INTERNATIONAL MARKETING ON BIKES

BIKES: DREAM MACHINES

Its visual appeal is a major factor, with its engine and elements visible, it appeals strongly to the riders. Its design is a powerful attractant. Motorbikes are heart throbs in the automotive world. It would not be an over statement that 90 percent of people who start earning buy a motor bike as a first means to travel. One reason can be attributed to the fact that they can take their feet off the ground and flutter away easy on their vehicles. Motorcycles provide a convenient and relatively inexpensive alternative to automobiles. Another reason being they are more maneuverable than automobiles and they deliver higher fuel economy. This convenient mode of transport has earned many titles from every generation thanks to the different people riding the devil. Some have termed it as a killer vehicle, some as heartthrobs and some as freedom machines. Now a macho bike and a pretty girl on the pillion seat are considered to be traits of a real man. Bikes have more importantly become a symbol of manhood the macho a bike is, the better he is considered. Different groups have lived their times and helped in altering the image and perspective bikes were used for. have come a long way. India became the second largest two wheeler manufacturer in the world and starting in the 1950s with the Automobile Products of India (API) that manufactured the Lambrettas and Bajaj Auto Ltd. with its association with Piaggio of Italy (manufacturer of Vespa scooters) as the largest manufacturers within the country The license raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a sellers market. Customers in India were forced to wait up to 12 years to buy a scooter from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department. By the year 1990, Bajaj had a waiting list that was twenty-six times its annual output for scooters. From a mode of conveyance to their journey to machines made for style, these monster on road

In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts. The motorbike market, if we see world scenario, is quite large and there are many renowned manufacturers. Indian market if we check has got fewer players. The few major players in the Indian context but before that let us have look at the manufacturers at the world level. Harley Davidson Suzuki Honda Yamaha Kawasaki Triumph

Motorcycle Production, Japan - Jan 2010-Sep 2010

Jan 2010-Mar 2010

48,904

35,259

53,357

26,447

Apr 2010-Jun 2010

35,694

32,105

41,286

22,722

Jul 2010-Sep 2010

32,239

28,072

42,265

28,136

July 21, 2010 - Harley-Davidson reported in a public financial statement that they shipped 112,720 motorcycles in the first 6 months of 2010, a 15.2 percent decrease compared to last years 132,849 units for the period. January 12, 2010 - British motorcycle manufacturer Triumph delivered record UK sales in 2009, despite the global recession leading to a 10% drop in the UKs large capacity motorcycle market. The iconic brand increased sales in its home market by 26% in 2009, selling 7450 new motorcycles and overtaking Kawasaki to be the fourth largest big bike brand in the UK. Triumph finished the year very strongly, outselling all manufacturers in the month of November and trailing Honda by just 1 unit in December in the UK +500cc sector. In the space of 12 months Triumphs market share of the UK 500cc+ market has increased from 9.2% to 13%. This trend has been mirrored around the world, with Triumph increasing its market share in all major markets in which it operates, maintaining its position as the worlds fastest growing motorcycle brand.

Indian market
Indian motorbike market consists of quite a few players namely Bajaj, Hero Honda, TVS, Royal Enfield, Yamaha and Honda. There are four segments. Entry level

This segment is made of 100CC motorbikes used for mainly for commuting. These are bare basic machines that are less for tantrums and more for utility. This segment has got all the players participating actively in it products from various manufacturers are listed below:Bajaj: Platina, CT 100, Hero Honda: Splendor, CD Dawn TVS: Star City, Commuter This is a segment has been recently differentiated from the entry level. This segment is not majorly different form the entry level but it features more fancy snickering and snazzy paints but as far as the engine and power are concerned they are more or less the same as entry level bikes .:Bajaj: Discover 112 Hero Honda: Passion TVS: Centra, Victor Yamaha: Libero G5 Executive This segment of the bike market is rapidly growing. This mainly consists of 125cc class. These machines although more powerful than the commuter and the entry level segment the fuel economy is a bit less. preferred over the entry level. Bajaj: Discover DTSi Hero Honda: Super Splendor. Glamour Fi Yamaha: Gladiator TVS: Victor GLX Honda: Shine Premium This segment is mainly consisted of motorbikes which are more powerful. They are less on the utility side and more on the fun side. They form a segment at and above 150cc. Major players and their products are:Bajaj: Avenger, Pulsar 150, Pulsar 180, Pulsar DTS-Fi However these bikes are

