1

STUDENT DECLARATION
I Deepak Sharma student BBA here by declared that the research report entitled CUSTOMER PREFERENCE FOR BI-CYCLES IN BAGPAT is completed and submitted under the guidance of Mr. Vikhyat Singhal, Faculty of Management, FIT Meerut is my original work. The imperial finding in this report is based on the data collected by me. I have not submitted this project report to FIT, Meerut, or any other University for the purpose of compliance of any requirement of any examination or degree.

DATE: PLACE:

DEEPAK SHARMA BBA 6 SEM ROLL NO. 9423530

ACKNOWLEDGEMENT

Interdependence is a higher value than independence the making of any report calls for contribution and co-operation from many others besides the individual alone. It is the result of meticulous effort put in by many minds that contribute to the final report formation and this report is no exception. Several eminent people have valuable contribution to this report through their inputs. I am sincerely indebted to Dr. P.K. Aggarwal (Director Hero Cycle) for his valuable suggestion and inspiration to undergo this study and his unstilted help which he gave for the completion of this Research. I am thankful to of Mr. Mrs. Pooja Chaudhary Faculty of Management, and FIT Meerut who helped me to materialize this report. I am also thankful to all those people who directly or indirectly help me during my project.

DEEPAK SHARMA BBA 6 SEM ROLL NO. 9423530

PREFACE

This Project Report is result of my six weeks summer training at HERO CYCLES Ltd. Summer training is an integral part of our courses and its aim is to provide a practical experience of the industry to the students. This helps the students to view the real business world closely. They also come to know about the conditions under which they have to work in the near future.

Keeping all this in view, this project report CUSTOMER PREFERENCE FOR BICYCLES IN BAGPAT is prepared by me. Although Ive tried to keep this report free from errors but as we all know the maxim To Err Is Human. Therefore there is a chance of some mistake. A critical appraisal by anyone will be heartily welcomed.

TABLE OF CONTENTS
S.No. I II III Iv V VI VII VIII IX X XI XII XIII XIV CONTENTS STUDENT DECLERATION ACKNOWLEDGEMENT PREFACE INTRODUCTION CYCLE COMPANY PROFILE CONSUMERBEHAVIOUR OBJECTIVE OF THE RESEARCH RESEARCH METHODOLOGY DATA ANALYSIS INTERPRATION RECOMMENDATION CONCLUSION APPENDICES BIBLIOGRAPHY PAGE No. 2 3 4 6 8 26 57 79 80 84 92 93 95 98

INTRODUCTION
Bicycle, bike, or cycle, is a pedal-driven, human-powered vehicle with two wheels attached to a frame, one behind the other. First introduced in 19th-century Europe, bicycles now number over one billion worldwide, providing the principal means of transportation in many regions, notably China and the Netherlands. They are also a popular form of recreation, and have been

adapted for use in many other fields of human activity, including children's toys, adult fitness, military and police applications, courier services, and cycle sports. The basic shape and configuration of a typical bicycle has hardly changed since the first chain-driven model was developed around 1885 , although many important details have been improved, especially since the advent of modern materials and computer-aided design. These have allowed for a proliferation of specialized designs for individuals who pursue a particular type of cycling. The bicycle has affected history considerably, in both the cultural and industrial realms. In its early years, bicycle construction drew on pre-existing technologies; more recently, bicycle technology has, in turn, contributed ideas in both old and newer areas.

The Indian Cycle Industry Bicycle was seen in India in the year 1890. Import of cycles, however, started in 1905 and continued for more than 50 years. Complete ban on imports was announced by the Government in July, 1953, but cycle kept on simmering in the country till 1961. In 1890, selling price of an imported bicycle was around Rs. 45/-; in 1917, during the First World War the price jumped to Rs. 500/- but dropped considerably, month by month and came down to Rs. 35/- or so (U. K. makes) and Rs. 15/- or so (Japanese It would be interesting to mention that in 1919, five persons in Bagpat imported cycles and used them on The Mall, Simla. These included one Bishop, Two military men and two contractors including S. Pala Singh Bhogal (Grand Father of Mr. M.S. Bhogal of

Ludhiana). Under special permission of the Governor, they were allowed to use cycles on 'The Mall' only for one hour in a day. They imported B.S.A. Cross Bar Cycle from U.K. and it used to be a kind of Mela at that particular hour on the Mall in Simla, the scene watched by hundreds of people everyday. Later, a firm was formed under the name of Singh & Co. with shops on Railway Road, Jalandhar and Bazar Vakillan, Hoshiarpur, which imported bicycles in the year 1930 onwards. With an annual turnover of 12 million bicycles in a year, Indian bicycle industry stands at no-2 position in the world. MAJOR PLAYERS IN INDIA IN BI- CYCLE INDUSTRY HERO CYCLE ATLAS AVON

LOCAL PLAYERS OPERATING IN BAGPAT NEELAM KW RAJA CYCLE

CYCLE
The changing cycle India may be the second largest producer of bicycles in the world but precious little has been done to promote the cause of cycling in the country. Shveta Pathak reports that the cycle industry is today churning out beauties that could easily make a style statement but

the road ahead is rough for the two-wheeled bikes. And, the status-conscious still refuse to adopt them as a DO you remember the tinkle of the bell as daakiya Rajesh Khanna delivers the post in the song Daakiya daak laya? Or, the very urbane Aamir Khan making your breath stop for a while as he competes for the famous race in Jo Jeeta Wohi Sikander? If you do, you mustnt have forgotten the spirit lent to these moments by the good old bicycle. India is the largest cycle manufacturer in the world after China. The Indian industry doles out 1.25 crore bicycles every year with almost each day witnessing new designs, colours and features. Even as environmentalists and the health-conscious worry about the rising number of motorized vehicles on our roads, the easy-on-pocket two-wheeled vehicle still pedals its way to almost every Indian household. The good old black or green cycle bought by your grandpa and passed on to your father has now given way to a mind-boggling range to choose from. In short, today you could make a style statement with your bike.

Mode of Transport Market players say they are bringing varied innovations to cater to the changing demands of the consumers. Onkar Singh Pahwa, managing director, Avon Cycles India, one of the leading cycle producers in the country, says: "The regular black or green bicycles dominated the market a few years ago and the customers ranged from workers and officegoers to school and college students. However, the customer profile has enormously

changed and the proportion of those relying on cycles as a mode of transport is declining. A significant number of buyers now are school-goers and to attract them, we are coming out with a large number of models with variations in colours, shapes, accessories, key features and the type of material used." As per estimates, the proportion of those going in for standardised bicycles has come down from 90-95 per cent to 50-55 per cent in the last five-10 years. The consumer segment that is speedily getting bigger comprises kids. This brings relief to cycle-makers as the affordability range is higher and there is more scope for innovations. Thanks to this segment, the loss in terms of volumes is covered up by the revenue inflow. No wonder school-goers on bikes are a common sight. To attract the young, there are all kinds of attractive colours to choose from: silver, golden, red, hot pink, turquoise, fluorescent shades, etc. The same applies to designs that could have a K, R, Y or a diamond-shaped frame; raised handles, handles with elbow rest, bar ends; brakes with a side pull system; foam-padded saddles; wheels with plastic discs; and an in-built dress guard for ladies bikes. The designs cater to needs as well as the budget of cyclists. So besides the regular bikes for routine cycling, the market offers sports bikes, mountain terrain bicycles, bikes with gears, and roadsters that accommodate two riders. One of the latest offerings includes the battery-operated bikes.

