“Marketing strategies of two wheeler dealers in Bangalore” AUTOMOBILE SECTOR Submitt

ed by: SUCHINDRA REDDY.N

UNDER THE GUIDANCE OF: INTERNAL GUIDE GUIDE Prof.Narayana prasad MSB Bangalore M
BA DEGREE EXTERNAL
DEPARTMENT OF MANAGEMENT STUDIES MSB Bangalore Formerly MAGNUS School of Busines
s Bangalore- 560025 2009
DECLARATION
I the student of MBA 3nd semester, from MSB Bangalore MAGNUS School of Business
declare that this project report titled Marketing strategies of two wheeler deal
ers in Bangalore” is prepared by me of my sincere efforts.
This report is prepared under the valuable guidance of Prof.Narayana Prasad Depa
rtment of Management Studies. I also declare that this report has not been submi
tted to any other University or Institution for the award of any Degree, Diploma
, Fellow ship or other similar titles.
Place: Bangalore. Date: reddy.N Suchindra
CHAPTER SCHEME:-
1 Executive Summary 2 Introductions 3 Industry Profile 4 Objectives 5 Methodolog
ies 6 Data Collection 7 Bibliography
Marketing strategies of two wheelers dealers
1 EXECUTIVE SUMMARY This report deals with Motor Bike Industry in India, who are
the major players in two wheeler industry and what are all the marketing strate
gies they are adopted. How consumers recognize and rate different two wheelers i
n competitive scenario.
The project named “Marketing
strategies of two wheeler dealers in
Bangalore” is undertaken to analyze how dealers utilizing the four p`s (product, p
lace, price
and promotion) of marketing mix and what are all current trends is going on in t
wo wheeler automobile industry.
Main aspects of the project are to analyze the
different products and services offered.
This survey will help the two wheeler sector to evaluate their product and the s
ervices they deliver. This will act as a tool for the company to know their oppo
rtunities and threats in the market. Expectations of the company from this surve
y are: • • • How to maximize the sales. To improve the promotional activities. Customi
ze the product as per the customer’s needs.
This project is not concentrated to a particular area or factor. This project ba
sically includes all the factors which emphasize purchasing decision of a custom
er and his choice. The project is based on a Market Survey being conducted of th
e general customers & thereby analyzing and recording their views about present
strategies adopted by dealers.
2 INTRODUCTION Automobile is one of the largest industries in global market. Bei
ng the leader in product and process technologies in the manufacturing sector, i
t has been recognized as one of the drivers of economic growth. During the last
decade, well directed efforts have been made to provide a new look to the automo
bile policy for realizing the sector s full potential for the economy. Aggressiv
e marketing by the auto finance companies have also played a significant role in
boosting automobile demand, especially from the population in the middle income
group. A Nations economy is well known from its transport system. For instant a
nd rapid growth in economy, a well-developed and well-networked transportation s
ystem is essential. As India s transport network is developing at a fast pace, I
ndian Automobile Industry is growing too. Also, the Automobile industry has stro
ng backward and forward linkages and hence provides employment to a large sectio
n of the population. Thus the role of Automobile Industry is very essential in I
ndian economy. Various types of vehicles are manufactured by the Automobile Indu
stry. Indian Automobile Industry includes the manufacturing of trucks, buses, pa
ssenger cars, defence vehicles, twowheelers. The two-wheeler manufacturing is do
minated by companies like TVS, Honda Motorcycle & Scooter India (Pvt.) Ltd., Her
o Honda, Yamaha, Bajaj, etc. The automobile industry in the country is one of th
e key sectors of the economy in terms of the employment opportunities that it of
fers. The industry directly employs close to around 0.2 million people and indir
ectly employs around 10 million people. The prospects of the industry also has a
bearing on the auto-component industry which is also a major sector in the Indi
an economy directly employing 0.25 million people. All is not well with the auto
mobile industry the world over currently with the slowdown that has gripped most
of the major economies of the world. The gap between the manufacturing capacity
volume and the assembly volume is growing by the day and has worried the manufa
cturers. This state of affairs has triggered a lot of cutthroat competition and
consolidation in the industry. Cost reduction initiatives have come to be
the in thing in the global industry today. Towards this direction, many automobi
le factories are being closed down.
The Indian automobile industry is a stark contrast to the global industry due to
many of the characteristics, which are peculiar to India. The Indian automobile
industry is very small in comparison to the global industry. Except for two whe
elers and tractors segments, the Indian industry cannot boast of big volumes vis
-à-vis global numbers
OVERVIEW OF TWO WHEELER SECTOR Two Wheeler Industry The Indian two wheeler contr
ibutes the largest volumes amongst all the segments in automobile industry. Thou
gh the segment can be broadly categorized into 3 subsegments viz.; scooters, mot
orcycles and mopeds; some categories introduced in the market are a combination
of two or more segments e.g. scooterettes and step-thru s . In the last four to
five years, the two-wheeler market has witnessed a marked shift towards motorcyc
les at the expense of scooters. In the rural areas, consumers have come to prefe
r sturdier bikes to withstand the bad road conditions. In the process the share
of motorcycle segment has grown from 48% to 58%, the share of scooters declined
drastically from 33% to 25% , while that of mopeds declined by 2% from 19% to 17
% during the year 2000-01. The Euro emission norms effective from April 2000 led
to the existing players in the two- stroke segment to install catalytic convert
ers. All the new models are now being replaced by 4-stroke motorcycles. Excise d
uty on motorcycles has been reduced from 32% to 24%, resulting in price reductio
n, which has aided in propelling the demand for motorcycles. Within the two-whee
ler industry, motorcycle segment grew at a phenomenally high rate of 35% as agai
nst a deceleration of 3% for scooters and 27% for mopeds. In fact, motorcycle ha
s been taking away the share of scooters and mopeds in a 4.3 million two-wheeler
market and surging ahead with its market share of 68%. The increasing demand fr
om semi-urban and rural segments may have caused this positive shift
towards motorcycles. Also, easy credit coupled with low interest rate regime, co
nstrained personal transport, increasing income levels in middle class and highe
r aspirations of young people all seem to be the factors responsible for such hi
gh growth in two-wheelers. The growth in two-wheelers has been robust enough to
counter the slow down and other factors constraining the overall business activi
ty in the country. Also, rationalization of excise duty in the Union Budget 2002
-03 had a positive impact on the demand for motorcycles. We also expect the moto
rcycles to continue to lead the two-wheeler segment like in all other Asian coun
tries. Available forecasts suggest that this trend would continue for another co
uple of years and the industry would record nearly double-digit average annual g
rowth up to 2006. During the year, there have been important developments in two
-wheeler industry. The competition has strengthened though there are hardly any
new entrants into the industry. There is an increasing emphasis on price and thi
s has led to cost cutting efforts all across the industry, thereby, making the c
ustomer an ultimate beneficiary. The trend also saw introduction of new motorcyc
les with capacity ranging from 100 to 180cc bikes. We anticipate that many more
new models will be launched during the year and provide customers plenty of choi
ce at competitive prices. Businesses cannot consistently grow at 25-30 per cent.
