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TWO WHEELER INDUSTRY IN INDIA

A PROJECT REPORT ON TWO WHEELER INDUSTRY IN INDIA WITH REFRENCE TO HERO HONDA AND BAJAJ GROUP SUBMITTED BY BHUSHAN.P. RAHATEKAR T.Y.B.M.S. [Semester V] S. K. SOMAIYA COLLEGE OF COMMERCE & ARTS

SUBMITTED TO UNIVERSITY OF MUMBAI ACADEMIC YEAR 2010 – 2011 PROJECT CO-ORDINATOR

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DECLARATION I, Mr. BHUSHAN P. RAHATEKAR, (Roll no.104), (Seat no ) of

S.K. Somaiya College of Arts & Commerce, of TYBMS [Semester V], hereby declare that I have completed my project, titled ‘TWO WHEELER INDUSTRY IN INDIA WITH REFRENCE TO HERO HONDA AND BAJAJ GROUP’ in the Academic Year 2010-2011. The information submitted herein is true and original to the best of my knowledge.

________________ Signature of Student [BHUSHAN P. RAHATEKAR]

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CERTIFICATE I, Mrs. , hereby certify that Mr. BHUSHAN P. RAHATEKAR.(Roll no. 104) (Seat no. ), of S.K. Somaiya college of Arts & Commerce of TYBMS [Semester V] has completed his project, titled ‘TWO WHEELER INDUSTRY IN INDIA AND COMPARATIVE STUDY OF HERO HONDA AND BAJAJ GROUP’ in the academic year 2010-2011. The information submitted herein is true and original to the best of my knowledge.

_________________ Signature of the Course Co-ordinator

________________ Signature of the Principal

Signature of Project Guide External Examiner Internal Examiner [Mr./Mrs. -------------]

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TABLE OF CONTENTS Sr.No Particulars Pages From - To 1 Acknowledgement 2 Objectives of the Project 3 Parameters of the project 4 Executive Summary TWO WHEELER INDUSTRY IN INDIA 5 Introduction 6 Historical Industry Development 7 Current Scenario 8 Industry Structure 9 Growth in the Last Two Years Bajaj Group 12  Profile of the Company 13  Management 14  Objectives and Goals 15  Policies 16 17 18 19 20 21 23 24 25 26 27 28 29  Achievements and awards  Performance  Strategies used in the Past  Economics  Marketing  Management Information System  International Marketing  Production and Operation Research  Total Quality Management  Current Strategies Suggested Hero Honda Group  Profile  Management  Mission Statement

1 3 6 13 16 28 29 31 32 33 39 42 44 46 52 56 58 59 62 63 65 67
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30 31 32 33 34 35 36 37 38 39 40 41 42

 It’s Vision  Achievements and Awards  Areas of Management  Marketing  The Number Game  A Company Par Excellence  Exports Which company will benefit in future? Recommendations Porters 5 force of competition Conclusion Questionnaire Bibliography

67 68 75 80 84 85 88 90 94 98 101 104 106

ACKNOWLEDGEMENT This project on “TWO WHEELER INDUSTRY IN INDIA WITH REFRENCE TO HERO HONDA AND BAJAJ GROUP” is a result of co-operation, hard work and good wishes of many people. I, student of S.K. Somaiya College of Arts and Commerce would like to thank my project guide, , for his involvement in my project work and timely assessment that provided me inspiration and valued guidance throughout my study. I owe the debt to ,------- Principal of S.K. Somaiya College of Arts and Commerce for giving me an opportunity to present a creative outcome in the form of project work. I would like to thank ------ course co-ordinator, for his friendly guidance and constant encouragement.

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I also take this opportunity to express my sincere gratitude to the library staff, who have provided me right information and study at right time. I express my deep gratitude towards all my college friends and my family members whose efforts and creativity has helped me in giving the final shape and structure to project work. I am also thankful to all those seen and unseen hands and heads, which have been direct or indirect, help in completion of this project work. EXECUTIVE SUMMARY In stark contrast to the situation that prevailed in the 1990s, the two-wheeler industry has now acquired the traits of any other consumer durable industry, of price wars, celebrity endorsements and ever-increasing sales and other promotional outgo. In the 1990s, the profit margin of the top companies was not subject to the kind of strain that is being witnessed in the recent quarters. The entry of more players into the fast-growing four-stroke motorcycle market, has led to higher competitive pressure for the companies. Earlier, Hero Honda and Bajaj were the only producers of four-stroke motorcycles. Now, TVS Motor, Kinetic, Honda,Yamaha along with Bajaj and Hero Honda are jostling for space in the fourstroke market. This has led to an increase in the number of models and a consequent reduction in product life cycle. This has resulted in an increase in overall expenses, including promotional costs, for the companies. Apart from the capital expenditure, new product launches have an inflationary impact on expenses of a recurring nature, such as sales promotion and staff cost.
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This, coupled with the discounts that are being forked out, could have a negative impact on the profitability of the two-wheeler industry in the near term; at least until the volume growth manages to compensate this. OBJECTIVES OF THE PROJECT  Study the Two-wheeler Industry.  The Industry structure.  The forces that are at play in the Indian two wheeler market.  To analyze the reason for a major shift from scooters to motorcycle  Comparative analysis between bajaj motors and hero honda motors

RESEARCH METHODOLOGY It is well known fact that the most important step in marketing research process is to define the problem. Choose for investigation because a problem well defined is half solved. That was the reason that at most care was taken while defining various parameters of the problem. After giving through brain storming session, objectives were selected and the set on the base of these objectives. A questionnaire was designed major emphasis of which was gathering new ideas or insight so as to determine and bind out solution to the problems.

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DATA SOURCE Research included gathering both Primary and Secondary data. Primary data is the first hand data, which are selected a fresh and thus happen to be original in character. Primary Data was crucial to know various customers and past consumer views about bikes and to calculate the market share of this brand in regards to other brands. Secondary data are those which has been collected by some one else and which already have been passed through statistical process. Secondary data has been taken from internet, newspaper, magazines and companies web sites. RESEARCH APPROACH The research approach was used survey method which is a widely used method for data collection and best suited for descriptive type of research survey includes research instrument like questionnaire which can be structured and unstructured. Target population is well identified and various methods like personal interviews and telephone interviews are employed. SAMPLING UNIT It gives the target population that will be sampled. This research was carried in Surat. These were 100 respondents. DATA COMPLETION AND ANALYSIS After the data has been collected, it was tabulated and findings of the project were presented followed by analysis and interpretation to reach certain conclusions. SCOPE My project was based on the Comparative Study of Bajaj V/S Hero Honda and data was taken in the City SURAT only.

LIMITATIONS
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1. Research work was carried out in one Distt of Punjab (MUKTSAR) only the finding may not be applicable to the other parts of the country because of social and cultural differences. 2. The sample was collected using connivance-sampling techniques. As such result may not give an exact representation of the population. 3. Shortage of time is also reason for incomprehensiveness. 4. The views of the people are biased therefore it doesn’t reflect true picture.

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INTRODUCTION India, is the second largest producer of two-wheelers in the world. In the last few years, the Indian two-wheeler industry has seen spectacular growth. The country stands next to China and Japan in terms of production and sales respectively. The major players in the Two Wheeler sector are Bajaj Auto, Hero Honda, Kinetic, LML , TVS Motors, Honda and Yamaha The Indian two-wheelers industry can be broadly classified into three major segments -- scooters, motorcycles and mopeds. Majority of Indians, especially the youngsters prefer motorbikes rather than cars. Capturing a large share in the two-wheeler industry, bikes and scooters cover a major segment. Bikes are considered to be the favorite among the youth generation, as they help in easy commutation. Large varieties of two wheelers are available in the market, known for their latest technology and enhanced mileage. Indian bikes, scooters and mopeds represent style and class for both men and women in India. In the last five to six years, the two-wheeler market has witnessed a marked shift towards motorcycles at the expense of scooters. In the rural areas, consumers have come to prefer sturdier bikes to withstand the bad road conditions. The domestic two-wheeler industry has whizzed past a key milestone of making and selling one million units, in March. For the first time, the industry also crossed the 10-million mark in a fiscal by selling 10.5 million two-wheelers in 2009-10.

