CONTENTS

CHAPTER-I

 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES OF THE STUDY
 METHODOLOGY
 SCOPE OF THE STUDY
 LIMITATIONS OF THE STUDY

CHAPTER-II

 INDUSTRY PROFILE

CHAPTER-III

 COMPANY PROFILE

CHAPTER-IV

 THEORITICAL FRAME WORK

CHAPTER-V

 ANALYSIS AND INTERPRETATIONS

CHAPTER-VI

 FINDINGS AND SUGGESTIONS

 CONCLUSION
 BIBILOGRAPHY
 QUESTIONNAIRE

1
 INTRODUCTION

Marketing is the science of meeting the needs of a customer by providing valuable products to customers by
utilizing the expertise of the organization, at same time, to achieve organizational goals. According to The
American Marketing Association.

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large.

With this definition, it is important to realize that the customer can be an individual user, a company, or several
people who contribute to the purchasing decision. The product can be a hard good, a service, or even an idea –
anything that would provide some value to the person who provides an exchange. An exchange is most often
thought of as money, but could also be a donation of time or effort, or even a specific action. A producer is
often a company, but could be an individual or non-profit organization.

Classical marketing is often described in terms of the four “P’s, which are:

 Product – what goods or services are offered to customers

 Promotion – how the producer communicates the value of its products
 Price – the value of the exchange between the customer and producer
 Placement – how the product is delivered to the customer.
Defination: Philip Kotler defines marketing as :-marketing is about Satisfying needs and wants through an
exchange process

The Marketing Concepts:

The marketing concept is the philosophy that urges organization to focus on their customers’ needs. Analyzing
their needs and making such decisions that satisfy those needs in a better way than competitors.

2
To have a better understanding of marketing concept, it’s worthwhile to review the other philosophies that once
were dominated and are still being practiced by some of the firms.

Production Concept

The idea of production concept – “Consumers will favor products that are available and highly affordable”. This
concept is one of the oldest Marketing management orientations that guide sellers.
Companies adopting this orientation run a major risk of focusing too narrowly on their own operations and
losing sight of the real objective.
Most times; the production concept can lead to marketing myopia. Management focuses on improving
production and distribution efficiency.

Product Concept

The product concept holds that the consumers will favor products that offer the most in quality, performance
and innovative features.
Here; under this concept,
Marketing strategies are focused on making continuous product improvements.
Product quality and improvement are important parts of marketing strategies, sometimes the only part.
Targeting only on the company’s products could also lead to marketing myopia.

Selling Concept

The selling concept holds the idea- “consumers will not buy enough of the firm’s products unless it undertakes a
large-scale selling and promotion effort”.
Here the management focuses on creating sales transactions rather than on building long-term, profitable
customer relationships.
In other words;
The aim is to sell what the company makes rather than making what the market wants. Such aggressive selling
program carries very high risks.
3
In selling concept the marketer assumes that customers will be coaxed into buying the product will like it, if
they don’t like it, they will possibly forget their disappointment and buy it again later. This is usually very poor
and costly assumption.

Exchange concept:

In this concept organizations are thinking that marketing is nothing but exchanging of goods and services for
money.

4
NEED FOR THE STUDY

5
OBJECTIVES OF THE STUDY

6
METHODOLOGY

The data for the proposed study on the product is obtained through a mix of data sources
like.

1. Primary Source
2. Secondary Source

Primary Source:

The primary data are those which are collected a fresh and for the first time. It is obtained
either through observation or through direct communication with the respondents.

It includes the collection of data through a questionnaire, which consists of a set of

questionnaire presented to respondents for the answers. Because of its flexibility, the
questionnaire is by far the most common instrument used to collect primary data and through
observation.

Secondary Source:

The secondary data means data that is already available, i.e., they refer to the data, which has
already been collected and analyzed by someone else.

It includes periodical, magazines, newspaper, company newsletters, reports, internet, and

brochures etc.

7
LIMITATIONS OF THE STUDY

 Time is one of the main constraints; the entire study was conducted within a short period.
 The study is subjected to limited region that is in Rajahmundry only so; the inferences
made by the study may not be applicable to the entire market. Because of the individual
indifferences.
 Larger the sample size, higher the accuracy however due to constraints small sample was
chosen which might allow changes as deviation of result from the population
characteristics.
 Sampling errors might have been caused by the random sampling technique
administration.
 Difficulty in collection of accurate data as there is possibility of biased answer, from the
respondents.
 As there is possibility of biased answers from the respondents, the information collected
may not be accurate

8
EXECUTIVE SUMMARY

In today’s competitive business world every single customer is important for the business. In
order to reach each and every customer the companies come up with many strategies.

This research study has been conducted to see the sales performance of the firm Reddy
babumotors,rajahmundry through sales promotion.

The research study has been conducted with help of the firm’s annual report of past two years.
The annual financial reports consists of the details requires for the calculations of the various
accounting ratios which guide us to see the financial performance of the firm. Personal
discussion has been carried out with the accounts department officials.

9
 INDUSTRY PROFILE

History of Bikes in India:

Mobility, especially in terms of transportation defines success of a nation or a community. Before the British
laid foundations for railway tracks in India to infuse mass transportation in the country, affluent people had the
luxury of being driven around in cars and the lower and upwardly mobile populus were dependent on carts
pulled by bullocks and horse carriages until the introduction of pedal bicycles.

The evolution of pedal powered cycle into a motor powered two wheeler helped people move faster and further.
People could move out of rural India and move towards the big cities hoping to find new jobs and starting new
businesses in a new, emerging India.

The first motorbike in India:

The first bike commissioned in India was the 350 cc powered Bullet manufactured in England and assembled in
Madras (now Chennai) by the Royal Enfield UK company. Back then Royal Enfield was a British company.
The rugged Bullet was ordered by the Indian Army.

The tough build quality and broad wheel base helped the Jawans ride through tough terrains in the north and
eastern parts of India with relative ease.
The government of Independent India laid tough restrictions on the import motorcycle industry by encouraging
manufacturing and assembly in india.

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There are four major aspects which lead to the success of the two-wheelers in India
• Top quality, international standard manufacturing technologies

• Upwardly mobile, high earning youth

• Easy access to two wheeler loans

• Reduction in taxes and duties

Where to from here?

From launching Bike ambulances to two wheeler taxis, a developing India is going through a green patch in
terms of new age business ideas created by Indians for the very Indian problems being faced on a day-to-day
basis.
Indian manufacturers have dabbled with making motorcycles which run on all mass market fuels available, such
as diesel, petrol, CNG and now with advances in battery technology, there are a few brands (local) who are
about to pioneer electric mobility for the masses.

Two wheelers have become one among Indian families

Indians love for the freedom and mobility the two wheeler offers has woven an emotional bond between the
machines and Indian families themselves. We always depend on those fabulous two wheels to take us from
home to office or on cool rides to the countryside during weekends and long holidays. No wonder there are
thousands of biker clubs which span the length and breadth of the country.

Two wheelers represent tremendous value for money, mainly due to its low cost (when compared to cars),
significantly higher mileage, easy repayment options, and high standard of engine technology improves
longevity of the machines. However, timely care and servicing is a must to get the best out of them.

Two wheeler Indian manufacturer:

• TVS Motor Company

• Honda Motorcycle and Scooter India (Pvt.) Ltd

• LML (India) Limited

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• Hero Honda Motors India Limited

• Royal Enfield Motors India Ltd

• Yamaha Motors India Pvt. Ltd

• Mopeds in India

• Motorcycles in India

• Scooters in India

• Bajaj Auto Ltd

• Kinetic Motor Co. Ltd

• Monto Motors

• Suzuki Motor Corporation

• Hero Moto corp Motors Ltd

Two-Wheeler Market in India

Indian Two-Wheeler Market is noticing a continuous upsurge in demand and thus resulting in growing
production and sales volume. This owes a lot to the launching of new attractive models at affordable prices,
design innovations made from youths’ perspective and latest technology utilised in manufacturing of vehicles.
The sale of two-wheeler products has increased substantially. The sales volumes in the two-wheeler sector shot
up from 15 percent to 24 percent between 2008-09 and 2013-14.