Hero Honda: Achiever, CBZ Xtreme, Karizma TVS: Apache Royal Enfield: Thunderbird, Electra, 500S The two-wheeler industry is passing through a very interesting business phase. While the companies are slugging it out to maintain or increase their market share, the consumers are a happy lot. Developments such as the entry of more number of players into the motorcycle market, price discounts offered by producers, monsoon failure and growing competitive pressure have changed the underlying basics of the industry. The impact of these developments is reflected in a change in market share, a divergent trend in share price and the sharp swing in the price-earnings multiple. The battle lines are drawn between the two rivals in the two wheeler segment Bajaj Auto, which has been inching closer to the numero- uno position in the last few months is now at a sniffing distance from arch rival Hero Honda. Hero Honda's has been feeling the heat from new competitors like its own HMSI. Hero Honda net profit up 48.9 pc On the back of robust growth in all segments, Hero Honda on Monday reported its highest ever quarterly profit at Rs 598.8 crore for the three months ending March 31 and registered a jump of 48.9 per cent over the year-ago period.

The company will be investing Rs 350 crore in 2010-11 on capex, which includes Rs 130 crore for increasing the company's production capacity at the Haridwar plant. "The net profit, the turnover and the number of units sold in the fourth quarter is the highest ever, and we have been able to achieve this due to all round growth in all the segments," Hero Honda Senior Vice-President (Marketing and Sales) Anil Dua told reporters.

The total turnover during the last quarter of 2009-10 also increased by 20.2 per cent to Rs 4,122.32 crore over the year-ago period. During the January-March period, Hero Honda

sold 11,86,536 units, up 18.9 per cent over last year. For the entire 2009-10 financial year, the net profit after tax of the company soared by 74.1 per cent to Rs 2,231.83 crore. The total turnover last fiscal stood at Rs 15,860.51 crore, up 28.1 per cent compared to 2008-09, the company, which is also the world's largest two-wheeler maker, said. The company also declared a final dividend of 1,500 per cent or Rs 30 per share on each share had launched nine new of models and variants Rs across segments last 2. fiscal. During FY'10, the company's total sales increased by 23.6 per cent to 46,00,130 units. It Commenting on the plans for the ongoing fiscal, Hero Honda Chief Financial Officer Ravi Sud said, "We will invest Rs 300-350 crore in total capex, which includes capacity expansion at Haridwar, refurbishing of plants (Gurgaon and Dharuhera) and process improvement." The company is increasing its total capacity to 5.7 million units per annum from the current 5.4 million units by August-September, he added.Sud said the company will invest about Rs 130 crore to ramp up production at its Haridwar plant to 7,000 units per day from 5,000 units a day at present. When asked about the company's proposed fourth plant, Dua said, "The existing three plants are fully capable of meeting our requirement for the fiscal 2010-11, but beyond that we will require extra capacity."A feasibility study is currently on and the company will decide on the plant in another two months' time, he added. Sud said ideally the company will be looking for an initial capacity of half a million units per annum for the fourth plant, but declined to comment on further details such as investment and location. On raw material prices, Dua said the company is keeping an eye on commodity price movements, and is absorbing the pressure without passing on the burden to customers

HERO HONDA BIKES FACTS Type : Public company BSE:HEROHONDA M Founded: January 19, 1984 in Gurgaon, Haryana, India Headquarters : New Delhi, India Key people: Brijmohan Lal Munjal (chairman & founder) Toshiaki Nakagawa (joint managing director) Pawan Munjal (CEO) Industry: Automotive Products: Motorcycles, Scooters Revenue: U$ 2.8 billion Website: www.herohonda.com

