History of Motorcycles Essay

History Of Motorcycles And The Automobile Industries Marketing Essay Automobile is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognized as one of the drivers of economic growth. During the last decade, well directed efforts have been made to provide a new look to the automobile policy for realizing the sector’s full potential for the economy. Steps like abolition of licensing, removal of quantitative restrictions and initiatives to bring the policy framework in consonance with WTO requirements have set the industry in a progressive track. Removal of the restrictive environment has helped restructuring, and enabled industry to absorb new technologies, aligning itself with the global development and also to realize its potential in the country. The two-wheeler industry has been in existence in our country since 1955. Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment in India. The composition of the two-wheeler industry has witnessed sea changes in the postreform period. It consists of three segments viz. scooters, motorcycles and mopeds. India is the second largest producer and manufacturer of two-wheelers in the world. Indian two-wheeler industry has got spectacular growth in the last few years. Hero Honda, the ‘World No. 1’ two wheeler manufacturer for past 5 years in row is a joint venture between India’s Hero Group and Honda Motor Company, Japan has not only created the world’s single largest two wheeler company but also one of the most successful joint ventures worldwide. India is the second largest producer and manufacturer of two-wheelers in the world. Indian two-wheeler industry has got spectacular growth in the last few years. Indian two-wheeler industry had a small beginning in the early 50’s. The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. Hero Honda and Bajaj Auto are two of the Indian companies that top the list of world companies manufacturing two-wheelers. The two-wheeler market was opened to foreign companies in the mid 1980s. The openness of Indian market to foreign companies lead to the arrival of new models of two-wheelers into India. Easy availability of loans from the banks, 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 in India. This lead to the strong growth of Indian automobile industry. The two-wheeler industry in India has grown rapidly in the country since the announcement of the process of liberalization in 1991 by the then finance minister Dr. Manmohan Singh, now Prime Minister of India. Previously, there were only a handful of two-wheeler models available in the country. Currently, India is the second largest producer of two-wheelers in the world. It stands next only to China and Japan in terms of the number of two wheelers produced and the sales of two-wheelers respectively. In the year 2005-2006, the annual production of two-wheelers in India stood at around 7600801 units. The trend of owning two-wheelers is due to a variety of facts peculiar to India. One of the chief factors is poor public transport in many parts of India. Additionally, two-wheelers offer a great deal of convenience and mobility for the Indian family. Hero Honda Motors Limited, based in Delhi, India, is the world’s largest manufacturer of motorcycles. Hero Honda is a joint venture that began in 1984 between the Hero Group of India and Honda of Japan. It has been the world’s biggest manufacturer of 2wheeled motorized vehicles since 2001, when it produced 1. 3 million motorbikes in a single year. Hero Honda’s Splendor is the world’s largest selling motorcycle. EVOLUTION OF TWO-WHEELER INDUSTRY IN INDIA Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment. The two-wheeler industry has been in existence in the country since 1955. It consists of three segments viz. scooters, motorcycles and mopeds. According to the figures published by SIAM, the share of two-wheelers in automobile sector in terms of units sold was about 80 per cent during 2003- ¬04. This high figure itself is suggestive of the importance of the sector. In the initial years, entry of firms, capacity expansion, choice of products including capacity mix and technology, all critical areas of functioning of an industry, were effectively controlled by the State machinery. The lapses in the system had invited fresh policy options that came into being in late sixties. Amongst these policies, Monopolies and Restrictive Trade Practices (MRTP) and Foreign Exchange Regulation Act (FERA) were aimed at regulating monopoly and foreign investment respectively. This controlling mechanism over the industry resulted in: (a) several firms operating below minimum scale of efficiency; (b) underutilization of capacity; and (c) usage of outdated technology. Recognition of the damaging effects of licensing and fettering policies led to initiation of reforms, which ultimately took a more prominent shape with the introduction of the New Economic Policy (NEP) in 1985. However, the major set of reforms was launched in the year 1991 in response to the major macroeconomic crisis faced by the economy. The industrial policies shifted from a regime of regulation and tight control to a more liberalized and competitive era. Two major results of policy changes during these years in two-wheeler industry were that the, weaker players died out giving way to the new entrants and superior products and a sizeable increase in number of brands entered the market that compelled the firms to compete on the basis of product attributes. Finally, the two- ¬wheeler industry in the country has been able to witness a proliferation of brands with introduction of new technology as well as increase in number of players. However, with various policy measures undertaken in order to increase the competition, though the degree of concentration has been