12 years. Java,

and escort. While the Enfield bullet was a four strokes bike, the Java

and Rajdoot were two-strokes bikes. The motorcycles industry was

originally dominated by Enfield with 350 cc bikes. The motorcycles

industry was cc segment. The two wheelers segment was opened up

to foreign competition in the mid 1980s which saw the entry of the

Japanese manufactures into the country.

CLASSIFICATION OF THE INDUSTRY

The two-wheeler segment can be categorized into the scooter,

mopeds, and motorcycles.

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Motorcycles: this segment has shown the best performance in the

recent years. The market leaders in this section are Bajaj Auto. TVS,

Mahindra, Hero Honda. [The splendor is the most popular segment

among motorcycles.]

Two Wheeler Industry

It wasnt an easy year for the two wheeler industry. Rising interest

rates and the economic slowdown resulted in delayed consumer

decision making and a rise in loan defaults. Over the course of the

year, banks withdrew financing facilities from satellite towns. The

share of financing, which had increased rapidly to 50-60 per cent of

the total retail sales by early 2007, has now come down to below 30

per cent.

This came as a major setback for the two-wheeler industry.

Ongoing government investments very clearly emphasis inclusive

growth through improved connectivity, job-creation and improvingquality of life. The rural road outlay has been upped by close to 60

per cent, the budget for the Urban Renewal Mission has been hiked

by 87 per cent, and fund allocation to the ongoing National Highways

program has been upped by 23 per cent.

Importantly, India has added fresh impetus to its flagship job creation

program for rural India: the National Rural Employment Guarantee

Scheme. During 2008-09, this scheme, which provides 100guaranteed days of work a day for the countrys rural poor, provided

employment opportunities to more than 44 million households last

year; a year ago, 33 million households were covered.

During the year, there have been important developments in two-

wheeler industry. The competition has strengthened though there are

hardly any new entrants into the industry. There is an increasing

emphasis on price and this has led to cost cutting efforts all across

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the industry, thereby, making the customer an ultimate beneficiary.

The trend also saw introduction of new motorcycles with capacity

ranging from 100 to 250cc bikes. We anticipate that many more new

models will be launched during the year and provide customers

plenty of choice at competitive prices.

Businesses cannot consistently grow at 25-30 per cent. Each

business has a tendency to taper and plateau after attaining a

particular size. An annual growth rate of 10-12 per cent over a period

of time is extremely healthy.

The TCS study rankings are conducted at the motorcycle segment-

level to provide comparisons among similar groups of motorcycles.

Motorcycles ranking highest in their respective segments for TCS are:

Hero Honda splendor plus (best standard motorcycle segment); Bajaj

pulser (best executive motorcycle segment); Hero Honda karizma

(best premium motorcycle segment); and Royal Enfield Bullet Electra

(best cruiser motorcycle segment). "The relatively low score for the

executive segment indicates that most manufacturers have fallen

short of meeting the high expectations of these buyers,".

Production, sales growth of the industry

The two-wheeler companies have been operating at high capacities

due to high growth rates between 2009 and 2008. The growth is

expected to lead to increase in the capacities from present 52 lakh

units to 65 lakhs per annum in the year 2009-10, whereas the actual

production estimates by that period at an estimated growth rate of

18% is only 60 lakhs.

Charts showing two-wheeler industry growth rates

Demand

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In India the two-wheeler provide an easy and popular mode of

personal transport for the middle classes. With public transportation

system being inadequate and ineffective the demand for the two-

wheeler is likely to rise. The two-wheeler sales are expected to touch

the 5 million mark by the end of the decade as against the annual

sales of 35,49,271 in 2008-09.

Technology

With liberalization and the increasing competition. The two- wheeler

industry has witnessed technological changes. The four- stroke

engine is being introduced in place of the traditional populations and

fuel inefficient two stroke engine. The smaller capacity engine with

the electronic fuel injection is also being used. Bajaj auto is now

feeling the need to increase its technological competence. Wit the

competition cashing in on the technological competence for their

collaborators. Emphasizes being laid on lighter and fuel- efficient

vehicles. A class of vehicle having fuel efficiency of a moped and

sleekness and style of the motorcycles called scooterette is growing.

The vehicles offer a fuel efficiency of 60-65 km p/h. They enter into

new segment,Bajaj Auto has come out with TVS with Scooty pep and

Hero Honda has come out with a Pleasure and upgraded version of

sleek.

Government policy

The excise duty on two-wheeler , which has previous 10 percent to

30 percent according to the engine capacity, was rationalized is only

two categories size. 15 percent for 75 cc engine capacity and 25

percent for above 75 cc engine capacity the excise duty structure

has been left untouched since the 1993-94 budget.

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Marketing and The Distribution

Like any other emerging country, India experienced the knock-oneffects of the global crisis during the year in review. The effects were

felt through the monetary, financial and real channels. Drying up of

global finance impacted from the middle of the fiscal impacted

domestic capital finance; and corporate earnings came off peaks. In

April 2009, Reserve Bank of India predicted that the Indian

economy's growth for 2008-09 would slow to 6.6 per cent, breaking

an excellent five-year growth sequence. There were two dimensionsto the economic slowdown. In the first half, inflation ran into double

digits as a result of the global crude shock and the global food grain

shortage. To control inflation, the RBI clamped down on money

supply, and reduced liquidity in the economy. By the time inflation

started coming under control, domestic interest rates started

shooting up. Meanwhile, the global crisis erupted, putting further

pressure on liquidity levels.

By October 2008, slowdown was clearly apparent in export-intensive

sectors, both in the manufacturing and service side. By December,

the slowdown turned into de-growth. The cutback in demand from

Europe and the US was so sharp that even a competitive rupee,

which devalued by around 12 per cent during the year, couldn't act

as a buffer. By December 2008, the growth momentum of the first six

months was lost. Planned investment projects were shelved; live

projects faced a shortage of funds as credit flows dried up. As money

became dearer, pay packets became slimmer and risk aversion grew

both from the demand and supply side.Compulsions of coalition

politics at the Centre and the impending Lok Sabha elections didn't

help either, and slowed down reforms and implementation of

projects, particularly in critical sectors like roads, ports and

power.The worst hit was the manufacturing sector. From the second

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half of the financial year, the index of industrial production

contracted on three occasions, remained close to zero on two

occasions, and was mildly positive only once.

Two Wheeler Financing

Though two-wheeler are the most preferred from of transport in

India,the fact remains that it is a lower end market product. Most

two-wheeler manufacturer like Bajaj Auto and kinetic engineering

have set up their own finance company since organized financiers do

not think the returns are particularly attractive. The argument given

by some financiers is that the price of a Yamaha or Hero Honda is so

high that people prefer to buy a second hand car instead. This is

particularly true of small town where people desire to own a car and

they have the means the two wheeler is then only a second vehicle

for the family.

MARKET MECHANICS:

Since 1985, when the first Hero Honda it has been and instant hit. A

mileage miser with just about adequate performance further backed

by image of Honda and Hero Cycles brand of aggressive marketing, it

climbed up the sales chart outselling every other motorcycle by ten

of thousands every year.

Over the years, company has received its share of accolades,including the National Association of India Award against 200

contenders.

SEGMENTATION, TARGETING & POSITIONING

From the current segmentation, targeting & positioning and

consumer surveys we found that our client has targeted the following

segments:

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Congested areas of urban cities.