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In 2009-10, total two-wheeler sales were up by 24.52%, over the previous fiscal which stood at 8.4 million,. The market is dominated by motorcycles accounting for nearly 77-78% of all sales, scooters sell around 15-16%, and the rest by mopeds. With these heady numbers, India has emerged as a strong competitor to China, the largest two-wheeler market with 15 to 16 million bikes.

HISTORICAL INDUSTRY DEVELOPMENT The invention of the first two-wheeler is a much-debated issue. "Who invented the first motorcycle?" may seem like a simple question, but the answer is quite complicated. Two-wheelers owe their descent to the "safety" bicycle, i.e., bicycles with front and rear wheels of the same size, with a pedal crank mechanism to drive the rear wheel. Those bicycles, in turn descended from high-wheel bicycles. The high-wheelers descended from an early type of pushbike, without pedals, propelled by the rider's feet pushing against the ground. These appeared around 1800, used iron-banded wagon wheels, and were called "bone-crushers," both for their jarring ride, and their tendency to toss their riders. Gottlieb Daimler (who later teamed up with Karl Benz to form the Daimler-Benz Corporation) is credited with building the first motorcycle in 1885. One wheel in
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the front and one at the back, it had a smaller spring-loaded outrigger wheel on each side. It was constructed mostly of wood, the wheels were of the iron-banded wooden-spoken wagon-type, it definitely had a "bone-crusher" chassis! The Indian two-wheeler industry made a small beginning in the early 50s when Automobile Products of India (API) started manufacturing scooters in the country. Until 1958, API and Enfield were the sole producers. In 1948, Bajaj Auto began trading in imported Vespa scooters and three-wheelers. Finally, in 1960, it set up a shop to manufacture them in technical collaboration with Piaggio of Italy. The agreement expired in 1971. In the initial stages, Automobile Products of India dominated the scooter segment; Bajaj Auto later overtook it. Although various government and private enterprises entered the fray for scooters, the only old player that has lasted till today is LML. Under the regulated regime, foreign companies were not allowed to operate in India. It was a complete seller market with the waiting period for getting a scooter from Bajaj Auto being as high as 12 years. The motorcycles segment was no different, with only three manufacturers viz Enfield, Ideal Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were two-stroke bikes. Enfield 350cc bikes and Escorts 175cc bike initially dominated the motorcycle segment. Motorcycle, the name is evolved from motorized cycle. A motorcycle has an engine, wheels and chain exposed. Moreover, it is chain driven. Two-stroke motorcycles are positioned as power bikes by making use of their high power
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delivery to cater the young generation. Four-stroke motorcycle is positioned as fuel-efficient and environment friendly vehicle. The two-wheeler market was opened to foreign competition in the mid-80s. And the then market leaders - Escorts and Enfield - were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With the availability of fuel-efficient low power bikes, demand swelled, resulting in HeroHonda then the only producer of four stroke bikes (100cc category), gaining a top slot. The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively. These two players initially started with assembly of Complete Knocked Down Kits, and later on progressed to indigenous manufacturing. In the 90s the major growth for motorcycle segment was brought in by Japanese motorcycles, which grew at a rate of nearly 33% CAGR in the last five years. The industry had a smooth ride in the 50s, 60s and 70s when the Government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mn vehicles in 1990. The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in providing ease of use to the scooter owners. This helped in inducing youngsters and working women, towards buying scooters, who were earlier, inclined towards moped purchases. In the 90s, this trend was reversed with the introduction of scooterettes. In line with this, the scooter segment has consistently lost its part of the market share in the two-wheeler market.
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TWO WHEELER INDUSTRY: THE CURRENT SCENARIO FY09 ends with hope of improvement…. FY09 ended on a positive note for two wheeler companies as sales volumes of companies showed improved performance in the last few months as compared to earlier period of the year. HH & TVS have reported a jump in volumes to the extent of 10% and 4% respectively. While, BAL has restricted fall to 13% due to strong volumes generated by the recently launched XCD. It is noteworthy that despite the fall in volumes on a yearly basis, BAL has reported flattish growth on m-o-m basis during the month of March 2009 and is improving sales every month, though not on y-o-y basis. The benefit of excise duty cut along with new launches in the form of variants has led the growth for companies in the two wheeler space The excise duty cut benefit extended beyond 31st March 2009 is also a positive indication for the two wheeler industry and we believe that it will help the companies in reporting good volumes along with attractive new launches, Which without any doubt have been the key for the volumes growth for the companies during FY09. In the near future we expect the volumes of companies to improve on the back of 1) softening interest rates and 2) Improvement in exports (post H1FY10). However, we remain hopeful that volumes will continue to pick up as the companies have planned new launches strategically which is likely to continue the existing growth of companies in future.

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Exports which account for a sizeable portion of the volumes for TVS and BAL have been declining on a monthly basis which is due to the increasing competition in the global arena and also due to the slowdown in global economy. Exports of BAL fell by 8.2% y-o-y while TVS grew robustly by 25% on a y-o-y basis, but its volumes on m-om basis reported a fall of 1.5%. It is interesting to note that on a yo-y basis the two wheeler industry has reported growth of 2.5%. We upgrade our outlook on the sector to Neutral from negative on the back of improvement in overall scenario. FY09 ended on positive notes as volumes of companies improved in the last few months. Industry Sales Volume SEGMENT MAR-O8 MAR-09 YoY% 541306 607970 1 2.5 FY08 FY09 YoY%

MOTORCYC 535945 LES TOTAL WHEELER 2 593143

YTD YTD 6094661 6265625 2.8 6787270 6971288 2.7

Source: Company/ * Cumulative Sales volume for HH,TVS, BAL.

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Following are the recent trends in two wheeler industry:

MAJOR SHIFT FROM SCOTERS AND MOPEDS TO MOTORCYCLES : The composition of the two-wheeler industry has witnessed sea changes in the post-reform period. In 1991, the share of scooters was about 50 per cent of the total 2-wheeler demand in the Indian market. Motorcycle and moped had been experiencing almost equal level of shares in the total number of two-wheelers. In 2003-04, the share of motorcycles increased to 78 per cent of the total twowheelers while the shares of scooters and mopeds declined to the level of 16 and 6 per cent respectively.

COMPANIES RAISING CAPACITY TO MEET THE GROWING DEMAND: All the major two-wheeler manufacturers, viz. Bajaj Auto, HHML, TYS, HMSI and others, have increased their manufacturing capacities in the recent past. The two-wheeler production capacity is to reach 22.31 million units in 2011-12 compared with 10.78 million in 2006-07. Most of the players have either expanded capacity, or converted their existing capacities for scooters and mopeds into those for manufacturing motorcycles. The move has been prompted by the rapid growth reported by the motorcycles segment since FY1995.