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BIKE COMPANIES IN INDIA:
Hero MotoCorp:
Hero MotoCorp is one of the best and market leaders in India’s two wheeler segment. Hero MotoCorp is
formerly known has Hero Honda, it was collaboration between Honda motors Japan and Hero cycles India.
Recently Honda decided to move out from collaboration to showcase its own products in market and Hero
Honda rebranded as Hero MotoCorp. Hero MotoCorp is one of the worlds largest and India’s Number one two
wheeler manufacturing company.

Honda Motorcycle and Scooter India (HMSI):

Hero Moto Corp Honda started to sell its own vehicles with Honda brand name once the end of partnership
between Honda motors Japan and Hero cycles India. Honda lunched Honda Activa which is a gearless scooter
in India and it has redefined the scooter market in India. Honda Activa is one of the best selling gearless
scooters in India. After success of Honda active, it has launched Honda Aviator, Honda Dio, Honda Activa I
and Honda Activa 125 to Indian Market. Honda’s Unicorn one of the bestselling bikes of India. Other available
Honda bikes are Honda CB Shine, Honda CB Trigger, Honda CB Twister, Honda CBF Stunner, Honda Dream
Neo and Honda Dream Yuga.
TVS Motors:
TVS motor is another Indian company which manufactures two wheelers apart from its other business. TVS
started two wheeler businesses with collaboration of Japan Suzuki. After many years it has started to sell its
own TVS brands. TVS Apache is one of the best selling bikes of TVS motors. Other available bikes are TVS
Apache RTR 180, TVS Flame, TVS Jive, TVS Phoenix, TVS Star and TVS Wego gearless scoter with body
balancing technology.

Bajaj Auto:
Bajaj is India’s largest two wheeler and world’s largest three wheeler manufacturing company. Bajaj Pulsar is
one of the best selling sports bike in India. Other bikes of Bajaj’s are Bajaj Avenger, Bajaj Discover, Bajaj
Platina, Bajaj Discover 150, Bajaj Discover 125, Bajaj Discover 125 ST and Bajaj Pulsar 200NS.

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Suzuki Motorcycle India Limited:
Suzuki Motorcycle India is a subsidiary company of Japan’s Suzuki Motor Corporation. Suzuki GS150R,
Suzuki Access gearless scoter , Suzuki Hayate, Suzuki Slingshot, Suzuki Swish are available bikes of Suzuki
Motorcycle India.
Yamaha Motor Pvt. Ltd:
Yamaha Motor Pvt. Ltd is subsidiary company of Yamaha Motor Company. Available bikes from Yamaha are
Yamaha FZ, Yamaha Fazer, Yamaha Crux, Yamaha Ray Z and Yamaha Ray 125 gearless scoter.

Facts of two wheeler industry in India:

 According to industry body, the Society of Indian Automobile Manufacturers, the Indian two-wheeler
industry is expected to post an annual growth of 11-12 per cent, and the market is expected to double
every four years till 2020. According to data from Nomura and Crisil, as many as 10 million two-
wheelers were sold in India 2011-12. Vehicles in the executive segment formed the bulk of sales at 6.5
million, followed by the economy segment (1.8 million) and premium segment (1.7 million).

 The recent series of hikes in the price of petrol have played a significant role in the sale of two-
wheelers, according to SIAM, as most first-time four-wheeler buyers in rural India and tier II and tier III
cities have deferred their purchases. Two-wheelers account for a whopping 76 per cent of market share
in the automobile sector in Asia’s third-largest economy. Passenger vehicles account for 16.25 percent.

 Honda made its ambitions clear by launching the 110cc Dream Yuga, its first low-cost motorcycle
meant to target the budget market ruled by Hero and Bajaj. The Dream Yuga comes at an attractive Rs.
44,642, and will compete with Hero’s Splendor, which costs Rs.42,950. The Splendor is India’s top-
selling bike.

 Other two-wheeler companies such as Yamaha and Suzuki, too, are steadily focusing on the mass-
market segment in an attempt to dislodge the two giants—Hero and Bajaj. Yamaha last month
announced a new $280 million factory in India to nearly triple its capacity to 2.8 million motorcycles by
2018, while Suzuki Motor, which is expected to launch a mass-market offering soon, is building a new
factory to take its India capacity to close to one million motorcycles by 2014.

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 Hero has a market share of around 56 per cent in the overall domestic two-wheeler market. At 25.5 per
cent, Bajaj comes a distant second, but maintains a healthy lead over Honda and TVS, which have 7.5
per cent and 6.2 per cent market share, respectively. In terms of volume growth over the previous fiscal
year, Hero leads with 16.5 per cent, followed by Honda (13.6 per cent), Bajaj (7.4 per cent) and TVS
Motors (minus 0.3 per cent). Top brands from each stable are as follows: Hero – Passion, Splendor and
Pleasure (scooter); Bajaj – Pulsar and Discover; Honda – Unicorn, Twister and Activa (scooter); TVS –
Flame, Apache and Scooty (scooter).

 In April 2015, 173,087 Honda Activa were sold in April 2015 while total of 344,752 scooters were sold
in the same month. This shows that out of every 2 scooters that hit the road in India, 1 of them is an
Honda Activa.

 Contrary to huge growth rate seen in the scooter segment in the last few quarters in the long-term
scooter sales grew only 4.5 times since 1995 compared to 17.3 times surge in motorcycles sales in
India.

 A generation shift is sometimes best described by numbers and that stands true even here. From a time
when scooters were the need of the hour, we soon took liking to motorcycles. WHile scooters grew only
4.5 times in 2 decades since 1995, motorcycles raced away and grew by over 17 times.

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 COMPANY PROFILE

HISTORY:

HERO MOTOCORP:

Hero Moto Corp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New
Delhi, India. The company is the largest two-wheeler manufacturer in the world, and also in India, where it has
a market share of about 46% in the two-wheeler category. The 2006 Forbes list of the 200 World's Most
Respected Companies has Hero Honda Motors ranked at #108. On 31 March 2013, the market capitalization of
the company was 30,800 crore (US$4.5 billion).

Hero Honda started its operations in 1984 as a joint venture between Hero Cycles (sometimes called Hero
Group, not to be confused with the Hero Group food company of Switzerland) of India and Honda of Japan. In
2010, when Honda decided to move out of the joint venture, Hero GroupboughtthesharesheldbyHonda.
In June 2012, Hero Moto Corp approved a proposal to merge the investment arm of its parent Hero Investment
Pvt. Ltd. with the automaker. This decision came 18 months after its split from Hero Honda.

"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 owned 26% stake in the Company.

During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and
low cost. A popular advertising campaign based on the slogan 'Fill it – Shut it – Forget it' that emphasized the
motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. In 2001, the
company became the largest two-wheeler manufacturing company in India and globally. It maintains global
industry leadership to date. The technology in the bikes of Hero Moto Corp (earlier Hero Honda) for almost 26
years (1984–2010) has come from the Japanese counterpart Honda.

The new brand identity and logo of Hero Moto Corp were developed by the British firm Wolff Olins. Thelogo
was revealed on 9 August 2011 in London, to coincide with the third test match between England and India.

16
Hero Moto Corp can now export to Latin America, Africa and West Asia. Hero is free to use any vendor for its
components instead of just Honda-approved vendors.

RECOGNITION OF HERO MOTOCORP:

Formation of Hero Moto Corp:

Hero Moto Corp Limited

Type Public Company

Industry Automotive

Founded 19 January, 1984

Founder BrijmohanLallMunjal

Headquarters New Delhi, India

Area served India, Angola, Bangladesh,

Guatemala, Honduras, Kenya, Peru,Sri Lanka, Tanzania, Turkey, Uganda.

MD & CEO PawanMunjal

Products Motorcycles, scooters, three wheeler vehicles

Parent Hero Group

Website www.heromotocorp.com

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The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29
July 2011. The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff
Olin’s. The logo was revealed on 9 August 2011 in London, to coincide with the third test match between
England and India.

Hero Moto Corp can now export to Latin America, Africa and West Asia. Hero is free to use any vendor for its
components instead of just Honda-approved vendors.

On 21 April 2014, Hero Moto Corp announced their plan on a ₹254 crore (US$37 million) joint
venture with Bangladesh's NitolNiloy Group in the next five years. Also hero updated its 100cc
engine range in 2014 for 110cc bikes except hero dawn.

MILESTONES OF HERO MOTOCORP:

1956 - Formation of Hero Cycles in Ludhiana(majestic auto limited)

1975 - Hero Cycles becomes largest bicycle manufacturer in India.