Males/Females between the age group of 18-36

Middle class people , mostly officials & executives

The client analysis from our questionnaire it was found that our client

has targeted the right segment

HHML is overlooking one feature in bike which is its low maintenance

cost and reliability (i.e. less chances of breakdown) which is absent in

its competitors. Therefore, in order to meet the sales target, two

option are available with the client, one is to redesign the bike and

second is to reposition the bike as Bike with one time investment.

Since redesigning of bike may involve a big task and huge

investment therefore we recommended repositioning the bike.

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COMPANY PROFILE

The Hero Honda story began with a simple vision the vision of a

mobile and an empowered India, powered by Hero Honda. This vision

was driven by Hero Honda's commitment to customer, quality and

excellence, and while doing so, maintain the highest standards of

ethics and societal responsibilities. Twenty five years and 25 million

two wheelers later, Hero Honda is closer to fulfilling this dream. Thisvision is the driving force behind everything that we do at Hero

Honda. We understood that the fastest way to turn that dream into a

reality is by remaining focused on that vision.

There were many unknowns but we kept faith, and today, Hero

Honda has been the largest two wheeler company in the world for

eight consecutive years. Our growth has kept compounding. The

company crossed the ten million unit milestone over a 19-year span.

In the new millennium, Hero Honda has scaled this to 15 million units

in just five years! In fact, during the year in review, Hero Honda sold

more two wheelers than the second, third and fourth placed two-

wheeler company put together. With Hero Honda, the domestic two

wheeler market was able to show positive growth during the year in

review. Without Hero Honda, the domestic market would have

actually shrunk.

Over the course of two and a half decades, and three successive joint

venture agreements later, both partners have fine-tuned and

perfected their roles as joint venture partners. What the two partners

did was something quite basic. They simply stuck to their respective

strengths. As one of the world's technology leaders in the automotive

sector, Honda has been able to consistently provide technical know-

how, design specifications and R&D innovations. This has led to the

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development of world class, value - for- money motorcycles and

scooters for the Indian market. On its part, the Hero Group has taken

on the singular and onerous responsibility of creating world-class

manufacturing facilities with robust processes, building the supply

chain, setting up an extensive distribution networks and providing

insights into the mind of the Indian customer. Since both partners

continue to focus on their respective strengths, they have been able

to complement each other. In the process, Hero Honda is recognized

today as one of the most successful joint ventures in the world. It is

therefore no surprise that there are more Hero Honda bikes on thiscountry's roads than the total population of some European countries

put together!

The company's meteoric growth in the two-wheeler market in India

stems from an intrinsic ability to reach out and come closer to its

customers, with every passing year. Hero Honda's bikes are sold and

serviced through a network of over 3500 customer touch points,

comprising a mix of dealers, service centres and stockists located

across rural and urban India. Hero Honda has built two world-class

manufacturing facilities at Dharuhera and Gurgaon in Haryana, and

its third and most sophisticated plant at Haridwar has just completed

a full year of operations. It is difficult to imagine that all this has

happened in the span of just two and a half decades!

The best is yet to come. During the year in review, Hero Hondapowered its way in a market that, for all practical purposes, was

feeling the full effects of the economic slowdown in India. With an

economic recovery now clearly on the cards, Hero Honda is all set to

ride into another summit. As Brijmohan Lall Munjal, the Chairman,

Hero Honda Motors succinctly puts it, "We pioneered India's two

wheeler industry, we've steered it through difficult times; now it is

our responsibility to set the pace again.''

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.

New Models

The company has a large portfolio of brands, with the money-

spinners being mainly Splendor Plus (the world's largest selling bike)

and Passion. However, the company claims it was the launch of the

150cc CBZ and 225cc KARIZMA which established Hero Honda as an

inspirational brand. "The launch of CBZ and KARIZMA got us into a

different league altogether. Although the sales are just about 3,000 a

month, it made us an overall bike company, Hero Honda would

launch a new model of the KARIZMA by the end of current year, the

Managing Director, Mr. brijmohanlal Munjal, said. Meanwhile, the

company is yet to decide on the location of its proposed Fourth

manufacturing unit. The feasibility study is on'', he said, adding that

the new plant was likely to come up in the next 18 months. New

launches are likely to help Hero Honda gain a market share in the

coming quarters.

Hero Honda Motors Ltd, has launched a new 100-cc four-stroke bike,

CD deluxe and Dawn is likely to be phased out of the market once

the new model sells ``10,000 plus'' units per month.

Sales Performance

Hero Honda went against the grain and created a growth trajectoryall of its own. Sales of the company grew by over 11 per cent in

volume terms and in value terms; they grew by over 19 per cent.

Effectively, this helped the company end the year with a market

share of around 60 per cent. This robust performance helped the

company increase earnings margin 120 basis pointsa remarkable

feat, considering that elsewhere in the world, the automobile industry

went through its worst year in recent history.

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Hero Hondas performance in its silver jubilee year helped it retain its

position as the worlds largest two wheeler company for the eighth

year in a row. It also helped the company cross the 25 million unit

markbecoming the first company in India to reach this milestone.

Last year, two new models were launched, namely CBZ XTREME and

HUNKto address super-style and economy segments. Passion pro

has found its position firm amongst Indian models, only next to

Splendor, the largest selling bike in the world in terms of sales

performance. CBZwas re-launched as CBZ XTREME, in April 2007,

with changes and value additions to cater to specific needs of the

customers. Reportedly CBZ XTREME is doing well in its segments

and has sold over 10,000 units in the initial months itself.

Hero Honda has targeted a sale of over 3 million bikes for the year

2009-10. This effort is supplemented by a major launch this year, in

October end; this bike will have some exclusive features and will be

in the 200cc plus range. There are some ambitious programmes of

launching a new range of bikes with technical support from Honda in

the coming years.

With a slew of such measures the capacity available at present

locations can at best support two-million production target at the

existing plants. The company, therefore, is looking at the possibility

of setting up a third plant to meet the future demand and for which

techno-economic study is in progress.

New Initiatives

Customer and customer satisfaction is the purpose of our being anentity. To increasingly understand him and make him part of our

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ongoing business. Customer related initiative has been the increase

of warranty period to three years since July 2008. This has

attracted a great deal of customer attention.

During the year the company has added nearly a hundred

dealerships and SSPs. In terms of sheer numbers, the network has

grown by 16% during the year 2008-09. We would endeavor to

increase our reach to every corner of this country.

Plans for the future

In the previous year, the domestic two-wheeler industry entered a

period of de-growth. However, this was arrested in 2008-09, largely

on the back of Hero Honda's performance. After the blip of last year,

the two-wheeler industry went back to a growth phase, largely driven

by Hero Honda and exports. The industry clocked total volumes of 8.5

million during the year in review, a growth of 5 per cent compared to

a fall of 5 per cent in the previous year. The pace of growth was lower

in the domestic market, where the industry clocked sales of 7.43

million, a rise of only 2.60 per cent.

This, however, was a significant improvement over previous year

when the industry had shrunk by 8 per cent.

