Marketing Mix & Strategy Analysis of Hero Honda Hunk

Marketing Management Analysis


Group Assignment

Hero Honda-Hunk Page 1

Submitted to Prof. Prabu Doss K Prof. Deepa Prof. Manisha Nayar

Submitted by Hitesh Goyal Chetan J Aravinthan VP

Batch PGPRM-9,MBA 12 B

Reg. No. BLR 0903071001 BLR 0903031007 BLR 0903031012

Total words 3600


Contents: Page No:

1. Executive summary 3

2. Challenge 3

3. Situation Analysis

3.1 Company Analysis 3

3.2 Competitor Analysis 4

a) Strength 4

b) Weakness 4

3.3 Climate Key Trends

a) Political environment 5

b) Legal environment 5

c) Technological environment 5

3.4 SWOT Analysis

a) Strength 6

b) Weakness 6

c) Opportunity 7

d) Threats 7

4. Marketing segmentation and positioning 7

5. Marketing mix

a) Product 9

b) Price 10

c) Place 11

d) Promotion 12

6. Plan for next one year 13

7. Conclusion 13

8. Reference 14



1. Executive Summary

We as a team have chosen Hero Honda Hunk as a product for our marketing plan report. Our

challenges are to collect the data about the firm from relevant website, article, magazine and

journal review then interpret it, analysis the firm, competitor and the industry situation and

how Hero Honda is segmented, positioning, targeting, how it is using price mix and how we

recommend for next one year plan. Hero Honda is the market leader of two-wheeler in India

but they are not marketing leader in term of international business. So the main challenge is

how to become the international market leader and second challenge is how Hero Honda

HUNK can become the successful product thus Bajaj Pulsar is already there in market and it

is very successful and the biggest competitor of HUNK. So, we recommended that we will

tie-up with any well known international company, franchise the foreign player or game such

as MOTO-GP to earn goodwill in foreign country and to make HUNK successful and defeat

Bajaj Pulsar we will modify in product line such as like Pulsar, Hunk will be available in

many models like 200 cc, 250 cc or more than 250cc.

2. The Challenge

We as a team have taken Hero Honda Hunk for our report. Our challenges are to collect the

data and interpret it according to the report about Hero Honda and automobile industry which

helps us to complete our report and for this we refer Hero Honda website, other relevant

website, relevant articles and magazine. So, our main challenge is to gather information about

the company and the whole industry.

3. Company Analysis

Hero Honda Motor Company ltd started as the joint venture between India’s Hero Group and

Honda Motor Company Japan which was took place in 1983. Now it is one of the largest

two-wheeler companies. This company has many manufacturer units in many part of India

such as Dharuhera and Gurgaon in Haryana and Haridwar in Uttrakhand which are producing

4.4 million units per year. CD 100 was the first motor bike which they introduced in 1984.

After that it came up with different models of bikes and scooters with various features such as

Splendor, Passion, Karizma, CBZ and many others. Splendor was declared as 'World No. 1'

largest selling single two-wheeler model in 1997. Hence HHML stands as a STAR in BCG

matrix with high market share and high market growth. Now Hero Honda is contributing

nearly 59% to India motor cycle industry and Hero Honda’s sale for the previous year (2008)



was increased by 27% and it export zoomed by 78% but still it is behind The Bajaj Auto Ltd..

The main goal of company is make Hunk successful in India as well as at international level

and become largest exporter and international company of the market. (sector trends, 2009.)

3.1 Competitor analysis

Bajaj Auto LTD. occupied 25.4% of market share in Indian motorcycle industry. We have

found that Bajaj Auto Ltd. can be considered as a big competitor of Hero Honda at national

level. Last year was not good for it. Bajaj Auto's total sales declined by 26% from 203081

units in Apr '08 to 149733 units in Apr '09.Its domestic sales reduced by 23% from 138117

units in Apr '08 to 106516 units in Apr '09. Also its exports crashed by 33% from 64964 units

in Apr '08 to 43217 units in Apr '09. But still they are market leader in term of export. Bajaj

launched pulsar to the market to compete with Hero Honda and Bajaj pulsar has become a

market leader in Indian two-wheeler industry. With its strategy they targeted the youth and

middle aged group who are between the ages 18-35.The range of bikes which the company

has launched recently is Pulsar-150cc, Pulsar-180cc, Pulsar-200cc and Pulsar-220cc and it is

the close competitor for hero Honda HUNK. (sector trends, 2009.)

a) Strength

Bajaj Auto has much strength such as they have many manufacturing plant in many part of

India, they have a wide range of product line such as Pulsar, Caliber, Avenger, X-ide and

many others, it is well known for its R&D, product development, process engineering and

low-cost manufacturing skills , its environmentally friendly image for example it has opened

the first green field plant at Pantnagar in Uttarakhand and it is one of the largest exporters of

two and three-wheelers in the country with exports forming 18% of its total sales.

b) Weakness

It has some weakness also which stop it to become the market leader in India such as it has a

huge cost of production because of this they had to closed its Akurdi plant on September 3,

2007, it has a few dealership showroom all over the country compare to Hero Honda.( sector

trends, 2009.)