1983 - Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed Shareholders
Agreement signed

1984 - Hero Honda Motors Ltd. incorporated on 19th January at New Delhi.

The company entered into a technical-cum-financial collaboration agreement with Honda Motor
Co. Ltd., Japan (HML).

Hero Honda motorcycle CD 100 launched.

In November, 1,19,99,985 equity shares issued at par of which 71,99,985 shares reserved for
allotment as under:

31,19,998 shares to Hero Cycles (P) Ltd., Hero Investments (P) Ltd. and Bahadur Chand
Investments (P) Ltd.;

31,20,000 shares to Honda Motor Co. Ltd., Japan;

9,59,987 shares to friends and association of promoters.

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Out of balance 48,00,000 shares, 2,40,000 shares were reserved for subscription by the
employees of the company and 96,000 shares by business associates. The remaining 44,64,000
shares were offered at par for public subscription during November1985.

The company embarked on its second phase of expansion of increasing its installed capacity
from 1,20,000 to 1,50,000 vehicles p.a. by the addition of several critical aluminum and steel
components.

1986 - 36,00,000 rights equity shares issued at par in proportion of 3:10

1987 - The company offered 6,00,000 – 15% secured redeemable non-convertible debentures of
Rs.100 each for cash at par on rights basis in the proportion of 1 debenture : 18 equity shares.

Another 3,00,000 – 15% debentures were allotted to retain over subscription. The debentures
were to be redeemed at a premium of Rs.5 per debenture on the expiry of the 7th year from the
date of allotment of the debentures.3,75,000 rights equity issued at par in proportion of 3:10

1989 - Hero Honda motorcycle Sleek launched.850 equity shares forfeited.

1990 - The company was planning to launch a new model motor cycle – CD 100 SS, suitable to
semi-rural conditions. In the domestic market, the company was reported to have a market share
of 46%.850 forfeited shares reissued.

1991 -Hero Honda motorcycle CD 100 SS launched.

1994 - Hero Honda motorcycle Splendor launched.

The company proposed to expand the capacity of existing plant at Dharuhera to 2,40,000 nos.
p.a. Another plant with an installed capacity of 1,50,000 nos. p.a. at Gurgaon Industrial Estate
was being set up.

The company issued 39,79,500 bonus shares to the existing share holders in the ratio of 1:4.

19
The company also issued 28,557 no. of fractional coupons representing 14,250 shares against
which shares shall be allotted to presenting the same for consolidation and allotment.

The company’s production and turnover increased to 1,83,490moorcycles and Rs.483.85crores

respectively due to growth in demand for two-wheelers and declining inflation.

1995 - 14,420 bonus shares issued by way of consolidation of fractional coupons.

A new Technical Collaboration Agreement has been signed with Honda Motor Co. Ltd., Japan
for the period up-to the year 2004which includes technology related to models of higher engine
displacement.

The company allotted 39,79,500 equity shares of Rs.10 each as bonus on 7 th February, by way
of capitalization of General Reserves.

The company also issued 28,557 no. of fractional coupons representing 14,250 shares against
which shares shall be allotted on presenting the same for consolidation and allotment.

1997 - Hero Honda motorcycle Street launched.

HHML has set up a new motorcycle plant in Gurgaon, near Delhi for the manufacture of the
Honda Super Cub 100cc step-through bike.

1998 - The company proposes to increase the share capital to 5crore equity Shares of Rs.10
each, 4lakhs cumulative demable preference shares of Rs.100 each and 4Lakh cumulative
convertible preference shares of Rs.100 each with power to increase or reduce it from time to
time.

The company further proposes to capitalize Rs.19,96,87,5OO from general reserve to share
capital through issue and allotment of bonus shares. Altogether, 1,99,68,750fully paid bonus
shares will be allotted and distributed to members of the company holding equity shares of the
company in the proportion of one bonus share for every fully paid equity shares of Rs.10 each.
20
Motorcycles major Hero Honda is considering entry into scooters in collaboration with partners,
Honda Motors, after the Japanese company decided to walk out of Kinetic Honda, their scooter
venture with the Firodias of Pune.

Honda Motors recently pulled out of its joint venture with the Firodias in which it held a 51 per
cent equity stake.

Honda Motor Company Ltd of Japan (Honda) and Kinetic Honda Motor Ltd (KHML) have
signed a five—year license and technical assistance agreement under which KHML will
continue to receive the technical knowhow, critical vehicle parts and access to Honda's markets
even after the sale of Honda stake in KHML to Kinetic Engineering Ltd (KEL).

The Company changed the paradigm in two–wheelers by launching the most powerful and fast
bike –CBZ(ee) with a unique feature of Transient Power Fuel Control (TPEC)system.

2,39,62,500 bonus shares issued in proportion 1:1.

1999 - Hero Honda motorcycle CBZ launched.

Hero Honda Motors Ltd (HHML) and 20th Century Finance Corporation Ltd have signed a
Memorandum of Understanding (MOU) for financing of Hero Honda motorcycles.

The company, a joint venture between Honda Motor Company of Japan and Hero group of
India to produce four-stroke motorcycles, also aims to increase its share by 1 percent to 38.6
percent during the current fiscal.

Leading two-wheeler manufacturer Hero Motors has formed a joint venture with Briggs
Stratton of US to develop and manufacture four-stroke engines for mopeds and scooters in
India.Honda Motor Company of Japan has decided to re-enter the scooter market in India as
also foray into three-wheelers in a joint initiative with its existing joint venture company Hero
Honda Motors Ltd.

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2000 - Hero Honda Motors Ltd. and Tata Finance Ltd. have signed a national tie-up agreement.
The Company is the largest manufacturer of motorcycles in the country.

The Company will re-launch its step-through Street Smart on Baisakhi 13th April.

Hero Honda Motors Ltd (HHML), has launched an upgraded version of the existing step-
through motorcycle – the Hero Honda Street.

The Company was ranked as the 9th Highest Value Creator among 12 industry groups within
the Bombay Stock Exchange top 100 companies over a five year period (1994-99).

2001- The Company has secured shareholders’ approval for splitting one equity share of Rs.10
each into five equity shares of Rs.2 each in the ratio of 1:5.

Hero Honda Motors Ltd. has become the largest seller of motorcycles amongst all Honda
companies and ventures in the world by selling one million motorcycles during the current
financial year.

Credit rating Agency Crisil has reafirmed outstanding ‘AAA’ rating assigned to the proposed
Rs.15 crore non-convertible debenture issue, Rs.16 crore Commercial paper programme and
fixed deposit programme of Hero Honda
Motors.

Promoter-Chairman of the country‘s largest motorcycle manufacturing company, Hero Honda

Ltd., BrijmohanLallMunjal has bagged the prestigious Earnest and Young Entrepreneur of the
Year (EOY) here on September 27.

2002 - Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition launched
.Company included in the 30 companies Bombay Stock Exchange index

(Sensex).Become world's largest two wheeler company by selling 1.3 million vehicles in 2001.

22
Japanese automaker Honda Motor for the first time decides to source motorcycles from its
Indian joint venture Hero Honda to sell as 'Honda' brand name in Vietnam.

Royalty to the Japanese parent, Honda Motor Co, hiked toRs.630 per vehicle as compared to the
flat royalty of Rs.200on existing models like Splendor and Passion.

Approves Foreign Institutional Investors (FIIs) to increase their stake from the present 24
percent to 40 percent .Comes out as the most profitable two-wheeler company in the country
during the trailing four quarters by over taking second-largest player, Bajaj Auto .Smart, a 75 cc
step-through .Comes out with a free insurance scheme worth Rs.1,000 for all its bikes.

2003 - Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor plus, Hero Honda
motorcycle Passion Plus and Hero Honda motorcycle Karizma launched.

Achieves a landmark sales turnover of over Rs.5,000 crore during 2002-03.Hikes production
capacity at two of its manufacturing facilities to three lakh units .Hero Honda and SBI Cards
launch co-branded credit card for Hero Honda's customers. Achieves milestone by producing
five million bikes from its Dharuhera plant in Haryana joins hands with Small Industries
Service Institute (SISI) to train the unemployed youth who have finished diplomas.

Initiates a new dealer credit system which will bring downits receivable levels to around seven
days and save the company Rs.100 crore.