Motorcycles continue to constitute the largest chunk of the two-

wheeler industry, and during the year in review, accounted for fourfifth of sales. Interestingly, for the second year in succession,

scooters increased their share in the two-wheeler pie from 14 per

cent to 16 per cent. This is clearly a trend reversal from the last 10

years, where the share of scooters in the two-wheeler pie had been

shrinking. Changing lifestyles among women, and the introduction of

feature-rich, high-quality scooters possibly has much to do with the

revival in demand

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The entry segment made up of basic 100 cc bikes -Had started

slowing two years ago, and during the year in review, sales in this

segment were down by more than 15 per cent. This could be

attributed to the fact that deluxe segment bikes have become

affordable on account of a 4 per cent excise cut, 1 per cent reduction

in CST and the special package of reduction in excise duty in

December, which most manufacturers passed on to the consumers.

The deluxe segment-made up of value for money and feature-rich

bikes in the 100-125 cc category-grew by 15.2 per cent. The 125-250

cc category-grew at 8.8 per cent. The pace of growth has fallen fromlast year's levels. There is no doubt that the higher interest rates

have brought down growth. Nevertheless, this segment was still able

to clock a growth rate in high single digits mainly because of the

excitement caused by a slew of new models that came into this

segment during the year.

The bigger story, of course, is that buyers in small-town India and

rural India, as well as employees of the state and Central

government, were relatively less affected by the slowdown, and this

benefitted the two wheeler industry.

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VISION

Hero Honda now the leader in the two wheeler industry. Leaders are

not born, they evolve over time. It all started on the auspicious.

Baisakhi Day the 13th of April 1984, when the Hero Honda Motor

Company joined hands. On its journey to take on the No. 1 morale,

Hero Honda created some prominent milestones..

This leadership has been achieved only because of its philosophy

to excel in all areas. In fact, passion to excel is a credo of the entire

Hero Honda family and is a way of life in Hero Honda. The changing

Scenario of increasing competition and the entry of new brands has

made the credo even more relevant. It serves as a constant reminder

to ensure excellence in providing service to the customer. They are

providing outstanding customer service.

It is in keeping with Hero Hondas own passionate commitment toprovide ultimate customer satisfaction. Today, they consistently meet

and exceed all requirement on quality, cost and delivery.

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ACHIEVEMENTS

AWARDS AND ACCOLADES

Year Awards & Recognitions

2009 ET Awards for Corporate Excellence - Hero Honda is the winner of the

Company of the Year" award for 2008 - 09.

2008 NDTV Profit Business Leadership Award 2008 - Hero Honda Wins the

Coveted "NDTV Profit Business Leadership Award 2008"

Top Gear Design Awards 2008 - Hunk Bike of the Year Award

NDTV Profit Car India & Bike India Awards - NDTV Viewers Choice

Award to Hunk in Bike category

India Times Mindscape and Savile Row ( A Forbes Group Venture ) Loyalty

Awards - Customer and Brand Loyalty Award in Automobile (two-wheeler)

sector

Asian Retail Congress Award for Retail Excellence (Strategies and Solutions

of business innovation and transformation) - Best Customer Loyalty Program in

Automobile category

NDTV Profit Car India & Bike India Awards - Bike Manufacturer of the year

Overdrive Magazine - Bike Manufacturer of the year

TNS Voice of the Customer Awards:

No.1 executive motorcycle Splendor NXG

No.1 standard motorcycle CD Deluxe

No. premium motorcycle CBZ Xtreme

2007 The NDTV Profit Car India & Bike India Awards 2007 in the following

category:

Overall "Bike of the Year" - CBZ X-treme

"Bike of the Year" - CBZ X-treme (up to 150 cc category)

"Bike Technology of the Year" - Glamour PGM FI

"Auto Tech of the Year" - Glamour PGM FI by Overdrive Magazine.

"Bike of the Year" - CBZ X-treme by Overdrive Magazine.

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Ranked CBZ X-treme "Bike of the Year" - by B S Motoring Magazine

Most Trusted Company , by TNS Voice of the Customer Awards 2006.

CD Deluxe rated as "No 1 standard motorcycle" by TNS Voice of the Customer Awards

2006.

2006 Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler

Company).

One of the 8 Indian companies to enter the Forbes top 200 list of worlds most reputed

companies.

No. 1 in automobile industry by TNS Corporate Social Responsibility Award.

Best in its class awards for each category by TNS Total Customer SatisfactionAwards 2006:

Splendor Plus (Executive)

CD Deluxe (Entry)

Pleasure (Gearless Scooters)

Splendor & Passion - Top two models in two wheeler category by ET Brand Equity

Survey 2006.

Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two WheelerCompany).

Top Indian company in the Automobile - Two Wheeler sector by Dun & Bradstreet

- American Express Corporate Awards 2006.

Hero Honda Splendor rated as India's most preferred two-wheeler brand at the Awaaz

Consumer Awards 2006.

Certificate of Export Excellence for outstanding export performance during 2003-04

for two-wheeler & three- wheelers - Complete (Non SSI) by Engineering Export

Promotion Council.

The NDTV Profit Car India & Bike India Awards 2006 in the following

category:

Bike Maker of the Year

Bike of the Year - Achiever

Bike of the Year - Achiever (up to 150 cc category)

Bike of the Year - Glamour (up to 125 cc category)

NDTV Viewers' Choice Award to Glamour in the bike category

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2005Awaaz Consumer Awards 2005 - India's most preferred two-wheeler brand by CNBC in

the 'Automobiles' category.

Bike Maker of the Year Award by Overdrive Magazine.

ICWAI National Award for Excellence (Second) in Cost Management 2004 in the private

sector category by ICWAI.

10th Motilal Oswal Wealth Creator Award for as the most consistent wealth creator for

the period 1991-2005.

2004Winner of the Review 200 - Asia's Leading Companies Award (3rd Rank amongst the

top 10 Indian companies).

GVC Level 1 (Highest Rating) by CRISIL for corporate Governance.

Adjudged as the Best Value Creator - Large Size Companies 2003-04 by The Outlook

Money.

Corporate Excellence Award 2004 by Indian Institute of Materials Management.

Adjudged as the Organization with Innovative HR Practices by HT Power Jobs for HR

Excellence.

ICSI National Award for Excellence in Corporate Governance 2004 by The Institute of

Company Secretaries of India.

2003Winner of the Review 200 - Asia 's Leading Companies Award (3rd Rank amongst the


Most Respected Company in Automobile Sector by Business World.

Bike Maker of the Year by Overdrive Magazine.

2002Bike Maker of the Year by Overdrive Magazine.

Winner of the Review 200 - Asia 's Leading Companies Award (4th Rank amongst the


Company of the Year of ET Awards for Corporate Excellence.

Ranked 4th in 'Overall Best Managed Company' category, ranked 3rd in 'Best FinancialManagement' and 'Best Operational Efficiency' category, ranked 6th in 'Overall Best

Investor Relations' category, by Asiamoney.

Highest Wealth Creating Company of the Year Award by the Money.

GVC Level 1 (Highest Rating) by CRISIL for Corporate Governance.

2001Bike Maker of the Year by Overdrive Magazine.

Winner of the Review 200 - Asia 's Leading Companies Award (9th Rank amongst the

top 10 Indian Companies).

Winner of Three Leaves Award for showing Corporate Environment Responsibility inthe Automobile Sector by Centre for Science & Environment.

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1999 National Productivity Award for the Best Productivity Award in the category of

Automobile & Tractor presented by Vice President of India.

1995 The Analyst Award 1995 presented to Hero Honda Motors Ltd. on being ranked 9th

amongst the most investor rewarding companies in India.

