KCB ID: 13015

University of Wales

MBA

MODULE TITLE: MANAGING MARKETS

ASSINGMENT TITLE: PART-A: Macro Environment

And

PART-B: Marketing Mix

LECTURER NAME: JAS NAIDOO

KCB ID: 13015

DATE OF SUBMISSION:22/03/2010
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__________________
PART – A
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MACRO ENVIRONMENT

FOR

THE HERO HONDA MOTORS LIMITED

INDIA
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INTRODUCTION

Any of the working Organisation is usually affected by two major factors that is its internal and
external environment which is called in management as micro and macro environment. The factors
which are within the control of the organisation are micro environment where as the factors which
cannot be fully controlled by organisation are macro environment, it is so essential for a company to
study, analyse and understand the measures of the influence on the company’s different policies
(Kotler Et all, 2004 pg 43).

Macro environment primarily consist of Political, Economical, Socio-cultural and Technological

factors, known as PEST or STEP and its detailed analysis called as PEST Analysis (Sullivan and Adcock,
2004 pg 27). PEST analysis for the “HERO Honda Motors Limited is intensely cited in this report as
follow.

Source: http://www.mindtools.com/pages/article/newTMC_09.htm

P. Political and Legal Environment:

Indian automobile sector is the highly influenced market for the government to enhance its Foreign
Domestic Investment policy and also it is an economic growth booster, so the major focus of Indian
government tends to focus its automobile market.

More flexible policies been framed for ease finance and finance procedure, banks are
encouraged to provide easy auto finance to the customers, auto industries starving to get
benefit of such policies so they attract consumers by pricing and promotional offers.
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For example: Exchange offers with ease finance schemes, special discount offers, 0% finance
schemes
Minimum 100days National Rural Employment policy- 2008-09 for the poor rural area as to
make their stronger uplift economic advantage, so that strong rural economic platform can
be achieved, which is the ideal platform as entry level most successful segment for two-
wheeler companies. To attract such consumers company launched special rural segment
motor bike like “CD Dawn”, “joy” out of which “CD Dawn” is the most successful model.
After the liberalisation policy in 1991 two wheeler industry claimed highest growth every
financial year and today it reached as the second largest producer in the world.
There are some adverse impact also as 12% excise duty lead the two wheeler companies
difficult to fight with small budget car manufactures like: TATA Nano, so the industry
demanding to lower down the excise duty up to 8% as to sustain and differentiate both of
the markets. For example the bike owner of Karizma or Hunk or CBZ Xtreme will attract for
the low budget car due to equal cost of ownership and more benefits.
The frequently rising prices of fuel have brought many reforms in the sector to provide fuel
efficient motorbikes, for example: Bajaj “platina”, “Discover”: Hero Honda “Deluxe” ,
“Splendor” , “Passion”. It also immerge electric bike segment which becomes very successful
in urban sectors.

E. Economical Environment:

Automobile industry in India mostly for the two wheeler segment depends on the lower and
medium middle class people, which having strongly buying cyclist over a period of time so even the
recession period there is a bloom in automobile industry which results surprisingly developed and
strong potentials.

Middle class segment becoming stronger over a passing year which is the most prominent
factor for two wheeler domestic sales, therefore company focused to this niche segment by
introduction “Splendor +”, “Passion pro”, “Glamour FI”
Indian manufacturing industry has quoted 14.3% in Q3 of 2009-2010 over the Q3 of 2008-
2009, the cumulative production for two wheeler industries have reached almost to
9.5million from April-February 2010.
Overall growth for the two wheeler industries has been registered 24.58% out of that
Motorbike have 24.91% for April-February 2010.
The government plans to continuity in the saving rate of country which is close to 38% of
GDP, as high savings will create important quantity for mobilising investments in some areas
like infrastructure, fuelling etc.
According to IMF the worst global economy era will be going and the expected growth will
be from 1.4% to 2.5% by the year 2010. Considering this company has planned to launch
new variants in the market, “New Karizma ZMR” and “Hunk Limited Edition” already
launched.
Considering overall growth company also planned to increase its production capacity and
therefore it wants to invest in its fourth plant, which will bring not only the production
capacity but will be introduced new products in different segments.
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S. Socio/Cultural Environment:

It basically focused to the demographic and cultural factors of the society, which is the vast area to
study the changes in social and cultural background and according to this company has to respond in
the market.