NICHE MARKETS ALSO WITNESSING INTENSE COMPETITION:
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A significant trend witnessed over the past five years is the inclination of consumers towards products with superior features and styling. Better awareness about international models has raised expectations of consumers on some key attributes, especially quality, styling, and performance. High competitive intensity has prompted players to launch vehicles with improved attributes at a price less than the competitive models. In an effort to satisfy the distinct needs of consumers, producers are identifying emerging consumer preferences and developing new models. For instance, in the motorcycles segment, motorcycles with engine capacity over 150cc, is a segment that has witnessed significant new product launches and hence, become more competitive. The indigenously launched Pulsar 150 had met with success on its launch and thereafter, a host of models have been launched in this segment by various players. While Bajaj Auto launched the Pulsars (150, 180 & 200cc) with digital twin spark technology (DTSi) that offers a powerful engine and fuel efficiency of 125 cc models, model launches by other players include HMSI's Unicorn besides the HHML's CBZ Xtreme and TVS' Fiero F2. Moreover, in the recent past, the motorcycle segment has witnessed launch of vehicles with higher engine capacity (higher than 150cc) and power (higher than 15bhp). These include models such as Bajaj Auto Avenger and Royal Enfield's Thunderbird followed by HHML's Karizma. The products in this segment cater for style conscious consumers. In the scooters segment, the market for plastic-bodied variomatic scooters continues to witness growth in the scenario of overall decline in scooter volumes. Higher volumes and growth are especially true for certain scooter models, such as Honda Activa, that brought in new technology (besides variomatic transmission) to
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further differentiate themselves. Thus, the need to differentiate and create a niche has led to companies strengthening their research and development (R&D) capabilities and reducing the development time for new models.

VEHICLE EMMISSION NORMS: Emission norms for all categories of petrol and diesel vehicles at the manufacturing stage were introduced for the first time in India in 1990 and were made stricter in 1996. When the 1996 norms were introduced, it resulted in certain models being withdrawn from the market. With Stage I India 2000 emission norms coming into place, the cost of developing suitable technology has remained high. Among the two and three wheelers, both selected models of Hero Honda (Splendor and CD 100) are the most eco friendly two wheelers. They have scored above average in vehicle and engine design and are one of the very few, four-stroke two wheeler fitted with any kind of pollution control equipment. Bajaj CT 100, which ranks third, has scored well in vehicle and engine design but lacks in emission control equipment and comparatively poorer emission. The best performing two-stroke model ranks fourth amongst the two wheelers. The lowest score has been obtained by Kinetic Safari moped, which obtained average scores in design and emissions and very poor scores in pollution control equipment and emissions.

INDIAN AUTO POLICY 2002:
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The Government of India approved a comprehensive automotive policy in March 2002, the main proposals of which are as under:  Foreign direct investment: Automatic approval is proposed to be granted to foreign equity investment up to 100% for manufacture of automobiles and components.  Import tariff: Import tariffs are proposed to be fixed at a level such that they facilitate the development of manufacturing capabilities as opposed to mere assembly.  Incentives for R&D: The weighted average tax deduction under the Income Tax Act, 1961 for automotive companies is proposed to be increased from current level of 125% (The weighted average deduction for R&D was increased to 150% in the Union Budget 2004-05). Further, the policy proposes to include vehicle manufacturers for a rebate on the applicable excise duty for every 1% of the gross turnover of the company expended during the year on R&D.  Environmental aspects: Adequate fiscal incentives are proposed to promote the use of low-emission auto fuel technology (in line with the Auto Fuel Policy). The auto policy states the Government's intent to align domestic policy with the international practice of imposing higher road tax on old vehicles so as to discourage their use.

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INDUSTRY STRUCTURE The composition of the industry consists of motorcycles, scooters and mopeds. Over the past decade, there has been a consumer preferential shift from mopeds to scooters and now motorcycles. On account of the shift, the motorcycle segment dominates the two-wheeler industry with a market share of close to 80%. The motorcycle segment is further sub divided into 3 classes, starting from the entry/economy class (Rs 30,000 – Rs 40,000), executive class (Rs 40,000 –Rs 50,000) and the premium class (>Rs 50,000). India is the 2nd largest two-wheeler market in the world with a size of over Rs 100,000 mn. The total sale of two wheelers in India has touched a figure of 7.9 mn units by March, 2007, up 11.4% from the previous fiscal figure of 7.1 mn units. Production during the period reached 10.8 mn units, entailing a demand ratio of 72%. In terms of sales and market share the major players of the industry are Hero Honda, Bajaj Auto and TVS Motors. Other players include Kinetic Motors, Yamaha Motor and Honda Motorcycle and Scooter India (HMSI). The motorcycle segment is primarily led by Hero Honda with a market share of 59% followed by Bajaj Auto 18%, HMSI 9%, TVS Motors 7% , Yamaha 5% and 2% by others. On the other hand the scooter segment is led by HMSI which has a dominant share of 63% followed by TVS Motors 16% , Hero Honda 14% and 7% by others. When it comes to the moped segment, it is primarily dominated by market share of 100%. TVS Motors with the

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TWO-WHEELER INDUSTRY GROWTH IN THE LAST TWO YEARS The two-wheeler (2W) industry has shown a healthy volume1 growth of 21.9% (yo-y) during the period April-January 2010 contributed by a mix of favorable demand and supply drivers. While on one hand, a steady revival in economic activity, low excise duties, low interest rates and relatively higher disposable incomes enabled the demand pull; on the other hand, launch of new products/ variants by manufacturers, targeted marketing spends and expansion of customer touch points (not withstanding sharp decline in organized financing) provided the complementary supply push. The above growth is significant in the backdrop of a negative volume growth of 5.0% witnessed in 2007-08 and the rather subdued volume growth of 4.6% seen in 2008-09. While the current growth rate may moderate in the near term, the industry is expected to be on track for a healthy 911% annual growth over the medium term, supported by a combination of favorable demand drivers in the domestic market and strong exports growth.

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PROFILE OF THE COMPANY: The Bajaj Group came into existence during the turmoil and the heady euphoria of India's freedom struggle. Jamnalal Bajaj, founder of the Bajaj Group, was a confidante and disciple of Mahatma Gandhi, and was deeply involved in the effort for freedom. The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the Company today, are often traced back to its birth during those long days of relentless devotion to a common cause. Today, Rahul Bajaj is the Head of the Group. He has been the Chief Executive Officer of Bajaj since 1968 and is recognized as one of the most outstanding business leaders in India. As dynamic and ambitious as his illustrious predecessors, he has been recognized for his achievements at various national and international forums. Bajaj Auto is the flagship of the Bajaj Group of Companies. Its world’s fourth largest manufacturer of two wheeler and India’s second largest manufacturer of two wheeler and the fourth largest two wheeler and three wheeler make

MANAGEMENT A team of seasoned professionals ably manages Bajaj Auto Ltd. Board of Directors Rahul Bajaj

Chairman
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Madhur Bajaj Rajiv Bajaj Sanjiv Bajaj D.S. Mehta Ranjit Gupta C P Tripathi N H Hingorani Kevin D’sa Pradeep Shrivastava S Shridhar V S Raghvan S Ravikumar

Vice Chairman Managing Director Executive Director Whole-Time Director Vice President – Insurance Vice President Operations Vice President Commercial Vice President Finance Vice President Engineering Vice President – – – – –

Marketing & Sales Vice President – Corporate Finance Vice President Business Development Vice President Human Resources Vice President Research Development Company Secretary Cost Accountant Director Director Director Director Director
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K Shrinivas Abraham Joseph

– – &

J Shridhar A P Raman Kantikumar R Podar Shekar Bajaj D J Balaji Rao J N Godrej S H Khan

TWO WHEELER INDUSTRY IN INDIA

Ms Suman Kirloskar Naresh Chandra Nanoo Pamnani Manish Kejriwal P Murani Niraj Balaji

Director Director Director Director Director Director

BAJAJ PERFORMANCE  The market for the so-called 'mature' segment, which according to Mr.Rajiv Bajaj (managing director) included, geared scooters, mopeds, step-thru's and three-wheelers.  The geared scooter market in which Bajaj is clearly the market leader with its Chetak and Super's till ruling strong. The company has a stranglehold in the southern and western regions of the country with a market share ranging between 80% to 90%.  Next, comes the largest market of the north (55% of total scooter market). Here too Bajaj is relatively well placed with only LML to worry about. But the good part of the story ends right here. As this market is a mature one, growth opportunities are limited and Bajaj has come around to accept that only too well.