1995 National Award for outstanding contribution to the Development of Indian Small Scale

Industry (NSIC Award - Presented by President of India).

1991 Economic Times-Harvard Business School Award for Corporate Performance to Hero

Honda Motors Ltd.

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SALES

2621400

3000751

3336756 3337142

3722000

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

2004-05 2005-06 2006-07 2007-08 2008-09

MARKET SHARE

29

60%20%

10%

5% 5%

Hero Honda BajajTVS yamahaOthers


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METHODOLOGY

The project involves the study of four- strokes bike segment in two

wheeler industry sector, which involved:

1. Market survey/ Researches

2. Meeting the retailers and the customers

3. Desk Research

RESEARCH APPROACH

I did two types of surveys (Data source):

A. PRIMARY SURVEY

1. P/S T

1

was done visiting Hero Honda Motors Ltd. Corporate office,Basant Lok, Vasant Vihar regarding segmentation, targeting and

positioning of their brands in the two wheeler sector. A lot of desk

research was also done.

2. P/S T2 conducted by visiting Hero Honda Motors Ltd. And retailers

of Hero Honda {Khanna Automobiles & ESS AAY Agencies , auto

needs(INDIA) Pvt.Ltd).Basic objective was to know their product

price, distribution channel, their customers , their process of

segmentation ,targeting and positioning in the problems faced by

the customers and lastly their views about the model.

3. P/S T3 conducted by taking views of the customers using this

model of Hero Honda i.e. Hero Honda splendor. Their view points

About the model, their grievances/ complaints about it. Last but

not the least their views about modification required in it.

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RESEARCH INSTRUMENT

The research instrument used was a structural questionnaire. It wasformulated after detailed discussion.

SAMPLING PLAN

a) sampling unit:The sampling unit constituted the people in

the middle income going in for bikes.

b) sampling size: the sample size consists of 45 customers, out ofwhich 5 refused to fill the questionnaire and 5 forms were found

incomplete.

c) sampling procedure : Convenience sampling.

B) SECONDARY SURVEY

1) S/S T1 was conducted gaining information from different

magazines newspaper. And on company from their annual reports

and balance sheets and their website.

2) Promotional strategies used at present like sponsoring programme

and various event which have no direct bearing on the product.

However the main focus is to influence youth- the largest group.

e.g. Hero Honda Sa Re Ga Ma Pa.

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REVIEW OF LITERATURE

This chapter presents an exhaustive literature review of quality

dimension in marketing strategies. The discussion in this chapter is

centered on how more the quality dimension in marketing strategies

understood as part of this research. Furthermore, this chapter

explores the topic specific to the industries viz. Two Wheeler

Industry.

The term marketing strategies began to find its way into theacademic marketing literature only in the late 1980s. The first use of

the term is attributable to Professor Leonard Berry of Texas A& M

University in an American Marketing Association presentation in

1983. The literature on marketing strategies in the early 1990s for

the most part did not approach the subject from the consumers

perspective. There were of course notable exceptions. In 1990, John

Czepiel, Professor of Marketing at the New York University observedthat a marketplace based marketing strategies is the mutual

recognition of some special status between exchange partners.

(Czepiel, 1990). Susan Fournier refers to what marketing is supposed

to be the epitome of customer orientation (Fournier, 1999).

The literature in services marketing, in recognition of such facts,

defines marketing as the attraction, maintenance and enhancement

of marketing strategies (Berry, 1997), or attracting, developing and

retaining marketing strategies (Berry and Parasuraman, 1991).

Traditional measures of service marketing strategies

The primary outcome measures of marketing strategies, satisfaction

and quality, have an extensive literature in both the product and

service fields yet, particularly in the services literature, there are still

some lack of conceptual distinction between the two constructs.

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Since it is reasonable to assume a high level of correlation between

the two constructs, most studies adopt one or the other measure,

often without any discussion of the justification for the choice.

Satisfaction has proven to be an elusive construct to capture. Much of

the literature on satisfaction focuses on the expectancy-

disconfirmation paradigm as a means of identifying the process by

which customers make satisfaction evaluations. Within this paradigm,

satisfaction occurs when expectations are confirmed or positively

disconfirmed. Measures generally focus on assessing disconfirmation

at the attribute level although recent extensions of the model include

affective dimensions and emotions (Oliver, 1991).

Several alternatives to the expectancy-disconfirmation paradigm

have been proposed. Some suggest that values are better predictors

of satisfaction because values are more enduring than pre-purchase

expectations. Others question the expectancy-disconfirmation model

as being overly dependent on situational induced factors. As an

alternative they proposed the comparison level model, which

suggests that consumers examine each product attribute against a

reference set of attribute levels.

Each of these theories has been supported in empirical studies. Yet

none has been overwhelmingly accepted as an adequate explanation

for consumer post-purchase evaluations. Perhaps this is because

satisfaction with a product or service has traditionally been studied

as a unidimensional construct. However, in many studies,

researchers have found that satisfaction is not a unidimensional

construct (Leigh 1987). In fact for many products and services the

use of an overall, summary satisfaction measure may mask

important diagnostic information about the nature of satisfaction, its

determinants and consequences. Further, the nature of these

dimensions may vary across services.

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Another explanation for the inadequacies of existing satisfaction

measures may lie in questions raised in the consumer behaviour

literature regarding the emphasis placed on satisfaction research as

the main method of post-purchase evaluations. Woodruff and Gardial

have suggested that while satisfaction describes the customer's

reaction to the value received from a particular offering, customer

value describes the nature of the marketing strategies between user

and product. With few exceptions (Gardial et al., 1992; Woodruff and

Gardial, 1996), studies of post-purchase evaluation do not address

the possible marketing strategies between value and satisfaction /dissatisfaction. Yet, as discussed in Woodruff and Gardial (1996) the

perception of receiving added value is critical to understanding the

nature of the relationship. Relationships, which are not perceived as

being mutually beneficial, are terminated. The importance of value to

the service experience may explain the use of quality as another

measure of service effectiveness as in econometric terms value

equals quality divided by cost.

Regardless of the paradigm, traditional measures of satisfaction used

in the service sector operationalize the concept on a discrete

transaction basis and generally assess the construct from only one

partner's point of view. Yet it is clear that service relationships are

built upon repeated encounters and are dyadic. If the intention is to

evaluate satisfaction with the relationship, current measures of

satisfaction seem inadequate.

Researchers often distinguish between satisfaction and quality based

on a longitudinal dimension with satisfaction seen as a transaction

specific evaluation while quality represents a long-run overall

evaluation or attitude. However, the distinction between satisfaction

and quality in service delivery has become blurred (Bitner, 1990;

Bolton and Drew, 1991). In fact Zeithaml et al., (1990) define qualityas meeting or exceeding customer expectations, the traditional

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definition of satisfaction within an expectancy disconfirmation

paradigm.

One of the most prominent measures of service quality is the

SERVQUAL measure based on Parasuraman et al. (1985) gap model.

This model suggests that differences between consumers'

expectations about the performance of a general class of service

providers and their assessment of the actual performance of a

specific firm in that class drives perceptions of quality. The

measurement of quality is functionally identical to satisfaction

measures based on the expectancy-disconfirmation model. The

distinction arises primarily from the nature of the items or attributes

used.

Another approach to SERVQUAL is simple performance measures.