For example: HERO Honda have launched its first scooter “Pleasure” with the tag line of “why should
boys have all the fun”, with considering the cultural change in Indian society as women are tends to
work rather than to prefer at staying home, as the scenario was changed and that change brings
something different respond in the market.

It been also noticed by the company marketing and selling prospective that youngsters are
preferring to modify the bikes after purchasing, as they tends to show it more glamorous and style
performing also an added things are its sporty looks, in responds to this company have launched
“CBZ” but in terms of other variable that first launch was not successful as lower millage and High
segment bikes were not available in the competition, so it not recall the preliminary need in young
group segment. After carefully considering all and extensive research company have launched many
favourable models in the market which suits with the ideology of young generation like: “Glamour
FI”, “Ambition 135”, “Achiever”, “CBZ Xtreme”, “Hunk” and “karizma” these preferable launches
were done in between 2004 to 2009 that time there are players in the market like Bajaj “Pulsor 180
and 220 DTSi”, “TVS Apache”, Honda “Unicorn 150cc” and Yamaha FZ.

Hero Honda “Street” was launched by the influence of heavy traffic and narrow riding space in the
urban areas, it was the clutch less gear shifting vehicle specially designed for metros. So that hassle
free driving experience can be achieved, not only this but it’s reduced load on clutch plate will
increase the engine and fuel performance.

As per the demographic analysis of rural area Hero Honda launched several models like from: “CD
100”,”CD 100SS”,”Joy” and “Dawn” which are tuff on the road and consist of much more metals
rather that hard fibre body.

T. Technological Environment:

New innovations and advancement in the technology is always acceptable in the working
environment of Hero Honda group. As to be distinctive and with more features advantage in the
market, also offering the wide options within the product range, which are targeted to different
segments.

The most successful model of company was launched in 1994 “Splendor”, the company also get
success to keep the track and continue it over the decade and more today there are different
variants available in “Splendor” as “Splendor +”, ”Super Splendor” and ”Splendor NXG”. The main
ideology of company behind it was to keep the most successful brand in the market with new
innovations and technology so they changed the style and performance features of the model, the
latest model comes with self start option, alloy wheels and disc brakes.
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In the competitive environment company keep new technological implementation to its products, it
not only changes the cubic capacity in the model but also add new technological advancements.

• Splendor +: 97.2 cc, kick start Super Splendor: 125 cc, electric start, multi plate wet
clutch.
• Glamour: 124.7cc, kick & electric, Side draft variable fuel system, Advanced Micro Processor
Ignition.
• Glamour FI: 124.8cc, kick & electric start, Programmed Fuel Injection system, full transited
Ignition.
• CBZ Xtreme: 149cc, disc brakes, alloy wheels, pilot lamp, multi reflector head light.
• Hunk: 149cc, Robust Masculine look, Gas charged shock absorber, Advanced Tumble Flow
Induction fuel system ATFI.
• Karizma ZMR FI: 225cc, front & rear disc break, collapsible rear view mirror, Integrated LED
tail light, 5 speed gear box.

The above examples indicates that company periodically evaluate and changes the needed
technological factors and put the most running existing model in the market with distinguish
approach by changing style and design, nevertheless best thing it indicates here is technological
advancement: HUNK’s Advanced Tumble Flow Induction fuel system and Glamour’s Programmed
Fuel Injection system lead it ahead to compete with Bajaj’s DTSi and exhaust TEC technology.

CONCLUSION:

PEST analysis in terms of its theoretical aspect can be vast and little bit complex but with the
practical approach to “Hero Honda Motors Limited” it will become ease to understand each factors
how it influence company’s marketing environmental decision. It been seen clearly that for
automobile sector and for motorbike division specially Socio-cultural and Technological environment
plays major role so the industry have to focus more to these factors, while as Political, Legal and
Economical environments are normally in favour of motorbike industry particularly in India, but this
could not be in the case of other economy so company also have to consider such factors wisely as
they also have major effect when goes adversely. For Hero Honda group though company is
performing and growing well but at this growth level it strongly have to keep its success for that not
only to focus on Political, Economical, Social/Cultural and Technological factors but also have to
adopt some competitive strength.
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PART – B
________________________________

MARKETING MIX
FOR

THE HERO HONDA MOTORS LIMITED

INDIA
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INTRODUCTION

To attain substantial response from the target market a business firm set controllable strategic
marketing tools called “Marketing Mix”, which basically consist of four group of variables “Product”,
“Price”, “Place” and “Promotion”, also known as “Four Ps”. The main objective behind this is to do
everything for influencing the market for a particular product or service (Kotler Et al, 200? P49).