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 Sale of Company's new products introduced during 1998 - 1999 viz., Spirit, Bravo, Legend and Caliber was 30% of the total number of two wheelers sold during the period.  Going forward, its strategy would be to position itself in the fuel-economy segment at a competitive price point. Secondly, Bajaj will try to capture market share by introducing top-of-the-line scooters, which match its competitors in terms of style and technology. Towards this, Bajaj Introduced the four-stroke 'Chetak' in November 2000 giving 65 kms/liter fuel economy and the 'Fusion' and 'BravoHP' in October 2000 to give LML something to think about.  In Step-thru, the upgraded M-80 Major was introduced in August 1999. It incorporates a new engine that delivers higher power, better fuel economy and significantly lowers emissions. This vehicle is well received by customers.  The success of Pulsar has helped the company to stay clear of adopting an aggressive price reduction strategy. Caliber 115 has also enjoyed a fair degree of success. As a result, aided by its cash-rich status, the company has been able to hold its ground in the times of recession.  Bajaj has consistently rolled out successful models for example one of the feathers in its crown is the Bajaj Pulsar…..a premium bike segment motorcycle which has been a very successful model. Bajaj Discover is one other bike which created quite a stir in the industry.
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 With the Indian two-wheeler industry focused on the motorcycle segment, Bajaj Auto now becomes the only Indian company with offerings in each user segment. Starting with the entry level CT 100 & Platina, the company’s range includes ‘Discover’ and ‘XCD DTS-i’ in the executive bike segment, Pulsar in the premium bike segment, and the only cruiser bike of India the ‘Avenger’.  An estimated Rs.100crores has been invested in developing ‘Pulsar’ and the project took 36 months from conceptualization to commercial production of the vehicle. Pulsar is being manufactured at Bajaj Auto’s state-of-the-art facilities at Chakan near Pune. STRATEGIES USED IN THE PAST Bajaj strategic plan was to establish in three main areas viz. establish volume leadership, establish cost leadership and reduce the respond time and bring in. Volume Leadership:  Retain the high reliability and work on easing out immediate availability.  Vast expansion supported by Quality circles, kanban, just-in-time and high automation.  Expanded the dealer network to reach town, cities and even villages.  Improve the genuine spares availability.  Reduce the prices drastically to match local specious parts.
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 Cashed on branding, image to penetrate into rural areas than competitors.  Came up with easy financing scheme and several occasional discounts to establish volume leadership. Cost Leadership:  Macro value addition chain was exploited throughout the companies operation but also spread within micro value addition chain i.e. dealers and distributors, through free test rides, registration and insurance schemes.  Macro value addition suppliers offering them hi-tech automation, by keeping and improving the productivity.  After exploiting value addition micro and macro chain further establishing the cost leadership, cost cutting exercises, was adopted to ultimately reduce the cost of 58% to a target of 55%. Response Time:  Total transparency within the dealer, distribution and works through online.  Delivery within 24 hours of any variant within the circle.  Improves ecstatic and added variants to support the wide range.  Make available any variant, any range or access to definite information directly. Improve to customer’s perception and loyalty to product with widening the base and strengthening the brand loyalty.

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Example: Bajaj scooter customers change over to Bajaj motorbikes.

MARKETING Four P’s of Marketing Mix 1. Product The term "product" is anything that can be offered to a market to satisfy a want or need. Products that can be marketed include Physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Components of a market offering: Value based prices

Attractiveness of Market offering
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Product features and Quality

Services mix and Quality

Product Levels In planning its market offering, the company needs to think through five levels of the product. Each level adds more costumer value, and the five constitute a customer value hierarchy. First level is the core benefit. transportation) Second level, the company has to turn the core benefit into a basic product. The basic product would include the gears, the leather seat, the rear view mirrors, the trunk and the petrol tank. The essential accessories that would make the product useful. Third level, the company prepares an expected product, a set of attributes and conditions buyers normally expect when they buy the product. Here in case of two wheelers it is the warranty, the after sales service that the customers expect. At
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The fundamental service or benefit that the

customer is really buys. Here in Bajaj the core product is the vehicle. (Means for

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Bajaj they have special customer care service tips which are accessible even on its website. They have a 24-hour service whereby the customers can post their queries to the company and they try to answer the queries within a span of 7 days. They have personalized service charts, which are exclusive to each model. This enables the customer to get the right way of taking care of his vehicle. Fourth level, the marketer prepares an augmented product that exceeds customer expectations. Auto finance is one such feature which is an unexpected service though these days it’s no more a pleasant surprise almost all leading companies offer finance which works as an incentive for the buyers. Augmented product adds cost and soon becomes expected product. Bajaj Auto Finance Ltd (BAFL), a group company of Bajaj Auto Ltd is one of the biggest retail financing companies in the country today.

2. Price Pricing is an important part of the marketing strategy. The consumers demand quality products at low prices which is as good as a tightrope walk for manufacturer as he needs to control the cost in order to reduce price but at the same time also maintain good quality. The basic price-deciding factor in any product is the cost. At Bajaj also the cost factor is taken into consideration while deciding the prices for the products. So now we have more and more products trying to find space in the market, which makes them, take every possible step to eat into each other’s share. For products

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like Two-wheeler the positioning of the product as well the price of the product is quite important. Products offered and their price  Platina  Discover 150  XCD 135 DTS-si  Discover 135  Pulsar 150 DTSi  Pulsar 200 DTSi  Pulsar 220 DTS-Fi  Pulsar 135 LS  Avenger 220 DTSi  Spirit  Wave 38,115 51,000 42,136 53,238 68,000 72,515 92,540 59,000 77,010 26,000 39,500
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 Kristal DTSi  Blade DTSi 3. Place

36,100 40,000

Bajaj has a very wide spread dealer network of 219 dealers across the country and abroad which provide excellent customer service. The company has been operating in the two-wheeler industry since decades and enjoys a favorable logistics position. Considering that the industry demands a good availability of service stations Bajaj definitely has a distinct edge over its competitors due to the presence of a widespread dealer and service station network in the remotest region of India.

4. Promotion Bajaj Auto is an aggressive advertiser. The advertising Budget of Bajaj Auto is more than Rs.100 Crore. Bajaj has a distinct style of promoting its products, for every product launched there’s a new and fresh advertising strategy, developing the firm-positioning platform. One of the successful campaigns from the Bajaj has been the commercial for the launch of Bajaj pulsar. Bajaj Pulsar
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Chatting merrily, three girls walk by a line of motorbikes. One's dupatta skims over the bikes and then gets stuck... ...making her turn in consternation. She pulls it away slowly to reveal... ... The logo, “Pulsar". MVO: Bajaj Pulsar, definitely male Market Segmentation rather than Product Differentiation: Over the past four years, the 100cc economy segment has taken off, as Bajaj introduced low priced motorcycles. The economy segment’s share of the total motorcycle market has ballooned to 31% from about 20% three years ago. The 100cc executive segment continues to dominate the motorcycle market-it forms about 56% of the total motorcycle sales. The premium segment 125cc+ is small at 13% of the total market. However, this premium segment is growing continuously.

It can be clearly seen that an attempt has been made by all the motorcycle producing companies to lure the customers to buy their bikes in the entry level segment with one of the long term objectives to gain their loyalty towards the company so as when these customers tend to shift towards higher segments they prefer their brands again.