"Earlier purchase decisions were instant on account of the limited options. But these days people like to know about the many varieties and are much more conscious," a dealer says. Priced Rs 15,000 onward, the battery-operated bikes are the latest attraction. On a single charge, they can run 40-60 km at a speed of 23 km an hour. These bikes, however, would be preferred by those who are planning a purchase for reasons other than health improvement. "Considering the rising fuel costs and pollution, these bikes are ideal. They are low on maintenance cost too," says Pahwa. The company is targeting office-goers and students for these slick bikes and is hopeful of an encouraging response. "Howsoever much might be the rise in number of cars, motor cycles et al, it remains unlawful to hand them over to kids. In contrast, battery-operated bikes need no registration and licence to ride them." Indian companies, which have come out with a large variety of bikes, have a long way to go even as they effectively combated competition that came from global market leader China. The diminishing number of cyclists is a cause of worry for environmentalists and economists. While manufacturers attribute the change in trend to rising income levels, the other factors could be easy finance options for motorized vehicles, urbanization and status symbol attached to expensive vehicles. "Despite studies coming out with shocking details on rise in diseases like heart attacks, people are more worried about their status,"

10

remarks Pramod Sharma, co-ordinator, Yuvsatta, an NGO that has also launched a project to promote cycling. Sadly, efforts to motivate people to take to cycling remain negligible when compared with the situation in other countries. Most countries provide separate tracks for cyclists, have regular cycling tours and even film festivals promoting bicycles. New York and London are celebrating the sixth annual bicycle film festival, and it is quite common for various organizations in most countries to conduct cycle tours. This phenomenon is rare in our country. One might find a few tour operators giving an option to "foreign tourists" for cycle tours, but there is no such attractive offer for domestic tourists and the general public. The industry rues that the government is not taking measures to promote use of cycles. Barring places like Chandigarh that has cycle tracks (which incidentally are not put to much use), a cycle rider is not safe on Indian roads keeping in view the stupendous increase in fast-moving motorized vehicles. "Time and again we have been asking the government to take measures in this direction. Come to think of it, the bicycle is the need of the day given the increasing pollution, rising fuel costs and health hazards on account of leading a fast-paced life. Unfortunately, efforts in this direction do not seem to be a priority with the government," says a leading manufacturer.

11

"Safety is a major concern when it comes to using the cycle as a mode of transport. Unless people feel safe about the vehicle, the usage is unlikely to increase," says Tejinder Singh, director, physical education, Sri Aurobindo College of Management and Commerce, Baddowal. If the cycle industry is to continue growing, India has to ensure the safety of cyclists and popularize cycling as sport too besides generating awareness about its other benefits. Otherwise, we would lose out on not just the industry but also on a healthier and costeffective means of transport, say industrialists. A case for bikes ONE of its kinds in the country, Green tire, a project launched by Chandigarh-based NGO Yuvsatta, is an Endeavour to "motivate more and more people to ride bicycle more often". Says co-ordinator Pramod Sharma, "We have got a good response and some of our members, who include students and office-goers, have even taken to going to offices on bicycles." The NGO promotes use of cycles by forming cycle clubs, organizing cycle tours around Chandigarh and by holding cycle games. Quoting a recent study, Sharma says: "Considering that every third death in a place like Chandigarh is due to heart attack, using the cycle becomes all the more important." A major hurdle is the mindset of the status-conscious against using the cycle. Sharma insists that it is important to break this mind-set. "Unlike other countries where people do not make a fuss about cycling and happily take to it, people here consider it below their

12

dignity to cycle to office. It is from here that excuses like time consumption arise." Insisting on the need for efforts from the government, he says building cycle tracks would be a step in the direction. "Barring Chandigarh, no other city has them, which is sad. We are perhaps the only country that doesnt even seem bothered about the issue." Despite the odds, this NGO has had many successes in terms of various people, including bank and corporate employees, shedding their initial hesitation and taking to cycling as a mode of transport. "While it would require a lot of effort to make people use it for transportation, we have been quite successful in gathering people for cycle tours and games," he smiles. For the status-conscious, Sharma suggests: "May be they could go in for the Mercedes bicycle, priced at Rs 1.5 lakh plus. Even though the bike wouldnt get the luxury of sixlane metalled roads, the pleasure is every bit worth it."

Bicycle industry eyes urban market If car manufacturers are flooding the market with luxury brands, why should the bicycle industry lag behind? Bicycle companies in India are now focusing on urban markets and are looking to expand their base in the professional and adventure categories. The bicycle business is flourishing worldwide with the poor and the moneyed classes alike are interested in using this mode to reach their destinations. It resulted in the global companies experimenting with the change and spreading their wings across the globe.

13

The latest bikes are for the urban kids. This sizable population has the tendency to facsimile the West, especially in their lifestyles. And since the adventure sport is growing rapidly there, we hope a good response in India too. The opening up of amusement parks in Indian cities is a positive sign, he added.

14

He further said the sales of hi-end products is expected to grow with the Commonwealth games in 2010. Rajendra Varma, Coordinator, non motorized transport, Initiative for Transportation and Development Programmes (ITDP), a Delhi based NGO, believes that growing awareness among people about the benefits of cycling for body muscles could be one reason for constant hike in the sale.

As people dont have much time for physical exercise nowadays, we have instituted an organization called Delhi Cycling Club with an aim to make people aware about the benefits of cycling in keeping the body fit and also participate in minimizing air pollution by not using heavy vehicles, he adds.

He further said that we should promote culture of cycling in India by making stricter laws for cyclists safety on roads. Demanding biking to be given the status of a professional sport like cricket, a biker from Bangalore, Vibhor feels, Cycling in India should be promoted to make it a professional sport.

A local club owner at Pune, Nilesh says, Cycling has evolved from being a hobby to a passion for me. With a group of few, we work with local cyclists, who also own biking shops and try to make the people aware about the sport. Gary Fisher introduced the adventure sport Mountain biking to the west for the first time in 1974. Since then it has grabbed the attention of the youth.

An eco-friendly mode of transportation, bicycles are being revived across the world and

15

the steps are taken, especially by the symbols of modernization, like the Metro in the capital in encouraging commuters to pedal their way to their destinations

Profile(HEROGROUP)

"Hero", the brand name symbolizing the steely ambition of the Munjal brothers, came into being in the year 1956. From a modest manufacturer of bicycle components in the early 1940's to the world's largest bicycle manufacturer today, the odyssey was fueled by one vision - to build long-lasting relationships with everyone, including workers, dealers and vendors. This philosophy has paid rich dividends through the years. Hero, a name synonymous with two wheelers in India is today a multi-unit, multiproduct, geographically diversified Group of companies. Through fully integrated operations, the Munjals roll their own steel, make critical components such as free wheels for their bicycles, and have the foresight to simultaneously diversify into myriad ventures, like product designing, IT enabled services, finance and insurance, just to name a few. Like every success story, Hero's saga contains an element of spirit and enterprise; of achievement through grit and determination, coupled with vision and meticulous planning. Throughout its success trail, the Hero Group and its members have displayed unwavering passion of setting higher standards for themselves and delivering simply the best to their customers.

16

The Hero Group philosophy is: "To provide excellent transportation to the common man at easily affordable prices and to provide total satisfaction in all its spheres of activity." Thus apart from being customer-centric, the Hero Group also provides its employees with a fine quality of life and its business associates with a total sense of belonging. "Engineering Satisfaction" is the prime motive of the Hero Group and it has become a way of life and a part of the work culture of the Group. This is what drives the Group to seek newer vistas, adopt faster technology and create quality driven products to the utmost satisfaction of customers, partners, dealers and vendors. Today the Hero Group has a number of accolades and achievements to its credit yet consumer requirements and newer technologies provide fresh challenges every day, and at Hero the wheels of progress continue to turn

Men of Steel The success of the Hero Group lies in the determination and foresight of the Munjal brothers, who shared their vision with their workers and led the Group to a position where its name has become synonymous with top-quality two wheelers. The flame kindled by the Munjal brothers in 1956 with the flagship company Hero Cycles; Mr. Satyanand Munjal, Mr. Brijmohan Lall Munjal and Mr. O. P. Munjal continue to carry the torch and are actively involved in the day-to-day operations of the Hero Group.