Hondas entering the Indian market and its international strategy. Honda was one of the first and the most powerful foreign companies that attempted to profit from such a shift in the policy of Indian government and, as soon as restrictions were lessened Honda entered the Indian market of two-wheelers. It should be pointed out that Hondas entering the market was the part of the companys international strategy. Honda, being specialized mainly on the production of engines, aimed at the global expansion. Not surprisingly that by 2002 this company had 100 plants in 33 countries. One of the main strategies the company used in the international arena was a so-called localization, which implied the development of local plants that could match the local demands. As a result, Honda traditionally entered into the joint ventures in order either to overcome certain fiscal restrictions or to get easier access to the local market. The latter is actually one of the main reasons for Honda initially to choose Hero as its partner in production of motorcycles in India. Hero was quite popular company in India and possessed a well developed net of dealers and Honda supposed to contribute technologically to the development of Hero Honda Motors and quickly gain a lion share of the market using Heros loyal dealers. Eventually, the deal was done in June 1984 when the joint venture was created and named Hero Honda Motors that opened new perspectives for the cooperation of two companies. Hero Honda Motors Limited is a two wheeler manufacturer based in India. Hero Honda is a joint venture between the Hero Group of India and Honda of Japan. The company is the largest two wheeler manufacturer in India and also has been referred to as the world's biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera India. Munjal family and Honda group both own 26% stake in the Company. In 2010, it was reported that Honda planned to sell its stake in the venture to the Munjal family. The technology in the bikes of Hero Honda for almost 26 years (1984-2010) has come from the Japanese counterpart Honda.

Vision 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 Hondas commitment to customer, quality and excellence, and while doing so, maintaining the highest standards of ethics and societal responsibilities. Hero Honda believes that the fastest way to turn that dream into a reality is by remaining focused on that vision. Strategy Hero Hondas key strategy has been driven by innovation in every sphere of activity building a robust product portfolio across categories, exploring new markets, aggressively expanding the network and continuing to invest in brand building activities. Manufacturing Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and the latest manufacturing plant is based at Haridwar, Technology In the 1980s Hero Honda pioneered the introduction of fuel-efficient, environment friendly four-stroke motorcycles in the country. Today, Hero Honda continues to be technology pioneer. It became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006. Products Hero Honda's product range includes variety of motorcycles that have set the industry standards across all the market segments. The company also started manufacturing scooter in 2006. Hero Honda offers large no. of products and caters to wide variety of requirements across Distribution The company's growth in the two wheeler market in India is the result of an intrinsic ability to increase reach in new geographies and growth markets. Hero Honda's extensive sales and service network now spans close to 4500 customer touch points. all the segments. in the hill state of Uttrakhand.

These comprise a mix of authorized dealerships, Service & Spare Parts outlets, and dealerappointed Brand The company has been continuously investing in brand building utilizing not only the new product launch and new campaign launch opportunities but also through innovative marketing initiatives revolving around cricket, entertainment and ground- level activation. Hero Honda has been actively promoting various sports such as hockey, cricket and golf. Hero Honda was the title sponsor of the Hero Honda FIH Hockey World Cup that was played in Delhi during Feb-March 2010. Hero Honda also partners the Commonwealth Games GROWTH Today Hero Honda has an assembly line of 9 different models of motorcycle. Currently the largest producer of Two Wheelers in the world. Sold 3 million bikes in the year 2005-06. Competition Hero Honda is a market leader with a significant market share of around 57% ahead of its closest competitor Bajaj auto which has a market share of around 32%. As it fights to protect its dominance in the Indian motorcycle market, Hero Honda which still commands the lion`s share in the fast-growing Indian motorcycle market, has off late seen mounting pressure from rival Bajaj Auto, that has launched variants in the high-volume 100cc version of the market. Bajaj, which has been working hard to corner market share from Hero Honda, seems to be gaining ground after it launched a 100cc Discover model. Since then, its share in the segment increased to 19% in the five months ending August compared to 10% in the same period of 2009-10. However, HHML is in a strong position to withstand these pressures due to the large economies of scale that it possesses and its large and well-penetrated distribution network. 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 Delhi 2010. outlets across the country.