MANAGEMENT INFORMATION SYSTEM Bajaj - The IT Effect

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In the dynamic environment within which all organization has to function IT certainly has started playing a vital role. Indian organizations are no exception to this. IT planning and implementation in such a changing environment has become a challenging task. However, right from the beginning the IT strategy has been to focus on the current business needs and to use the available technology to help in achieving the business objectives at that time.

This resulted in a 4-phase implementation: Phase I - started with use of computers in accounting. Phase II - the focus changed to manufacturing. Online computers were used during this phased to help in achieving production targets, improving men and machine productivity, improving quality and reducing costs which were the major issues at a time when the company was in the seller’s market. Phase III - in this phase Bajaj auto used the exploding technology in the areas of CAD/CAM, Networking and Communications and Office automation in the strategic areas of marketing and engineering. Marketing and dealership computerization was brought into effect. Phase IV- in this phase Bajaj auto used SAP. The my SAP Enterprise Portal will cover 100 sales field employees, 350 dealers in the first phase and the remaining will be covered in second phase. The dealer portal, in addition to operating
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information, provides access to unstructured information like news items, new product releases, new product introduction, dealer discussion groups, internal market-place, etc.

INTERNATIONAL MARKETING Based on their brand of globalization, they have built their distribution network over 60 countries worldwide and multiplied their exports from 1% of total turnover in Fiscal 1989-90 to over 5% in Fiscal 1996-97. The countries where their products have a large market are USA, Argentina, Colombia, Peru, Bangladesh, Sri Lanka, Italy, Sweden, Germany, Iran and Egypt. Bajaj leads Colombia with 65% of the scooter market, in Uruguay with 30% of the motorcycle market and in Bangladesh with 95% of the three-wheeler market.

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Several new models are being developed specifically for global markets and with these they will progressively endeavor to establish their presence in Europe too. In countries where they perceive a good market potential, they seek a tie up with one of the major industrial establishments, which would be in a position to invest in the project and which would also entail manufacturing activities apart from marketing, distribution and after sales services through a well-established nationwide network. PRODUCTION AND OPERATION RESEARCH R&D Objectives and Set-up The objective of Bajaj Auto's R&D is to contribute towards making life a better experience for society as a whole. They intend to achieve this objective by giving priority to environmental concerns, which include minimizing toxic emissions and optimizing the use of natural resources while also keeping in mind the exact requirements of the customers in a fast changing world racing towards modernization. They intend to use R&D not only to develop products better and faster, but to also evolve technologies that are eco-friendly, more fuel-efficient and cost effective. Their strength in R&D comprises 500 dedicated professionals who work as team members on a platform concept. These platforms comprise of engineers skilled in product engineering, manufacturing engineering, component development, project management and quality assurance. The primary objective of these platforms is to develop newer, better, more efficient and less polluting vehicles for both the Indian and International market.
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Their foreign technology partners, like Kawasaki, Kubota and Tokyo R&D, collaborate closely with the platform teams, with transfer of the latest technology and R&D assistance. Their designs are also subjected to an exacting and critical assessment from our technology partners.

TOTAL QUALITY MANAGEMENT The core competency of Bajaj Auto lies in the quality provided to the customers. At Bajaj, they are committed to high quality standards with a motive for productivity behind it. They believe that poor quality is the greatest productivity deterrent of all. The constant drive for perfection and the single-minded pursuit of excellence of the employees makes Bajaj one of the largest manufacturers of two and threewheelers and gives it the resilience to take on competition from the world's biggest players. This commitment starts with the top management and extends to every worker on the shop floor. The phenomenal growth in volumes, profitability and market share, year after year, has been possible only because every aspect of the operations is managed to perfection through effective management systems, HRD initiatives and quality assurance and control.

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At Bajaj, products are more than just a process output. They are an expression of creative and innovative energies, in which technology plays a passionate role. And in the midst of all this, Bajaj has never lost sight of the human factor. Acutely tuned to lifestyles and social conditions, Bajaj engineers are trained to develop products that precisely match consumer needs.

The Process: The process of achieving such high levels of quality begins at the product development stage itself and continues right up to the time the vehicle stands gleaming in a dealer showroom. During the elaborate development procedure, prototypes over three different stages are subjected to a battery of laboratory and field tests. Besides supervising the preproduction process, Quality Assurance lays down norms for their vendor force. The close interaction ensures that agreed quality levels are unfailingly maintained on the shop floor, mistakes are not rectified- they are prevented. Cell members conduct a scrupulous self-inspection of components while Quality Control experts measure and improve manufacturing processes, through the application of statistical tools. Every engine and transmission assembly, and finally every vehicle goes through a series of static and dynamic product verification checks by 'Quality Control' before clearance for dispatch to the dealers.
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The process of quality control is extended to its dealerships and sales and service outlets, where every dealer conducts an extensive pre-delivery inspection before a vehicle is delivered to a customer. Workshops are manned by skilled companytrained mechanics and equipped with appropriate tools, testing facilities and adequate stocks of spare parts.

The determined effort to optimize employee output has led to the adoption of the unique V1-V10 system of cellular manufacture. This model calls for a continuous minimization of all inputs - space, men, material, and equipment - to achieve the same level of output. Results: Results have been creditable. Manpower productivity measured in terms of number of vehicle per man-year has grown by 88% in this decade alone. More significantly, the increase in capacity at Bajaj in recent years has been largely due to a surge in productivity rather than a rise in investment. Quality Management: ISO 9002 Certificate awarded by the Bureau Veritas Quality International (BVQI), to the Moped and Motorcycle Division of the Company at Waluj, Aurangabad, in December 1994.

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ISO 14001 Certificate awarded by the Bureau Veritas Quality International (BVQI) to the Company's Plant at Waluj, Aurangabad, in August 1997.

CURRENT STRATEGIES SUGGESTED  Bajaj auto must come out with new models in 2 and 3-wheeler segment to sustain its market share in the comparative domestic market.  Bajaj auto should tighten up the supply chain mechanism and gearing up of the distribution system. It is advised also Bajaj auto to take steps for cutting costs, especially overheads including salaries.  Bajaj should strengthen its marketing and sales department by creating a separate team for different products in the coming months.  Stung by the declining scooter sales, Bajaj auto should undertake a portfolio re-shuffles exercise by which the motorcycles division will be main growth vehicle of the company.

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 It should gear up towards improving its productivity levels and they should be able to double the output with the current workforce.  There is a need for greater decentralization at the plant level to ensure that each worker adds value.  In a bid to cut costs, the company should work towards in pushing up indigenization for its 2-wheeler models and reduce waste at the factory level.

PROFILE OF THE COMPANY: "Hero", the brand name symbolizing the steely ambition of the Munjal brothers, came into being in the year 1956. From a modest manufacturer of bicycle components in the early 1940's to the world's largest bicycle manufacturer today, the odyssey was fueled by one vision - to build long-lasting relationships with
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everyone, including workers, dealers and vendors. This philosophy has paid rich dividends through the years. Hero, a name synonymous with two wheelers in India is today a multi-unit, multiproduct, geographically diversified Group of companies. Through fully integrated operations, the Munjals roll their own steel, make critical components such as free wheels for their bicycles, and have the foresight to simultaneously diversify into myriad ventures, like product designing, IT enabled services, finance and insurance, just to name a few. The Hero Group philosophy is: "To provide excellent transportation to the common man at easily affordable prices and to provide total satisfaction in all its spheres of activity." Thus apart from being customer-centric, the Hero Group also provides its employees with a fine quality of life and its business associates with a total sense of belonging. What started out as a Joint Venture between Hero Group, the world's largest bicycle manufacturers and the Honda Motor Company of Japan, has today become the World's single largest two wheeler Company.