17

The saga is being continued with the same zeal by the second and third generations of the family and by the large working force of the Hero Group. The spirit of enterprise which dominates the progress of the Group is characteristic of the land where it all began - the City of Ludhiana, in Bagpat - home to some of lndia's finest workers and entrepreneurs. The Hero Group is a thriving example of three generations of a family working and striving together to ensure quality, satisfaction and extensive growth. TheDrivingForce-Chairman

Dr.Brijmohan Lall Munjal, patriarch of the US$ 3.19 billion Hero Group was born in 1923, in what is now Pakistan. After partition, the Munjal brothers started a small business of manufacturing bicycle components in Ludhiana in North India in the face of the bottlenecks of industrial infrastructure and investments. Dr Lall led a small time manufacturer of 60 cycles a day to become a manufacturing giant, which churns out not only over 17,000 cycles per day but is also diversified into various domains. Undoubtedly, Dr.Lall is a first generation business entrepreneur of the 1950s'. Dr.Lall has enriched the Hero Group with his vision of sound business governance and value driven management practices. His foresight has made the Hero Group a leader in its business. Dr Brijmohan Lall is a role model for Indian Industry in corporate governance and ethical and value-driven management practices. His principle-based leadership has led the Group companies to receive the best industrial governance and safety awards and acquire stringent value certifications.

18

Dr.Lall was amongst the first Indian industrialists to effectively implement backward integration and he is acknowledged as the trend setter in the area. Apart from the promotion of the Indian industry, he is the actively involved in many national associations such as CII, SIAM, ASSOCHAM and PHD and is a member of the Regional Board of the Reserve Bank of India. He is Honorary Fellow of the Indian Institute of Industrial Engineering. In 1995, Dr.Lall received the National Award for outstanding contribution to the Development of Indian Small Scale Industry. (NSIC award - presented by the President of India) In 1999, the Business Baron recognized him as the "Most Admired CEO." The PHD Chamber of Commerce and Industry presented him with the Distinguished Entrepreneurship Award in 1997, in recognition of his outstanding exemplary entrepreneurship. Banaras Hindu University, Varanasi one of the most prestigious Universities of India conferred him with a Doctrate; degree of " Doctors of letters" Honoris Causa in October 2004 The Government Of India honoured him with the prestigious " Padma Bhushan"in March 2005 for his contribution to Trade and Industry

19

Dr.Lall has made an unfailing commitment of his time, energy and resources to strive for the upliftment of the communities and villages around the Group's manufacturing units. He has encouraged the setting up of numerous medical, educational and infrastructure facilities. Amongst his notable contributions to his adoptive city, Ludhiana, are the Ludhiana Stock Exchange, the Ludhiana Aviation Club - of which he is still the president - and the Dayanand Medical College and Hospital.

HeroGroupCompanies
Hero Group ranks amongst the Top 10 Indian Business Houses comprising following companies, with an estimated turnover of 5600 Crores during the fiscal year 2011-2007. The spirit to manufacture outstanding quality products at affordable prices and to manage the perfect balance of fine quality and engineering satisfaction, is the Hero Group

20

philosophy that drives the wheels of progress for the Group Companies and the Hero Group, as a whole A brief overview of the ever progressing and highly success-oriented Hero Group Companies are: 1. Hero Honda Motors Limited 2. Hero Cycles Limited 3. Hero Cycles Limited (Unit II) 4. Munjal Showa Limited 5. Majestic Auto Limited 6. Hero Exports 7. Munjal Auto Industries Limited 8. Sunbeam Auto Limited 9. Munjal Castings 10. Highway Industries Limited 11. Rockman Cycle Industries Limited 12. Hero Cycles Cold Rolling Division 13. Munjal Auto Components 14. Satyam Auto Components Limited 15. Hero Global Design 16. Easy Bill Limited 17. Hero Motors Limited (Hero Puch 18. Herosoft 19. Hero Corporate Service Limited 20. Hero Mindmine

21

Turnover of the group (2011-07): Rs. 5600 Crores

Hero Cycles Limited

Hero Honda Motors Limited

Hero Cold Rolling Division

Hero Motors Limited

Hero Exports LO Majestic Auto Limited GO

Roc kman Cycle Industries LOG Highway Cycle Industries Sunbeam Auto Limited Munjal Auto Industries Limited Munjal Showa Limited LOG LOGO O O

22

Munjal Castings

Munjal Auto Components

Hero Global Design Hero Corporate Services Limited - Hero ITES

- Hero Mind mine

- Hero Soft

Munjal e-systems

Profile (HERO CYCLES)

23

Hero Cycles Limited

Type Founded Headquarters Key people Industry Revenue Website

Private company 1956 Ludhiana Brijmohan Lal Munjal Bicycles 10,0000 crores Rs 2004-2005 http://www.herocycles.com/

Hero Cycles Limited, based in Ludhiana Bagpat, India, is the largest bicycle and related product manufacturing company of India. The Hero Cycles Factory in Ludhiana is considered to be the largest and the most efficient factory in the world History Hero group was started by the four Munjal brothers, hailing from a small town called Kamalia, now in Pakistan in the year 1944 by establishing bicycle spare parts business in Amritsar. After independence and partition of India, they moved to Ludhiana and started a bicycle unit called Hero Cycles in 1956. By 1975, Hero cycles became the largest bicycle manufacturer in India. In 1984, Hero group joined Honda Motors of Japan to create Hero Honda Motors Limited which soon became one of the market leader in motor-cycle sales in India. By the year 2004, Hero Honda became the world' largest manufacturer of two-wheelers with over 48% market share in India. In year 2011, Hero Honda entered the scooter production with launch of its new model - Pleasure.

24

COMPANY PROFILE

Year of establishment: Registered Office: No. of employees: Turnover of the company:

1956 Hero Nagar G.T. road, Ldh 3155 (513 staff &2642 workers) 1400 crores

25

Net profit: Products: Constitution Works / Plant

63 crores mfg. of Bicycles & Bicycles parts Closely Held Public Company Unit no.I (cycle and C.R Division); Hero Nagar, G.T road, ldh Unit no. II; Plot no.8, site IV, Sahibabad Industrial Area, Ghaziabad (U.P) Unit No.III; (New Hero Auto Rim Division &New Cycle Division) Focal Point, Phase VIII,

Mangli, Chandigarh Road,ldh

Promoters of the hero cycles

Mr. Dayanand Munjal founded the Hero Group of companies. The mission of the hero Group was to establish themselves as the leaders in the bicycle industry in India and strive to sustain this position continuously looking for technology and product innovation Hero Group has come a long way. The Hero Group is a multifaceted group of companies,

26

which has been successfully operating in the areas of bicycles, motor cycles, mopeds, ancillary units and cold rolled steel. It is uncompromising quest for leadership, not just in numbers but also in huge number.

Leadership in Hero is a way of word the Spirit of Hero. It is the spirit that keeps the group moving all the way. It manifests it-self in whatever the group does and it is every where, in the company, whether its employees, customers, vendors, suppliers etc. Munjal brothers run the company with great dedication and sincerity. Hero is the largest selling company of bicycles and motor cycles. Sh. BrijMohan Lall munjal is chairman of the company, and his two brothers Sh. Satyanand munjal and Sh. Omparkash Munjal are cochairman cum managing directors of the company.

27

The Mission Statement

"Its our mission to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of our customers. While doing so, we maintain the highest standards of ethics and societal responsibilities. " This mission is what drives us to new heights in excellence and helps us forge a unique and mutually beneficial relationship with all our stakeholders. We are committed to move ahead resolutely on this path, shown to us by visionaries like Mr. Satyanand Munjal, Mr. Om Prakash Munjal, the late Mr. Dayanand Munjal and lateMrRamanKantMunjal. Mr Brijmohan Lall Munjal, Chairman & MD - THE HERO GROUP.

The Vision
"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 keep the momentum going to take the

28

SUPER BRAND
Globally, a select few, exceptionally powerful brands, are recognized as Super Brands. Some of the Indian brands have made it into this unique hall of fame, and amongst that coveted group features Hero Cycles. Super Brands are actually the big ideas which provoke us to explore the realms of our dreams and inspire us to live satisfying life styles. Anchored in omnipotent consumer insights, the super brands go beyond mere functional promises as they trigger deeply embedded emotional chords. Hero Cycles has been one of the most progressive and dynamic brands for the decades now. More than 3200 dealers, 4800 employees and more than 9.6 Crore satisfied customers, have directly or indirectly, endeavoured tirelessly to make Hero Cycles a phenomenal success and are the true guardians of this brand.