The marketing literature provides considerable evidence that this

approach is superior to the expectations-performance gap model

(Bolton and Drew, 1991; Cronin and Taylor, 1992; Woodruff, et al.,

1983). In a test of their performance-only (SERVPERF) model, Cronin

and Taylor provide evidence that performance explains more of the

variation in service quality than does SERVQUAL (Cronin and Taylor,

1992).

Both SERVQUAL and SERVPERF are global measures of service

quality. The use of a global measure in the evaluation of service

relationships may, however, not be adequate. Particularly in service

relationships relying on social and structural bonding mechanisms

which have increasing levels of customization, a global measure may

not provide the details necessary to fully assess the

strengths/weaknesses of the relationship.

Quality measures, like satisfaction measures have been criticized as

being largely unidimensional (Zeithaml, 1988). Though SERVQUAL is

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an attempt to correct for this deficiency there are still other

dimensions, which may lead to a purchase experience particularly as

that occurs in a marketing strategies context. Zeithaml (1988)

recognized these failings and proposed a model from an exploratory

study utilizing a means-end hierarchy to investigate the marketing

strategies between price, quality and value. The resulting model

indicates that perceived quality is one of many concepts (i.e.,

perceived sacrifice, high-level abstractions, intrinsic attributes) that

result in perceived value which then leads to purchase.

Obviously satisfaction and quality are important concepts in the

evaluation of service relationships. Both are necessary but not

sufficient to good relationships. However, much controversy

surrounds these constructs and their marketing strategies (Cronin

and Taylor, 1992; Parasuraman et al., 1994; Teas, 1993). Some

literature suggests that satisfaction is an antecedent of service

quality (e.g., Bitner, 1990; Bolton and Drew, 1991) while

Parasuraman et al. (1985) suggest that perceived service quality

leads to satisfaction. Cronin and Taylor (1992) in their test of

SERVPERF found evidence that the latter is in fact the correct causal

order. Thus it appears that to adequately evaluate service

relationships, both concepts must be measured to account for the

ongoing nature of the relationship.

Relationships are a multiplex phenomenon. The nature of themarketing strategies depends on the kinds of satisfaction desired by

the parties involved; the clients may seek socio-emotional provisions

and/or instrumental provisions, and may allow these concerns to

determine their focus in the relationship. Thus their behavioral

intentions may depend on the provision criterion. The relations also

depend on whether the types of bonds are substantively grounded or

emotionally based. This view reinforces the presence of suchvariables as trust, which are primarily socioemotional, and the more

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instrumental provisions such as legal, planning and technical bonds,

which partly reflect the variable commitment. The conceptualization

of such variables cannot be completely socioemotional or

instrumental, and in the interests of clarity and functionality, the

definitions of the antecedent states of loyalty in the marketing

strategies are based on trust, intimacy, etc.

But it reinforces the basic assumptions in the model. That the

presence of attitudinal variables like trust also play a role and they

determine the overall benefits (provisions) perceived even in a

business relationship. Thus, it is not solely direct commercial value

related considerations but also such attitudinal considerations, which

go beyond the service interaction or episode, which determine

loyalty.

Marketing strategies strength can be seen as the resistance to

disruption of the relationship. The marketing strategies are

developed partly on a basis of evaluations made and partly as a

result of bonding and commitment (Strobacka, Strandvik and

Gronross, 1994). Thus the strength of marketing strategies can be

derived only partly from behavioural variables since they only give an

indication (Hoekstra, 1993) .In most studies when measuring

marketing strategies strength one indicator at a time is used. Since a

behavioural and a mental dimension can be distinguished in a

marketing strategies (Poiesz and Van Raaji, 1993, Storm, 1991), theindividual indicator can be behavioural (descriptive) or mental

(attitudinal) in nature.

From the behavioural point of view indicators like length of the

relationship, recency, frequency, monetary value and regularity are

used most often to get an idea of marketing strategies strength.

Another behavioral indicator could be whether the customer

simultaneously uses also competing companies or only uses

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attitude towards interacting with each other, coupled with the bonds

of various types, is a determinant of marketing strategies strength

(Liljander and Strandvik, 1995). Marketing strategies strength is

closely related to loyalty, or behaviors, which reflect loyalty like

recommendations, repurchase intentions and actual repurchase, etc.

(Storbacka, Strandvik and Gronroos, 1995).

Marketing literature talks about four sources of consumer trust:-

Generalized trust (derived from social norms)

System trust (rule of law, regulations, contracts, bureaucracy

professionals)

Personality based trust (general tendency to trust/distrust

determined by personality traits)

Process based trust (developed through repeated interactions,

firm/brand specific, interpersonal)

A customers first encounter with a service firm is his or her first

moment of truth and is a potential first step on a road leading away

from reliance on generalized, system and personality based trust

towards a reliance on process based trust. Because system and

generalized trust are held in common by members of society and are

equally available to all firms, they offer less potential for competitive

advantage. By building process based trust, however, service firms

can encourage customer retention and gain competitive advantage

(Barney and Hansen, 1994).

Trust is a multidimensional construct with cognitive, affective and

behavioral dimensions and recent empirical investigations

(Cummings and Bromiley, 1996) have supported this theorizing. In

relationships, individuals trust cognitively based on their knowledge

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of their partners character, they trust affectively based on their

emotion towards their partners and they trust behaviorally by taking

actions that display trust in their partners.

Previous conceptualization s of trust in marketing research has

tended to emphasize the cognitive dimension. The affective

dimension of trust has been largely ignored in the literature.

However, more recently, marketing researchers have examined

social support behaviour in service relationships (Adelman and

Ahuvia, 1995; Adelman, Ahuvia and Goodwin, 1993), which engender

affective trust.

Trust is built up when there are assurances of higher and stable

levels of satisfaction (the exceeding of expectations, every time, in

the service quality approach), and there is lower risk perceived,

security, a feeling of reliability about the supplier, and assistance.

This level of service quality obviously builds trust, and can explain

the threshold of satisfaction which precedes a change in loyalty

behaviour, for some additional benefits are being offered, and the

interactions assume a greater number of dimensions. Trust will lead

to sharing of goals and values, as at this stage, assistance is

expected and also given, in achieving goals that are perceived to be

for the common good of both partners.

Dwyer et al. (1987) marketing strategies development process model

posits that with time, a marketing strategies moves along a

continuum from awareness to commitment and the latter represents

the highest stage of relational bonding. It must be acknowledged that

the possibilities for creating and managing trust and commitment in

relationships may be limited (Gronroos, 1994).

A natural consequence of this may be the stage of opening up, giving

more and accurate feedback by sharing more vital knowledge, which

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corresponds to intimacy. Marketing strategies literature also enriches

the explanation of why there is sharing, and also why that sharing

seems to provide a jump in the level of loyalty related behaviour.

Intimacy talks of socioemotional benefits, which strengthen the

relationship; and it implies a sharing of vital information, sharing

socially and psychologically. In service quality terms, this would imply

an increase in satisfaction due to more need areas being satisfied, as

needs other than the usual instrumental provisions are being

satisfied. Here the type of marketing strategies positive, cemented

through socioemotional provisions including bonds such as social,planning, clubs, etc and a positive attitude towards interacting with

each other. This directly impacts marketing strategies strength and

hence loyalty.