MANAGEMENT Chairman & Whole-time Director Managing Director & CEO Joint Managing Director Director Technical Director Mr. Brijmohan Lall Munjal Mr. Pawan Munjal Mr. Akio Kazausa Mr. Toshiaki Nakagawa Mr. Sumihisa Fakuda
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Vice President & CFO Mr. Ravi Sud Vice President - Sales, Marketing & Mr. Anil Dua Customer Care Vice President – Operations, Dr. Anadi Pande

Corporate Planning & Strategy Plant Head Dr. Vikram Kasbekar Vice President – Information Mr. Vijay Sethi Systems G. M. Legal & Company Secretary Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive & Independent Director Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive Director & & & & & & Mr. Ilam C. Kamboj Mr. Om Prakash Munjal Mr. Sunil Kant Munjal Mr. Masahiro Takedagawa Mr. Satoshi Matsuzawa Mr. Pradeep Dinodia

Independent Mr. Gen. (Retd.) Ved Prakash Malik Independent Mr. Analjit Singh Independent Dr. Pritam Singh Independent Ms. Shobana Bhartia Independent Mr. Sunil Bharti Mittal Independent Mr. Meleveetil Damodaran

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Areas of Management The Hero Group has done business differently right from the start and that is what has helped them to achieve break-through in the competitive two-wheeler market. The Group's low key, but focused, style of management has earned the company plaudits amidst investors, employees, vendors and dealers, as also worldwide recognition. The growth of the Group through the years has been influenced by a number of factors: Inventory Control

The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-in-time inventory. The Group boasts of superb operational
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efficiencies. Every assembly line worker operates two machines simultaneously to save time and improve productivity. The fact that most of the machines are either developed or fabricated in-house, has resulted in low inventory levels. Purchase Policy 80% of the components in the manufacturing of a bike today are outsourced to the vendors. Those vendors are located in the vicinity of the plants and company is moving towards full employment of “Just in Time” policy wherein the components arrive, just before they are required to be installed on the bikes, resulting in substantial savings in terms of inventory costs. Most vendors supply the components & HHML shares a very nice relationship with the vendors. In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production in the unit and is functional even till date. The raw material vendors bring in the goods get paid instantly and by the end of the day the finished product is rolled out of the factory. This is the Japanese style of production and in India; Hero is probably the only company to have mastered the art of the just-in-time inventory principle. Ancillarisation An integral part of the Group strategy of doing business differently was providing support to ancillary units. There are over 300 ancillary units today, whose

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production is dedicated to Hero's requirements and also a large number of other vendors, which include some of the better-known companies in the automotive segment. The Munjals have gone much beyond the conventional definition of ancillarisation, making it a point to extend technical and managerial support to these ancillaries. These ancillary units are manned by friends, relatives, ex-employees or close associates of the Munjal family since the Group patriarch, Mr. Brijmohan Lall, "… never wanted to march alone." Financial Planning The Hero Group benefits from the Group Chairman's financial acumen and his grasp on technology, manufacturing and marketing. Group Company, Hero Cycles Limited has one of the highest labor productivity rates in the world. In Hero Honda Motors Limited, the focus is on financial and raw material management and a low employee turnover. Diversification Throughout the years of mammoth growth, the Group Chairman, Mr. Lall has actively looked at diversification. A significant level of backward integration in its manufacturing activities has been substantial in the Group's growth and led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto Components and Munjal Showa Limited amongst other component-manufacturing units.

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Then there were the expansion into the automotive segment with the setting up of Majestic Auto Limited, where the first indigenously designed moped, Hero Majestic, went into commercial production in 1978. Then came Hero Motors that introduced Hero Puch, in collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in 1984 to manufacture 100 cc motorcycles.

In Conclusion The Hero Group's phenomenal growth is the result of constant innovations, a close watch on costs and the dynamic leadership of the Group Chairman, characterized by an ethos of entrepreneurship, of right attitudes and building stronger relationships with investors, partners, vendors and dealers and customers.

MARKETING

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P’s of Marketing Mix: A. Product & Price: Hero Honda Motors Ltd.  Splendor+  CBZ X-treme  CD Dawn  Karizma  CD Deluxe  Achiever  Glamour PGM FI  Passion Plus  Hunk 49,193 67,835 40,077 86,502 42,627 63,660 65,152 50,902 67,292

Hero Motors
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 Smart  Sting  E Zee SX Product Range and New Models

23,256 26,615 27,407

The Company's product range includes "Splendor" which is the largest selling motorcycle brand in the world with over 6.9 lakhs vehicles sold in 2000-01. A cumulative over 5 million customers are the real foundation of the company's strength. The identity of Hero Motors in the market has been established through two of its leading international products - Hero Puch and Hero Winner. When Hero Motors entered into a technical collaboration with Steyr Daimler Puch of Austria, Hero Puch was born which marked a new chapter in the two-wheeler scenario of the country. Hero Puch, the mini-motorcycle designed by Ferdinand Porsche combined the power (4.15 bhp) and ease of a motorcycle and at 91 km/hr, the economy of a moped.

B. Place
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Dealer Network At Hero essentially they have a completely customer-driven approach. A nation-wide dealer network comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise holders for motorcycles, ensures convenient access to the Group's products across the country. Strong dealer company relationship with a deep sense of belonging to the Hero fraternity, the Group's dealer network has catalyzed growth and acted as a strong bridge between the customers and the Group. Sales agents from Hero travels to all the corners of the country, visiting dealers and send back daily postcards with information on the stock position that day, turnover, fresh purchases, anticipated demand and also competitor action in the region. There are more than 1000 committed dealers & service outlets spread across the country. The authorized workshop have well laid out standards for motorcycle servicing supported by fully equipped infrastructure in terms of quality precision instruments, pneumatic tools & a team of highly trained service technicians. Having your motorcycle serviced at an authorized workshop ensures highest standards of service quality and reliability.

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C. Promotion HHML is an organization, which is known for its innovative & Aggressive Marketing. All the mediums are used extensively, be it print or mass media like T.V & hoardings. HHML also promotes sports in the country. It had also the sponsored of the ICC world Cup 2003 and half of the Indian team represented Hero Honda. Those players are Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh, Zaheer Khan and Sourav Ganguly as Brand Ambassadors. Superstar Hrithik Roshan is also a Brand Ambassador for Hero Honda Company. HHML has print ads that the customer gets to see almost every day in newspapers, magazines, etc. This has increased the brand recall by a significant number. They also have their bikes featured in various TV programs like top drive on star news and others which act as a strong reference.