Ambitions, belief, empathy and a strong culture of sensitivity are at the heart of Hero Cycles brand. Each of these values is reflected in the companys products, its communication and its dealings with suppliers, employees, dealers and customers. Be it companys environment friendly manufacturing processes or the brand initiatives for the lower income customers, leadership is all about capturing the hearts & minds of the people- the way a true Hero always does.

29

Born out of Passion

The ore goes into fire only to shed off its impurities. Similar is the man whose virtues shine when he is tried by the fire of life. Taking upon Novelty itself as a competitor, the Hero Cycles, has been always striving for perfection and innovation in every aspect of their dealings. The pursuit to innovate is endless at Hero, so much so that innovation has become a buzz word in Hero premises. Hero Cycles has been able to use changes and new trends to its advantage by identifying emerging need gaps and expanding its product portfolio to appeal to different kinds of customers. In its endeavour to keep a step-ahead of times, Heros most advanced & modern R & D department continuously creates innovative products having functional attributes & aesthetics, meeting the aspirational needs of its proud customers around the globe. As a result, Hero Cycles was able to launch several new concepts and models in bicycles like the Mountain Bikes, Racer Bikes, Dirt Terrain Bikes & D-frame bikes besides creating a variety of cycles for different user segments and sub-segments including women and children, students, adventure seekers, labourers, city customers and fitness conscious. Rolling out nineteen new models in just one year, itself speaks volume for Heros emphasis on innovations & designs

Quality : The Driving Force

At Hero Cycles, quality is a tradition, be it in the form of well trained labour, technically superb machines or world class quality. The conformance to quality at Hero begins on shop floor, with every worker ensuring at each stage manufacturing, that only perfect product passes through his hands. Heros production department too believes in following

30

the zero-defect approach and continuous upgradation of its manufacturing systems. The marketing and operations teams are also constantly creating new and effective strategies using modern management techniques. And finally, every Hero cycle goes through a series of rigorous quality checks before it leaves the factory. No wonder, Hero is in proud possession of ISO-9001, ISO-9002 & BVQI certifications and also ISO 14001, environmental compliance endorsement from the Ministry of Environment.

Constant quality upgradation ensures that the company stays in the global mainstream and maintains its edge, through excellence. A technology tie-up with National Bicycle Industries of Japan led to the launch of the World 1 series of cycles, besides introduction of new frame designing and features like- A-frame, D-frame, Y-frame, Swan shaped frame, speedometers & indicators among others

Heroes moving the Globe

Today Hero Cycles is one of the handful companies in India which can boast of the global scale of operations, not just in size or superior technology, but also its innovative marketing strategies. True to its leadership stature, Hero has not only achieved a volume of production that can be matched by no other cycle manufacturer in the world, but has also started exporting bicycles to countries like US, Germany and Japan, which is a manifestation of Heros quality and marketing capability. Heros forays into the overseas markets pioneered the Indian export in bicycle segment as early as 1963. While initial exports were restricted to the Africa and the Middle-East, today more than 50% bicycle exports meet the demands of sophisticated markets in Europe and America. Indeed, to

31

dare to explode from a small town of Ludhiana to worlds best and household name in 89 countries, it has Herculean task by any standards. This Super Brand has still a long way to go but there is no hurdle too big and no accomplishment permanent as this super brand thrives on the philosophy that Heroes in the market-place are the ones, who forge strong relationship by being relevant, constant and persistent, ...the True Heroes - in spirit and in form.

BULIDING RELATION
At Hero, its always believed that there is much more to life than just business. As a company with a heart, it has certain commitments towards its employees, the society and the nation. Though growing incomes, changing life styles and availability of cheap customer finance has changed the market scenario enormously, Hero believes that cycles can still be the driving force of the rural economy. By introducing the loan facilities under Hero Cycle Loan Yojana through Corporation Bank and Oriental Bank of Commerce, Hero Cycles has enabled low income customers to purchase cycles on easy terms.

Commitment to its employees is just as important as commitment to the society. All efforts are taken to make sure that employees are provided the best working conditions as work culture at Hero revolves around the philosophy-if theres one way to work, its with the heart. At Hero Cycles, there is a strong affinity towards building the relationships with employees, workers, vendors and dealers. Job security, growth opportunity and

32

respect are the unspoken, yet understood components of every mans package who chooses to work within the fold of Hero family. It is quite common to find two generations of the same family working together in the company, or the workers sharing their skills with other family members and passing on finest training to each other. It goes without saying that people at Hero are its largest investment and easily the largest asset.

At customer front too, Heros perception of customer relationship management (CRM) does not end with merely meeting their expectations and aspirations or by ensuring complete customer delight by overnight turnaround of customer complaints, but it goes several steps beyond that horizon. The company believes in delivering value to the customers even before they feel the need. This has helped Hero Cycles develop immense brand loyalty and customer satisfaction. Like a true Super Brand, Hero has been able to attract the respect and awe of not only its users, but also those who are directly or indirectly exposed to it

Promotions

Until 1986, the company had no need for mass communication. But as competition started growing, Hero Cycles begun to feel the need for creating lasting impression on the customers mind. In the mid 1980s Hero was perceived to be the manufacturer of the

33

basic black bicycles. The company required an image change. It needed to communicate to customers the vast portfolio of products that it had, particularly in the recreational segment. The launch of innovative products and their use as image builders happened simultaneously. Since 1986, the communication strategy has been to build each product separately and create a unique positioning for them. In this way the Ranger was positioned as the bike for outdoor fun, Impact was the preferred choice among city riders and Jet was projected as the lightest running roadster while Hawk was the racers edge. Each of these launches and their promotion, gave the Hero brand a new meaning. The brand has also used celebraties - including film stars Sanjay Dutt, Rani Mukherjee, Hrithik Roshan and Ameesha Patel. The latest is Indias new bowling sensation, Irfan Pathan who has also been a real life Hero cycle user.

34

35

36

37

Krokx 10T
FRAME FORK HANDLE Ergonomically designed MIG welded frame. Uni-Crown MIG welded fork. Stylishly designed, extra raised Handle for comfortable riding. Soft synthetic resin grips. Specially Engineered side pull Caliper Brake system. Friction-free cable casings for effective braking. Specially designed resin molded anti-skid body reflectorised pedals. Adjustable, hi-riser style banana type comfortable saddle with attractive backrest.

BRAKES

PEDALS SADDLE

38

TRAINER WHEELS

Specially designed extra strong side supporters. Attractive, large resin molded wheels. Available crash pad on handle bar. Available in attractive colors and graphics.

CRASH PAD SET COLOR & GRAPHICS

Note : Due to continuous innovation & improvements, specification is subject to change without notice. Accessories shown in the picture may or may not be a part of the standard equipment with the bike.

39

Milestones
Hero's success saga contains an element of spirit and enterprise; of achievement through grit and determination, coupled with vision and meticulous planning.

1956 1961

Hero Cycles Limited is established. Rockman Cycles Industries Limited established, which is today the largest manufacturer of bicycle chains and hubs.

1963

It pioneered bicycle exports from India - a foray into the international market.

1971

Highway Cycles was set up to meet the demands of Hero Cycles. It is today the largest manufacturer of single speed and multi-speed freewheels.

1975

Hero Cycles Limited became the largest manufacturer of bicycles in India.

1978

Majestic Auto Limited was formed and the Hero Majestic Moped was introduced.

1981 1984

Munjal Castings established. Hero Honda Motors Limited established in joint venture with Honda Motors of Japan, to manufacture motorcycles.

1985

Munjal Showa Limited established to manufacture shock absorbers and struts and is today among the top two shock absorber manufacturing companies in India.

