Hero Honda Marketing Mix

“We, at the Hero Group are continuously striving for synergy between technology, systems, and human resources to provide products and services that meet the quality, performance, and price aspirations of the customers. While doing so, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keeps the momentum going to take the company to excellence in the new millennium” 2TODAY, THE HERO GROUP IS INTEGRATED BACKWARDS AND HAS 18 COMPANIES IN ITS FOLD COMPANY Hero Honda Motors Limited Hero Cycles Limited Munjal Showa Limited Sunbeam Auto Limited Majestic Auto Hero Exports Munjal Auto Industries Ltd Rockman Cycle Industries Highway Cycles Hero Honda Finlease Ltd Hero Auto Limited Munjal Castings Satyam Auto Components Ltd Hero Financial Services Ltd Hero Corporate Service Ltd Hero Global Design Munjal Sales Corporation Easy Bill Limited PRODUCT/ SERVICE Motorcycles Cycles, Auto Components, and Cold Rolled Steel Shock Absorbers Aluminium Castings Mopeds, Scooterette, and Health Care Equipment International Trading Arm Auto Components Cycle and Auto Components Cycle Components, Auto Components and Machine tools Financial Services Two-Wheelers Non Ferrous Castings Sheet Metals and Fabricated Auto Components Financial Services BPO Services, IT, Training & Education Product & Engineering Design Distribution Payment services 3 THE GROUP HAS BUILT AN IMPRESSIVE PORTFOLIO OF BUSINESSES THE GROUP HAS BUILT AN IMPRESSIVE PORTFOLIO OF BUSINESSES Hero position in India by sales* Company Segment Market leader Top 3 • • • • • • • Hero Honda Motors Hero Cycles Munjal Showa Highway Cycles Rockman Cycles Munjal Auto Industries Ltd. SunBeam Auto • • • • • • • Motor Cycles Cycles Shock absorbers Cycle components Cycle components Auto components Castings * For a specific segment 4 SNAPSHOT OF HERO GROUP’S ACHIEVEMENTS SNAPSHOT OF HERO GROUP’S ACHIEVEMENTS Figures in USD millionWorld’s largest two-wheeler manufacturer Owns world’s biggest selling motorcycle brand – Hero Honda Splendor World’s largest bicycle manufacturer Hero Honda amongst top 3 Indian companies by Far Eastern Economic Review, 2002 Deep market penetration with 5000 outlets 22,000 plus employees Over 55 million bicycles and 7 million motorcycles on Indian roads Ranked No. 1 amongst Indian automobile companies by Businessworld (Jan. ‘03) “Entrepreneur of the Year” award to the Group Chairman by Ernst &Young Hero Group Financials Gross Revenues CAGR = 29% 1810 510 1998 Net Profits CAGR = 40% 2003 137 25 1998 Networth CAGR = 26% 2003 315 99 1998 2003 5 THE GROUP HAS WON SIGNIFICANT ACCLAIM AND RECOGNITION WITHIN THE GROUP HAS WON SIGNIFICANT ACCLAIM AND RECOGNITION WITHIN THE BUSINESS COMMUNITY THE BUSINESS COMMUNITY “One of top 30 brands in India” “Hero Honda among top 3 Indian companies” Indian Businessman of the Year award for Group ChairmanEntrepreneur of the Year award for Group Chairman from Ernst & Young Economic Times – Harvard Business School award for Excellent Corporate Performance Group’s management style acclaimed by • INSEAD, France • London Business School, UK • World Bank Two of the group companies are the world’s largest manufacturers Hero Honda – two wheelers and Hero Cycles Bicycles 6 HERO GROUP’S TRACK RECORD HAS ALSO BEEN ACCLAIMED BY HERO GROUP’S TRACK RECORD HAS ALSO BEEN ACCLAIMED BY Boston Consulting Group has ranked Hero Group as one of the top ten Business Houses on Economic Value Added (EVA), in India Over Drive Magazine, May 2002 Hero Honda Is World Production Numero Uno!Hero Honda Is World Leader Net Profit CAGR of 50% in last five years The Hero Group is recognized as a long term partner and an ideal employer: Hero Group’s partnership with Honda Motors, Japan is nearly 20 years old Hero Cycles Limited has not lost a single man-day of production since 1956 7 HERO HONDA MOTORS IS ONE OF INDIA’S MOST SUCCESSFUL COMPANIES HERO HONDA MOTORS IS ONE OF INDIA’S MOST SUCCESSFUL COMPANIES USD million Revenues Net Profits Market share 1,093 CAGR: 35% CAGR: 50% 100% = (mn units) Others 1. 4 3.