THE NUMBER GAME
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Hero is one of the few vehicle brands that, despite the fluctuations, have never managed to go out of the A&M Top Brands Survey. This is probably because of its envious high-sales record in the two-wheeler market. But its popularity (in terms of brand awareness and recall) does seem to be facing a somewhat downward trend. Hero in 1992 had a rank of 40 and a power score of 26. This, needless to say, has been Hero's highest rank and power score till date. At that time, Hero had a higher ranking than its main competitor in the bicycles market, Atlas, in the main earners and young adults segment. Its worst performance was amongst housewives. In the early 1990s, Hero had started an aggressive rural-oriented campaign for its motorcycles, in order to break into the rural market. The creative route taken by the group was by taking parallels from popular Hindi movies to deliver the intended message. The campaign generated high interest and the strategy did work, as demand and brand acceptability picked up in rural areas. But unfortunately, that was at the cost of popularity in urban areas. The year 1993, saw the brand's ranking fall nine places to 49. Brand preference was stronger amongst rural consumers than urban ones and amongst lower-income-groups than the higher-income earning segment. And by 1997, the brands ranking has picked amongst housewives, young males and the western regions, thus increasing its overall ranking to 45. The next year, 1998, saw only a minute decrease in ranking with the rank falling one place to 46. But a worrisome trend emerged. Hero has lost scores in around 12 segments out of 14. Hero Honda was still the largest selling motorcycle company but other companies such as TVS, Bajaj and Yamaha had started to catch up. This led to Hero's rank
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decreasing to a low of 54 in 1999. Its performance in urban areas had dragged it down a few notches. A COMPANY PAR EXCELLENCE A rich background of manufacturing high value, reasonably priced products, an uncompromising pursuit of the goals to attain quality along with customer satisfaction, the resulting affinity in working cultures - brought the world's largest manufacturer of motorcycles in collaboration with the world's largest bicycle manufacturer, bringing forth a market leader. Honda Motor Company of Japan and the Hero Group entered a joint venture to setup Hero Honda Motors Limited in 1984. The Market Leader Today Hero Honda has managed to achieve indigenization of over 95 percent, a Honda record worldwide. Hero Honda is at present the largest-selling Indian motorcycle and the most fuel-efficient in its category - the outcome of Hero Group's foresight and another classic example of how the group strives to provide the customer with excellence and satisfaction. Hero Honda became the first company in the country to introduce four-stroke motorcycles and set the standards for fuel efficiency, pollution control and quality. It has a production capacity of 1.2 million motorcycles, which shall be enhanced to 1.5 million motorcycles in the coming years. It has an excellent distribution and service network spread throughout the country.

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Customer-centric The Company's success has been driven by customer centric policies and teamwork to achieve progress and productivity. The philosophy of Hero Honda emphasizes the "Pursuit of Excellence" in designing and manufacturing technologically and qualitatively superior products and in creating economic value for its stakeholders. It takes care of its customers through value based competitive pricing and good after sales service. Excellent marketing, finance and loan services, an efficient dealer network, tactical promotion comprising of fuel conservation campaigns, mobile workshops, safety driving courses and others, all placed Hero Honda in a league distinct from the conventional. The Company focuses on providing "Value for Money" through its pricing strategies and after sales services. Excellent Collaborator Relationship Hero Honda is now the leading two-wheeler Company in India in terms of net sales. It is both the leading two wheeler manufacturer and sales operation among Honda's worldwide operations. The Company has maintained excellent relationship with all stakeholders including its collaborators. Hero Honda has emerged as the most successful joint venture Company of Honda in the world, their relationship over 116 years old now.

ERP Implementation

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The Company has successfully implemented SAP R/3 (ERP Program - "Project Synergy") thereby enabling proper planning and companywide efficiency. The modules were implemented and stabilized in a record 10 months period. It speaks of the commitment of the management and the implementation team towards making it processes accountable and efficient.

ANALYSIS

Q1) Which bike do you have? Hero Honda Bajaj Any other 47 38 15

Hero honda Bajaj Any other

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Q2) Which Model do you Have? Hero Honda Splender Passion Karizma Any other
25 No of Persons 20 15 10 5 0 1 Model Name Hero Honda Splender P assion Karizm a Any other

21 13 7 6

Bajaj CT 100 Discover Pulsar Any other

7 12 11 8

14 No of Persons 12 10 8 6 4 2 0 1 Model N ame Bajaj C 100 T D iscover P ulsar Any other

Q3) In which family Income level do you Fall? 100000200000 200000300000 300000400000 22 45 23
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above 400000
50 No of Persons 40 30 20 10 0 1

10

100000-200000 200000-300000 300000-400000 abov e 400000

In co m e le ve l

Q4) For how long do you own a bike? 0-1 year 1-2 year 2-3 year above 3 year 34 29 26 11

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40 30 No o f 20 Pe r s o n s 10 0 1 No o f ye ar s 0-1 y ear 1-2 y ear 2-3 y ear abov e 3 y ear

Q5) For what purpose do you use your Motor Bike? Hero Honda Bajaj Office Purpose 9 4 Personal purpose 13 15 Joy Purpose 19 16 Other 6 3

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20 No of Persons 15 10 5 0 Of f ic e Pers onal Joy Purpos e purpos e Purpos e Pu r p o s e Other Hero Honda Bajaj

Q6) How do you come to know about this Motor Bike? Newspaper Television Magazine Friends & Relative
No of Persons 2 5 2 0 1 5 1 0 5 0 H roH n a e od Nm o C m a y a e f o pn B ja a j N wsp p r e ae T le io e vis n Mg e a zin F n s &R la rie d e tive

Hero Honda 4 23 2 18

Bajaj 2 16 1 19

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Q7) Does Advertisement Influence your decision in choosing a Motor Bike? Yes No Cant say 87% 5% 8%

Ys e N o Cn s y at a

Q8) Do you have full knowledge about Bikes before buying? Hero Honda Yes No 25 22 Bajaj 23 15

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30 No of persons 25 20 15 10 5 0 Hero Honda Company Name Bajaj Yes No

Q9) Which Factor below Influence your decision? Hero Honda Bajaj Price Mileage Quality Resale Value Status symbol 72% 78% 65% 40% 10% 78% 64% 48% 28% 7%

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No of Persons

10 0% 8% 0 6% 0 4% 0 2% 0 0 % H ro H n a e od C m a yN m o pn a e B ja a j P rice M ae ile g Qa u lity R sa V lu e le a e S tu sym o ta s bl

Q10) How would you rate the following factors of Bikes with respect to different company? Hero Honda Bajaj Mileage Price Pick up Maintenance Look & Shape Brand Image
100% No of Persons 80% 60% 40% 20% 0% Hero Honda Bajaj Com pany Nam e Mileage Price Pick up Maintenance Look & Shape Brande Image

74% 68% 70% 58% 85% 53%

72% 65% 80% 62% 80% 55%

Q11) If new Bike with good features comes in, then would you like to change your bike?
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Hero Honda Yes No Cant say
25 No of Persons 20 15 10 5 0 Yes N o Views

Bajaj 21 14 3

19 17 11

H H ero onda Bajaj

C say ant

QUESTIONNAIRE NAME: - ……………………………………………… CONTACT NO ………………………………………. AGE:15-20 25.30 OCCUPATION:Businessman Student Q1) Which Bike do you have?
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Hero Honda Q2) Which Model do you have? Hero Honda: Splendor Karizma Bajaj: CT 100 Pulsar

Bajaj

Any Other

Passion Other Discover Other

Q3) In which Family Income do you Fall? 100000-200000 300000-400000 Q4) For how long do you own a Bike? 0-1 year 2-3 year 1-2 year above 3 years 200000-300000 Above 400000

Q5) For what purpose do you use your Motor Bike? Office Purpose Personal Purpose

Joy Purpose Other Q6) How do you come to know about this Motor Bike? Newspaper Magazines Television Friends/Relatives

Q7) Does Advertisement Influence your decision in choosing a Motor Bike? Yes No Can’t say
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Q8) Do you have full knowledge about Bikes before buying? Yes Q9) Which factor below influence your decision? Price Resale Value Mileage Status Symbol Quality No

Q10) How would you rate the following factors of bikes with respect to different companies? Hero Honda Bajaj Mileage Price Pick up Maintenance Look/Shape Brand Image Q11) In new bike with good feature comes in, then would you like to change your bikes? Yes No Can’t say

Q12) Any Suggestions for Company ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… …………………… DATE: (SIGNATURE)
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CONCLUSION Changing Landscape of the two-wheeler industry The two-wheeler industry is passing through a very interesting phase. Developments such as the entry of more number of players into the motorcycle market, price discounts offered by producers, monsoon failure and growing competitive pressure have changed the underlying basics of the industry. The impact of these developments is reflected in a change in market share, a divergent trend in share price and the sharp swing in the price-earnings multiple. Suzuki, the global major, which recently severed its ties with TVS Motor Company, has now decided to set-up manufacturing facilities in the country. Apart from international companies, there is growing competitive pressure from existing domestic producers as well.