Each business has a tendency to taper and plateau after attaining a particular
size. An annual growth rate of 10-12 per cent over a period of time is extremely
healthy. The TCS study rankings are conducted at the motorcycle segment-level t
o provide comparisons among similar groups of motorcycles. Motorcycles ranking h
ighest in their respective segments for TCS are: Hero Honda CD100 SS (best stand
ard motorcycle segment); Hero Honda Splendor (best executive motorcycle segment)
; Bajaj Pulsar (best premium motorcycle segment); and Royal Enfield Bullet Elect
ra (best cruiser motorcycle segment). "The relatively low score for the premium
segment indicates that most manufacturers have fallen short of meeting the high
expectations of these buyers," states Mr. Lochan. "Bajaj Pulsar is one exception
with segment-leading ratings across all aspects of ownership experience, partic
ularly on areas related to vehicle styling."
The feeling of freedom and being one with the Nature comes only from riding a tw
o wheeler. Indians prefer the two wheelers because of their small manageable siz
e, low maintenance, and pricing and easy loan repayments. Indian streets are ful
l of people of all age groups riding a two wheeler. Motorized two wheelers are s
een as a symbol of status by the populace. Two wheelers in India are the second
largest producer and manufacturer of two-wheelers in the world. It stands next o
nly to Japan and China in terms of the number of two-wheelers produced and domes
tic sales respectively. Indian two-wheeler industry has got spectacular growth i
n the last few years. Indian twowheeler industry had a small beginning in the ea
rly 50 s. The Automobile Products of India (API) started manufacturing scooters
in the country. Bikes are a major segment of Indian two wheeler industry, the ot
her two being scooters and mopeds. Indian companies are among the largest two-wh
eeler manufacturers in the world. In the initial stages, the scooter segment was
dominated by API; it was later overtaken by Bajaj Auto. Although various govern
ment and private enterprises entered the fray for scooters, the only new player
that has lasted till today is LML. The motorcycle segment was initially dominate
d by Enfield 350cc bikes and Escorts 175cc bike. The two-wheeler market was open
ed 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 fou
r Indo-Japanese joint ventures. With the availability of fuel efficient low powe
r bikes, demand swelled, resulting in Hero Honda then the only producer of four
stroke bikes (100cc category), gaining a top slot. The first Japanese motorcycle
s were introduced in the early eighties. TVS Suzuki and Hero Honda brought in th
e first two-stroke and four-stroke engine motorcycles respectively. These two pl
ayers initially started with assembly of CKD kits, and later on progressed to in
digenous manufacturing. In the 90s the major growth for motorcycle segment was b
rought in by Japanese motorcycles, which grew at a rate of nearly 25% CAGR in th
e last five years. The industry had a smooth ride in the 50s, 60s and 70s when t
he Government prohibited new entries and strictly controlled capacity expansion.
The industry saw a sudden growth in the 80s. The industry witnessed a steady gr
owth of 14% leading to a peak volume of 1.9mn vehicles in 1990.
In 1990, the entire automobile industry saw a drastic fall in demand. This resul
ted in a decline of 15% in 1991 and 8% in 1992, resulting in a production loss o
f 0.4mn vehicles. Barring Hero Honda, all the major producers suffered from rece
ssion in FY93 and FY94. Hero Honda showed a marginal decline in 1992. The reason
s for recession in the sector were the incessant rise in fuel prices, high input
costs and reduced purchasing power due to significant rise in general price lev
el and credit crunch in consumer financing. Factors like increased production in
1992, due to new entrants coupled with the recession in the industry resulted i
n company either reporting losses or a fall in profits.
Evolution of Two-wheeler Industry in India: Two-wheeler segment is one of the mo
st important components of the automobile sector that has undergone significant
changes due to shift in policy environment. The two-wheeler industry has been in
existence in the country since 1955. It consists of three segments viz. scooter
s, motorcycles and mopeds. In India there are some MNC’s and Indian company dealin
g in automobile sector. The main key players who are dealing in this sector are
Hero Honda, Bajaj, Yamaha, Honda, and TVS. Hero Honda is the biggest player in t
his sector in India as well as in the world and playing a very important role in
two wheeler automobile sector. Hero Honda, Bajaj and TVS are the Indian compani
es and Yamaha & Honda are international automobile brand.
Bajaj is the first Indian two wheeler automobile company in the market since 194
5 with the name M/s Bacharj trading corporation private limited. In 1959 M/s Bac
harj trading corporation private limited change its name as Bajaj Auto Ltd. Baja
j Auto obtains license from the Government of India to manufacture two- and thre
e-wheelers vehicles in 1959.
Hero Honda Motors Limited was established in 1984, as a joint venture between In
dia s Hero Group (world s largest bicycle manufacturers) and Japan s Honda Motor
Company. And created the world s single largest two wheeler company and also on
e of the most successful joint ventures worldwide. During the 80s, Hero Honda be
came the first company in India. Over 19 million Hero Honda two wheelers running
on Indian roads today.
TVS Motors is the third largest company in the two-wheeler industry with a marke
t share of 16%. Infect, it is the only Indian company without a foreign collabor
ation in the two-wheeler industry. When the company opted out of the collaborati
on with Suzuki in 2002, many believed that TVS was headed towards extinction. Bu
t the company proved the doomsayers wrong and came out with a very successful `T
VS Victor . TVS Motors Ltd. originally incorporated in 1982 to manufacture two-w
heelers in collaboration with Suzuki Motors of Japan, TVS was one of the leaders
in two-wheeler industry.
Yamaha Motor Corporation is the auto mobile company of Japan (1953) which works
in India since 1955 and providing latest technology in India from last two decad
es. Yamaha Motor India was incorporated in august 2001 as a 100% subsidiary of Y
amaha motor corporation, Japan
Honda motors of Japan is not a new name in the two wheeler scenario in the count
ry, they were in a tie up with the Firodias owned Kinetic group. However in the
late 90s they parted ways after problems arose over issues like introduction of
new models, advertising expenditure, marketing strategies and other related issu
es. In the mid 80 Honda motors of Japan joined hands with the largest bicycle ma
ker of India the Hero cycles to create Hero Honda which in a couple of decades o
r so have gone on to
become the single largest motorcycle company in the world. Though Honda has come
on its own on the Indian market yet it will be providing technological support
to Hero Honda for the next ten years. Thus presenting a unique situation in whic
h the company will be in direct competition with the company which it has been a
ssociated for nearly two decades. Honda Motorcycles and Scooters India limited,
a 100% subsidiary of Honda motor company Japan eventually entered the Indian mar
ket with Honda Unicorn in 2004.