Forges marketing pact with Aprilia, the Italian bike maker, to introduce its range of
motoscooters and top-end motorcycles in India.

2004 - Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ Star launched
.Hero Motors has announced a licensing agreement with Austria-based Bombardier-Rotax that
will provide 125cc-175ccengines for the upcoming ‘Hero Aprilia’ range of scooters.

2005- Hero Motocorp’s Super Splendor, Hero Honda motorcycle CD Deluxe, Hero Honda
motorcycle Glamour, Hero Honda motorcycle Achiever and Hero Honda Scooter Pleasure
launched.
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2006 - 15 million production milestone achieved.

2007 - New Models of Hero Honda motorcycle Splendor NXG, New Models of Hero Honda
motorcycle CD Deluxe, New Models of Hero Honda motorcycle Passion Plus and Hero Honda
motorcycle Hunk launched.15 million production milestone achieved. Hero Honda Motors Ltd.
has appointed Mr. Yutaka Kudo as Director and Whole-time Director of the Company in the
category of Executive Director w.e.f. April 1, 2007.

2008- New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour, Glamour and
Hero Honda motorcycle Passion Pro launched .Hero Honda Motors Ltd has informed that Mr.
Arun Nath Maira has been appointed as the Additional Director in the Category of Non-
Executive and Independent Director w,e.f.December 20, 2008 by the Board of Directors by way
of passing a resolution by circulation.25 million production milestone achieved.

2009 - New Models of Hero Honda motorcycle Karizma – ZMR and limited edition of Hero
Honda motorcycle Hunk launched Hero Honda Motors Ltd has appointed Mr. Ravi Nath as an
Additional Director in the category of Non-Executive and Independent Director w.e.f. October
14, 2009 by the Board of Directors by way of Passing a resolution by circulation on October 14,
2009.

2010 - New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda motorcycle
Hunk and New Hero Honda Motorcycle Super Splendor launched.

2011 - New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZ Xtreme, Karizma
launched. New licensing arrangement signed between Hero and Honda.In August, Hero and
Honda parted company, thus forming Hero Moto Corp and Honda moving out of the Hero
Honda joint venture. In November, Hero launched its first ever Off Road Bike Named Hero
"Impulse".

2012 - New Models of Hero Moto Corp – Maestro the Musculine scooter and Ignitor, the young
generation bike, are launched.

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2013 - Hero Moto Corp unveiled line-up of 15 updated products including Karizma R, ZMR,
XTREME, Pleasure, Splendor Pro, Splendor ISMART, HF Deluxe ECO, Hero Moto Corp
Super Splendor, Passion Pro and XPRO, Glamour and Glamour FI etc. It also introduced three
new technologies- Engine Immobilizer in new XTREME, Integrated Braking System (IBS) in
new Pleasure and i3S (Idle Stop and Start System) in new Splendor ISMART[13]

2014 - Hero Moto Corp Launched Splendor Pro Classic

2015- Hero Moto Corp Launched Hero Impluse

2016- Hero Moto Corp Launched Hero HX 250R

2018- Hero Moto Corp set to introduce four motorcycles with 200-300cc engine capacity

Termination of Honda joint venture:

By December 2010, the board of directors of the Hero Honda Group had decided to terminate the joint venture
between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26%
stake of the Honda in JV Hero Honda. Under the joint venture Hero Group could not export to international
markets (except Nepal, Bangladesh and Sri Lanka) and the termination would mean that Hero Group could now
export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their
bikes.

The Japanese auto maker will exit the joint venture through a series of off market transactions by giving the
Munjal family—which held a 26% stake in the company—an additional 26%. Honda,

which also has an independent fully owned two-wheeler subsidiary—Honda Motorcycle and Scooter India
(HMSI)—will exit Hero Honda at a discount and get over ₹6,400crores for its stake. The discount will be
between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed
on December 16, 2010.

The rising differences between the two partners gradually emerged as an irritant. Differences had been brewing
for a few years before the split over a variety of issues, ranging technology tie-up that expires in 2014) as
well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant

25
for Honda was the refusal of Hero Honda (mainly managed by the Munjal family) to merge the company's spare
parts business with Honda's new fully owned subsidiary Honda Motorcycle and Scooter India (HMSI).

As per the arrangement, it will be a two-leg deal. In the first part, the Munjal family, led by
BrijmohanLalMunjal group, will form an overseas-incorporated special purpose vehicle (SPV) to buy out
Honda's entire stake, which will be backed by bridge loans. This SPV would eventually be thrown open for
private equity participation, and those in the fray include Warburg Pincus, Kohlberg Kravis
Roberts (KKR), TPG, Bain Capital, and Carlyle Group.

Operations:

Hero Moto Corp has five manufacturing facilities based at Dharuhera, Gurgaon, Neemrana, Haridwar
and Halol under Green Field stage. These plants together have a production capacity of 76lakhs+ 2-wheelers per
year. Hero Moto Corp has a sales and service network with over 6,000
dealerships and service points across India. It has a customer loyalty program since 2000, called the Hero
Honda Passport Program which is now known as Hero Good Life Program.

It is reported that Hero Moto Corp has five joint ventures or associate companies, Munjal Showa, AG
Industries, Sunbeam Auto, Rock man Industries and Satyam Auto Components, that supply a majority of its
components.

The company has a stated aim of achieving revenues of 64,000crores (US$9.3 billion) and volumes of 10lakhs
two-wheelers by 2016–17. This in conjunction with new countries where they can now market their two-
wheelers following the dis engagement from Honda. Hero Moto Corp hopes to achieve 10 per cent of their
revenues from international markets, and they expected to launch sales in Nigeria by end-2011 or early-2012.

Company performance:

The company has sold over 7crores 2-wheelers since its inception in 1984 till March 2013. It sold 60.7lakhs 2-
wheelers in 2012, out of which 55lakhs were motorcycles. Hero Moto Corp sells more

two wheelers than the second, third and fourth placed two-wheeler companies put together. Its most popular
bike Hero Honda Splendor sells more than 10 lakh units per year.

In 2013, Hero Moto Corp registered best ever calendar year performance of more than 61lakh unit sales. By
selling 6,25,000 units in the month of October, it became the first-ever manufacturer to cross landmark 6lakh
26
unit sales in a month. In the last quarter of the year or say in the festive season, the company sold more than
16lakh units, while in non-festive time in April–May 2013, it managed to sell out quite good numbers of units—
11lakh.

Listings and shareholding:

The equity shares of Hero Moto Corp are listed on the Bombay Stock Exchange, where it is a constituent of
the BSE SENSEX index, and the National Stock Exchange of India, where it is a constituent of the NSE Nifty.

As on 31 December 2013, the promoters Munjal Family held around 40% equity shares in Hero Moto Corp.
Over 61,000 individual shareholders hold approx. 7.44% of its shares. Foreign Institutional Investors hold
approx. 30% shares in the company.

Shareholders (as on 31-Dec-2018) Shareholding

Promoter Group 39.92%

Foreign Institutional Investors (FII) 30.63%

Foreign Corporate Bodies 12.29%

Individual shareholders 06.44%

Insurance companies 05.38%

Mutual funds/UTI 02.56%

Bodies Corporate 01.60%

Financial Institutions / Banks 00.53%

Others 00.60%

Total 100.0%

27
PROFILE OF DIRECTORS:

Mr. Pawan Munjal

Chairman,
Managing Director & CEO

Mr. Munjal is the Chairman, Managing Director & CEO of the Company. He is responsible for growth and
strategic planning for the entire Group. A graduate in Mechanical Engineering, Mr. Munjal has been
instrumental in bringing about technological and managerial excellence in the Company's operations. He has
been the Chairman of several Committees of CII.

He is also on the board of Indian School of Business. An avid golfer, Mr. Munjal is Past Chairman of the Asian
PGA Tour Board of Directors and the Past President of Professional Golfers Association of India (PGAI).
Under his guidance, Hero Moto Corp launched the Hero Indian Sports Academy (HISA) in collaboration with
Laureus Foundation to provide equal opportunities in sports to various communities and to reward talent in the
country.

Awards and recognition:

 The Brand Trust Report published by Trust Research Advisory has ranked Hero Honda in the 7th
position among the most trusted brands in India.

