"Hero Honda"

By Akshay Visveshwaran Ashmita Mazumder Priyamvada Khatri Roshan Vailaya Tulika Shukla Vikas Chamarthi

BACKGROUND
Formed in 1984 as a JV between Munjal Brothers & Honda

Motors (both own 26 % each). Worlds No.1 two-wheeler company , in terms of unit volume sales. Worlds Largest Manufacturer of two-wheelers. Every second motorcycle bought in India is a Splendor Hero Hondas top-selling bike. Hero to pay Honda $1 billion , 30 50 % of the actual worth , through off-market transaction deals.

REASONS FOR THE SPLIT

Bharat norm IV would have to be implemented. Greater investment in technology , in turn. Lower profit margins and increasing R&D and loyalty

costs.
Hero wants to create their own identity in the global

market.

KEY ISSUES
Future of the group Transition from Hero Honda to Hero Market share decline Retaining core customer group

Increasing R&D and raw materials costs

New launches by competitors Local markets response decrease Export numbers declining Fresh branding initiatives

FUTURE New Markets & New Segments

The management is smart , experienced and veteran. They got their 26 % stake from Honda at a price much

cheaper to the market rate.

Expertise over Japanese Technology.

Can make their own presence felt in the global markets.

MARKET SHARE DECLINE

Exploring possibilities of entry-level launches at lower

prices compared to its competitors.

Three full years to develop their own capabilities and

come up with entry-level models.

High R&D and Cost Compensation

Choosing an in-house R&D team and not going for a

domestic/foreign partner for technical collaboration will help in saving overhead costs.
Hero could save up to 5500 crores on royalty for the financial

year 2011.

LOCAL MARKETS

Focus has to be majorly on the domestic markets , where

the main strength of Hero lies.

Heros old Splendor and Passion models constitute 70 %

of its sales ; all recent new bikes add up to only 8 % of sales.

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

BRANDING

Branding campaign needs to be completely revamped

because people wouldnt be able to relate with the Hero group so easily.

Technology agreement between Hero and Honda bars Hero

from using the Honda name if they decide to make changes to their current products. Hence , Hero has decided to rebrand.
This is the reason they have asked JWT to help them out.

 Plans include using a new branding strategy for , on the lines of

their Dhak Dhak Go and Fill It-Shut It-Forget It campaigns.

Reinforcement of the new brand is the biggest key.
100 crore is being allotted by Hero to reconfigure their new

brand name.
Hero is planning to launch 3 new models using their own

name, by the end of 2011 , with the first being a dirt bike.

NOW WHAT ?
Hero is mainly picturised as a bicycle company , rather than a 2-wheeler

organisation and creating a distinguishing shift in the peoples mind is most important.
Advertisement like Marutis Ghar aa gaya Hindustan can be thought of ,

to connect with the Indian audience.

Organize street shows and campaigns to create generic awareness among

the people about the upcoming Hero products.

Hero is reportedly hiring engineers from its competitors like Bajaj ,

Yamaha and Mahindra 2-wheelers.

DHAK DHAK GO !!!