The difference between marketing strategies strength and customer

loyalty is the difference between the object. The object of customer

loyalty maybe either the service provider/firm or a particular service

worker. The former is referred to as service loyalty, the latter as

personal loyalty. High levels of customer trust towards the firms

employees would be expected to translate into positive attitudes

towards the firm and high levels of customer commitment to the firm

s employees would expect customer patronage of the firm.

Therefore when a customer has a strong marketing strategies with

multiple personnel from the firm, researchers suggest a direct path

between marketing strategies strength and true customer loyalty to

the service firm.

Customer satisfaction with a companys products or services is often

seen as the key to a companys success and long-term

competitiveness. In the context of marketing strategies marketing,

customer satisfaction is often viewed as a central determinant of

customer retention.

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However there is a need to look beyond customer satisfaction as

several studies have established that higher levels of customer

satisfaction may not always result in higher levels of customer

loyalty. A few empirical investigations in this area indicate that a

direct marketing strategy between these constructs is weak or even

non-existent. Some studies suggest satisfied customers may not be

sufficient to create loyal customers (Cronin and Taylor, 1992; Fornell,

1992; Oliver, 2000). These studies tend to support Reichhelds (1993)

argument that customer satisfaction is not a surrogate for customer

loyalty.

In recent times, customer satisfaction has gained new attention

within the context of the paradigm shift from transactional marketing

to marketing strategies marketing (Gronroos, 1994; Sheth and

Parvatiyar, 1994), which refers to all marketing activities directed

towards establishing, developing and maintaining successful

relational exchanges (Morgan and Hunt 1994). In numerous

publications, satisfaction has been treated as the necessary premise

for the retention of customers and therefore has moved to the

forefront of relational marketing approaches (Rust and Zahorik,

1993). Kotler sums this up when he states: The key to customer

retention is customer satisfaction (Kotler, 1994). Consequently,

customer satisfaction has developed extensively as a basic construct

for monitoring and controlling activities in the marketing strategies

marketing concept.

There are obviously aspects ofmarketing strategies strength other

than customer satisfaction. These include, for instance, the existence

of bonds between the customer and the provider. These bonds

function as switching barriers beside customer satisfaction. Another

dimension relates to the customer's (and the provider's) commitment

to the relationship. Commitment might be based on customers'intentions and plans for the future.

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Within the interaction approach and network approach to industrial

marketing six different types of bonds have been suggested (Dwyer

et al., 1987). These are social bonds, technological bonds, knowledge

bonds, planning bonds, and legal/economic bonds. Although these six

bonds can also be found in consumer markets, they are somewhat

limited for this purpose.

In addition to these bonds, Liljander and Strandvik (1995) have

suggested that the consumer may also have geographical, cultural,

ideological and psychological bonds to a service provider. They

propose that ten different types of bond can be identified in the

consumer market: legal, economic, technological, geographical, time,

knowledge, social, cultural, ideological and psychological.

Liljander and Strandvik (1995) argue that the first five bonds-legal,

economic, technological, and geographical and time bonds constitute

effective exit barriers for the consumer. They can be seen as

contextual factors that cannot easily be influenced by the customer

but can be observed and managed by the service firm. They are

more likely to be perceived in a negative sense than the other five

bonds. It is, for example, associated with high costs for the customer

to switch banks if she is tied up with a mortgage in one bank. These

bonds can prevent the customer from switching banks even when the

service given is of low quality.

The other five bonds- knowledge, social, cultural, ideological and

psychological bonds, represent perceptual factors, which are difficult

to measure and manage by the firm. For example the cultural,

ideological and psychological are directly connected to the

customer's values and preferences. A psychological bond, where the

customer is convinced of the superiority of a bank, is probably a very

effective exit barrier. The consequence of bonds is that the customer

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might accept lower levels of service quality, compared with other

service companies, without breaking the relationship.

Quality dimension of marketing strategies: Studies specific to

Two-wheeler Industry

One of the ways in which companies have tried to establish bonds is

through the loyalty programs. Loyalty programs recently gained

considerable practical and academic attention in the context of

marketing management. The fundamental managerial objective of

these programs is to reward loyal customer behaviour with special

services or rebates and thereby at the same time to promote this

loyal behaviour in order to realize the economic benefit of long term

business strategies (Reichheld 1993, Sharp and Sharp 2008). The

extent to which loyalty program actually achieve this objective has

become increasingly the subject of scientific study (Strauss et al.,

2002, Verhoef, 2007, Yi and Jeon, 2004, Noordhoff et al., 2008).

Usually, such studies have focused on the question of how strong the

supposed connection between participation in a loyalty program and

increased customer satisfaction and loyalty actually is.

Marketing Research on loyalty programs has increased in the last

years. The effect of loyalty programs on loyalty and their critical

success factors were investigated in the context off various industry

settings such as automotive industry (Stauss et al., 2005), financial

services (Bolton et al., 2007), retail stores (Noordhoff et al., 2008).

The results of an empirical study of Stauss et al. (2002) indicate that

the membership in an automotive customer club has a remarkable

impact on the marketing strategies. Bolton et al. (2001) shows that

participants of a loyalty program of a financial services provider

actually tend to realize increased revenues and higher service usage

levels and to overlook negative service experience.

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Noordhoff et al. (2008) is of the contention that a small number of

alternative loyalty programs in a market and only little familiarity off

customers with these programs positively affect the success of the

program. This is in accordance with the results of the study of

researchers who finds especially high levels of spurious loyalty

among members of frequent flyer programs who are participating in

several different programs.

According to Stauss, Schmidt and Schoeler (2002), More and more

companies are implementing loyalty programs in order to enhance

their knowledge of their customers, to identify their valuable

customers, to differentiate and give personal attention to these

valuable customers and especially to raise profits by increasing

customer retention and by enabling a more efficient use of marketing

goals.

They are of the opinion that few firms systematically verify whether

the program they implemented actually achieve these goals. The

consequences could be that the programs do not achieve the

retention effect aimed at or even that the overall marketing

strategies with the firm is weakened.

Zins (2007) in his study of the commercial two wheeler industries

opines that if loyal customer needs to be traced, three conceptual

perspectives are conceivable. First there are behavioural concepts,

which strictly look at the repeat purchase behaviour that may be

somehow biased (Conningham, 1956; Tucker, 1964). It was further

argued that concentrating on the behavioral aspects of loyalty would

consequently overestimate the share of true loyalty as there are

always customers who are forced to repeatedly buy the same brand

or use the same distribution channel (Day, 1969). Second the

attitudinal perspective in contrast allows gaining supplemental

understanding of loyal behaviour. Jacoby and Kyner (1973) advocated

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a six point definition of brand loyalty which they claimed to be

attitudinally based. This view has to be supplemented by the fact that

both authors supported a multidimensional understanding of the

attitude concept (Lutz, 1991). The third approach applies the

composite perspective combining attitudinal and behavioral

definitions. Strong vs. weak attitudes towards the object paired with

high vs. low repeat behaviour span the classic grid with four types of

loyalty: true, latent, spurious and low loyalty (Day, 1969).

Furthermore one direction of research tries to define commitment as

the particularly cognitively anchored, positive attachment to

behavioral acts, which is conditional for distinguishing between true

and spurious loyalty. (Bloemer and Kasper, 1995; Kiesler, 1971).

However two different types of commitment emerged from the

literature. These two are: affective and calculative commitment.