 It received the 'Best value for Money Bike Maker' and 'Best Advertising' in Two Wheelers Category at
the Auto India Best Brand Awards 2012.

28
Initiatives:

The company started Raman Kant Munjal Foundation (RKMF), in 1992 when it was known as Hero Honda
Motors Ltd., that looks after:

 Raman Munjal Vidya Mandir (an educational institution)

 Raman Munjal Memorial Hospital

 BML Munjal University

During the financial year, the company spent 1.4 crore on corporate social responsibility.

Vision:

The story of Hero Honda began with a simple vision - the vision of a mobile and an empowered India, powered
by its two wheelers. Hero Moto Corp Ltd., company's new identity, reflects its commitment towards providing
world class mobility solutions with renewed focus on expanding company's footprint in the global arena.

Hero Moto Corp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of two - wheelers,
based in India.

In 2001, the company achieved the coveted position of being the largest two-wheeler manufacturing company
in India and also, the 'World No.1' two-wheeler company in terms of unit volume sales in a calendar year. Hero
Moto Corp Ltd. continues to maintain this position till date.

Mission:

Hero Moto Corp's mission is to become a global enterprise fulfilling its customers' needs and aspirations for
mobility, setting benchmarks in technology, styling and quality so that it converts its customers into its brand
advocates. The company will provide an engaging environment for its people to perform to their true potential.
It will continue its focus on value creation and enduring relationships with its partners.

Core Values:

Integrity:

Adherence to ethical and moral principles

29
Humility:

Absence of arrogance, open mind towards absorbing new ideas, innovations and learning

Excellence through Teamwork:

Persistence and striving towards perfections in all our actions, products and services

Speed:

Responsiveness in all our actions; ability to execute, implement strategies

Respect:

Towards elders, seniors, everything worthy in the material, spiritual and the intellectual world.

Strategy:

Hero Moto Corp's key strategies are to build a robust product portfolio across categories, explore growth
opportunities globally, continuously improve its operational efficiency, aggressively expand its reach to
customers, continue to invest in brand building activities and ensure customer and shareholder delight.

Brand:

The new Hero is rising and is poised to shine on the global arena. Company's new identity "Hero Moto Corp
Ltd." is truly reflective of its vision to strengthen focus on mobility and technology and creating global
footprint. Building and promoting new brand identity will be central to all its initiatives, utilizing every
opportunity and leveraging its strong presence across sports, entertainment and ground-level activation.

30
Manufacturing:

Hero Moto Corp two wheelers are manufactured across 4 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 manufacturing plant is based at Haridwar, in the hill state of Uttrakhand; the latest addition is the state-of-
the-art Hero Garden Factory in Neemrana, Rajasthan.

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 Moto Corp's extensive sales and service network now spans over to
6000 customer touch points. These comprise a mix of authorized dealerships, service & spare parts outlets, and
dealer-appointed outlets across the country.

GREEN MANUFACTURING:

A MISSION TO MAINTAIN HIGH ECOLOGICAL STANDARDS:

At Hero Moto Corp we believe in sound and sustainable environmental practices.

Since inception we have cared for the environment by launching four stroke motorcycles in the era when two
stroke two wheelers were popular.

In this endeavor we have always been blessed and guided by our Chairman Emeritus Dr.BrijmohanLal that 'We
must give back to the society from whom we generate our wealth'.

As leaders in the automotive industry, we fully realized our responsibility to the fast changing industrial
environment and understand our role in Sustainable Development of the Nation.

Hero Moto Corp has introduced Green initiatives in the organization in Product Development, Manufacturing,
Supply Chain and all the functions. At Hero we have takes several initiatives to reduce Carbon, Water & Waste
footprint

31
We care for the environment:

Green Building:

Our latest plants have been developed on the green building concept i.e.Neemrana Manufacturing plant, GPC,
HGCIT facility Jaipur are LEED IGBC certified these are Hero’s one-of-a-kind-garden factories. From efficient
building envelope, to the Big Foot air handlers, to water and energy optimization - the Garden Factory
demonstrates HMCL’s environmental aspirations.

Green Roof:

Put together all are our plants cover 1,16,500sq meters of green Roof, the latest being 25000sqm in 2016-17 at
Vadodara. Hero's green roof helps to conserve energy by moderating the temperature on the roof and within
surrounding areas. It also helps to reduce the storm water runoff volume and peak flow rate dramatically. The
green roof can restore aesthetic and ecological value of open urban spaces. It addition to this, it protects
conventional roofing systems by doubling the service life of the underlying waterproof membrane.

Green Bio walls and Green Houses:

Our latest plants Green Houses with Green Roof, with Hydroponics technology, in which it requires only 2% of
water as compare to actual farming. By recycling carbon dioxide into the greenhouse, we enhance the plants
photosynthesis. The green walls Generates Oxygen and gives back to work environment.

Sewage Treatment Plant : Hero ensures that sewage is biologically treated to attain efficacy. This
treatment plant is designed to accommodate up to 6 hours of holding and ensuring effluent is 100% treated and
recycled into soft water that is used in cooling towers.

32
Zero Liquid Discharge Plant:

To prevent water pollution, Hero has also invested in an Effluent Treatment Plant which is capable of treating
waste water that contains degreasing chemicals, acidic/ alkaline nature, plating waste, heavy metals and waste
oil that is generated out of processes. The Waste water is either re-used in general activities or recycled back to
processes with help of reverse osmosis process and multi effect evaporators thereby reducing the fresh water
foot print. We recycle 90% of our waste water back to the process using Zero liquid discharge platform.
Balance 10% is being reused for horticulture activities.

Rain Water Harvesting:

All or plants are equipped with efficient rain water harvesting system which captures the rain water runoff and
recharged into the aquifer thereby improving the ground water levels with total rain water harvesting potential
of 25lakhs cubic meters which is much more than annual water requirement. The Rain water Harvesting scheme
extend up to the surrounding community and villages with an objective to control the rain water runoff,
maintain ground water levels hence improve water security and minimize water logging / flooding.

Waste Food Recycling:

Hero ensures hygienic disposal of municipal waste through its organic waste converter, which in turn generates
manure. This waste goes through 15 minutes of treatment and is then homogenized and odour free. It is turned
into compost in the next two weeks and finally is available for landscaping and greening applications. The
waste treatment helps in preventing generation of methane which has 25 times more global warming potential
as compared to CO2

Paint Conservation:

Along with preventing water pollution, Hero Moto Corp does its very best to prevent releasing pollutants in the
air as well. The company is gradually adopted water based painting system and advanced robotic painting
system which improves paint transfer efficiency. Our latest Vadodara plant is provided with a unique feature of
VOC control in the paint shop using the concept of Regenerative Thermal Oxidizers (RTO) to treat the VOC
before letting the emission into the environment.

Energy Conservation:

Company has taken several initiative towards conservation of energy and carbon reduction during the year
2016-17

33
  Company has very aggressive plans for expanding its renewal energy base, total solar PV capacity has
been enhanced to 5.6 MW .In 2016-17 itself we have added 3.0 MW Solar power including 2.0 MW at
Vadodara plant roof emission and 1 MW Solar Power Plant at Haridwar plant. It will have positive
impact on CO2 emission.

 100% LED lights are installed in all our latest plants and 40% of the conventional lights of our existing
plants have changed to LED.

 Closed type Cooling Tower at Dharuhera Plant having highly efficient cooling system irrespective of
ambient conditions with Energy reduction by 36%. Savings of 1.17 Lac KWH/year

 Small capacity Centrifugal compressor have been installed at Dharuhera Plant replacing screw type
compressors resulting in energy reduction by 33% (Savings of 5 Lac KWh/year).

 Energy Conservation at Gurgaon Plant expanding VAM by 150 TR., Reduced power consumption by
increasing LED lights, Occupation sensors in toilets, trip circuits for ideal running machines,
Replacement of AC’s with five star rating and VFD’s.