66 55 122 63 244 16 97-98 02-03 97-98 02-03 Hero Honda 37 97-98 45 02-03 “The HHML scrip has found favor with investors as it has given consistently high returns” – Economic Times 8HERO HONDA WAS RANKED AT NUMBER 3 AMONGST THE TOP TEN INDIAN HERO HONDA WAS RANKED AT NUMBER 3 AMONGST THE TOP TEN INDIAN COMPANIES BY FAR EASTERN ECONOMIC REVIEW – 2002 REPORT COMPANIES BY FAR EASTERN ECONOMIC REVIEW – 2002 REPORT 9 FACTORS WHICH MADE HONDA, JAPAN PARTNER WITH HERO GROUP* Honda selected the Hero Group for a variety of reasons, which included: Its engineering capability Relevance and salience of HERO brand Distribution network Commitment to Quality Know-how and experience in handling large volume production and distribution Tight focus on financial and raw material processes Low employee turnover Cordial Industrial Relations * Source:London Business School Case study, 2000 10 HERO CYCLES IS THE LARGEST PLAYER IN THE BICYCLE SEGMENT Sales: FY 2002-03* USD million • 132 (Cycles Business) 94 Sales of Hero Cycles is about 1. times its biggest competitor even though Hero was not the first to set up cycles business in India Hero Cycles has now maintained its market leadership position over the last 2 decades • 56 HERO Cycles Limited is a Guinness Book Record holder since 1986 as the world’s largest manufacturer of bicycles. Engineering Exports Promotion Council has awarded HERO Cycles with the Best Exporter Award for the last 28 years in succession. Source: Prowess 11 THE HERO CYCLES GROWTH HAS BEEN THROUGH A TIGHT FOCUS ON FOUR KEY FACTORS: Vision Aspiration of providing “cheapest” transportation to the poorest of India’s poor Action Introduce “Value for Money” product Sturdier product to meet rural demand Ancillarisation and backward integration Continuously improve productivity OutcomeProduct well accepted Production expanded from 25 cycles a day (1956) to 19,500 cycles a day (2003) Competition shrank across India from 100 manufacturers to 4 major players Maintaining Growth Expand markets Rural Focus Product Innovation Technical Alliances Integrated Backwards to remain costcompetitive and thus expand market share 12 HERO’S STRATEGY THAT MADE HERO CYCLES AND HERO HONDA GLOBAL LEADERS, REVOLVED AROUND 5 THEMES Hero Group NOT only as a “low cost provider” but also as “VALUE FOR MONEY” provider Build strong alliances and relationships with all stakeholders in the chain Benchmark against best global practices Product Innovation keeping in mind the sensitivities of the target market Strong culture of performance 13CONSEQUENTLY THE VALUE PROPOSITION BY HERO TO MARKETS WAS BASED ON Thorough understanding of fast-changing consumer behaviour, new market segments and product opportunities through customer interaction ; feedback Investments in Technology upgradation Using Foreign collaboration to assist in new design and production processes Focus on “Quality” Productivity and Profitability 14 TODAY HERO GROUP EXPORTS PRODUCTS ; SERVICES ACROSS CONTINENTS Exports bicycles, cycle components, motorcycles, mopeds and castings to more than 70 countries The “IT initiative” of the Group exports services to US, UK ; Australia The Group encourages Vendors to be part of the Global supply chain 15TO PROVIDE QUALITY PRODUCTS AND SERVICES, THE GROUP HAS TO PROVIDE QUALITY PRODUCTS AND SERVICES, THE GROUP HAS JOINT VENTURES AND BUSINESS ALLIANCES WITH MANY WORLD JOINT VENTURES AND BUSINESS ALLIANCES WITH MANY WORLD CLASS COMPANIES CLASS COMPANIES EralMetall, Germany Universal Cycles Plc, UK StyerDaimlerPuch, Austria FienTools, Switzerland Aprilia, Italy National Bicycle, Japan Honda Motors , Japan Showa Mfg. Co. , Japan Siemens Info. Systems , India SAP, India Navision (Microsoft),India LiveBridge, USA “Hero Honda motors is the most successful Honda joint venture worldwide” – K.