(Kumar et al., 1994; Mathieu and Zajac, 1990) Affective commitment

is non-instrumental and relies on the enjoyment of a satisfying object

or marketing strategies (Samuelson and Sandvik, 2007). In contrast,

calculative commitment is instrumental (Meyer and Allen, 2008) in

the way that the customer is forced to remain loyal against his/her

desire as long as cost benefit ratios or switching costs (De Ruyter et

al., 2008) dictate to do so.

According to Zins (2002), two main reasons may induce the customer

to be calculatively committed, lack of alternatives or high personalsacrifice. He is of the opinion that both issues are highly relevant in

the two-wheeler industries. Flight routes are not only characterized

by connecting city A with city B. Schedule elements such as

frequency, daytime and stop over contribute to customers overall

value assessment. Moreover, the generation of personal benefits

through frequent flier programs influences the personal sacrifice

involved.

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Furthermore, frequent flier programs often base their decisions on

mileage calculations that are competitive and situation driven. They

do not reflect true value. The decision regarding which seat class to

book is based on company restrictions, distance, price and individual

needs. A customers behaviour and expectations regarding schedule,

price, time and service is obviously bound to vary significantly

depending on whether he or she travels at his or her expense or on a

third party budget. In the light of these considerations, traditional

segmentation processes soon lead to dead ends and are not

appropriate tools for implementing CRM.

In case of the passenger two wheeler industries, Bouman & Wiele

(1992) in their work have build and tested an instrument on service

quality in the two wheeler industries. Their items were factor

analyzed and fall in three broad categories namely Customer

kindness, tangibles and faith. The factors can be classified as

follows:-

Factor 1: Customer kindness The front office personnels approach

to the customer and his problems regardless of the service delivered.

The customer needs to be helped quickly and in a friendly reliable

way.

Factor 2: Tangibles the essence of this actor lies in feasible

concrete characteristics of the service.

Factor 3: Faith. The way a two-wheeler business gives the

customer insight into the actual two wheeler industries process.

Information about the process produces faith and reassurance.

Another study on the passenger two wheeler industries was

conducted by Liljander and Roos (2007) in which they tried to explore

and provide meaning to spurious and true relationships. They

conducted a qualitative study in a two wheeler dealership in the

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European Union where profitability depends on customer

commitment to both after sales services and the two wheeler brand.

The study revealed that behavioral commitment to after sales

services was high but that affective commitment was low to

moderate. Customers were satisfied but did not perceive the

services to be superior to the competitors service offerings. They

trusted authorized repair in general and did not feel that after-sales

service would have more than a minor influence on the future two

wheeler purchases.

The study was designed to investigate customer commitment,

benefit and trust in after-sales service relationships. Two wheeler

-repair and maintenance services were chosen for several reasons.

First it is a credence-based service that is difficult for customers to

evaluate and customer trust is believed to be particularly important.

(Singh and Sirdeshmukh, 2001). Second, customers generally expect

dependable two wheeler-repair services from all repair shops and

other benefits will be needed to win higher customer commitment

(Gwinner et al., 1999).

According to Liljander and Roos, private customers tend to use an

authorized repair shop for their new two-wheeler until it is

approximately five years old. Thereafter most customers opt for

cheaper spare parts than those offered by authorized repair shops.

Furthermore in their study, a loyalty card given out by the parentcompany that also featured special offers on two wheelers, service

and spare parts was mentioned as a potential marketing strategies

benefit. However, this card can be obtained by anyone regardless of

marketing strategies length and thus constitutes a weak financial

bond (Berry, 2005).

Summary

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In the previous chapter, the conceptual framework of this research

study was discussed. Amidst the myriad of dimensions on quality in

the context of customer relationships, the definition which was

acceptable to the researcher was mentioned and the reason for

choosing the proposed model was also elaborated in this chapter.

The formulation of the various hypotheses based on the major

constructs i.e. product quality, service quality, customer satisfaction,

long term expectations, perceived switching cost, shared values,

trust and commitment and its impact on marketing strategies

strength is suggested in the concluding pages of the chapter. Alsobesides these nine attitudinal variables, the behavioral variables used

in the study have also been defined and the reasons for their

inclusion have been suggested based on past studies. However, their

role in the present study is more in terms of using them as

classification variables and proposed to be used for the purpose of

grouping.

The next chapter describes the research design and delineates the

research instrument developed for this study. The next chapter also

examines the issue of reliability and validity and provides the

structure for data analysis.

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MARKETING: AN INTRODUCTION

Marketing is a social and managerial process by which individuals

and groups obtain what they need and want through creating,

offering and exchanging products and values with each other. In this

way marketing is a business function that identifies customer needs

and wants, determines which target market the organization can

serve best, and designs appropriate products, services, and programs

to serve these markets.

Marketing is much more than isolated business function it is the

philosophy that guides the entire organization. The goal of marketing

is to create customer satisfaction profitably by building-value laden

relationship with important customers as well as fulfill certain

organizational objectives.

People throughout the various kinds of organizations-product or

service, profit or non-profit, domestic or global, small or large, need

to know how to define and segment a market and how to position

themselves strongly by developing need satisfying products and

services for chosen target segment. They must know how to price

their offerings to make them attractive and affordable and how to

choose and manage intermediaries to make their products available

to customers. And they need to know how to advertise and promote

products so customers will know and want them.

The objectives can be achieved through the implementation of

suitable marketing strategy by the organization. It is the marketing

logic that is formulated keeping in mind the needs of the consumers

and also strategies of the competitors. The 4 factors affect it are:

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Product - The tangible offer to the market, which includes the

product quality, design, features, branding and packaging.

Price The amount of money that customer pays for the product.

The price of the product should commensurate with its perceived

value. If does not, the buyers will turn to competitors products.

Place Includes the various activities the company undertakes to

make the product accessible and available to a large number of

target customers.

Promotion The fourth marketing mix tool, includes all the activities

the company undertakes to communicate and promote its products

to the target market. It consists of advertising, sales promotion,

public relations, and direct and online marketing.

Faced with unrelenting global competition, and ever more powerful

and demanding customers, companies across the world have come

to realize that their old ways of operating their long standing

methods for developing, making, selling and servicing products are

no longer adequate. They have also discovered that their existing

tools for improving operations are not making a dent in persistent

problems of high cost, poor quality and inadequate service. In order

to address these problems, these companies are taking measures

more radical than they have ever taken before. They have begun to

re-engineer, they have ripped apart their old ways of doing things

and started with clean sheets of paper.

Hero Honda has effectively evolved remarkable marketing strategies

for its 4Ps. It is because of this that Hero Honda has been able to

come out a niche for itself. But before we discuss the strategies for

the 4Ps separately, it is imperative that we know about the marketing

strategy. This is what keeps the Hero Honda going and have

reinforced its leadership in the motor bike segment.

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MARKETING COMMUNICATIONS

Walk the Talk though Advertising, sales Promotion, PublicRelations, through an emerging Media, including the Web these

things are done through.

Promotional Methods

Promotional Mix

Advertisement

Sales promotion

Public Relations

Event Management

Media Management ]

Budgeting

Measuring Effectiveness

And much more..

The internets greatest potential has been superbly exploited by the

small business ventures to reach customers directly. The market had

virtually opened quickly to market changes by providing accurate

market intelligence, faster communication and greater planning time.