lessened over time, deregulation of the industry has not really resulted in higher level of competition. A GROWTH PERSPECTIVE The composition of the two-wheeler industry has witnessed sea changes in the post-reform period. In 1991, the share of scooters was about 50 per cent of the total 2-wheeler demand in the Indian market. Motorcycle and moped had been experiencing almost equal level of shares in the total number of two wheelers. In 2003-04, the share of motorcycles increased to 78 per cent of the total two-wheelers while the shares of scooters and mopeds declined to the level of 16 and 6 per cent respectively. Different scenarios have been presented based on different assumptions regarding the demand drivers of the two-wheeler industry. The demand for mopeds is not presented in this analysis due to its already shrinking status compared to’ motorcycles and scooters. The high growth rate in motorcycle segment at present will stabilize after a certain point beyond which a condition of equilibrium will set the growth path. Another important thing to keep in mind while interpreting these growth rates is that the forecast could consider the trend till 1999 and the model could not capture the recent developments that have taken place in last few years . India is the second largest producer and manufacturer of two-wheelers in the world. Indian two-wheeler industry has got spectacular growth in the last few years. Indian two-wheeler industry had a small beginning in the early 50’s. The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. Hero Honda and Bajaj Auto are two of the Indian companies that top the list of world companies manufacturing two-wheelers. The two-wheeler market was opened to foreign companies in the mid 1980s. The openness of Indian market to foreign companies lead to the arrival of new models of two-wheelers into India. Easy availability of loans from the banks, 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 in India. This lead to the strong growth of Indian automobile industry. HERO HONDA Hero Honda Motors Limited, based in Delhi, India, is the world’s largest manufacturer of motorcycles. Hero Honda is a joint venture that began in 1984 between the Hero Group of India and Honda of Japan. It has been the world’s biggest manufacturer of 2wheeled motorized vehicles since 2001, when it produced 1. 3 million motorbikes in a single year. During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary ‘Fill it – Shut it – Forget it’ campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage. Over 20 million Hero Honda two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together! Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda’s top -selling motorcycle – Splendor. This festive season, the company sold half a million two wheelers in a single month—a feat unparalleled in global automotive history. Hero Honda bikes currently roll out from its three globally benchmarked manufacturing facilities. Two of these are based at Dharuhera and Gurgaon in Haryana and the third state of the art manufacturing facility was inaugurated at Haridwar, Uttrakhand in April this year. These plants together are capable of producing out 4. 4 million units per year. Hero Honda’s extensive sales and service network now spans over 3000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockiest and authorized representatives of dealers located across different geographies. Hero Honda values its relationship with customers. Its unique CRM initiative – Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India, increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly points out, â€Å"We pioneered India’s motorcycle industry, and it’s our responsibility now to take the industry to the next level. We’ll do all it takes to reach there. † WHICH SEGMENTS ARE BEING TARGETED AND NEED TO INFLUENCE THE TARGET MARKET? Geographic Segmentation calls for division of the market into different geographical units such as nations, states, regions, countries, cities, or neighborhoods. In the South Asian context, geographic segmentation assumes importance due to variations in consumer preferences and purchase habits across different regions, across different countries, and across different states in these countries. Demographic Segmentation In Demographic Segmentation, we divide the market into groups on the basis of variables such as age, family size, family life cycle, income, occupation, education, religion, race, generation, nationality and social class. One reason demographic variables are so popular with marketers in that they’re often associated with consumer needs and wants. Another is that they’re easy to measure. Psychographic Segmentation Psychographics is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values. People within the same demographic group can exhibit very different psychographic profiles. Values and lifestyles significantly affect product and brand choice of consumers. Religion has a significant influence on values and lifestyles. Market Targeting: Effective Segmentation Criteria to be useful, market segments must rate favorably on five key criteria: 1. Measurable, the size, purchasing power and characteristics of the segments can be measured. 