1985

The 100 cc Hero Honda Motorcycle arrived and by 1988 was the No. 1 among all motorcycles in India.

1986

Hero Cycles Limited entered the Guinness Book of Records as the largest bicycle manufacturer in the World.

40

1987 1987

Hero Motors, a division of Majestic Auto Limited set up in collaboration with Steyr Daimler Puch of Austria. Gujarat Cycles Limited, now known as Munjal Auto Industries Limited was established to manufacture and export state-of-the-art bicycles and allied products in its fully automated plant at Waghodia.

1987

Sunbeam Auto Limited, earlier a unit of Highway Cycles Limited, established as an ancillary to Hero Honda. It is the largest die casting plant in India.

1988

Introduced "Hero Puch" from Hero Motors Limited. This revolutionary machine immediately set new records of petrol efficiency and usable power in 50 - 65 cc machines.

1990 1991 1991

Hero Cold Rolling Division established and is one of the most modern steel cold rolling plants. Hero Honda receives National Productivity Council's Award. Hero Honda receives the Economic Times - Harvard Business School Association Award against 200 contenders.

1992 1993 1993 1995

Munjal Showa Limited receives National Safety Award. Hero Exports established as the International Trading Division for Group and non-Group products. Hero Motors becomes Indias largest exporter of two wheelers Hero Corporate Services Limited as the service segment for the Hero Group Companies, ancillaries, suppliers, dealers and other associates.

1996

- Hero Winner, a large-wheeled scooter was introduced by Hero Motors Limited with a choice of 50 cc and 75 cc engines.

1996

Munjal Showa Limited receives British Council's National

41

Safety Award. 1998 - Hero Briggs and Stratton Auto Private Limited was set up to produce 4-stroke two-wheeler engines in various cubic capacities. 1998 2000 Munjal Auto Components established to manufacture gear shafts and gear blanks for motorcycles. The Hero Group diversifies into IT and IT enabled services through its service segment - Hero Corporate Services Limited. 2000-2001 Hero Honda emerges as the market leader in motorcycles with sales of over a million motorcycles and a strong market share of 47%. 2001 Hero Global Design established to offer engineering services in CAD/CAM/CAE related to New Product Development, Design, Engineering and Manufacturing. 2002 2002 2002 2003 2004 2004 2004 Hero Cycles ties up with National Bicycle Industries, part of Matsushita Group to manufacture high-end bicycles. Fastener World Established. Easy Bill Established to offer utility bill collection & retail services. Tie up with Livebridge Inc., USA. Tie up with Bombardier - Rotax GmbH for scooter engines. Tie up with Aprilia Scooters, Italy. Hero Honda continues as the World's largest manufacturer of two-wheelers with annual sales volume of 2.07 million motorcycles and a market share of 48%. 2004 2004 HeroITES, a division of HeroCorporate Service Limited Retail Insurance business established.

42

hived off as a division of new company Hero Management Service Limited. HeroITES strengthens its relationship with ACS,USA,USD 5.0 billion market cap and Fortune 500 company. 2011 Hero Honda enters the scooter segment, launches 100cc "Pleasure" 2011 Hero Honda crosses a unit sales threshold of 3.0 million motorcycles Hero Group celebrates Golden Jubilee year since inception.It was commemorated by sales of over 15 million motorcycles & over 100 million bicycles. Today, Hero Group comprises of 20 companies, 300 ancillary suppliers, deep market penetration with over 5,000 outlets, 23,000 + employee and has a turnover of US$ 3.20 billion (FY 2011).

2005

2011

Board of directors Sh. Brijmohan lal munjal Sh. Satyanand munjal Sh. Om parkash munjal Sh. Vijay kumar munjal Sh. Suresh chandra munjal Sh. Ashish kumar munjal Sh. Sunil kant munjal (Chairman) (Co- Chairman cum M.D. of works) (Co- Chairman cum M.D. of mktg. & admn.) (M.D. of international marketing) (M.D. of domestic mktg.) (M.D. of unit-II Sahibabad) (M.D. of C.R..division)

43

Sh. Pankaj munjal Sh. S.k. rai Dr. M.a. zahir Dr. D.r. singh

(M.D. of new hero auto rim division) (M.D. of works) (Director) (Director)

Organization Chart: Hero Group

Board of Directors

Mr. Brij Mohan Lal Munjal

Mr. O.P. Munjal

Mr. Yogesh Munjal

Mr. Vijay Kumar Munjal

Mr. Sunil Kant Munjal

Mr. Suresh Chandra Munjal

Mr. Ashish Kumar Munjal

Mr. G.D.Kapoor President

Mr.KJS Bindra (SVP)

Mr. Bharat Goel (SVP)

Mr. YN Gupta (SVP)

Mr. SK Bhandari (SVP)

Mr. SS Saini (VP)

Mr.Ashok Abrol (VP)

Mr. AK Mathur (VP)

Mr. MR Munjal (VP)

Mr. AC Tiwari (VP)

44

Mr.VL Sehgal (Sr.GM)

Mr.Nipun Dang (GM)

Mr. Anil Bhatia (AVP)

Mr. KN Vijay (AVP)

Mr.RK Sehgal (AVP)

Mr. Dalip Kumar (GM)

Mr. Jit Lt Col TK Singh Physical Layout of Hero Cycles Ltd. Anand (GM) (GM)

Mr. Swran Singh (GM)

C.R.Division 12 11 4

10 8 20 7 21 5 6 2 1 3

13

14 15 16 17 18

Key to the physical Layout 1. Security 2. Admn, Block and systems 3. Lawn 4. Tabular 5. Generator Room 6. Scrap Yard 45 12. Scrap Yard 13. Rim plant 14. Boiler house 15. Paint shop 16. Main store 17. Polish Shop

7. Export Store 8. Export packing 9. Canteen 10. Ranger 11. Unit V Major Products

18. Effluent Treatment plant 19. Main Shed 20. Stores 21. Receipt and dispatch Store

The Hero Cycles Ltd. Manufactures cycles, rims, free wheels, hubs & chains and cold rolled strips as a main product. Company has long portfolio of different range of cycles. Company has 132models in the list, covers all the three section-gents, ladies and kids. It also manufactures cycle parts for its own requirements. After fulfilling the requirements of company, it can export its remaining quantity. The main products are:i) ii) iii) iv) v) Cycles Rims Free wheels Hubs and Chains Cold Rolled strips

.Another feather in the cap 'Hero Cycles Limited'- has added another feather in the cap by entering into strategic tie up with a leading bicycle manufacturer of Japan namely National Bicycle Industries of National Panasonic in august 2002 to provide on technology transfer for up gradation in phased manner. 46

After its tie up with national Bicycle industries, it has introduced new models as Cross fire, razorback, Synergy, Ranger Max, Hawlk NU Age, Nitrogen and Princess.

Customer satisfaction
HERO has been consistently keeping pace with the time, by steady adhering to consumer's aspiration. Over the year, the company has created market segments through product innovation, meeting the aspirations of the youth and middle class the company is honoring the watchword Customer Satisfaction. With its human approach, the company is manufacturing an environment-friendly range of products.

47

Global Gearing - Alliances

Over the years, Hero Group has strengthened its joint ventures, forged profitable relationships with its partners and allied itself with some of the best players in the market. Technology assimilation through wide sourcing has been and will continue to be an integral part of the progression of the Hero Group.