Suzuki, Senior Managing Director, Honda Motor, Japan 16 HERO GROUP HAS ALWAYS BELIEVED IN GROWTH THROUGH HERO GROUP HAS ALWAYS BELIEVED IN GROWTH THROUGH PARTNERSHIPS AND SHARING THE FRUITS OF GROWTH PARTNERSHIPS AND SHARING THE FRUITS OF GROWTH International PartnershipsHero Honda Motors is the most successful Honda joint venture worldwide, functioning for nearly two decades The relationship with Showa Mfg. Co. , Japan is over 17 years old and Munjal Showa is the largest manufacturer of shock absorbers in India Partnership with Other Stakeholders A large number of the 5,000 dealers have had a successful partnership with the Group for over four decades The Group has helped develop a large number of vendors who have grown along with the companies and therefore have a strong commitment in the success of the business The Group enjoys a very healthy respect amongst institutions including Banks, Central and State Governments 17HERO GROUP’S SUCCESS HAS ALSO BEEN THROUGH ITS SIGNIFICANT HERO GROUP’S SUCCESS HAS ALSO BEEN THROUGH ITS SIGNIFICANT INVESTMENT IN HUMAN CAPITAL INVESTMENT IN HUMAN CAPITAL Group’s Values • Human capital is the key “asset” • Continuously invest in this asset People Productivity • Enhancing people performance and productivity by – Training – Retraining – Incentivisation Multiskilling • To aid in employability • Ensures horizontal mobility across trades 18 RECOGNISING SOCIAL RESPONSIBILITY, THE GROUP CONTRIBUTES RECOGNISING SOCIAL RESPONSIBILITY, THE GROUP CONTRIBUTES ACTIVELY TOWARDS WELFARE OF THE SOCIETY THROUGH ITS ACTIVELY TOWARDS WELFARE OF THE SOCIETY THROUGH ITS NUMEROUS SOCIAL INITIATIVES NUMEROUS SOCIAL INITIATIVES The Group has set up and is involved with: Schools • Colleges • Hospitals • Vocational Training Centres • Promotion of Sports and Sports persons • Various community development activities and in improving rural and urban infrastructure 19 THE GROUP HAS DIVERSIFIED INTO THE SERVICES BUSINESS FOR THE GROUP HAS DIVERSIFIED INTO THE SERVICES BUSINESS FOR GLOBAL CUSTOMERS AND ASPIRES TO BE A SIGNIFICANT PLAYER OVER GLOBAL CUSTOMERS AND ASPIRES TO BE A SIGNIFICANT PLAYER OVER TIME TIME • Hero’s distinctive edge in all its businesses has been – World-class project management Superior service orientation Company Hero Corporate Service Division Activity BPO/ Call centre services Training and Education IT Services – •After attaining market leadership in motorcycles, Hero decided to enter into customer interaction services and software services because it can best leverage its distinctive skills/capabilities in these sectors Hero Global Design Product Design ; Engineering 20 RATIONALE FOR DIVERSIFICATION INTO SERVICES BUSINESS FOR RATIONALE FOR DIVERSIFICATION INTO SERVICES BUSINESS FOR GLOBAL CUSTOMERS GLOBAL CUSTOMERS Hero Group’s Ability to Compete • The Group has a proven track record of managing long term relationships with its domestic as well as global partners • The Group has demonstrated capabilities to manage a large pool of people (22,000 employees) which is a pre-requisite for success in this business • The Group has consistently exceeded customer expectations by understanding their needs both expressed nd implied • The Group’ s value proposition is based on providing value for money by managing cost (without compromising on quality) and efficient use of resources • The Group has attained leadership position through its service orientation Given the India advantage and the Hero Group’s attributes, BPO Services business is a compelling case for diversification with a fairly high likelihood of success 21 HERO GROUP FINANCIALS – Over the years 22 HERO GROUP: GROWTH IN REVENUES HERO GROUP: GROWTH IN REVENUES 2000 1800 1600 1400 CAGR = 29% over the last 5 years 1455 1810 US$ Mn. 1200 1000 800 600 400 200 0 1997-98 1998-99 1999-00 510 618 829 1110 2000-01 2001-02 2002-03 23HERO GROUP: GROWTH IN NET PROFITS HERO GROUP: GROWTH IN NET PROFITS 160 140 120 CAGR = 40% over the last 5 years 120 137 US$ Mn. 100 80 60 40 20 0 70 55 39 25 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 24 HERO GROUP: MOVEMENT OF RETURN ON EQUITY HERO GROUP: MOVEMENT OF RETURN ON EQUITY 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1997-98 1998-99 1999-00 2000-01 29. 3% 32. 3% 33.

50% 45. 80% 45. 90% 34. 2% Year 2001-2002 2002-03 25 SUMMARISING 26 HERO GROUP HAS BUILT LEADERSHIP POSITIONS PRIMARILY DUE TO ITS HERO GROUP HAS BUILT LEADERSHIP POSITIONS PRIMARILY DUE TO ITS BELIEF IN THE FOLLOWING PRINCIPLES BELIEF IN THE FOLLOWING PRINCIPLES Understanding stakeholder (incl. nternational partners and customers) expectations and delivering value for money Managing relationships Creating a Performance culture “Partnership Approach” with ancillaries Efficient Current Asset Management Accepting and using ever changing technology as a facilitator Strong quality and process orientation 27 RESULTS OF GROUP INITIATIVES The Group’s philosophy of empowering and training human capital, use of appropriate technologies, constantly being close to the customer and maintaining a healthy work environment with the highest standards of ethics and corporate governance has resulted in the Group companies excelling in their chosen field through a service attitude year after year, leading to impressive financials and healthy returns to all stakeholders 28 THANK YOU 29