Reduction in power consumption in Canteen & Admin block VRV control through RTC and by installation
of Air Conserve System in Plant Utility system at Neemrana Plant resulting in combined saving of 16.4 Lac
KWH

PRODUCT PORTFOLIO OF HERO MOTOCORP

Product Name Product Model

SPLENDOR PRO

34
PASSION PRO TR

PASSION PRO

SPLENDOR NXG

SPLENDOR +

35
HF DELUXE

HF DAWN

SPLENDOR PRO CLASSIC

SPLENDOR ISMART

36
HF DELUXE ECO

PLEASURE

MAESTRO

PASSION XPRO

37
GLAMOUR PROGRAMMED FI

GLAMOUR

SUPER SPLENDOR

38
IGNITOR

XTREME

HUNK

IMPULSE

39
ACHIEVER

KARIZMA

KARIZMA ZMR

40
THEORITICAL FRAMEWORK

Are monetary savings the only explanation for consumer response to a sales promotion? If not,
how do the different consumer benefits of a sales promotion influence its effectiveness? To
address the first question, this research builds a framework of the multiple consumer benefits of
a sales promotion. Through a series of measurement studies, the authors find that monetary and
nonmonetary promotions provide consumers with different levels of three hedonic benefits
(opportunities for value expression, entertainment, and exploration) and three utilitarian benefits

(savings, higher product quality, and improved shopping convenience). To address the second
question, the authors develop a benefit congruency framework, which argues that a sales
promotion’s effectiveness is determined by the utilitarian or hedonic nature of the benefits it
delivers and the congruence these benefits have with the promoted product. Among other
results, two choice experiments show that, as predicted for high-equity brands,

monetary promotions are more effective for utilitarian products than for hedonic products. The
authors then discuss the implications of the multibenefit and the benefit congruency frameworks
for understanding consumer responses to sales promotions, reexamining the value of everyday-
low-price policies, and designing more effective sales promotions.

Pierre Chandon is Assistant Professor of Marketing, INSEAD. Brian Wansink is Associate

Professor of Business Administration, of Nutritional Science, of Advertising, and of
Agricultural and Consumer Economics,University of Illinois, Urbana-Champaign. Gilles
Laurent is Professor of Marketing, Groupe HEC. The authors thank Adam Brasel, Jer-Yuan
Chao, Maryse Delamotte, Seabum Park, Pierre Volle, and Anne Macquin for help with the data
collection. The article is based on Pierre Chandon’s dissertation and has benefited from the
comments of Donnie Lichtenstein, Laurence Capron, James Hess, Stephen Hoch, Kent Monroe,
Scott Neslin, and Terence Shimp. Marketers and academics often view the reliance on

sales promotions, especially monetary promotions, as a suboptimal consequence of price

competition caused by myopic management (Buzzell, Quelch, and Salmon 1990). These critics
argue that, in the short run, the proliferation of monetary promotions erodes their capacity
41
to rent market share, which explains why so many are unprofitable (Abraham and Lodish 1990;
Kahn and McAlister 1997). In the long run, it is feared that sales promotions increase price
sensitivity and destroy brand equity—both with retailers and consumers (Mela, Gupta, and
Lehmann 1997). As a result, many industry experts are calling for more effective and cost-
efficient promotions that rely less on price (Promotion Marketing Association of America Inc.

1994), and some go so far as to recommend eliminating most promotions by switching to an

everyday-low-price policy (Kahn and McAlister 1997; Lal and Rao 1997).

The central premise of this research is that the value that

sales promotions have for brands is related to the value, or

benefits, that sales promotions have for consumers. Adopting this consumer perspective leads to
the fundamental

question of why consumers respond to sales promotions.

Most econometric or game-theoretic studies assume that

monetary savings are the only benefit that sales promotions

have for the consumer. If this is true, an everyday low price

may indeed represent an efficient solution for providing

consumers with these savings while minimizing search costs

for the consumer and logistical costs for the firm. Conversely, if, as this research argues, sales
promotions provide

consumers with an array of hedonic and utilitarian benefits

beyond monetary savings, everyday low prices cannot fully

replace sales promotions without the risk of alienating consumers who value the nonmonetary
benefits of sales promotions. From a research perspective, the existence of multiple

consumer benefits may also help explain some puzzling

42
consumer responses to sales promotions that cannot be fully

explained by the search for savings (e.g., Dhar and Hoch

1996; Hoch, Drèze, and Purk 1994; Inman, McAlister, and

Hoyer 1990; Schindler 1992; Soman 1998).

Beyond its intended contribution to the general debate

on the value of sales promotions or on the antecedents of

consumer response to them, studying the consumer benefits

of sales promotions has practical implications for improving

their effectiveness. The existence of multiple types of consumer benefits provides a stepping
stone for a benefit congruency framework, which argues that a sales promotion’s

effectiveness is determined by the congruency between its

benefits and those of the promoted product. In particular, the

benefit congruency framework argues that because monetary and nonmonetary sales
promotions offer different benefits, they should be more effective for different types of

products.

In the next section, we show how fragmented explanations for consumer “deal proneness” can
be integrated into a

framework of the hedonic and utilitarian consumer benefits

of consumer sales promotions (defined as temporary and

tangible monetary or nonmonetary incentives intended to

have a direct impact on consumer behavior). In the second

section, we report the results of three measurement studies

43
that validate the consumer benefit framework through multiorder confirmatory factor analyses
and structural equation

models. In the third section, we develop a benefit congruency framework and examine its
implications for the effectiveness of monetary and nonmonetary promotions for different types
of products and for brands with various levels of

66 / Journal of Marketing, October 2000

brand equity. This framework is supported by the results of

the two experimental studies we present in the fourth section. In the discussion section, we
explore the implications

of the consumer benefit and the benefit congruency frameworks for sales promotion theory and
practice.

Hedonic and Utilitarian Consumer

Benefits of Sales Promotions

Why Do Consumers Respond to Sales

Promotions?

Behavioral research on sales promotions has tended to focus

on the demographics of deal-prone consumers (Bawa and

Shoemaker 1987; Blattberg et al. 1978; Narasimhan 1984)

and the identification of personal traits such as “coupon

proneness,” “value consciousness,” or “market mavenism”

(Feick and Price 1987; Lichtenstein, Netemeyer, and Burton

1990, 1995; Mittal 1994). These studies offer a coherent

44
portrait of the demographic and psychographic characteristics of deal-prone consumers (for a
review, see Blattberg and

Neslin 1990, pp. 65–82). However, because of their focus on

individual variables, these studies do not examine the nature

and the number of the specific consumer benefits of sales

promotions. As a result, most analytic and econometric

models of sales promotions simply assume that monetary

savings are the only benefit that motivates consumers to

respond to sales promotions (Blattberg and Neslin 1993).

Yet some robust empirical results suggest that monetary

savings cannot fully explain why and how consumers

respond to sales promotions. For example, why do consumers respond more to an on-shelf
coupon than to a similarly advertised temporary price reduction that offers the

same monetary incentive (Dhar and Hoch 1996; Schindler

1992)? Why do consumers respond to insignificant price

reductions (Hoch, Drèze, and Purk 1994; Inman, McAlister,

and Hoyer 1990), and why do consumers switch brands

because of a coupon or a rebate but then not redeem it (Bawa

and Shoemaker 1989; Dhar and Hoch 1996; Soman 1998)?

To account for these findings, researchers have advanced

explanations related to achievement motives (Darke and

Freedman 1995), self-perception (Schindler 1992), fairness

45
perception (Thaler 1985), or price and quality inferences in

low-involvement processing (Inman, McAlister, and Hoyer

1990; Raghubir 1998; Raghubir and Corfman 1999). However, the extent of support for some
of these explanations is

limited. For example, the achievement and self-perception

arguments are contradicted by the finding that lucky bargains are enjoyed as much as those
acquired skillfully

(Darke and Freedman 1995) and that some consumers may

feel embarrassed to buy a promoted brand (Simonson, Carmon, and O’Curry 1994). That
consumers enjoy paying

prices that are lower than the reference price and that are

therefore not fair to the seller indicates that fairness perceptions cannot alone explain the
puzzles mentioned previously.

Finally, most existing studies examine only the consequences of these nonmonetary benefits
without directly

measuring them. When nonmonetary benefits are directly

studied (e.g., Shimp and Kavas 1984), the use of single-item

measures precludes the study of their construct validity.

In summary, the contributions of the personality studies,

the parsimony of the economic perspective, and the existing

work on the nonmonetary benefits of sales promotions have

greatly contributed to the understanding of consumer

46
response to sales promotion. An integrated study of the consumer benefits of sales promotions,
however, would help

reconcile the fragmented nature as well as the empirical and

conceptual limitations of these seemingly disparate studies.