Technology Related Partnerships/ Alliances & Joint Ventures

IT Related Alliances

Product Engineering Related Alliances

Microsoft, Singapore

PTC Porsche Design

DynEd International ACS, USA Target Design Universal Cycles Plc, UK EralMetall, Germany

48

T.I Murugappa Group

Type Founded Headquarters Key people

Public (NSE, BSE) 1900 Chennai M.A. Alagappan (Executive Chairman) sanitaryware, Life Insurance, General Insurance, fertilisers, abrasives, automotive chains, car door frames &

Industry

steel tubes Revenue $ 2 billion Employees 28,000 Website http://www.murugappa.com/ Murguppa Group is an Indian conglomerate with interests in engineering, abrasives, sanitaryware, fertilisers, finance, bio-products and plantations. The group started in early 20th century. Started at the same Tiruvottriyur, Chennai (Now Carborundum Universal Ltd)in the name of Ajax India Ltd and made hardwares. The Murugappa Group, headquartered in Chennai, India, is a $ 2 billion (Rs 8,500 crore) conglomerate with interests in engineering, abrasives, sanitaryware, fertilisers, finance, bio-products and plantations. It has 29 companies under its umbrella, of which eight are listed and actively traded on the National Stock Exchange and the Bombay Stock Exchange. Together, they have over 28,000 employees.

CONSUMERS BUYING BEHAVIOR

49

Understanding the buying behavior of the target market is the essential task of marketing management under the marketing concept. The consumer market consists of all the individuals and households who buy or acquire goods and services for personal consumption. Consumers vary tremendously in age, income, educational level, mobility patterns and

taste.

MODEL OF CONSUMER BEHAVIOR

Due to the growth in the size of firms and markets, marketing decision makers have been

removed from direct contact with their customers. Managers have had to turn to

consumer research. They spend more money in trying to learn : Who buys? How do they

buy? When do they buy? Where do they buy? Why do they buy?

How do consumers respond to various marketing stimuli, arranged by the company, is

main question. Therefore, business & academic researchers have invested much energy in

researching the relationship between marketing stimuli and consumer response.

50

Outside Stimuli

Buyers Black box

Buyer

respo

nses Marketing Product Other Economic Buyer Buyer Product choice

Price

Technological

Characteristics

Decision

Brand choice

Place

Political

Process

Dealer choice

Promotion

Cultural

Purchase choice

Purchase

amount

MODEL OF BUYER BEHAVIOR

51

Their starting point is the stimuli-response model. Above figure shows marketing and

other stimuli entering the buyers black box and producing certain responses. The

stimuli are of two types. Marketing stimuli consists of the 4 Ps : Product, Price, Place and

Promotions. Other stimuli consist of major forces and events in the buyers environment

economic, technological, political and cultural. All these stimuli pass through the buyers

black box and produce the set of buyer responses: Product choice, brand choice, dealer

choice, purchase timing and purchase amount.

52

MAJOR FACTORS INFLUENCING CONSUMER

BEHAVIOR

Consumers purchases are highly influenced by cultural, social, personal and psychological factors.

53

Cultural Culture Social Reference grou ps Age and life Subculture Family Cycle stage Occupation Perception Motivation Buyer Psychological Personal

Social class Roles and status

Learning belief & attitude

DETAILED MODEL OF FACTORS INFLUENCING BEHAVIOR

(A) CULTURAL FACTORS:

54

Cultural factors exert the broadest and deepest influence on consumer behavior.

CULTURE:

Culture is the most fundamental determinant of a persons wants and behavior. The child

growing up in a society learns a basic set of values, perception, preference & behavior

through a process of specialization involving the family & other key institutions.

SUBCULTURE:

Each culture contains smaller groups of subcultures that provide more specific

identification & socialization for its members. Four types of sub culture can be

distinguished.

(i) Nationality groups.

(ii) Religious groups.

(iii) Racial groups

55

(iv) Geographical areas.

SOCIAL CLASS:

Virtually all human societies exhibit social stratification. More frequently, stratification takes the form of social classes. Social classes are relatively homogenously and enduring divisions in a society, which are hierarchy ordered and whose members share similar values, interests, and behavior. (B) SOCIAL FACTORS:

A consumers behavior is also influenced by social factors, such as the consumers

reference groups, family, and social roles and statuses.

(i) REFERENCE GROUPS:

A persons reference groups are those groups that have a direct or indirect influence on

the persons attitudes or behaviors. Groups influence will be stronger for products that will

be visible to others whom the buyer respect.

56

(ii) FAMILY:

Members of the buyers family can exercise a strong influence on the buyers behavior.

The family of orientation consists ones parents. From parents a person acquires an

orientation toward religion politics, & economics and a sense of personal ambition self-

worth & love. The following products and services fall under such.

Husband-dominant : Life insurance, automobiles

Wife-dominant

: Mixer, Washing Machine, and Kitchenware

Equal

: Housing, Entertainment, and Housing Furniture

(iii) ROLES AND STATUSES:

Participating of buyer in the different groups as clubs, organization influence his/her

buying behavior. His/her position in the different groups can be termed as roles & status.

57

A role consists of the activities that a person is expected to perform according to the

persons around him/her. Each role carries a status reflecting the general esteem :

accorded to it by society.

(C) PERSONAL FACTORS:

Personal factors a buyers decisions by his/her personal characteristics, occupation,

economic circumstances, life style, and personality & self- concept.

(i) AGE & LIFE CYCLE STAGE:

People change the goods and services; they buy over their life time. They eat baby food

in childhood, most foods in the young age and special diets in the later year.

(ii) OCCUPATION:

58

A persons consumption pattern is also influenced by his or her occupation. A blue-chip

worker will purchase good clothes, care etc.

(iii) ECONOMIC CIRCUMSTANCES:

A persons economic circumstances will greatly affect product choice. His economics

circumstances consists of their spend able income, saving & assets, borrowing power.

(iv) LIFE-STYLE:

A persons life style is that persons pattern of living in the world as expressed in the

persons activities, interests & opinions.

(d) PSYCHOLOGICAL FACTORS:

A persons buying choices are also influenced by four major psychological factors-

(1) Motivation

59

(2) Perception

(3) Learning

(4) Beliefs and Attitudes

( E) BUYING ROLE:

For many products, it is easy to identify the buyer. Men buy shaving Cream, Razor,

Cigarette etc. While cosmetic, pantyhose etc.

Thus, we can distinguish several roles people may play in a buying decision.

Initiator

: One who first suggests or thinks of the idea of buying the particular

product or service.

Influencers

: One whose views or advice carries some weight in making

the final decision.

60

Decider

: One who ultimately determines any part of, or the entire

buying decision whether to buy, what to buy, or where to

Buy.

Buyer

: One who makes the actual purchase.

User

: One who consumes or uses the product or service.

61

TYPES OF BUYING BEHAVIOR

There are four types of consumer buying behavior based on the degree of buyer

involvement in the purchase and the degree of differences among brands.

Significant Differences Between brand Few difference between brand

High involvement Complex buying Behavior

Low involvement Variety seeking buying behavior

Dissonance reducing buying behavior

Habitual buying behavior

(a) COMPLEX BUYING BEHAVIOR

Consumers go through complex buying behavior when they are involved in a purchase

and aware of significant difference existing among brands. Consumers are highly

involved ma purchase when it in expensive, risky and highly expressive.

62

(b) DISSONANCE - REDUCING BUYING BEHAVIOR

When the consumers are highly involved in a purchase but see little differences in the

brands. It in based on the fact that the purchase is expensive, infrequent & risky. For

example, shopping for carpet.

(c) HABITUAL BUYING BEHAVIOR

Many products are bought under conditions of low consumer involvement and absence of

significant brand differences. A good example is the purchase of salt.

(d) VARIETY-SEEKING BUYING BEHAVIOR

Some buying situations are characterized by low consumer involvement but significant

brand difference e.g. in purchasing cookies.

63

CONSUMER BUYING BEHAIOUR

SALES PROMOTION - A THEORETICAL FRAMEWORK

Sales promotion consists of a diverse collection of incentive tools, mostly short-term,

designed to stimulate quicker and / or greater purchase of particular products / services by

consumers or the trade.

Whereas advertising offers a season to buy, sales promotion includes tools for consumer

promotion e.g. samples, coupons, cash refund offers, prices-off, premiums, prizes,

patronage rewards, free trials, warranties, demonstration, contests:

Trade promotion e.g. buying allowances, free goods, merchandize allowance, cooperative

advertising, advertising and display allowances, push money, dealer sales contests.