Market share of tw o w heeler automobile sector
Hero Honda
35.60%
27.50%
Bajaj M otors T VS M otors Yamaha M otors Honda M otors Others
9.50% 4% 7%
16%
SEGMENTATION OF TWO WHEELER A Two Wheeler Sector Sub-Segmenting in the three Seg
ments.
1. Motorcycle 2. Scooter 3. Mopeds
Segment-wise Analysis of Indian Two Wheeler Market Segment A1 Description Scoote
r engine capacity A2 less 10% 32.9% than 75 cc Scooter with 5% engine capacity b
etween 75-125 (Scooterette) A3 Scooter engine capacity between B1 125-250 cc Mot
orcycle with engine capacity between B2 75-125 cc Motorcycle with engine capacit
y 5% 17% 44.8% 62% 66% 14.9% with 12% 1% -27.7% cc share in 2001- Share in 20060
2 with 5% 07 0% CAGR 33.99%
between B3 75-125 cc Motorcycle with engine capacity between C1 75-125 cc Mopeds
10% 5% -2.7% 1% 1% 5.7%
financing ratio
12 months back Current Drop 8,00bps 58% 50%
hero bajaj auto honda Tvs motors
71% 59% 1200b ps 1500bps
65% 50%
Financing ratios.
The sentiment towards the two-wheeler segment has been badly hit in FY08 due to
the rise in interest rates and resultant loan defaults on the part of the custom
ers. With banks having been forced to slow down lending for the purchase of two-
wheelers, the
incremental volume growth of most motorcycle majors such as Bajaj Auto, TVS Moto
rs and Hero Honda has taken a beating.
Destination India
India is on every major global automobile player’s roadmap, and it isn’t hard to see
why:
India is the second largest two-wheeler market in the world
The auto component industry has come of age and now forms an important component
of the Indian economy. In recent years, it has grown more impressively, fetch d
ouble digit growth. More interestingly, it has captured attention as well as bus
iness from leading auto makers of the world. The industry plays a crucial role i
n the automobile sector. Manufacturing vehicles typically involve assembling a l
arge number of components out-sourced from number of ancillaries or component ma
nufacturers. Competitiveness with quality as a theme has been the watchword for
the Indian industry and especially the auto component industry ever since the In
dian economy was opened up to the world in the early 1990s. While economic reviv
al, lower interest rates and better road infrastructure are driving domestic dem
and for automobiles and, therefore, components, increasing outsourcing by global
automobile majors is creating a huge export opportunity for Indian component ma
nufacturers.
Growth Prospects and Key Drivers of the Indian Two Wheelers Industry
The growth witnessed by the Indian two wheeler industry indicates the growing de
mand for low cost personal transportation solutions amongst the 300 million Indi
an middle class consumers. Despite this spectacular growth rate, the two wheeler
penetration (number of two wheelers per 1000 inhabitants) in India remains lowe
r than other Asian
countries. This fact provides an opportunity for continued growth in the market.
India has the lowest Penetration of two wheelers as compared to countries like
Taiwan, Thailand, Malaysia, Vietnam, Indonesia and China. In the present scenari
o, growth in the two wheeler Industry will be driven by several factors: Rise in
India’s Young Working Population With the rising levels of per capita income of p
eople, the Indian two wheeler market offers a huge potential for Growth. This gr
owth is relevant in the light of the fact that 70 per cent of India’s population i
s below the age of 35 Years and 150 million people will be added to the working
Population in the next five years. The number of women in the urban work force i
s also increasing; this will lead to the Growth of gearless scooters. Rise of In
dia’s Rural Economy and Growth in Middle Income Households The growth prospects of
the Indian rural economy offer a significant opportunity for the motorcycle ind
ustry in India. The penetration of motorcycles amongst rural households with inc
ome levels greater than US$ 2,200 per annum has already increased to over 50 per
cent. The current target Segment for two wheelers, i.e., households belonging t
o the Income category of US$ 2,200–12,000 is expected to grow at a CAGR of 10 per
cent.
Greater Affordability of Vehicles The growth in two-wheeler sales in India has b
een driven by an increase in affordability of these vehicles. An analysis of the
price trends indicates that prices have more or less stagnated in the past. Thi
s has been part of the marketing strategy adopted by the manufacturers to gain v
olume, as well as conscious efforts adopted to bring down costs. The operating e
xpenses of leading manufacturers have declined by around 15 per cent in the last
five years. With greater avenues of financing, the customer’s capacity to own a t
wo wheeler has improved.
Rapid Product Introduction and Shorter Product Life Cycle The last five years ha
ve witnessed a sharp increase in new product launches in the twowheeler industry
. It is estimated that close to 50 new products have been launched by manufactur
ers during this period, filling up all price points and targeted at various cons
umer segments. Inadequate Public Transport Systems in most Urban Areas The econo
mic boom witnessed in the country and the increased migration to urban areas hav
e increased the traffic congestion in Indian cities and worsened the existing in
frastructure bottlenecks. Inadequate urban planning has meant that transport sys
tems have not kept pace with the economic boom and the growing urban population.
This has increased the dependence on personal modes of transport and the two wh
eelers market has benefited from this infrastructure gap. Challenges faced by th
e industry Despite the high growth achieved in the past and the high potential i
n the future, the two-wheelers market faces some challenges.
Rising Customer Expectations The growth witnessed by the Indian two wheeler indu
stry has attracted a number of new entrants to the market and it is expected tha
t the Indian industry will become more competitive in the future. The plethora o
f products introduced in the past has also raised customer expectations with res
pect to reliability, styling, performance and economy. Environmental and Safety
Concerns The increasing demand for two wheelers will need to be managed to addre
ss issues relating to overcrowding of roads. Another problem is the insufficient
infrastructure for inspection to ensure adherence to emission norms. As the ind
ustry grows, it is important to regulate the sale of used two wheelers in a more
organised manner for which a
mechanism needs to be evolved. Unregulated sale of two wheelers, especially in t
he rural areas, are likely to create issues related to emissions and safety of v
ehicles.
Creation of Distribution Infrastructure Leading companies need to ensure that on
one hand they build adequate infrastructure in terms of dealerships and servici
ng stations in the urban areas and on the other ensure that their distribution i
nfrastructure also reaches the rural areas
OBJECTIVE OF THIS STUDY This study is done in keeping following objectives in vi
ew.
1
To Understand the Marketing Strategies of scooters and motor bikes dealers in Ba
ngalore.