The marketing mix is to be made by considering target segment of market and for the better
response; it should be achieved or done within stipulated time duration.

The 4Ps Marketing Mix

Product Price
Product range Pricing model
Product performance Discount Policy
Branding Credit terms
Packaging Non-financial cost
Design
Service support

Place/Distribution Promotion
Channel Advertising
Support supplied by Sales force
Channel Direct marketing/On-line
Market/customer Public Relations
Coverage
(Source: “Introduction to Marketing Concepts” Drummond G and Ensor J, 2005 p-11)

When the analysis for the particular segmented product or services been need some additional
edge, three additional factors also involved as People, Process and Physical evidence specifically for
the services (Drummond G and Ensor J, 2005 pp10-11).

PRODUCT:

Since the launch of first motorbike CD 100 company have launched different 20 products and new
variants in the existing models, on the analysis of market and to sustain in competitive environment.
The different models with the specific targeted objective are:

1. CD 100: Launched in 1985 first motorbike by the group, basically focused to the rural areas,
the design of vehicle therefore been framed sturdy and tuff, it was the most success vehicle
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that time, target consumers responds greatly and company claimed its first success in the
motorbike industry. CD 100 been followed by CD 100SS (In 1991), JOY (In 2001) and DAWN
(In 2002), later on new variants with new upgrades and features been launched like CD
DAWN (2003).

2. “Sleek”: Continues with the same engine specification some more additional features added
to CD 100 platform, its design been changed to modern and stylish, metal frames replaced
by the hard fibre. It was launched to focus urban area, but cannot get true on the company’s
expectations.

3. “Splendor”: The most successful and highest selling motorbike of the world was launched in
1994, distinctive style feature, high fibre body with new designed look and metal finish are
the best selling criteria for the “splendor”. It was basically launched for the office going
executives and working professionals, fuel efficiency, and stylish sober design leads to
appeal the same definition and it hit the Indian roads. “Splendor” not only covered its
segment but it was also successful in rural area as well, gradually company have put some
innovative features and technologies to this existing most popular brand to keep it 9
consecutive years most selling motorbike vehicle: Splendor + (2003), Super Splendor (2005),
Splendor NXG in 2007.

4. Street: Company launched its new technology, clutch less gear shifting, ideal for city rides in
heavy traffic, narrow streets, specially designed for urban areas and also focused to female
gender as ease to ride the bike. Somehow due to some technological draw back company
discontinue its product from the market, thought it was the only products in its segment.

5. CBZ: The most recognised and stylish shaped designed specially focused to youngsters as per
their demanding nature of sporty bike, company had launched CBZ in 1999. It was the only
bike that time in 150cc segment and attired the most success as well. In 2004 company again
launch New CBZ and CBZ Xtreme in 2008.

6. PASSION: New design, sturdy and stylish appeal, with new headlights and totally sturdy
looks are the key elements, it is little bit heavy also as for better riding comfort, focused
specifically to urban area, but also successful in rural sectors as well. Company continue this
model with further expansion with new features and technologies as it is also one of the
golden feather in its product range: PASSION + (2003), New PASSION + (2007) and PASSION
Pro (2008).

7. Apart from these company also launched other variants for different segments like:
“Ambition” 135cc (In 2004), “Achiever” 150cc (In 2005), “Glamour” 125cc (In 2005),
“Glamour FI” (In 2008), “KARIZMA ZMR FI” 223cc (In 2009) and “HUNK” Limited Edition
150cc (In 2009).

8. In 2005 company has launched its first scooter vehicle specially designed for urban women
as aspiring to their attitude “Pleasure” with the distinctive launch as well little bit separate
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from the male biker zone, which have new variant in 2008 as New Pleasure and recently in
2010 specially on women’s day.