Sales force promotion (bonuses, contests, sales rallies).

64

Sales promotion tools are used by most organizations, including manufacturers,

distributors, retailers, trade associate and non-profit organizations.

A decade ago, the advertising-to-sales promotion ratio was about 60/40. Today in many

consumer packaged goods companies, the picture is reversed with sales promotion

accepting for between 60-70% of the combined budget. Sales promotion expenditures

have been increasing 12% annually, compared with advertisings increase of 7.6% of the

fast growth is expected to continue.

Several factors contributed to the rapid growth of sales promotion, particularly consumer

markets.

Internal factors include the following Promotion is now more accepted by top management as an effective sales tool.

More product managers are qualified to use sales promotion tools;

65

 Product manager are under greater pressure to increase their current sales.

External factors Includes the following:

The number of brands has increased.

Competitors use promotions frequently.

Many brands are at parity. Consumers are more deal oriented.

The trade has demanded more deal from manufactures.

Advertising efficiency has declined because of arising costs, media costs and legal

restraints.

The rapid growth of sales promotion media (contests, coupon etc) has created a situation

of promotion clutter. Similar to advertising clutter. There is a danger that consumers will

start tuning out, in which case coupons. And other media will weaken in their ability to

66

trigger purchase. Manufacturers will have to find ways to rise above the clutter, for

instance, by offering large coupons, redemption values or using more dramatic point of

purchase displays or demonstrations.

PURPOSE OF SALES PROMOTION

Sales promotion tools vary in their specific objectives. A free sample stimulates consumer trial, while a free management advisory service cements a long term relationship with retailers. Sellers used incentive type promotions to attract new tiers, to reward loyal customers, and

to increase the repurchase rates of occasional users.

New tiers are of three types

Users of another brand in the same category.

Users in other categories and

67

Frequent brand switches.

Sales promotions often attract the brand switches, because users of other brands arid

categories do not always notice or act on a promotion. Brand switches are primarily

looking for low price, good value or premiums. Sales promotion is unlikely to turn them

into loyal brand users; Sales promotions are used in markets of high brand users. Sales

promotions are used in markets of high brand similarity produce a high sales response in

the short run but little permanent gain in market share. In markets of high brand

dissimilarity, sales promotions can alter market share more permanently.

Sellers often think of sales promotion as designed to break down brand loyalty, and

advertising as designed to build up brand loyalty. Therefore, an important issue for

68

marketing managers is how to divide the budget between sales promotion and

advertising.

Ten years ago marketing managers would decide what they needed to spend on

advertising and put up the rest on sales promotion. Today marketing mangers first

estimate what they need to spend in trade promotion, then what they need to spend in

consumer promotion and whatever is left they will budget for advertising.

A study conducted by Brown has revealed the following: Sales promotion yield faster response in sales than advertising does.

Sales promotions do not tend to yield new, long term buyers in mature markets

because they attract mainly deal prone customers who switch among brands as

deals become available.

69

Loyal brand buyers tend not to change their buying patterns as a result of

competitive promotion.

Advertising appears to be capable of increasing the prime franchise of a brand.

There is also evidence that price promotions do not permanently build total category

volume. They usually build short term volume that is not maintained. Small share

competitors find it advantageous to use sales promotion, because they cannot afford to

match the large advertising budgets of market leaders. Nor can they obtain shelf space

without offering trade allowance or stimulate consumer trial without offering consumer

incentives. Price competition is often used by a small brand seeking to enlarge its share,

but it is IT less effective for a category leader who growth lays in expanding the entire

category.

70

Sales promotion seems most effective when used together with advertising. In one study,

point-of purchase displays related to current TV commercials were found to produce 15%

more sales than similar displays not related to such advertising. In another, a heavy

sampling approach along with TV advertising proved more successful than either TV

alone or TV other coupons in introducing a product.

SELECTING THE SALES PROMOTION TOOLS

Sales promotion tools are selected keeping in view the sales promotion objectives. These,

objectives are derived from broader promotion objectives which are derived from more

basic marketing objective d for the product. The specific objectives set for sales

promotion will vary with the type of target market.

71

For consumers objectives include encouraging purchase of larger size units, building trial

among non-user and attracting switches away from competitors brands.

For retailers objectives inducing retailers to carry new items and high level of inventory,

encouraging off season buying, encouraging stocking of related items, offsetting

competitive promotions, building brand loyalty of retailers and gaining entry into new

retail outlets. For the sales force, objectives include encouraging support of a new

product or model, encouraging more prospecting and stimulating off-season sales.

Many sales promotion tools are available to accomplish these objectives.

The main sales promotion tools are designed for consumer promotion, trade promotion

and business promotion.

72

CONSUMER PROMOTION TOOLS:

The main consumer promotion tools include samples, coupons; cash refund offers, price

packs, premiums, prizes, patronage awards, free trials, product warrantees, tie-ins, and

point-of-purchase displays and demonstrations.

SAMPLES:

They are offers of a free amount or trial of a product to consumer. The sample might be

delivered door to door, sent in the mail; picket up in a store, found attached to another

product or featured in an advertising offer. Sampling is the most effective and most

expensive way to introduce a new product.

COUPONS:

73

They are certificate entitling the bearer to a stated saving on a purchase of a specific

product. Coupons can be mailed, enclosed in or on other products, or inserted in

magazine and newspaper advertisements.

CASH REFUND OFFERS:

Cash refund duffers or rebates are like coupons except that the price reduction occurs

after the purchase rather than at the retail shop. The consumer sends a specified proof of

purchase to the manufacturer who in turn refunds part of the purchase price by mail.

PRICE PACKS:

Price packs are offers to consumers of savings off the regular price of a product flagged

on the label or package. They may take the form of a reduced price pack which is single

74

packages sold at a reduced price, or banded pack, which is t related products banded

together (such as a toothbrush and toothpaste). It is very effective in stimulating short

term sales.

75

PREMIUM (OR GIFTS):

Merchandise deferred at a relatively low cost or free as an incentive to purchase a

particular product. A with-pack premium accompanies the product inside (in pack) or on

(on pack) the package. This may include reusable container, T-shirts, combs etc.

PRIZES:

They are offers of the chance to win cash, trips, or merchandize as a result of purchasing

something

FREE TRIALS:

They consist of inventing prospective purchasers to try product without cost in the hope

that they will buy the product.

TIE IN PROMOTIONS:

76

In a tie in promotion, two or more brands or companies team up on coupons, refunds, and

contests to increase their pulling power. Companies pool funds in the hope of broader

exposure.

77

POINT-OF PURCHASE (POP) DISPLAYS AND DEMONSTRATIONS:

They take place at a point of purchase or sales. A five foot high cardboard display of a

product next to the shelf where the product is stored is an example.

Apart from these contests, exchange schemes, service discounts, easy installments and

finance offers are also employed.

In developing a sales promotion program, the marketer must make further decisions to

define the full promotion programme. The marketer has to determine the size of the

incentive to offer. A certain minimum incentive level will produce more sales response

but at a diminishing rate. Conditions for participation have to be established. Incentives

might be offered to everyone or to select groups. A premium might be offered only to

78

those who turn in box type or proof-of-purchase seals. Sweeps takes might not be offered

in certain states or to families of company personnel or to persons under a certain age.

Then the marketer has to decide on the duration of promotion. If the sales promotion p is

too short than many prospects will not be able to take advantage and if its too long then

the deal may lose some of its act now force. According to one researcher the optional

frequency is about 3 weeks per quarter.

The marketer must choose a distribution vehicle e.g., a 15% off coupon can be distributed

in the package, store mail or advertising media.

The timing of promotion must be established and finally the marketer must determine the

total sales promotion budget.

79

In spite of the extra precautions, steps taken by the marketers, there are certain problems

which are faced by them as far as sales promotion is concerned.

First of all promotions might decrease long run brand loyalty by making more consumers

deal prone rather than advertising prone.

Second promotions can be more expensive than they appear and some are inevitably

distributed to wrong consumer e.g. noneswitches, always switches and the companys

own customers.