2 To gain valuable insight into the two wheeler sector. 3 To study the current t
rends in two wheeler sector. 4 RESEARCH METHODOLOGY AND RESEARCH DESIGN: The aim
is to bring a clear picture of the procedure followed in the study. Sample Size
: Total sample size was 12.The response taken by interview as well as questionna
ire. Sample frame: Since the research was localized, the sample frame consisted
of local dealers from Bangalore
Primary Data: - The Primary Data is to be collected through 1. Questionnaire 2.
Personal interview Secondary Data:- The secondary data is to be collected from d
ealers service centers Internal Reports Documents Journals & Magazines Websites
Research Design: - The primary data and secondary data will be studied and analy
zed appropriately and interpreted to extract certain facts .Whenever necessary s
tatistical tools and financial tools like tabulation, graphs will be used to pre
sent the findings effectively .
EXPECTATIONS OF THE COMPANY FROM THIS SURVEY: This survey will help the two whee
ler sector to evaluate their product and the services they deliver. This will ac
t as a tool for the company to know their opportunities and threats in the marke
t. Expectations of the company from this survey are: 1) How to maximize the sale
s. 2) To improve the promotional activities. 3) Customize the product as per the
customer’s needs.
LIMITATIONS OF THE STUDY: • The study limited to the extent of available data. • An
in depth study might not be done because of time constraints. • The study is restr
icted to Two-wheeler dealers in Bangalore city only.
Marketing Mechanism Promotion
Promotion concerns the message the firm sends out to potential consumers. It pro
vides information and persuades people, it creates awareness, stimulates demand
and differentiates the product and influences public behavior. Promotion won’t mak
e a bad product that no one wants a success; although the absence of promotion m
ight htat a good product is not successful, promotion includes all the activitie
s or tools a company uses to communicate or promote its product in the market.
Promotional tools or promotion mix
1. PERSONAL SELLING: It involves personal confrontation either by phone or face,
it
is an expensive and time-consuming tool of promoting the product.
2. ADVERTISING: It is defined as a paid non-personal communication with a target
(usually mass) market. It is cost effective and can reach a large number of peop
le. It can also be used for long term or short term objectives.
There are various forms or mediums through which can advertise.
A. Broadcast Media:
• • •
Television Radio Cinema
B. Print media:
• • •
Newspapers Magazines Leaflets
C. Outdoor media:
•
Posters and billboards.
1. PUBLIC RELATIONS AN PUBLICITY:
Public relations are an umbrella term and refer to the totality of the organizat
ion’s behavior with respect to the society in which it operates. The maybe regarde
d as good or bad and is reflected in the company’s reputation and image.
2. SPONSORSHIP:
Sponsorship can be seen as a part of public relations and it is certainly the ca
se that some sponsorship goes on to generate positive publicity for the organiza
tion.
3. DIRECT MARKETING: It is an interactive system of marketing which uses one or
more advertising media to affect a measurable response at any locations.
4. DIRECT MARKETING INCLUDES: • • • • • Direct mail. Telemarketing. Door to door selling.
Direct response advertising: ‘phone now’ or ‘fill in the coupon ads’ Home shopping of va
rious types.
Factors that guide a marketer’s decision in selecting a promotion mix: a) Nature o
f product b) Overall marketing strategy c) Buyer readiness stage d) Product life
cycle stage
1. SPONSORSHIPS:
The company has not left any stone untamed in sponsoring the major events both g
lobally and domestically. The biggest of all is the sponsorship of the “WORLD CUP” f
or which Hero Honda has the credit of being the only two-wheeler company in the
world to do so. Besides this, the company has also sponsored events like “Master G
olf”, television academy awards, etc, Thus the company has gained a lot of reputat
ion by doing so.
2. DISCOUNTS/OFFERS: The company has started giving discounts and other offers t
o the customers on the purchase of a new bike, for instance, with the World Cup
offer, in which the consumer was to get a 1 gm gold coin with every purchase. Bu
t after all these schemes and benefits may be because of cut-throat competition
in the segment with heavyweight competition such as Bajaj, kinetic, Yamaha, and
TVS the company (HERO HONDA) officially says: “Our aim is to proactively and consi
stently deliver value to the customer. We are giving back to the customer after
becoming successful. Most companies give discounts only when their products are
not doing well in the market. There is lost of competition in the segment, espec
ially from Bajaj. But the reason for Hero Honda’s success it that we are consumer-
focused while other companies such as Bajaj tends to be more competitor-focused.
PROMOTION POLICY:
Company gives advertisement in different media vehicles time to tome. Like in TV
. Magazines, newspaper, etc.
 Hero Honda also organizes free service camps every year. Hero Honda also takes a
rt in trade fair. Hero Honda with the help of ICICI Bank provides loan to the cu
stomers & also provide easy monthly installment scheme to customers. Hero Honda
gives huge commission to their dealers. No. of players in the two wheeler automo
bile sector (India): Hero Honda motors ltd. Bajaj auto ltd. TVS motors company l
td. Yamaha motors India Honda motorcycle and scooters India Royal Enfield Suzuki
Motors LML
MARKETING MIX PLAN Demographic Segmentation
•
Income: Our customer survey indicates that the segments available for the Hero H
onda bike are the people with monthly income of Rs. 10,000 and above.
•
Age: The main segmented group for the motorcycle are 18 years and above.
•
Occupation:
All kinds of people are taken into account.
Students,
professionals, Govt. Servants, etc. Geographic Segmentation: regions of India. P
sychographic segmentation: brand conscious. Behavioral segmentation: status, ben
efit wise. This segmentation is done considering user People purchasing bikes ar
e very stylish, The potential customers are basically from every
Targeting The proposed targeting people in the age group of 18 years and above w
ith a monthly income of Rs. 10,000 and above, who are adventurous, enthusiasts a
nd socializing and who are either students or retired individuals or may be empl
oyed as professionals, government servants or having their own business, but mos
tly male.
Positioning The image that Hero Honda creates in the mind of the customers is th
e faith. The add shown by it says “Desh ka Dhadkan”. That means it’s a member of the I
ndian family. It represents the Indian culture and society. The objectives can b
e achieved through the implementation of suitable marketing strategy by the orga
nisation. It is the marketing logic that is formulated keeping in mind the needs
of the consumers and also strategies of the competitors. The 4 factors affect i
t are:
Product - The tangible offer to the market, which includes the product quality,
design, features, branding and packaging. The product is perfectly designed and
all the switch are well placed, which provides a good riding condition
Price – Pricing is an important component of marketing mix of firm. Determining th
e prices of different products of a firm is a very difficult task of the marketi
ng manager. Price denotes money value of a product. It represents the amount of
money for which a product can be exchanged. In other words, prices represent the
money which the buyer pays to the seller for a product price represents the exc
hange value of goods and services in terms of money. Price is all around. Price
factor has very well been touched by the manufactures. The manufactures (Hero Ho
nda) are charging very comparatively cheaper prices then their competitors. The
pricing strategy of the company is very set. They price their product according
to the cost of production and also by keeping an eye on the price of the competi
tors of that segment & demand of the product in the market.