during the year in review. Without Hero Honda, the domestic market would have actually shrunk. MODELS Hero Honda Ambition 133,135 Hero Honda CD 100,CD SS, CD Dawn Hero Honda Splendor , Splendor+ , Super Splendor, Splendor NXG Hero Honda CBZ , CBZ Xtreme Hero Honda Passion , Passion+ , Passion Pro Hero Honda Karizma Hero Honda Hunk Hero Honda Pleasure Hero Honda Glamour KEY MILESTONES 1983 : Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed 1984: Hero Honda Motors Ltd. incorporated 1985 :First motorcycle "CD 100" rolled out 1992 : Raman Munjal Vidya Mandir inaugurated 1994 : New motorcycle model - "Splendor" introduced 2000: model 2001: One million production in a single year : 5,000,000th motorcycle 2003: Becomes the 1st Indian Company to cross the 7 million sales Splendor has emerged as the World's largest selling model for the calendar year in a row (2000, 2001, New motorcycle model - "Karizma" introduced third 2002) 4,000,000th motorcycle produced wheeler Splendor declared 'World No. 1' - largest selling single two-

 2005 : Hero Honda is the World No. 1 for the 4th year in a row Super Splendor , CD Deluxe , Glamour ,Achiever First Scooter model from Hero Honda - "Pleasure" introduced 2006 : Hero Honda is the World No. 1 for the 5th year in a row SWOT Analysis Strengths o Ability to understand customers needs and wants o Recognized and established brand name o Effective advertising capability o Its after sells service o Technology o Maintenance cost is low o Resell value is high o Companys name is synonymous with fuel-efficient bikes and connectivity Weaknesses o R&D is not close to the Hero manufacturing plant o Hero is vulnerable in the joint venture because Honda Motor Company has so much power o Brand name of Hero itself has no influence in the automobile industry. Opportunities o Global expansion into the Caribbean and Central America o Expansion of target market (include women) o Become Indias leader in the scooter market o Financial help easily available o Relatively low rate of interest and the discount of prices offered by the dealers and manufacturers lead to the increasing demand for two-wheeler vehicles o Large market for the high performance segment which is increasing with the upliftment of the lifestyle of people. introduced

Threats o Honda Motorcycles and Scooters India can take away market share and cause joint venture to go sour o Bajaj Motors is a strong competitor o The big giant like Harley-Davidson will introduce soon in Indian market o FDI announced in Automobiles is 100%. o Petrol price increases o Pollution norms o Aluminum and steel price increases

Future Plans
Hero to take a call on Honda ties before 2014 25-year old joint venture with Japans Honda Motor , deadline in 2014 The Munjals of the Hero group and Honda Motors are equal partners in Hero Honda, Indias largest motorcycle company. Honda decided to establish its 100% subsidiary in India and produce scooters and motorcycles. The two partners have also not agreed on the issue like Hondas desire that the JV firm join its umbrella parts company Honda Motor India. Under the new terms agreed between the two parties, Hero Honda will continue producing and selling all the current models in the market. The company will be free to develop new products to sell in domestic and international markets to acquire the technology. Honda officials said that there is also a plan to grant new licenses for the new products which will be introduced under the new brand. As per the terms and conditions of the separation, the R & D support from Honda will continue till 2014 i.e. Hero has 4 years to catch up on their R & D processes. There are certain key issues which are coming in light after the Hero Honda split. One, by 2015, it will be mandatory for all the two wheelers. In order to meet this requirement, manufacturers would need to make large investments in technology. Honda is well versed with the fuel injection system, which is required to meet the

emission norms, while the Hero group would lose this technology know how as a result of the split. Secondly, Hero Honda is facing problem with the unmentioned royalty amount payable to Honda. Here group also fears that company would be forced to pay huge expenses to Honda for Technology support till the next stage of emission norms. Reasons for success The deep penetration network of hero largely benefited the sales. Absence of major competitors in initial years. Sound and proven technical capabilities of Honda and the reliability of Hero. Increased market for motorcycles: Better Fuel efficiency. Change in peoples perception. Decrease in price difference with scooters. Conclusion Customer satisfaction is the one of the most major part of the buying behavior Company has to Build strong brand awareness and credibility among its customers Majorities of people are aware about its brand Try to produces such vehicles that attract the customer. Hero Honda must be increase their: Bikes tank petrol capacity; Gear box; Maximum power; Cubic capacity; Maximum Speed. Established name and dominant market position Strong Marketing Department Local Knowledge Technological Advancements