This helped to reduce the market volatility the dealer to understand

the significance and value of e-commerce and benefits of embracing

the latest in information technology, and initiate concrete steps to

capitalize on it. The marketing is also done through sales

promotions, Advertisement, publicity, etc.

Strong dealer relationship expands the scope of the commercial

paper programme in an organization and Hero Honda is doing that.

They are doing the communication through newspaper, magazinesand television channels, etc.

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4P s of Marketing

PRODUCTS

Hero Honda, which has a technology tie-up with Japan's Honda

Motors, was currently discussing the feasibility of manufacturing

scooters for the Indian market, Mr. Munjal said. However, the

company has a binding clause with Honda's scooter manufacturing

Indian subsidiary, preventing it from making scooters till 2008.

Hero Honda Motors, India's largest motorcycle company, has

launched the premium segment 223cc motorcycle Karizma priced at

Rs 79,000 (ex-showroom, Delhi). Many of the products which the

companies have started have been phased off. Now the existing

products are KARIZMA, CBZ X-TREME, HUNK, SPLENDOR+,

ACHEIVER, PASSION+, SUPER SPLENDOR, GLAMOUR,

PASSION PRO, SPLENDOR NXG, CD DELUXE and PLEASURE.

Among these we are going to analyze only three (1) CBZ X-TREME,

(2) KARIZMA and (3) Splendor+.

KARIZMA

CBZ X-TREME

SPLENDOR+

The TCS study examines customer evaluations at three distinct

ownership periods: 1 to 6 months, 7 to 18 months, and 25 to 36

months. This helps in understanding the differences in satisfaction

during initial ownership, in-warranty and post-warranty ownership

periods. Satisfaction ratings decline as the length of vehicle

ownership increases. However, Hero Honda Splendor is among the

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few models to maintain consistency across the three ownership

periods.

SPLENDOR+

The Ex-Showroom Prices

DelhiMumbai

38,50039,000

Engine 4-stroke, OHC, single cylinder, air-cooled

Displacement 97.2cc

-Clutch type Manual

Clutch Primary -

Clutch Secondary Multi-plate wet

Transmission 4-speed constant mesh

Final Drive Roller chain

Ignition Kick starter

Starting Kick starter

Frame Double cradle tubular type

Suspension (Front) Telescopic hydraulic fork

Suspension (Rear) Swing-arm with hydraulic dampers

Dimensions(LxWxH)

1950x720x1040mm

Wheel Base 1230 mm

Ground Clearance 159 mm

Dry Weight 100.3 kg

Tyres:Front/Rear 2.75"x18"/2.75"x18"

Max.Power 7.2 PS @ 8500 rpm

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Max.Speed 90 km/h

Fuel Tank Capacity 10.5 ltr (1.4 ltr reserve)

CBZ X-TREME

Specifications

Displacement 150 cc

Power 14.6 PS @ 8000 rpm

Torque 14.2nm @ 6500 rpmAcceleration 0-60 km/h in 5 seconds

Bore x stroke 63.5 mm x 49.5 mm

Compression ration 8.5:1

Type of brake

Front Disc type (130 mm diameter)

Rear Drum (130 mm diameter)

Type of engine 4-stroke, single cylinder, air-cooled,ATFT

Fuel Tank Capacity 12.5 liters (Full)

2.5 liters (Reserve)

Available in attractive colors

Black-Tahitian Blue-Candy Blazing Red - Sparkling Silver Metallic

Tasmania Green - Sienna Gold Metallic

* Hero Honda CBZ meets the India 2001 Emission Norms.

** Specifications are subject to change without prior notice.

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Check out these unique 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 Trip meter: Tachometer displays the engine rotation

speed. And first time feature - the Trip meter, 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: Inject fresh air into the exhaust port, to

meet emission norms. Unique Trapezoidal headlight: Gives the CBZ a

distinctly stylish look and helps see clearly in the darkest of night.

Multi lever Lockable seat: Provides storage space. It also doubles as

an antitheft mechanism for the CDI unit, R R Unit and the battery, as

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

Zero crank case evaporative emission: A pollution control feature so

advanced that it is for the first time in India. keeping alive the Hero

Honda tradition of special care for the environment. So come, test

ride the Hero Honda CBZ -XTREME. Unplug your imagination.

Motorcycling Unplugged

Equipped with 5 gears and a 150 cc engine that generates 14.6 PS

power. Enough to take it from 0-60 km/h in just 5 seconds. And to

effortlessly touch the top speed of 100 km/h. The CBZ-XTREME also

has the widest rear tyre - with a unique treat pattern that is not

available on any Indian motorcycle; and large, 130 mm drum brakes.

Front disc brakes, it enhances the braking performance.

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KARIZMA

Specification

Engine 4-Stroke, Single Cylinder, Air Cooled, OHC

Displacement 223 cc

Medium Power 16.8 BHP at 6000 rpm

Gar Box 5-Speed constant mash

Clutch Multi-plus wat type

Max speed 125 km/h

Acceleration 0 to 60 km/h in 3.8 seconds

Frame Single Cradle Tubular Diamond Type

Suspension (Front) Telescopic Hydraulic Front Fork

Suspension (Rear) Swing arm with 5 step adjustableHydraulic shock observer

Brake Type: (Front) 276 mm disc type

(Rear) 130mm drum type

Final Drive Roller Chain

Battery 12V-3 Ah (Kick Start) 12V-7Ah (Self start)

Ignition Digital CDI system (AMI)*

Starting Kick Starter/Self Starter**

Wheel base 1355 mm

Ground clearance 150 mm

Length 2125 mm

Width 755 mm

Height 1160 mm

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Product Range and New Models:

The Company's product range includes "Splendor+" which is

the largest selling motorcycle brand in the world with over

10 lacs vehicles sold in 2008-09. A cumulative over 40 million

customers are the real foundation of the company's strength. The

total shall soon cross the 7 million mark. Its volumes have been

growing at a strong pace of 40% p.a. over the last five years.

The Company launched a new 100 cc model "Passion pro" in

June 2008. The motorcycle is focused on style and contemporary

design, compared to the Company's earlier motorcycles that were

focused on utility and/or style. "Passion pro" has received an

excellent response from the market and has established itself well,

with sales reaching a level of 29000 units in august 2008, within

just three months of its launch.

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PASSION PRO

Specification

Engine 4-Stroke, Single Cylinder, Air Cooled

Bore x Stroke 63.5 mm x 49.5 mm

Displacement 156.8 cc

Compression Ratio 8.5 : 1

Carburetor Side Draft Type (With TPFC)

Engine Oil

Capacity

1.2 Litres

Clutch Multiplate Wet Type

Transmission 5-Speed, Constant Mesh

Final Drive Roller Chain

Ignition Electronic CDI

Starting Kick Starter

Frame Diamond Tubular Type

Fuel Tank Capacity12.5 Litres (2.5 Litres Reserve)

Suspension (Fr.) Telescopic Hydraulic Fork

Suspension (Rr.)Swing Arm with 5-Step Adjustable HydraulicDamper

Types of Brakes(Fr.) -

Drum Version (130 mm Dia.) Disc Version -Caliper Type(Rr.) Drum (130mm Dia.)

Dimensions(LxWxH)

2090 mm x 755 mm x 1115 mm

Wheel Base 1330 mm

Ground Clearance 150 mm

Dry Weight 130 kg

Tyres (Fr.

Suresh Reserch Report

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