The pricing strategies adopted by Hero Honda Ltd. The management of a firm decid
e to fix the price at the competitive level. This method is adopted by Hero Hond
a because the bike market is highly competitive. The amount of money that custom
er pays for the product. The price of the product should commensurate with its p
erceived value. If does not, the buyers will turn to competitors products.
Place – Includes the various activities the company undertakes to make the product
accessible and available to a large number of target customers. • There are about
many regional offices located in major cities through out the country. • There ar
e more than 10,000 dealers through out the country. • For the product distribution
the company distributes its products through authorized dealers. • The variety pr
oducts are easily available in showrooms.
Promotion – The fourth marketing mix tool, includes all the activities the company
undertakes to communicate and promote its products to the target market. It con
sists of advertising, sales promotion, public relations, and direct and online m
arketing. Promotion represents all of the communications that a marketer may use
in the marketplace. Promotion has four distinct elements - advertising, public
relations, Personal selling and sales promotion. A certain amount of crossover o
ccurs when promotion uses the four principal elements together, which is common
in any promotion. Advertising covers any communication that is paid for, from te
levision and cinema commercials, radio and Internet adverts through print media
and billboards. One of the most notable means of promotion today is the Promotio
nal Product, as in useful items distributed to targeted audiences with no obliga
tion attached. This category has grown each year for the past decade while most
other forms have suffered. It is the only form of advertising that targets all f
ive senses and has the recipient thanking the giver. Public relations are where
the communication is not directly paid for and includes press releases, sponsors
hip deals, exhibitions, conferences, seminars or trade fairs and events. Word of
mouth is any apparently informal communication about the product by ordinary in
dividuals, satisfied customers or people specifically engaged to create word of
mouth momentum. Sales staff often plays an important role in word of mouth and P
ublic Relations. The various promotional activities adopted by the Hero Honda Co
mpany. The company has 100crore rupees for its promotional activities out of whi
ch 75% is sponsored by the company and 25% from the dealers. They may sign a cel
ebrity for its promotional activities in recent futures. • The company provides si
x free services to its customers in comparison to its competitors. • The company p
rovides good services facilities to its customers through dealer’s service station
.
• Dealers encourage its customers by giving discount, providing 0% interest loan s
chemes, prices, coupons etc. The various promotional activities adopted by Hero
Honda bikes are as follows Credit & finance schemes Free services to the consume
rs Advertisements on Televisions, Newspapers, Magazines Road Shows Free trials f
or the new consumers
RESULTS Companies data shows that the company produces approximately 1, 11,000 v
ehicles per month. Out of which they sales 60,000 motor cycles per month. The co
mpany has more demand of its product in western region. The company has 21 regio
nal offices throughout India out of which 10 contains training centers. The main
objective of these offices is to pay emphasis to human resource development and
provide good services to its customers.
Customer: The results from customer survey are as follows: 1. 2. 3. 4. Customers
prefer because of their fuel efficiency. Customers prefer because of their perf
ormance. Customers prefer because they are value added product. Customers also p
refer because they are stylish.
Marketing MIX in two wheelers 4’PS OF MARKETING OF HERO HONDA
PRODUCTS Hero Honda, which has a technology tie-up with Japan s Honda Motors, wa
s currently discussing the feasibility of manufacturing scooters for the Indian
market, Mr. Munjal said. However, the company has a binding clause with Honda s
scooter manufacturing Indian subsidiary, preventing it from making scooters till
2004. Hero Honda Motors, India s largest motorcycle company, has launched the p
remium segment 223cc motorcycle Karizma priced at Rs 79,000 (ex-showroom, Delhi)
. Many of the products which the company has started with have been phased off.
Now the existing products are Karizma, Ambition, CBZ, Splendor, Splendor+, Passi
on, Passion Plus, CD 100 SS, CD 100 and CD Dawn. Among these we are going to ana
lyze only three – (1) CBZ, (2) Ambition and (3) Splendor (4) Splendor +. • • • • CBZ Ambit
ion Splendor Splendor +
The TCS study examines customer evaluations at three distinct ownership periods:
1 to 6 months, 7 to 18 months, and 25 to 36 months. This helps in understanding
the differences in satisfaction during initial ownership, in-warranty and post-
warranty ownership periods. Satisfaction ratings decline as the length of vehicl
e ownership increases. However, Hero Honda Splendor is among the few models to m
aintain consistency across the three ownership periods.
PRICING
Pricing is a important component of marketing mix of the firm. Determining the p
rices of different products of a firm is very difficult task of the marketing ma
nager. Price denotes money value of a product. If represent the amount of money
for which a product can be exchange. In other words, prices represents the money
which the buyer pays to the seller for a product price represent the exchange v
alue of goods and services in terms of money. Price is all around. Price factor
has very well been touched by the manufacturers. The manufacturers are charging
very comparatively cheaper price i.e. Rs 45000 approx. The pricing strategy of t
he company is very set. They price their product according to the cost of produc
tion and also by keeping an eye on the price of the competitors of that segment
and demand of the product in the market. A pricing strategy that ensured an aver
age manufacturer margin that game dealer an adequate return and created a reputa
tion with consumers like “a company selling a good quality product at a reasonable
price. Industry focus them selves the low cost producer with good quality and a
imed to maintain the price advantage in every market of two wheelers. Hero Honda
group ensures an easily affordable pricing through excellent transportation to
common man. I fixes customer centric pricing that provide customer total satisfa
ction. Hero Honda’s pricing objectives are: List price, Discount, Financing scheme
s, Credit terms, and Maximize profits Hero Honda group ensures an easily afforda
ble pricing through excellent transportation to common man. It fixes customer ce
ntric pricing that provides the customer with total satisfaction.
PLACE
HERO HONDA HAS direct contact with the dealers. There are no middlemen involved.
The dealers directly sell to the customers. The channel is of 1st level which h
as only the dealers as the link between the customers and the company. What Does
Customer Want? The customers of Hero Honda, according to the Asst. Manager (Sal
es) are very particular about the colors that Hero Honda offers in its wide vari
ety of scooters. He said that the customers are very much aware of their purchas
e. Gone are the days when the sales people could influence the buyer to buy a pa
rticular product. Almost 90-93% of the customer, whoever comes to the showroom?
Usually comes after he/she had made a decision. So, the work of the sales person
is less. The rest 7-10% have some doubts with regard to the purchase of Hero Ho
nda. It is here, where the sales persons have to do some work in convincing the
customers about the scooter. The sales person in this regard conveys the custome
rs about the mileage, strokes and also the parameters that the customers enquire
.