3.3 Climate Key Trends

a) Political environment

It is not favorable for Indian motorcycle industry as India opened up its FDI (Foreign Direct

Investment) and allowed all foreign companies to enter India. Indian companies enjoyed high

tariff for its product against importer but that has been stopped now because of big

competition by foreign players in India. Since India relaxed its barrier much foreign company

started its production unit in India and produces motorcycle for reasonable price as Indian

market is price sensible.

Though the whole world is under rescission, Economic environment is favorable to Indian

Motorcycle industry when compared to other countries around the world. Yes, economic

slowdown reduces the sales of two-wheeler in India but it will not affect so badly as other

countries. And also it is announced by government (Pay commission) that the individual

salary hike will be implemented in the near future.

b) Legal environment

It provides some favorable support to product pollution free bike & scooters. The government

had made it mandatory to produce pollution free bikes and scooters. Since April 2005, the

government imposed this rules. It helped in producing vehicle with low emission of pollution.

But it also increased the product price as the production cost increased due to added up

technology to control emission.

c) Technological environment

It affects price of the product it also improves the product standard in compared to

competitors. As the industry brings new technology to India, the companies also adheres

those technology to position their company as a technological improve company. This help to

improve the whole market and bringing the industry to next level generation. The improved

technologies also uplift the Indian motorcycle industry to international level.



3.4 Strength--Weakness--Opportunity--Threat (SWOT) Analysis

a) Strength

Market Share: Hero Honda has the highest market share of 40% in Indian 2-wheeler

industry so company can go for new product development or use this figure for campaigning.

Collaboration: Hero Honda is the only one company in two wheeler and automobile

industry which has collaboration with many banks in India as well as in foreign and it helps

them to increase their sale through loan such as ABN-AMRO Bank, Bank of America, Bank

of Tokyo-Mitsubishi, Canara Bank, Citibank, HDFC Bank, HSBC, ICICI Bank, Punjab

National Bank.

Brand Image and Strong Supply Chain: Company had already built a strong image on

customers that Hero Honda bike are fuel efficient by launching CD-100 and Splendor in the

very beginning of its journey in India. So Hero Honda has very good brand image and its

largest dealership and showroom all over India make it strong then others.

Low maintenance cost and easy access: Hero Honda bikes are well known for its very low

maintenance cost and less price for spare parts because Hero Honda’s goal is not only selling

bikes but also providing good service to its customer.

New technology intervention: New technology intervention upgraded Hero Honda’s bike

and brought a standard to it such as power break, self-start and strong body. Hence the resell

values for Hero Honda bikes are having high probability.

Advertisement campaigning: Hero Honda also has very good advertisement campaigning in

India through Television ads, event sponsoring, etc.

b) Weakness

Increase in current liabilities: Company’s current liabilities have been increasing from

2004. It was 1479 crore in 2007 but in 2008 it has increased up to 1824 crore. Because of this

the company equity share price has affected.

Competition: there are so many competitor have entered in to the market such as Bajaj Auto

Ltd., Suzuki Ltd., TVS Victor and so many. It affects the company’s sale also.



Brand image: When compared to Bajaj Pulsar, Hero Honda HUNK is standing below in

consumer’s mind for its style and performance.

Augment in employment cost and selling and distribution expenses: The expenditure of

company has increased from last few years because of lack of knowledge of labors about new

technology and uses of machines.

c) Opportunity

Increase in per capita income: The Indian two-wheeler industry is booming because of

increased per capita of each Indian bring lots of demand. This is evidenced by latest pay

commission announcement.

Increase in demand: A demand forecast done by idef.com says that in the next two years

(2010 & 2011) the demand for bike and scooter are going to increase by 14.2% which shows

the massive opportunity for companies to gain its market.

Increased availability of finance from financial intuitions brings lots of sales on credit. Hence

people tend to buy their dream bike soon rather than waiting for money to earn.

Huge population: India is on the 2nd position in term of population. So there is huge

opportunity for Hero Honda as well as for entire two- wheeler industry.

Improvement in Infra structure and education: India’s infrastructure quality is improving

day by day such as quality of roads, new technology, new media sources and education. So it

helps the two wheeler companies to increase their sales.

d) Threat

Increase in FDI: Since India opened it barrier for foreign direct investment in India many

foreign 2-wheeler companies going to invade India and creates heavy competition to Indian

Motor industry.

Increase in fuel, steel and aluminum price: Increased fuel price reduces the demand for

vehicle. So the growth of industry is dependent on fuel price.