Attractive growth rates in the motorcycle segment, has intensified competitive activity in the past two years. With product configurations across players converging, effective sales and marketing skills will likely determine future success. It is believed that there will be continuity of market growth, a gradual move up in the value change and a tight leash on costs by industry leaders to effectively counter sporadic price-led competition.

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Motorcycles embody the best features of a two-wheeler such as fuel efficiency, ruggedness and greater product differentiation. Our population profile (skewed towards the youth) and a rising service class tilts the balance in favor of motorcycles. Currently all the major players in the industry- Hero Honda, Bajaj Auto and TVS Motors have nearly equal scores in all the competitive positions, with the rest of the players lagging behind in the run. Hero Honda had been the first company in the Indian market to have envisaged the motorcycle market as an opportunity market and invested wholeheartedly in it. Due to its superior and reliable products and excellent services reached the number 1 position. It has placed most of its bikes in the early stages in the Utility segment appealing to the masses. Its product positioning has also been very good, which has also attracted other players in the market and driven growth in the sector. But Hero Honda has surely held the first mover advantage. Bajaj on the other hand, has been the second mover in the segment. Realizing the potential of the motorcycle segment it started looking into it and due to its focus and continued efforts and ability to understand the market has been able to give Hero Honda a run for its money. It has provided the consumers cheaper and more fuel efficient bikes, increased product lines and above all has now taken a substantial market in the Premium segment.

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Only Yamaha Motors has the financial muscle and product range to compete with the three giants Hero Honda, Bajaj and TVS Motors. It has the technical know-how and good products in international arena. It has to understand the Indian market and the Indian customer in order to have a good product mix in India. It is felt that in the next two years there will be a change in the segmentation of the market with newly defined segments in terms of price and engine capacity. All the three segments will move in an upward direction in terms of engine capacity.

RECOMMENDATIONS Opportunities and Threats for the Industry  Motorcycles race ahead There are no signs of a reversal in the growing consumer preference for motorcycles to scooters. Riding comfort, better control and superior mileage have attracted consumers to motorcycles. Also, the soft interest rate regime over the last two years has resulted in a steady drop in lending rates. As a result, the cost of retail loan has fallen steadily which, in

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turn, has prompted consumers to go in for motorcycles, though they are a costlier than scooters.

In the motorcycle market, the consumer preference has tended to be skewed in favour of four-stroke models. With petrol prices ruling firm, it is not all that surprising to find the growing consumer preference for four-stroke bikes that offer superior mileage. Existing majors — Hero Honda and Bajaj — have taken efforts to enhance their presence in the fast growing four-stroke segment. With a series of successful launches such as Platina, CT 100 and XCD, Bajaj has turned out to be a star performer in terms of improvement in turnover and increase in market capitalization.

 Scooters on a downhill ride Scooters continue to lose favor at the market place. In the geared scooter segment, the lack of choice and practically, no major improvement in product features, design and styling have driven consumers away. Bajaj has stopped scooter manufacture. In the scooter market, the ungeared models have turned out to be the dark horse. The ease of usage and relatively lower product weight make ungeared scooters a popular choice, especially among women. Moreover, this product segment has seen more product launches compared to the geared models.
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Kinetic Motor launched its Blaze model, while Bajaj came up with Krystal. Honda Motor of Japan has launched the Activa model produced by its local subsidiary. The recent success of Activa is a pointer that a good product with different style and design would always find market acceptance. If the companies manage to come up with more such products, scooters could stage a comeback in the two-wheeler market.

 New models hold the key Given this backdrop, it is evident that model launches are critical for survival and growth. With more models coming up, the related expenses such as advertisement and other promotional outgo are sure to go up. Industry majors have already upped their ad-spends over the recent years. Hero Honda and TVS Motor have gone a step ahead by roping in celebrities as brand ambassadors. With competitive pressure on the rise, the companies would raise the load of promotional activities, which could bring pressure on profit margins. This apart, the necessity to launch models at regular interval would also push up development and other related expense such as technical know-how and royalty payment. The bottom-line is that the scope for any major expansion in profit margin may be relatively limited from current levels. The earnings growth would be driven more by volumes.
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 Competition on the rise The growing popularity of motorcycles has resulted in more players vying for a place in this market. Besides the top three companies, three others are fighting for a place in the segment. This has resulted in the market place becoming crowded with numerous models. With more products vying for consumer attention, the product life-cycle could get shortened. As a result, it would be all the more imperative for companies to launch models at fairly frequent intervals. This would be the single-most important factor for success. This has already been evident in Bajaj's and TVS' recent performance. Backed by successful model launches, both have managed to enhance their market share in the motorcycle market. This, in turn, has led to an improvement in their financial performance. After a considerable time, HHML came up with Passion, which has enjoyed reasonable success at the market place. Other offerings such as CBZ and Achiever enjoyed muted success.

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There would be a limited market potential for higher priced products. The Rs 50,000 mark is probably a serious psychological barrier. Below this price segment is where there would be huge volumes.

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PORTERS 5 FORCES OF COMPETITION

The state of competition in an industry depends on five basic forces: Customers, Suppliers, Potential Entrants, Substitutes & the Industry. The collective strength of these forces determines the ultimate profit potential of an industry. Knowledge of the underlying sources of competitive pressure provides the groundwork for a strategic agenda of action. They highlight the critical strengths and weaknesses of the company, animate the positioning of the company in its industry, clarify the areas where strategic change may yield greatest payoff, highlight the places where industry trends promise to hold the greatest significance as either opportunities or threats.

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 Rivalry among existing firms – High The two-wheeler industry is categorized by intense competition mainly between the three majors – Bajaj Auto, Hero Honda & T V S Motor Co. There are also some small players who are gaining market share such as Honda & Kinetic. The industry is constantly witnessing price-cuts, freebies & product launches.  Threat of Substitute Product – High The two-wheeler industry faces direct competition from the automobile sector. With the increase in disposable income & increase in bank finance people prefer to have cars rather than two wheelers. Thus the demand for cars affects the demand for two-wheelers. If the demand for cars falls, the demand for two-wheelers will rise.  Barriers to entry –High The barriers to entry & exit are high. The investment required to compete with these giants would be significant. Thus it is very difficult for newcomers to enter this sector. The industry attractiveness is low not due to profit margin but due to intense & well established competitors.

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 Bargaining power of suppliers – Poor The two-wheeler industry, rely on only a few selected vendors. Thus the bargaining power is poor. Around 60% - 90% of the product is outsourced thus the suppliers have a direct impact on the company’s cost & profitability.  Bargaining power of buyers –High The bargaining power of the buyers is high. There are a variety of products available to customers to choose from. The customer is treated “as a king”. The marketers have segmented the market into three categories namely entry level, executive & premium category. It has been observed that companies which have ignored the customers have suffered – Bajaj Auto, which once operated without a marketing department, but instead had a dispatch department. However the rules of the game have changed. The customer should be the focus of all activities. All activities Production & Marketing should be done keeping the consumer in mind.

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BIBLIOGRAPHY The source of the information collected for the project is as follows:
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Primary data: Interview of proprietor of Siddhivinayak Motors. Secondary data:  Business World  Business India Webliography:
 www.google.com  www.yahoo.com  www.herohonda.com  www.managementparadise.com  www.bajajauto.com  www.autoindia.com

and also the information from professors, parents and friends.

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