How Is The Price Determined According To The Change? Manufacturer, on the basis
of the cost of production determines the price and the factors like tax and othe
rs. Usually the sales tax on the two wheelers is 8% but in Hero Honda it 4%. Thi
s is because Delhi Government has found out that the pollution from Hero Honda i
s very less due to the catalytic converter which every model of Hero Honda have.
The government has identified that by using the catalytic converter Hero Honda
is helping the environment which is a social cause. Hero Honda Bikes not only ha
ve market in India, but also in abroad. To maintain the differences in market of
the different companies it takes the help of the local manufacturers or the dea
lers outside for the distribution of their scooters smoothly.
PROMOTION BY HERO HONDA
Advertisement, local events sponsorship and promotions and inviting a prominent
personality for the inaugural or first like delivery function would contribute e
ffectively in generating a wider local interest and attention. Hero Honda’s latest
DKD –2 commercial its two brand starring its Ambassador and India’s heart throbs, H
ritik Roshan and Sourav Ganguly, truly reflects the multi fact roles that today’s
new generation plays. The commercial reflecting the charisma and vibrancy of the
se two stars, takes Desh Ki Dhadkan to dazzling new heights. It is young, colorf
ul and vibrant and represents the icons of contemporary times. And it will go a
long way in strengthening the leadership status of the product by the mile. The
new commercial is powerful film repeat with an impressive storyline. The effort
to pack the story, drama and impact in just 60 seconds was phenomenal challenge
itself. The idea was born itself. The idea was born out of the very essence of “He
ro and Stars”. Keeping in mind would cause on the drama and impact it would cause
on the audience. It is a commercial packed with action where today’s heart throbs,
Hritik and sourav, are seen tackling new roles. The story being in a field adjo
ining a hill with two cool men, Hritik and Sourav on Hero Honda bikes and Passio
n respectively. Both Sameer and Aditya win lifetime opportunity act with Hritik
and Sourav, the two star heartthrobs of millions in India and all four will be s
een in action in the new commercial DKD-2. These are some of the Slogan for ever
y product (Bike) and these are following:CD-100 CD100SS Splendor Street Smart Pa
ssion CBZ Hero Honda : : : : : : : Fill it, shut it, Forget it. Tough and Rugged
. Designed to Excel. License to enjoy. When style matters, Bike born in studio n
ot in factory. Motorcycling Unplugged. Leading the way.
4’PS OF MARKETING OF TVS MOTOR COMPANY PRODUCTS • • • • • • • • • • • • • • • • • • • Centr
Samurai Scooty Scooty Pep Spectra Star Star City Star DLX Suzuki Fiero Victor V
ictor Edge Disc Victor Edge Drum Victor GLX Victor GX XL Super XL Super H
With the Apache, TVS is now set to redefine the 150 CC segment. With this launch
TVS aims at strengthening its position in the premium segment of the motorcycle
and consolidate further on total volumes.
ADVERTISEMENT OF TVS MOTORS TWO-WHEELER major, TVS Motor Company, has come up wi
th an improved performance for the first quarter of this fiscal. The company con
tinues to ride on the success of the recently-launched four-stroke model, Victor
. For the quarter ended

June 2002, the turnover increased about 54 per cent to R
s 629.97 crore. The Victor ride: The sharp spurt in motorcycle sales volume ha
s been the key driver of revenues. The sustained demand growth for Victor, coupl
ed with the recovery in sales volume of the two-stroke model, Max 100, aided an
88 per cent jump in motorcycle sales volume. Victor s success has improved the c
ompany s product-mix. An indigenously developed product, the profit margin on Vi
ctor is relatively high, compared to Fiero and other brands. This, in turn, has
pushed up the operating profit margin to 9.23 per cent from 7.38 per cent in the
corresponding previous quarter. The margin expansion would have been even bette
r, but for the increase in staff cost and other expenditure. TVS Motor had signe
d up Sachin Tendulkar as its brand ambassador. Notably, other expenditure (inclu
ding advertisement and promotional costs) increased to Rs 98.66 crore from Rs 69
.42 crore. The post-tax earnings increased 149 per cent to Rs 26.78 crore. The g
rowth in net profit was stunted by a rise in taxation provision to Rs 12.26 cror
e from Rs 3 crore in the 2000-01 first quarter. Deferred taxation of Rs 3.34 cro
re also played a part in pulling down the bottom-line for TVS Motor.
PROMOTION OF TVS MOTORS Promotions at all cities hosting the matches will give e
veryone a chance to be a part of the fun filled experience surrounding this even
t. TVS customers will get an opportunity to participate in pitch on wheels , wh
ich is a hit wicket get ticket promotion" which began on October 19. Pitch on
wheels is a promotional activity wherein a vehicle promoting the match would ma
ke a round of the whole city prior to each match. The spectators at the stadium
too will be treated to a whole lot of entertainment in the form of music and dan
ce during breaks in the games. There would also be lucky draws for everyone in t
he stadium with TVS bikes as prizes How does TVS Motor create value for its cust
omers and measure satisfaction levels? In addition to continuous innovation to i
mprove the performance, features and durability of our two-wheelers, we also ben
chmark the sales of the products and service processes to offer better value to
the customer. Customer service is provided through a large network of fully equi
pped dealers, authorized and certified service points. The service network is eq
uipped with state of the art workshops, hydraulic and pneumatic equipment, carbo
n emission devices, etc. A network of authorized spare parts stockiest has also
been set-up to ensure timely supplies. We commission customer satisfaction surve
ys through specialist agencies on a continuous basis to monitor the feedback, wh
ich is benchmarked to improve product performance and satisfaction. The company
was ranked second in overall customer satisfaction and TVS Centra emerged as the
top choice in the executive segment. Since dealers are the first customers, a c
omprehensive dealer management system (DMS) is being introduced to improve deale
rship sales and services processes. Regular meetings of select groups of dealers
, designated as presidents club and antenna club , are conducted to obtain fe
edback on customer s expectations and solve customer problems.
ADVERTISING STRATEGY Currently the number one company in terms of sales and has
been dominant in the two-wheeler segment since the past decade. Since the incept
ion of hero Honda, the company has been using television as a major role for its
publicity. Though hero Honda was dominant in sales it lacked the skills of crea
ting a spectacular ad till now. Though it had a vast range of mobiles, its adver
tising strategy was not up to the mark. For its publicity hero Honda has been us
ing many famous celebrities like Saurav Ganguly, the captain of Indian cricket t
eam, Hritik Roshan and other famous personalities as their brand ambassadors. Th
us, hero Honda has been spending huge amounts on its publicity.