Economic Recession: If the recession continuous like this then the growth of Indian 2-

wheeler market will also be reduced like any other country.



4. Marketing segmentation and positioning

This segmentation is basically concentrated on behavior and uses of product:

Decision role involved in purchasing motorbike:

1. Initiator: It is a consumer who found the need of bike such as it may be people who are

doing job or students.

2. Influencer: Person who influence other person to make a decision to buy a particular

product which he is using or he has knowledge about that product. He may be a person’s

relative, friends or colleague.

3. Decider: It is a decision taker consumer who is going to buy a bike for himself or for his

elder brother or son.

4. Buyer: He is that person who will actually pay for the motor bike. It can be father, a

person himself.

5. User: He is that person who will use the bike such as student or son or a person who is

doing job.

Age and income: More than 70% of population in India is lower than 30year age. Secondly

the per capita income has increased up to Rs 38,084 in India. So the average Indian living

standard is developing and it makes the customers to think about premium bikes to ride on

the road rather than a low end bike. So Hero Honda is segmented the market according to age

and income and they are targeting the middle level income people and 18 to 40 year age

people.

Status symbol: Hero Honda has 15-20% market share in premium bike segment. This can be

increased by sale of Hero Honda motor bike in the premium market. Premium bike users use

bike as a status symbol, relaxing transporter, an alternative for car, easy career from point A

to point B. They targeting and positioning like this that Hero Honda facilitates all these uses.

Benefit sought: Today consumers are just not look at money but they look at quality of the

product also. So Hero Honda is targeting those people and segmented and positioning

through their good quality such as good quality of steel and aluminum, good tyre quality

which help rider at raining time and protect the bike to slip.



Product speclization: After segmentation the market a company can target the customer by

inform them how the product is unique then others, what is the features and uses such as Hero

Honda is doing for his bike- Hero Honda HUNK has supporting features like Air cooled 4-

stroke single cylinder with 150cc engine, max power of 14.4ps at 8500 rpm, advanced

microprocessor ignition system, 5-speed gear, front disc and rear drum break.

Premium Bike: Hero Honda position itself as premium bike under 150cc motorcycle

segment and serving for office and college goers with age range 18 to 45.

5. Marketing Mix:

Hero Honda HUNK is positioned in premium market segment. So the marketing mix of

product, price, place and promotion are done according to premium market segment.

a) Product

The product name: Hero Honda HUNK (Tagline- Because muscle matter)

The Brand name: Hero Honda

Product Strategies

Core benefit: good mileage, less fuel consumption, self start, and good looking.

Basic Product: Simple motorbike with average mileage and kick start

Expected product: Super mileage, two silencer with nitrogen gas slender, power break,

more than 500 cc, racing bike

Product line: The product line for Hero Honda is motor bike is very simple. It has only one

product line which is Hero Honda HUNK 150cc. so it is very clear that the HUNK has no

choice in its product line.

Since HUNK is in premium bike segment, customers of this segment will look for many

advantages and its utilities.

The bike supports many of its features with its functions as follows,

FEATURES FUNCTIONS



150 cc Engine Provide power full ride and performance

Gas charged shock absorber Provide comfortable journey

Puncture resistant Tubeless tires Avoids tension and unnecessary stop

Strong muscular body Display style

Large fuel tank Gives good fuel storage capacity

Advanced Tumble Flow Induction (ATFI) Increases fuel efficiency

(Front)Disc and Drum(Rear)- brakes Provides safety ride

b) Price

Hero Honda HUNK listed its price @ 55,000. It is considered as the cheapest price quote for

a premium bike in India.

Pricing strategies are used in Hero Honda HUNK to increase its profit.

Hero Honda HUNK gives certain basic features with a list price and each extra unit of

features will add up the total cost of the vehicle. Hero Honda HUNK used this pricing

strategy.

For instance, HUNK self starter and kick starter will cost @ 57,000 & 55,000 respectively.

And also other options like alloy wheel, passenger footrest, pass-light, low fuel indicator and

colors. So choosing each one of these options will increase the total cost of the show room

price.

Apart from show room cost, extra costs are road tax, insurance cost,

Discounts are provided during many occasions like Indian festival days, government

celebration days and season celebration.

c) Place



Hero Honda HUNK will be sold in all Hero Honda exclusive show rooms only and each

showroom will be owned by different individual entrepreneur called dealer or agent. He/she

should sell all products of Hero Honda like vehicle and its spare parts and also should provide

vehicle service and customer service. Hero Honda showrooms will be situated in prime

locations all over India to providing there is good access for customers. Showrooms are

located in Metros, city and also in towns. And they use mobile showrooms to reach nearby

village around the town showroom. The stock will be sent directly to each dealer direct from

the manufacturing units. The goods will be transported through the dealer’s lorry or truck.