2. Substantial, The segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth going after with a tailored marketing program. It would not pay, for example, for an automobile manufacture to develop cars for people who are less four feet tall. 3. Accessible, The segments can be effectively reached and served. Differentiable, The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments. Actionable, Effective programs can be formulated for attracting and serving the segments. Hero Honda is targeting at youth, Unicorn looked sportier than all the existing motorcycles in the premium segment and was pitted against Bajaj Pulsar, the leader with 75 percent market share in that segment. DIFFERENT PROMOTIONAL TOOLS USED AND THE STRATEGY BEING USING THESE TOOLS? Promotion: Above the line (ATL) is an advertising technique using mass media to promote brands. Major above-the-line techniques include TV and radio advertising, print advertising and internet banner ads. This type of communication is conventional in nature and is considered impersonal to customers. The ATL strategy makes use of current traditional media: television, newspapers, magazines, radio, outdoor, and internet. Hero Honda used Above the Line Promotion because in the Above the Line promotion co. members used advertisement through Radio, T. V. , Newspaper and Other media communications. Place: Geographical Placing: – Geographical placing of the product has divided into 4 markets and these are: 1. Local 2. National 3. Regional 4. International Hero Honda used National Market for sale the Hero Honda Splendor. Hero Honda is also planning an extensive marketing campaign with the launch, which would reflect the bike’s contemporary styling and advanced technology. The integrated marketing campaign for ZMR will include outdoor media, Web, mobile, ground activations, print and electronic media, said the company. Hero Honda Pleasure – â€Å"Why should boys have all the fun? † Isn’t that a must ride statement, that can tempt any girl to just buzz with the wind. The Hero Honda Pleasure is Hero Honda’s maiden venture into the burgeoning gear-less scooter market. The pleasure has schemed its strategies to be the best seller by concentrating much on the interest of young girls who love to rock the field of glamor, luxury and comfort. Eye catchy features: The Pleasure sports flashy colours, from Tahitian blue metallic, force silver to the ever trendy colour black. Multi-reflector headlight, body-coloured mirrors, multi-reflector indicators, trendy rear grip, modern tall light cluster, and a new age oval-shaped instrument panel all make the Pleasure a head-turner. For more comfort during the ride, the scooter is designed with broader seat that offers greater riding comfort. Capacious luggage space, has been configured which, is large enough to keep even a helmet. The Pleasure is equipped with a technology, tuff-up tube and tyre combo that offers immediate remedy in the event of a puncture, by releasing an anti-puncture sealant gel. It is capable of attaining a top speed of 77kph. Hero Honda ahead in introducing new technology. The Company has left the competition in the motorcycle segment far behind in volumes as its nearest rival, Bajaj Auto, is a distant second with a market share of around 28 per cent only. The company’s success till date relates to the timely decisions regarding introduction of new technology products. Hero Honda was the first company in India to set standards for fuel efficiency with the launch of a four-stroke motorcycle in the mid-Nineties. This decision is yielding good results even today as can be seen from an uninterrupted growth witnessed by the company in its sales turnover and profitability margins over the past several years. However, future growth in these financial parameters, to a large extent, would also depend upon the way competition gears up in the domestic motorcycle market from the local, as well as foreign players. An eye on the customer In an effort to enhance value for customers, the company has initiated the â€Å"Rs 1001 customer price† benefit program across all its models. In addition, the passport program — which entitles a customer to a Rs 1 lakh accident insurance, lucky draws, gifts against redeemable points, cash discount on consumer durables, free tickets to company sponsored events, etc. – has met with an encouraging response (it has attracted around five lakh members to date) and is expected to continue its success into the future as well. Hero Honda: A ‘passion’ for growth Hero Honda has come up with yet another year of sharp growth in financial performance. The company has developed this ability to spring a surprise in terms of outperforming expectationsThe increase in sales volume and improvement in realization have both played a role in pushing up the turnover. The change in product-mix in favour of higher value products has resulted in improved realization for the company. The growing popularity of the Passion model appears to be the key factor behind improvement in unit realization. Aided by the emphasis on indigenisation, the company has managed to achieve better operational efficiency. The positive impact of these measures is reflected in the form of lower raw material cost (in relation to sales). The company is all set to make a foray into the lower price segment of the four-stroke market. Taking into account the recent trend in performance, the company appears well positioned to retain its top position in the motor cycle market and also sustain the recent rate of growth. Hero Honda is World Leader For 2001- 02, volume up by 38 per cent ; net profit soars by 88 per cent; total turnover up by 42 per cent Achieves a high 48 per cent motorcycle market share; and 33 per cent two-wheeler market share Announces 350 per cent final dividend and 250 per cent celebration dividend (over and above special interim dividend of 250%) Over the last five years, company’s total turnover grows by a whopping 580 %; PAT by 919 % Hero Honda plans sports spectacular. Hero Honda plans to organize a sports and glamour extravaganza in the country, on the lines of the Laureus World Sports Awards currently on in Monaco , in association with the Laureus world sports for Good Foundation, the organizer of the award. Revving up to stay on top Having achieved the status of the largest two-wheeler company in the