ADVERTISING STRATEGY BAJAJ Bajaj is always known for its outstanding ads over th
e period of time. Since its inception, Bajaj has come out with variety of ads an
d were always successful in their advertisements. Scooters were well known by th
e brand name of Bajaj. Be it any scooter, one used to recognize it by the brand
name Bajaj. This was the identity a decade ago which the Bajaj has still maintai
ned. Bajaj is always known for its ads without well-known brand ambassadors whic
h is again a plus point to its cart as it saves a huge cost in terms of brand am
bassadors unlike Hero Honda and TVS. Prior, Bajaj used to convey the feeling of ‘I
ndianness’ in its ads. With a punch line ‘Hamara Bajaj’ Bajaj drove into everybody’s hea
rts and the title song of ‘Naye Bharat Ki Naye Tasveer’ added a great value to its m
obikes and scooters. A couple of years back, Bajaj had introduced an advertiseme
nt which promoted all the different ranges it had, wherein they had shown each p
roduct they had with a feeling of Indianness. Example: Eliminator passes-by a ra
ngoli and drives slowly sideways without disturbing it. People on boxer pass-by
a temple and bend their head to
give a little offering. Such ads had revealing Indian culture had a great effect
on Indians and Bajaj was successful in most of its ads. But recently, Bajaj had
changed its brand logo along with its punch line i.e. ‘Hamara Bajaj’ got converted
to ‘Inspiring Confidence’. The reason for this change as told by the company officia
ls was to keep pace with the new technologies in the fast moving world. Even tho
ugh it had changed its punch line, it didn’t have much effect on its brand image.
A year back, Bajaj introduced DTSi technology upgrading its always successful PU
LSAR 150cc and 180cc. Though Bajaj had changed its identity it still dominates f
or its creativity in ads.
PULSAR 150cc (Definitely Male) The concept of Definitely Male was well accepted
by the people and Bajaj came out with some astonishing ads. Though the DTSi tech
nology was new, people accepted it very well. It easily conveyed the message it
wanted to. The following picture strips conveys the advertisement:
Getting on to his bike, a man gets all set to make a While the biker cruises thr
ough the city, some army move. As he puts his helmet on, a message men are out f
or their jog. Just before they cross a appears on the windshield, Partially sun
ny from road, a zebra crossing forms ahead them and 16:37 hrs. disappears after
them, while the biker waits patiently.
Brand Image create By Bajaj Brand image create by Bajaj through his pro bike sho
wroom which display his premium bikes range such as pulsar 220, Avenger, Pulsar
180 etc.
BAJAJ’s Pro Bike Showroom The Bajaj Prebaking showrooms will definitely be one of
the integral elements in his overall brand strategy to reinforce the image of Ba
jaj being a manufacturer of quality performance motorcycles in the country. It s
the retail experience a dedicated biker feels when he or she steps into a Probi
king outlet. It s a new space they have created and there s a lot of work to be
completed. BAJAJ PULSAR ‘DEFINATELY MALE’ Bajaj pulsar make an image of that there b
ike is only for guys. Through his Definitely Male Campaign they shows behave of
a young guys. This Advertisement helped lot Bajaj to create brand positioning.
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
TRENDS IN TWO WHEELER INDUSTRY
Mopeds
Over the last 15 years, moped’s contribution in overall 2-wheelers has declined si
gnificantly and now it remains a marginal category with just one manufacturer fo
r the product. Its contribution in the 2-wheelers industry now stands at 5% and
we expect that this segment will continue to be marginalised. The only player in
this segment is TVS Motor.
Scooters
Advent of fuel efficient motorcycles in the Indian 2-wheelers industry led to de
cline of Scooters. However, over the last five years, it has made a recovery and
is emerging as a niche segment targeted towards women commuters. One of the rea
sons for this is the increasing need of mobility for the women commuters especia
lly in the urban areas is due to higher number of college going girls and greate
r participation of women in urban work force. The product itself has gone for a
complete revamp and now this category mainly consists of gearless products. This
segment is now dominated by Japanese manufacturers with HMSI having the leaders
hip. HH, which is a late entrant in this segment, has also cornered a sizeable m
arketshare in the scooter segment. Another development in this segment is the la
unch of battery operated scooters. However, given the high replacement cost for
the batteries, this has remained a marginal segment.
Motor cycles and bikes Executive Segment
Executive segment is the largest motorcycle segment and this is the stronghold o
f market leader HH. Competitors have tried to challenge HH in this segment, howe
ver all such challenges have fizzled out over time. With higher growth in econom
y segment, the contribution of this segment had come below 50% in FY06. However
over the last
three years, it has made a strong come back and now accounts for almost 60% of t
he motorcycle share.
Premium Segment
This segment was creation of HH with CBZ ; however major boost to the segment w
as given by BJAUT through Pulsar which has dominated the segment. HH has remai
ned a marginal player in this segment and one of the reasons for this is presenc
e of HMSI in this segment. This segment remains a small segment in the Indian ma
rket with contribution of around 23% to the motorcycle industry. This is the per
formance segment and customers pay a premium for the novelty. Hence constant upg
radation in the product is a requisite for success in this segment. Dealers said
the customer preference is shifting away from entry-level (100cc) bikes towards
executive and premium bikes. Bajaj Auto will be the largest long-term beneficia
ry of this changing trend owing to its strong dominance in the executive and pre
mium segments.
MARKETSHARE OF 125-250 CC MOTORCYCLES (2007-08)
TWO WHEELER DEALERS IN BANGALORE
The Bangalore automobile market is one of the fastest growing segments of the ma
nufacturing sector in the recent years. And the role of the two wheelers in achi
eving this impressive growth cannot be ignored. All the leading players in the I
ndian two wheeler segment such as Hero Honda, Bajaj Auto, TVS Motor, Yamaha Moto
r and Kinetic Motor have continuously been working on enhancing their product va
lue and customer care facilities. An important aspect of their sales promotion h
as been the dealer network. The dealers play a very important role in the sales
promotion of the company s products and talking of the two wheelers, one really
cannot hope of a better way of reaching out to the customers except with a stro
ng dealers network. The two wheeler companies offer dealership to a selected few
based on certain parameters like sound financial background, availability of sp
ace in a prime location in the town/city and a decent understanding of the two w
heeler business. Motor cycle dealers act as a link between the company and the p
otential customers. All the leading players from the Indian two wheeler market h
ave set up a network of dealers spanning
over the towns and cities almost all over the country. A two wheeler dealer prov
ides a detailed insight into a two wheeler, their brands and range of options, f
inancing and other relevant information as expected from a customer s perspectiv
e. While the company in its advertisements and promotional campaigns highlights
on the broad features of the product, the customer is expected to get detailed i
nformation on everything that s/he wishes to know on the concerned two wheeler f
rom the dealer. Further, the dealer is expected to help and encourage the custom
er on identifying the best possible two wheeler that will meet her/his needs and
how best to acquire them. In addition to, the financing options, if and when ne
eded and how best to secure them, is also arranged by the dealers. A dealer in p
roper loop with the manufacturer can start various promotional programmers like
two wheeler for sale, zero percent finance, exchange offers etc.