PRICE:

Based upon the various segments different criteria of product and focusing to its future buyers
company’s marketing research team doing the perfect analysis before introducing any new product
in the market, in which pricing would obviously most important factor as price itself matters a lot.

There are different segments in which company’s products stand for with the aim to get specific
group of customers, “HERO Honda” models starts from the Rs. 32,000 to Rs. 91,000 ex-showroom
price (Delhi).

The most demanding segment is 100cc bikers zone in which company already have four most
successful variants one of that is the world market leader “Splendor” which ranging around Rs.
40,450 and basically focused to middle class consumers, the competition in this segment is so stiff,
as competition prices are quite more competitive to beat as Bajaj platina ex-showroom Rs. 32,500,
Discover Rs. 42,500, also Honda shine in Rs. 40,500.

There are specific models which are most performing and sturdy focused to rural segment like CD
Dawn starting around Rs. 32,000 to Rs. 36,000 for CD Deluxe, company have lot of variants around
the price tag of Rs. 45,000 as to beat the competitions which are doing well in the same segments

High end models which are reflecting sporty bikes and more stylish designed with more power and
pickup ranging between Rs. 60,465 to Rs. 91,000 which includes all CBZ, HUNK and KARIZMA.

Hero Honda have to set up such differentiation and segments as to meet the competitive strength as
Bajaj, TVS, Yamaha are also the players in each segment and all are ranging almost near to Hero
Honda model prices. Even then company is performing well due to trust of the customers in
company’s products.

PLACE/DISTRIBUTION:

It is the most important factor as only through this the visible stock of products or services
can be governed in the market; it is the most crucial factor which leads products to be
available to the consumer in time.

To deliver more than 25million customers is the most difficult job, therefore HERO Honda
Motors have extensive 3500 customer touch points, consist of dealers network, service
centres and stockists located all over India.

The process of delivering a vehicle to the customer is most crucial task, when the demand is
high and the supply is very low that time blocking period will be arise, to overcome the
situation company tends to limit per dealer supply so that equal distribution can be done.
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For example: Due to some wages problem in HONDA’s manesar plant production was
stopped, which blocked the supply to the dealers network. Besides the demand of Honda
“Activa” continuously rising but due to non availability of vehicle on time the consumer
group tends to move to competitors like Suzuki “Access”.

PROMOTION:

“HERO Honda” company spending massive expenses towards the sales promotion and
marketing activities as to make its presence always in the market, the major sectors for the
promotions are:

Advertising Campaigns: TV and Print media advertisement is the best preference of company
apart from these it also runs outdoor advertisements, the most famous advertisement is the
video promo “HERO Honda Desh ki Dhadkan”, which brought the inspirational touch and feel
like bike for the country the customers considering the product by hearts. Company also
have print advertisements which give tag line to the models which really define it:

“Karizma ZMR – Above All” denotes its superiority to all.

“CBZ Xtreme – Live Extreme, Live off the edge” specify the extreme level of
experiencing thrill.
“Pleasure – Why should boys have all the fun” gives speciality to woman as to mind a
feel.
Events and Sponsorships: Company also run the most successful programme in association

with Mtv which goes global now: The most important thing
behind this is to catch the young generation profile consumers directly with the core to
involve them in the show, let them see the show, meanwhile executively promote the range
of products to the niche segment. As far as the show goes successful company not only
generate revenue from it but also set a strong platform to promote its high end motorbikes
to younger generation.

Just 4 Her concept: To promote company’s first scooter pleasure targeted specifically to the
women groups, so company thought to sell it on the different premises apart from the other
male bikes showroom.

CONCLUSION:

The analysis with the live practical examples indicates that marketing department of Hero Honda
Motors done very well in terms of to get positive influence from the market, yearlong extensive
experience and detailed analytical strength of company leads to implement correct marketing
strategies and decisions, focusing the target groups and generating the revenue out of that was the
best set of example from the “Roadies show”, while talking about proper delivering of four Ps it was
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accurately done which shows the success of “Splendor”, “Passion”, “CD Dawn”, “CD Deluxe” and
their variants.

Total word count for PART-A = 1548

Total word count for PART-B = 1568 Excluding Executive Summary and References.