A Multibenefit Framework of Sales Promotions

Following Keller (1993), we define the benefits of sales

promotion as the perceived value attached to the sales promotion experience, which can include
both promotion exposure (e.g., seeing a promotion on a product) and usage (e.g.,

redeeming a coupon or buying a promoted product). This

definition implies that consumers respond to sales promotions because of the positive
experience they provide or,

consistent with Holbrook’s (1994) definition, because of

their customer value.

To develop a framework of the different consumer benefits of sales promotions, we elaborated

on the literature on

consumer response to sales promotions, customer value, and

hedonic consumption with nine in-depth consumer interviews (for more information, see
Chandon, Wansink, and

Laurent 1999). The result of this inductive investigation is the

multibenefit framework presented in Table 1, which lists six

consumer benefits of sales promotions and offers a definition

of each benefit, supporting research, and interview excerpts.

47
In Table 1, we indicate that one of the benefits of sales promotions for the consumer is the
monetary savings they provide (the savings benefit). However, sales promotions may

also enable consumers to upgrade to higher-quality products

by reducing the price of otherwise unaffordable products (the

quality benefit), which will often lead to a higher price being

paid. Because they signal the availability of the brand at the

point of sale and advertise its promotional status, sales promotions can also reduce consumer
search and decision costs

and therefore improve shopping convenience (the convenience benefit). Furthermore, sales
promotions can enhance

consumers’ self-perception of being smart or good shoppers

and provide an opportunity to reaffirm their personal values

(the value expression benefit). Because they create an everchanging shopping environment,
sales promotions can also

provide stimulation and help fulfill consumers’need for information and exploration (the
exploration benefit). Finally,

sales promotions are often simply fun to see or use (the entertainment benefit). It is worth
noting that the last five benefits

can be achieved above and beyond any monetary savings.

Distinguishing Hedonic from Utilitarian Benefits

These six benefits can be more parsimoniously classified.

Most classifications of customer value and the different types

of consumer benefits start with the distinction between utilitarian (extrinsic) and

48
Sales Promotion Effectiveness / 67

Babin, Darden, and Griffin (1994) show that this distinction

applies to shopping, because this activity provides utilitarian

benefits (by helping consumers efficiently find and buy the

best products) and hedonic benefits (by creating entertainment and raising self-esteem).
Similarly, the benefits of sales

promotions can be classified as utilitarian when they help

consumers maximize the utility, efficiency, and economy of

their shopping and buying and as hedonic when they provide

intrinsic stimulation, fun, and self-esteem.

Through these definitions, the savings, quality, and convenience benefits of sales promotions
can be tentatively classified as utilitarian, because they help consumers increase the

acquisition utility of their purchase and enhance the efficiency

of the shopping experience. In contrast, the entertainment and

exploration benefits of sales promotions can be tentatively

classified as hedonic, because they are intrinsically rewarding

and related to experiential emotions, pleasure, and self-esteem.

As Table 1 shows in more detail, the value expression benefit

of sales promotions is different, because it entails both hedonic

and utilitarian dimensions. On the one hand, buying a promoted product can provide shoppers
with the moral satisfaction of behaving according to their principles and values (e.g.,

being good or thrifty shoppers)—an intrinsic or hedonic benefit. On the other hand, buying a
promoted product can be a
49
means of increasing shoppers’ prestige and achieving higher

social status or group affiliation (e.g., becoming a recognized

smart shopper or a market maven)—an extrinsic or utilitarian

benefit. This classification needs to be validated with an empirical analysis of consumer

perceptions of the benefits delivered

by different monetary and nonmonetary sales promotions.

Measuring and Validating the

Benefits of Sales Promotions

In this section, we present the results of three measurement

studies, that examine whether consumers perceive all the

benefits hypothesized in the multibenefit framework and use

them when evaluating a promotion.

Studies 1 and 2: Scale Development and Validation

Scale development. To measure and validate the benefits

of sales promotions derived from the consumer interviews,

we followed Churchill’s (1979) scale development paradigm. To develop and purify a scale of
promotion benefits,

we used two convenience samples consisting of graduate

students (n = 37) and staff (n = 28) recruited at a major

French university. We asked respondents to consider 24 promotions as an exemplar of an

unspecified category of sales

promotions and indicate their level of agreement with 45

50
statements measuring the ability of a promotion to provide

each benefit. These statements were chosen by sales promotion experts from a corpus of 200
statements generated from

the literature and the consumer interviews described previously. The data were aggregated
across consumers and promotions. We analyzed the resulting 45 × 45 correlation

matrix through a principal component analysis followed by

an oblique rotation, using a state (versus a trait) analysis in

a procedure similar to the one Aaker (1997) uses to identify

brand personality factors. These analyses provided a set of

three indicators for each benefit as well as preliminary support for the six hypothesized benefits
(for more details, see

Table 1 and Chandon, Wansink, and Laurent 1999).

Validating the benefits of sales promotions. Validating

the dimensionality and the higher-order structure of the

multibenefit framework required collecting additional data

and analyzing them with confirmatory factor analyses

(Gerbing and Anderson 1988). Following the same procedure as in Study 1, in Study 2 we
asked 118 graduate students and staff at another French university to evaluate 4

promotions each (of a sample of 24 new promotions) using

the 18-item scale presented in Table 1. Using AMOS 3.6

(Arbuckle 1997), we first validated the internal consistency

and reliability each of the six congeneric models. We then

51
tested the convergent and discriminant validity of each benefit through first-order confirmatory
factor analyses. These

analyses show that the proposed model with six distinct but

correlated benefits significantly outperforms any models

that force two benefits to be perfectly correlated and, a fortiori, outperforms the prevailing
unidimensional model (for

more details, see Chandon, Wansink, and Laurent 1999).

Second-order factor analyses. As predicted, the six benefits are not orthogonal. To test the
utilitarian and hedonic

higher-order structure of the six benefits, we estimated the

model with the two second-order factors shown in Figure 1

and compared it with a single second-order factor model (see

Bollen 1989; Lichtenstein, Netemeyer, and Burton 1995). All

fit indices support the two higher-order factor model over the

unidimensional solution (χ2

127 = 565; p < .01, goodness-offit index [GFI] = .881, adjusted goodness-of-fit index

[AGFI] = .840, incremental fit index [IFI] = .882, root mean

square error of approximation [RMSEA] = .087 for the twoconstruct model, and χ2

128 = 830; p < .01, GFI = .851,

AGFI = .801, IFI = .810, RMSEA = .109 for the one-construct model). The difference in χ2
between the two models is

highly significant (χ2 = 265, degrees of freedom [d.f.] = 1, p <

.01). The proposed model provides the best fit of all possible
52
classifications of benefits into two higher-order constructs.

The correlation between the two factors is high (r = .67) and

comparable to the one (r = .55) reported by Batra and Ahtola

(1990). However, the correlation does not include the value of

1 in its confidence interval (estimated by bootstrap analyses),

and the amount of variance shared between the second-order

factors is lower than the average variance extracted for each

factor. These results therefore support the discriminant validity of the two utilitarian and
hedonic factors.

Study 3: How Do Promotion Benefits Influence

the Evaluation of Monetary and Nonmonetary

Promotions?

So far, the measurement studies have shown that consumers

perceive the six benefits of sales promotions as significantly

different and related to two different higher-order utilitarian

and hedonic dimensions. We now examine the predictive

validity of each benefit by estimating its ability to predict

the overall evaluation of monetary as well as nonmonetary

promotions.

Data and analyses. We collected three items measuring the overall evaluation of the promotion
in Study 2 that we have not yet discussed (“I like this type of promotion a lot,”

53
DATA ANALYSIS AND INTERPRETATION

Percentage of importance given to the promotional activities before buying product:

Particulars Respondents Percentage

100% 36 36%
75% 24 24%
50% 31 31%
25% 9 9%

Diagram

9
36

31 100%
75%
50%
25%
24

Interpretation:

The above table reveals that out of 100 respondents 36 members agreed that they give
100%importance to promotional activities before buying a product.

The promotional activity that attracts customers more about the show room:

54
 Particulars Respondents Percentage
Advertisements 8 8%
Sales promotional 23 23%
Activities
Personal selling 29 29%
Method
Public relations 24 24%
Sponsorship 16 16%

Diagram

16 23
Sales Promotional Activities

24 Personal Selling Method

Public Relations
29
Sponsorship

Interpretation:

The above table reveals that out of 100 respondents, 29 members agreed that personal selling
activities attract them more towards the showroom in respect to the show rooms promotional
activities.