Marketing strategies of two wheeler dealers in Bangalore
It’s the best time of the year to find great deals. Taking advantage of the festiv
e season, manufacturers and retailers everywhere are rolling out the red carpet
for customers. The two-wheeler market is no exception. With competition heating
up, bike and scooter manufacturers and finance companies are doing all they can
to attract customers. If you already had a mean machine on your shopping list, h
ere are some good reasons to go get it now. The festival season spells better of
fers in terms of discounts, freebies and attractive loan schemes. More important
ly, with a possibility of an interest rate hike, it is better to take advantage
of prevailing rates.
OFFERS FROM DEALARS AND BANKERS
•
There is the low-down on the offers. Bajaj Auto, along with ICICI, is offering i
ts Pulsar customers free registration and insurance through its dealers. It also
has a tie-up with HDFC, where Pulsar customers will get 200 liters of fuel free
in
Mumbai till the end of this month.
•
Market leader Hero Honda, which sells over two Lakh bikes every month, is wooing
customers by offering a free Reliance phone connection worth approximately Rs 3
,500 with any bike model. An HDFC account holder also gets free insurance regard
less of the model.
•
In some cities, HDFC is also offering free registration or a dinner set to Hero
Honda customers. Registration costs are roughly Rs 2,900 — the amount you save as
a customer.
•
ICICI is offering free registration and insurance in all metros; mobile handsets
, mobile accessories, mobile connection or a camera in cities in Bangalore and C
handigarh; free travel bags or dinner sets in Madhya Pradesh.
•
Tamil Nadu residents can also opt for a free domestic holiday. ICICI’s promotion f
or Hero Honda customers also includes a lower interest rate. At 13 per cent for
Hero Honda customers, equated monthly installments on a Rs 40,000 loan for 36 mo
nths have fallen from Rs 1,445 to Rs 1,348.
•
Hosur-based TVS is running a Sona Looto offer for customers buying the Victor, F
iero or Centra. Each customer will get a 3-gm gold coin worth Rs 1,800 with the
bike.
•
The nationwide promotion also involves a scratch card contest and 25 lucky winne
rs will be able to get into a Tanishq showroom and grab as much gold as they can
in one minute. Of course, there’s an upper limit: you can’t walk away with jeweller
y worth more than Rs 2.5 lakh
INTEREST RATES AND DISCOUNTS There are also better interest rates and discounts.
For example, Honda, a relatively new entrant in the motorcycle market, has tied
up with ICICI to offer an 8.4 per cent interest
rate and up to 96 per cent of the value of its Unicorn model. This is compared t
o the 1316 per cent interest rate that ICICI offers on two-wheeler loans. HDFC’s t
ie-up with Honda Unicorn customers includes a 100 per cent finance on the bike a
t a 16-18 per cent rate. The difference between ICICI’s and HDFC’s rate is that ICIC
I’s rate is flat rate, meaning that 8.4 per cent will be charged on the loan amoun
t for the entire tenure rather than a simple interest reducing balance calculati
on. However, you should also consider public sector banks for two-wheeler loans.
A low cost of funds means that public sector bank rates range between 10.5-12 p
er cent, compared to the 13-18 per cent range offered by private sector banks. A
lso, processing fees are a percentage point lower. However, there are no changes
in the 12 per cent interest rate on twowheeler loans. Like other players, BOB o
ffers loans up to Rs 1 lakh for any two-wheeler for a duration of up to 60 month
s. However, BOB does not levy any prepayment penalty and the outstanding interes
t is computed on a monthly rest. • HDFC is also leveraging its existing customer b
ase. For existing customers, the bank is waiving the last two equated monthly in
stallments and the 2 per cent processing fee, regardless of the model. • SBI has i
ntroduced a concessional rate of 10.5 per cent on two-wheeler loans as compared
to the usual 11 per cent. A customer can get an in-principal approval till the 1
5th of this month and choose a model till the year end for final sanction. • TVS h
as also tied up with financiers like HDFC and ICICI to offer a 14-inch LG colour
TV (in some states the offer is for a 20-inch colour TV
Dealer check
I visited few dealers to have a understanding at the grass root level and here a
re the key findings of the same
•
Our dealer check suggests that cash sales as part of overall sales has jumped to
approx 70-75% as compared to a mere 40% a year back. While, number of financed v
ehicles have dropped down to 25-30% as against 60% a year back. • Financing norms
have become very stringent in the last one year. Financers
are now doing a Cybil check and family background, residential proof etc have be
en stressed on to a comparatively higher extent. • Interest rates for two wheelers
have not taken a dip as against normal
player interest rates which have cooled down to a certain extent. Due to increas
e in number of defaults financers prefer higher interest rates in order to keep
customers at bay. interest rates have eased up from 14.5% to 13.5% now.
•
Dealers have also agreed to the fact that sales volumes are not going to jump
significantly unless financing norms and interest rates are eased up. price cuts
might offer temporary boost to sales but the long term problem still lies in th
e roots of financing and not pricing.
•
Two wheeler auto majors are feeling the pinch of rising input costs and weakenin
g Sales. in order to push the margins the companies have reduced dealer commissi
ons.
•
Due to the slowdown, two wheeler companies have stressed on cost
cutting measures. our meetings with dealers suggest that companies are cutting d
own on unnecessary day to day costs like lesser consumption of electricity, rati
onalization of staff. The earlier planned expenditure like expansion /renovation
of showroom has also kept on hold. but most of the dealers said they would sust
ain in this market even if two wheeler market doesn’t pick up of next 5-6 months.
•
Number of footfalls in the showrooms has dropped down significantly. one of our
dealer said that footfalls have dropped down to 20-25/day as against 50/day prev
iously thereby reporting a 50% fall in demand in urban areas.
•
Companies had offered restricted discounts on selective models during the
last festive season in 2007. However, in the recent festive season companies hav
e strategically launched new awaited models in order to push sales without any d
iscounts on the promotions.
•
Companies are facing stiff cost pressure and in order to cut down expenses compa
nies are cutting down on vendor bases.
•
Companies have been passing on all necessary benefits to the customers when it c
omes to reduction in prices. apart from this companies are now focusing on attra
cting customers by tying up with financers thereby making financing easier.
BIBLIOGRAPHY
MAGAZINES
AME BUSINESS MAGAZINE. AUTO MAGAZINE. BUSINESS INDIA FINANCIAL EXPRESS BUSINESS
LINE OVER DRIVE MAGAZINE.
WEBSITES
WWW. INDIAINFOLINE.COM WWW. HEROHONDA.COM WWW.TVSMOTOR.COM WWW.ECONOMICTIMES.COM
WWW.GOOGLE.COM