The dealers can either own the truck or else can hire it for rent. But company will not provide

any logistic help to its dealers.

The stock will be replenished ever month or after stock clear out in showroom. The action

will be taken whichever happens first. Initially, the dealer needs to pay part of the stock cost

as advance and remaining amount can be paid after the sold out. Each month the dealer needs

to reimburse the advance to Hero Honda for getting stocks.

Distribution for HUNK:

d) Promotion


manufacturer

retailers

consumer


Hero Honda HUNK will convey “Because MUSCLE matter” as their message. This caption

says that HUNK can provide a muscular look to you and your bike. Basically it says that it

provide style.

Hero Honda HUNK will be promoted directly by company through online promotions,

exhibitions, television ads, printed ads, and event sponsoring.

Online promotion: Hero Honda promoted its product through internet on their official

website: http://www.herohonda.com

Exhibition and trade fair: They participate in trade fair, established exhibition for example

they participated in trade fair November, 2008 which held every year in Delhi.

Television ads – Playing HUNK visuals between programs break. This visual playing will

give bike’s image with sound. Customers can have a detailed look of the product from his/her

home only.

Print ads – Displaying image on newspapers, magazines, pamphlets. This type of ads will

give overall look of the bike and also written details about bike features and function.

Customer can read and get the information about the bike.

Sponsor ads – Displaying the name Hero Honda HUNK on every possible place. This

display will create an opinion about the company and its product. It is the expensive way to

advertise but have the maximum impact on sales because nowadays events are happened not

only in venue but also telecasted over television.

Apart from company, dealers also provide their advertisement through mobile showroom,

stall at exhibitions, hoardings besides the road, wall paintings, etc.

6. Plan for next one year



The two wheeler sales increase by 7% from 585082 units in Apr '08 to 627421 units in Apr

'09. The growth in its total sales was because of domestic sales but decline in its exports. Its

domestic sales increase by 12% to 562357 units in Apr '09 largely driven by Hero Honda. Its

exports crashed by 22% to 65064 units in Apr '09 largely attributed to Bajaj Auto. Its exports

zoomed ahead by 78% from 3840 units in Apr '08 to 6826 units in Apr '09 but still Bajaj Auto

Ltd with sale of 43217 unit is the market leader. So to become a market leader in export we

will acquire any international two wheeler firm or we will tie-up with any firm. We will do

franchise with foreign player such as who participate in MOTO-GP games

In the same way 2nd problem for any company is increasing competition. From 2008-09 near

43 models have launched by different company for example Bajaj Auto Ltd. has launched

Bajaj Pulsar in 3 different models such as 150 cc, 180 cc, 220 cc. So, to sustain in market, I

will modify the bike such as only 150 cc HUNK is available in market, We will introduce the

new product line for example 250 cc or more then 250 cc bike because there is no any Indian

company which is offering more than 250 cc bike, so it will be revolution in two wheeler

Indian market. Secondly Hero Honda is doing well at domestic level as well as international

level. It is the market leader at domestic level but at international level still it is small player.

Conclusion

At last we can say that Hero Honda HUNK has good brand name, they are market leader. So

the main challenge is how to become the international market leader and second challenge is

how Hero Honda HUNK can become the successful product thus Bajaj Pulsar is already there

in market and it is very successful and the biggest competitor of HUNK. So, become

successful in both market they are segmenting according to demographic, physiographic and

targeting young people, middle income group as well as higher income group and they are

positioning as status symbol and we recommended that they should tie-up with any well

known international company, franchise the foreign player or game such as MOTO-GP to

earn goodwill in foreign country and to make HUNK successful and defeat Bajaj Pulsar, they

are modify in product line such as like Pulsar, Hunk will be available in many models like

200 cc, 250 cc or more than 250cc.



Reference

Kotler, P. & Keller, K. (2008).Marketing Management (13th ed).New Delhi: Prentice Hall of

India

Websites:

1) 5-May-2009 Auto - Two wheelers: Gains momentum

http://www.capitaline.com/user/FramePage.asp?id=1


2) Hero Honda Official site, Retrieved on 25th may 2009

http://www.herohonda.com/

3) Hero Honda HUNK, Retrieved on 25th may 2009

http://www.herohonda.com/hunkbike/index.html

4) Bike advice, Retrieved on 25th may 2009

http://bikeadvice.in/hero-honda-hunk-review-pictures/

5) two-wheeler India, Retrieved on 25th may 2009

http://www.2wheelsindia.com/2007/12/bajaj-pulsar-150-dtsi-vs-hero-honda.html





http://bikeadvice.in/hero-honda-hunk-review-pictures/

http://www.herohonda.com/hunkbike/index.html

http://www.herohonda.com/



Documents

Marketing Mix & Strategy Analysis of Hero Honda Hunk