"Hero Honda" By - Akshay Visveshwaran Ashmita Mazumder Priyamvada Khatri Roshan Vailaya Tulika Shukla Vikas Chamarthi

 Formed in 1984 as a JV between Munjal Brothers & Honda Motors (both own 26 % each).  World’s No.1 two-wheeler company, in terms of unit volume sales.  World’s Largest Manufacturer of two-wheelers.  Every second motorcycle bought in India is a Splendor – Hero Honda’s top-selling bike.  Hero to pay Honda $1 billion, 30 – 50 % of the actual worth, through off-market transaction deals. BACKGROUND

REASONS FOR THE SPLIT  Bharat norm IV would have to be implemented.  Greater investment in technology, in turn.  Lower profit margins and increasing R&D and loyalty costs.  Hero wants to create their own identity in the global market.

KEY ISSUES  Future of the group  Transition from Hero Honda to Hero  Market share decline  Retaining core customer group  Increasing R&D and raw materials costs  New launches by competitors  Local markets response decrease  Export numbers declining  Fresh branding initiatives

FUTURE – New Markets & New Segments  The management is smart, experienced and veteran.  They got their 26 % stake from Honda at a price much cheaper to the market rate.  Expertise over Japanese Technology.  Can make their own presence felt in the global markets.

MARKET SHARE DECLINE  Exploring possibilities of entry-level launches at lower prices compared to it’s competitors.  Three full years to develop their own capabilities and come up with entry-level models.

High R&D and Cost Compensation  Choosing an in-house R&D team and not going for a domestic/foreign partner for technical collaboration will help in saving overhead costs.  Hero could save up to 5500 crores on royalty for the financial year 2011.

LOCAL MARKETS  Focus has to be majorly on the domestic markets, where the main strength of Hero lies.  Hero’s old ‘Splendor’ and ‘Passion’ models constitute 70 % of it’s sales ; all recent new bikes add up to only 8 % of sales.

EXPORTS  Exports may not rise as fast as expected because it takes time to understand markets and to build supply chains.  The “Honda” tag name cannot be used for exports.  There will be an advantage if they export to particular locations where Honda already has a reputed name.  More exports of motorcycles will be possible, since it was only limited to India’s neighboring countries till now.

BRANDING  Branding campaign needs to be completely revamped because people wouldn’t be able to relate with the Hero group so easily.  Technology agreement between Hero and Honda bars Hero from using the Honda name if they decide to make changes to their current products. Hence, Hero has decided to rebrand.  This is the reason they have asked JWT to help them out.

 Plans include using a new branding strategy for, on the lines of their “Dhak Dhak Go” and “Fill It-Shut It-Forget It” campaigns.  Reinforcement of the new brand is the biggest key.  100 crore is being allotted by Hero to reconfigure their new brand name.  Hero is planning to launch 3 new models using their own name, by the end of 2011, with the first being a dirt bike.

NOW WHAT ?  Hero is mainly picturised as a bicycle company, rather than a 2-wheeler organisation and creating a distinguishing shift in the people’s mind is most important.  Advertisement like Maruti’s “Ghar aa gaya Hindustan” can be thought of, to connect with the Indian audience.  Organize street shows and campaigns to create generic awareness among the people about the upcoming Hero products.  Hero is reportedly hiring engineers from it’s competitors like Bajaj, Yamaha and Mahindra 2-wheelers.

DHAK DHAK GO !!!