The promotional activities that are being fulfilled buy firm are:

55
 Particulars Respondents Percentage
Awareness about the 12 12%
Product
Awareness about the 27 27%
Brand
Awareness about sales 42 42%
Of the product
All information 19 19%
Required

Diagram
Awarness about the product
19 12
Awarness about the Brand
27

Awareness about sale of the

42
product
All information Required

Interpretation:The above table reveals that out of 100 respondents 42 members express that
the awareness about the sales of the product is only fulfilled the promotional activities of the
firm.

The advertising activity that influences the customer most about the showroom:

Particulars Respondents Percentage

TV’s and radios 33 33%

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 Print media 21 21%
Bill boards and 32 32%
Hoardings
Internet 14 14%

Diagram

14
33
Tv's and radios

32 Print media
Bill boards and Hoardings
21
Internet

Interpretation:

The above table reveals that out of 100 respondents, 33 members agree that TV’s and radios are
the best advertising activities influencing them towards the show room.

Opinion of the customers about whether they believe that what they show about their products
through various advertisements is true:

Particulars Respondents Percentage

Yes 30 30%

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 No 15 15%
Mayn’t be 42 42%
Completely true

Can’t say 13 13%

Diagram

13
30
Yes
No
42 May not be completely true
15
Can't say

Interpretation:

The above table reveals that out of 100 respondents, 42 members say that what they show about
their products through various advertisements may not be completely true

Sales promotion activities the customer look for before buying a product:

Particulars Respondents Percentage

Exchange offers 30 30%
Special offers 13 13%
Discounts 21 21%
After sales services 36 36%

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 Diagram

36 30
Exchange Offers
Special Offers

13 Discounts
21 After sales services

Interpretation:

The above table reveals that, out of 100 respondents, 34 members says that they look for after
sales services sort of sales promotional activity before buying a product.

Sales promotion offers that attracted the customers:

Particulars Respondents Percentage

Premium offers 27 27%
Sweepstake 21 21%
Exchange offer 22 22%
Zero % financing 30 30%
Reward points etc,

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 Diagram

Premium Offers
30 27

Sweep stake

21 Exchange offer
22

Zero% financing reward

points etc,

Interpretation:

The above table reveals that, out of 100 respondents, 30 members were attracted by 0% finance
reward points etc; sort of sales promotional activity about the show room

Reason for why the firm is offering more sales promotional activities than its competitors:

Particulars Respondents Percentage

To satisfy customer 41 41%
To increase its sales 35 35%
To withstand as 10 10%
Market leader
All the above 14 14%

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 Diagram

14
10 41
To satisfy customer
To increase its sales
To withstand as Market leader
35
All the above

Interpretation:

The above table reveals that, out of 100 respondents, 41 members say that the firm is offering
more sales promotional activities than is competitors is only to satisfy its customers.

Contribution of personal selling activities to the overall income of the show room:

Particulars Respondents Percentage

100% 18 18%
75%-50% 24 24%
50%-25% 40 40%
25%-0% 18 18%

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 Diagram

18 18

100%

24 75%-50%
50%-25%
40
25%-0%

Interpretation:

The above table reveals that, out of 100 respondents, 40 members say that the personal selling
activities contribute 50%-25% of the show room’s overall income.

The best way of public relation:

Particulars Respondents Percentage

Press releases 25 25%
Providing extra 18 18%
Benefits to old
Customers
Product publicity 25 25%
Corporate 32 32%
Communications

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 Diagram

25 Press releases
32

Providing extra benefits to old

customers
18 Product publicity
25
Corporate communications

Interpretation:

The above table reveals that, out of 100 respondents, 32 members suggested corporate
communications as the best way of public relations.

Reason for why HERO maintaining public relations:

Particulars Respondents Percentage

Assist launch of new 20 20%
product
Repositioning a 27 27%
mature product
Building a mature 37 37%
product
All the above 16 16%

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 Diagram

16 20
Assist launch of new product
Repositioning a mature product
37 27
Building a mature product
All the above

Interpretation:

The above table reveals that, out of 100 respondents, 37members think that the firm is
maintaining its public relations for building interest in the public towards their firm.

Customers view about why HERO is sponsoring various activities:

Particulars Respondents Percentage

To increase its Brand 30 30%

Image
To catch interest of 35 35%
public
To fulfill social 17 17%
responsibilities
All the above 18 18%

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 Diagram

18 30
To increase its brand image
17 To catch interest of public
To fulfill social responsibilities
35
All the above

Interpretation:

The above table reveals that out of 100 respondents, 35 members express that the firm is
sponsoring for various activities to catch the interest of public

65
FINDINGS

 Promotional activities of Hero are capable in making its customers aware about the sales
of its products only.
 The promotional activities of HERO are incomparable with its major competitors.
 T.V’s and Radio are the best advertising activities which attract the customers towards
the show room.’
 HERO’s advertisement is slightly deviating from natural things and is super natural in
some prospects.
 HERO is successful in satisfying its customers through its sales promotional activities.
 Personal selling methods of the show room are attracting the customers than its other
promotional activities and they occupy major part in total sales of the show room.

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SUGGESTIONS

 HERO needs to concentrate more up on its advertisements.

 HERO should aim at providing awareness about its products and brand image to the
customers through its various promotional activities.
 HERO should be innovative in print media, internet sort of advertising activities also.
 As personal selling is a good weapon to the show room it should strive for its best usage.
 HERO should take up sponsorships for the fulfillment of social responsibilities also along
with its other objectivities.
 Finally, HERO so as to survive as a market leader it should be always innovative with
respective to its promotional activities.

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QUESTIONNARIE

Name: Age:

Gender:

Occupation: Income Level:

1. What percentage of importance do you give to promotional activities before buying a

product?

a)100% b)75% c)50% d)25%

2. Which of the following promotional activity attract you more about the showroom?

a) Advertisements b) Sales promotional activities

c) Personal selling methods d) Public relations

e) Sponsoring

3. Which of the following is being fulfilled through promotional activities of the firm?

a)Awareness about the product b)Awareness about brand image

c)Awareness about sales product d)All information required

4. Which of the advertising activities influence you the most about the showroom?

a)TV’s and radios b) Print media

c)Bill boards hoarding d) Internet

5. Do you believe that what they show about products through various advertisements is true?

a)Yes b)No c) Mayn’t be completely true d)can’t say

6.What sort of sales promotion activities do you look for before buying a product?

a)Exchange offers b) Special offers

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c)Discounts d) After sales services

7. Which of the following sales promotion offers frequently attract you the

Most?

a)Premium offers (gifts) b) Sweepstake(lucky draws)

c) Exchange offer d) Zero percent financing reward point, etc

8. Why do you think the firm is offering more sales promotional activities than

Its competitors?
a) To satisfy customers b) To increase its sale

c) To with stand as market leader d) All the above

9. To what extent does the personal selling activities contribute to the over

all income?

a)100% b) 75%-50% c) 50%-25% d) 25%-0%

10.What do you suggest the best way to public relations?

a) Press releases b) Providing extra benefits to old customers

c) Product publicity d) Corporate communications

11. Why do you think is Hero Moto Corp maintaining public relations?

a) Assist the launch of new product

b) Respositioning a mature product

c) Building interest in the public

d) All the above

12. In your view why Hero Moto Corp is sponsoring for various thing or

Activities?
69
a)To increase its brand image b) To catch interest of public

c)To fulfill social responsibilities d) All the above

13. Do you think that Hero Moto Corp differ from its competitors in

Promotional activities when compared?

a)Yes b) No c) Cant be compared d) Not exactly

14. Do you agree that there will be measurable raise in the sales of the firm

through its sales promotional activities?

a)Yes b) No

c)Not always d) Depends up on the activity

SIGNATURE

70
BIBLOGRAPHY

BOOKS:

 Marketing Management -- Philip Kotler

 Principles of Management -- PhillipKotler& Armstrong
 Marketing Management -- J.C.Gandhi
 Research Methodology -- Kothari

MAGAZINES:

 Business Today
 Moto World

WEBSITES:

 www.google.com
 www.indanautomobile.com
 www.heromotocorp.com

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