world, Hero Honda now seeks to retain that slot. The company has a large portfolio of brands, with the money-spinners being mainly Splendor (the world’s largest selling bike) and Passion. However, the company claims it was the launch of the 150cc CBZ, which established Hero Honda as an aspirational brand. â€Å"The launch of CBZ got us into a different league altogether. Celebrating its 25th year, Hero Honda released an innovative music video in the month of September. Titled â€Å"Hero Honda Dhak Dhak Go†, and involving as many as eight brand ambassadors of Hero Honda, the music video has been receiving rave reviews. WHICH STRATEGY OUT OF PUSH AND PULL IS USED AND WHY? Hero Honda is using both the strategy push as well as pull A push-pull-system in business describes the movement of a product or information between two subjects. On markets the consumers usually â€Å"pulls† the goods or information they demand for their needs, while the offerers or suppliers â€Å"pushes† them toward the consumers. Different push and pull strategies used by hero Honda: Push strategy Another meaning of the push strategy in marketing can be found in the communication between seller and buyer. In dependence of the used medium, the communication can be either interactive or non-interactive. For example, if the seller makes his promotion by television or radio, it’s not possible for the buyer to interact with. On the other hand, if the communication is made by phone or internet, the buyer has possibilities to interact with the seller. In the first case information is just â€Å"pushed† toward the buyer, while in the second case it is possible for the buyer to demand the needed information according to his requirements. Applied to that portion of the supply chain where demand uncertainty is relatively small Production & distribution decisions are based on long term forecasts Based on past orders received from retailer’s warehouse (may lead to Bullwhip effect) Inability to meet changing demand patterns. Large and variable production batches Unacceptable service levels Excessive inventories due to the need for large safety stocks Pull strategy In a â€Å"pull† system the consumer requests the product and â€Å"pulls† it through the delivery channel. An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers. Applied to that portion of the supply chain where demand uncertainty is high Production and distribution are demand driven No inventory, response to specific orders. Point of sale (POS) data comes in handy when shared with supply chain partners Decrease in lead time Difficult to implement Key Hero Honda brands continue to drive strong volumes across segments – CD Deluxe in entry segment, Glamour, the new Splendor NXG, Splendor + and Passion Plus in deluxe segment, and Hunk, CBZ X-treme and Karizma in the premium segment. .Hero Honda’s strategy for aggressive top line growth through new product launches, brand building initiatives backed by innovative communication has resulted in market share gain across every segment. Indeed, Hero Honda’s share in domestic motorcycles market has been growing upward of 50 per cent, despite the slowdown in the two-wheeler industry â€Å"However, we will stay true to our winning strategy, and keep refreshing our product portfolio and continue to invest in brand building. CRITICAL APPRAISAL The feeling of freedom and being one with the Nature comes only from riding a two wheeler. Indians prefer the two wheelers because of their small manageable size, low maintenance, pricing and easy loan repayments. Indian streets are full of people of all age groups riding a two wheeler. Motorized two wheelers are seen as a symbol of status by the populace. Thus, in India, we would see swanky four wheels jostling with our ever reliable and sturdy steed: the two wheeler. Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. India is the second largest producer and manufacturer of two-wheelers in the world. Indian two-wheeler industry has got spectacular growth in the last few years. In India there are 7 scooter manufacturers, 9 motorcycle manufacturers, 3 moped manufacturers. Bajaj Auto, Hero Honda, TVS, etc are the leading manufacturers. HEROHONDA has been the world’s biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it produced 1. 3 million motorbikes in a single year. Hero Honda’s Splendor is the world’s largest selling motorcycle. Today Hero Honda has an assembly line of nine different models of motorcycles available. It holds the record for most popular bike in the world by sales for Its Splendor model. Strategies followed by hero honda Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing. Promotion: Below the Line Promotion: „Below The Line is a common technique used for touches and feel products. Those consumer items where the customer will rely on immediate information than previously researched items. Below The Line techniques ensure recall of the brand while at the same time highlighting the features of the product. ‘Honda’ was already a household name in India. Hence, rather than putting major efforts into brand building, its marketing strategy emphasized on offering innovative products at competitive prices, novel promotional campaigns and developing an extensive distribution network†¦ So at last we can say that hero Honda is having a very good promotional strategy and this is the main reason of its success. It basically focuses on its customer satisfaction and from time to time it keep on showing its creativity and innovation It â€Å"However, we will stay true to our winning strategy, and keep refreshing our product portfolio and continue to invest in brand building. â€Å"One of the key pillars of hero honda strategy has been to consistently keep introducing new, advanced products and maintaining a balanced product portfolio.