In spite of all these problems, sales promotions will continue to play a growing role in the total promotion mix.

80

OBJECTIVES OF THE RESEARCH

To study the factors influencing the choice of customers while buying cycles. To study the satisfaction level of customers of geared cycles To study the performance of various cycle brands on selected parameters.

RESEARCH METHODOLGY:

81

SCOPE OF THE STUDY The project involves, the study of the segmentation, targeting & positioning of Hero Cycle two-wheeler in the market. And what people think about it. Hero Cycle. It includes carrying out a survey among customers & the industry people as well as the dealers. It also involves the devising of repositioning of the existing brand by some modifications; advertisement should be so made that the targeted segment comes to know what the Cycle is. How is it better from others. So, that in near future this Cycle becomes a grand success. Information regarding the market share, cost factors, the marketing and promotional strategies etc was collected from primary data sources Research Design The research design is a pattern or an outline of a research projects working, it is a statement of only the essential elements study, those that provide the basic guidelines for the details of the project. Further a research design is an arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. It constitutes the blueprint for collection, measurement and analysis of data. Research design stands for advance planning of the methods to be adopted for collecting the relevant data and the techniques to be used in their analysis, keeping in view of the objectives of the research.

The present study, being conducted, followed a descriptive design. It produces a picture of the phenomenon in which the decision maker is interested. As the data would be responses from a sample containing large number of source. Design of descriptive studies includes the nature and source of the data, the nature of expected results and the analytical method.

82

The research design for my research is descriptive, as I will be exploring some new facts about the CYCLES IN BAGPAT-selected insight into Market Behavior.

Data Collection For my research study the data has been collected by both the primary & secondary means. The primary data has been collected regarding the different attributes to be considered while preparing the questionnaire. The questionnaire was then designed keeping in mind the objectives of the study.

For primary data collection I adopted the structured questionnaire, which was filled by 21 respondents. The questionnaire was filled personally by visiting the respondents at their respective locations. The secondary data of my research has been collected through magazines, journals and some previous researches. Sampling Plan Sampling is an effective step in the collection of primary data and has a great influence on the quality of results. The sampling plan includes the universe, population, sample size and sample design.

Universe

83

Universe refers to all the eligible respondents for a particular research around the world. The universe for my research is all DEALERS OF CYCLES IN INDIA. Universe & population can be same in some researches Population Population refers to part of universe from which the sample for conducting the research is selected. Universe & population can be same in some researches. The population for my research is cycle dealers.

Sample unit

Each and every cycle dealer of Hero Cycles Ltd...

Sample size For this study 21dealers were selected. Sampling technique

There were 30dealers in all these towns but a few of them were unavailable so questionnaires were got filled from 21dealers.

84

DATA ANALYSIS AND INTERPRETATION

Q1: HOW LONG YOU HAVE BEEN ASSOCIATED WITH HERO CYCLES?

NO OF YEARS IN BUSINESS

0-5 YEARS 5% 5% 10% 5-10 YEARS 10-15 YEARS 80% MORE THAN 15 YEARS

85

ANALYSIS
A major chunk of current cycle dealers have been into this trade for a long time that is in this case more than 80% of the dealers have been cycle dealers for more than 15 years now. In fact there is just 2 dealers who has entered into this field in the last 5 years.

Q2: WHAT KIND OF CUSTOMERS PREFER TO BUY TYPES OF BIYCLES?

TYPE OF CUSTOMERS

10% 15% YOUNGSTRES PROFSSIONAL RACER BOTH 75%

ANALYSIS
From the graph it has been clear that it is youngster which prefer to buy bi-cycles

86

87

Q3: WHAT CUSTOMERS PREFERS WHILE BUYING CYCLE?

CUSTOMER PREFERENCE

23% 10% 8% 8% 51%

PRICE COMFORT DESIGN COLOUR SAFETY,QUALITY

ANALYSIS
Price is the most important factor which affects a customers decision while buying a cycle which is closely followed by looks. Comfort and brand are also important but surprisingly price is not a very important factor for customers of cycle as it is not a product meant for the masses.

88

Q4: WHAT TYPE OF CYCLES HAS MORE SALES? (IN PERCENTAGE)

90 80 70 60 50 40 30 20 10 0

78

Series1

10

12

STANDARD HI-END F ANCY CYCL ES

BOTH

89

Q5. Do you think brand name of a company affects the buying Decision of a customer?

EFFECT OF BRAND NAME

10% 10% YES NO CAN'T SAY 80%

Q: 6 Do you think extensive advertisement affects the buying decision of a customer? (IN PERCENTAGE)

80 70 60 50 40 30 20 10 0

75

10

15

YES

NO

CAN'T SAY

90

Q: 7 what kind of Marketing Strategies you have been following to increase the sale of cycles?

5% 15% FREE GIFTS 45% DISCOUNTS WARRANTIES REPAIR 35%

Q: 8 in which companys product (cycles) you are getting maximum no of complaints?

A N Y O TH E R NE E LA M A TL A S AVON HERO 0

10 20 25 35 10 10 20 30 40

91

Q: 9 According to you which media will be effective for advertisement

30%

25%

ELECTRONICS PRINT MOUTH TO MOUTH

20%

25%

BOARDS,HOLDIN G,WALLPAINTING

Q.10How will you rate Heros cycles as compare to others? (IN PERCENTAGE)
90 80 70 60 50 40 30 20 10 0 EXCELLENT GOOD 12 5 AVERAGE 4 POOR 79

92

Q: 11 Do you think there is a bright future of cycles in the market?

FUTURE OF HI-END BI-CYCLES

10%

10% YES NO CAN'T SAY 80%

ANALYSIS
Almost 80% of the dealers expect that the future demand for cycles will be Whereas 10% expect that the market would be higher than what it is at present. low.

93

Q12: ON THE BASIS OF OVERALL SALES COMPANY MEAN SCORE RANK AVON 2.39 II HERO 1.29 I TI 2.61 III ATLAS 2.71 IV OTHERS 2.91 V

Hero is the frontrunner in the overall sales followed by Avon. TI, the Ghaziabad bases company is third followed by Atlas. Other unorganized manufacturers like Neelam, K.W etc are fifth in the ranking in terms of overall sales.

Q:13 ON THE BASIS OF OVERALL PRODUCT RANGE COMPANY MEAN SCORE RANK AVON 2.22 III HERO 1.28 I TI 2.18 II ATLAS 2.91 IV OTHERS 3.54 V Hero has the most wide products range in the overall cycles segment which is followed by TI. Then comes Avon followed by Atlas.

94

Q.14 ON THE BASIS OF OVERALL CUSTOMER SATISFACTION COMPANY MEAN SCORE RANK AVON 2.19 II HERO 1.30 I TI 2.55 III ATLAS 2.73 IV OTHERS 3.66 V The customers of hero Cycles Ltd are the most satisfied customers in the cycle market followed by Avon and TI. Atlas comes fourth in the list followed by other unorganized players.

RECOMANDATIONS

95

 To increase their sales dealers are giving free gifts and discount from there on pockets. Instead of that company shoud has to provide them free gifts and freebies.

Some dealers sold local branded cycles with the name of hero cycles. Company should has to take some affirmative steps to that dealers which are selling local branded cycles with the name of hero cycles

To cater the competetion hero cycles has to concerate more on advertisement.

CONCULSION

96

 80% of the respondates are given response that they are in the business more than 15 years. Only 10% of respondates are in the business in between 10-15 years.

From the graph no-1one can clearly see that hero cycle is no-1 in terms of sale

From the graph no-2 we can clearly see that its the youngesters who prefer to buy fany hi-end racing cycles.

From the figure-3 one can clearly see that while purchasing hi end bi-cycles price is the most dominating factor followed by safety and quality.

Hi-end cycles has more sales as compare to standard cycles.

80% of respondate agreed that brand name of a company effect the buying decision of a customer.

75% of respondate agreed that advertisement plays the important role while influence the customer buying habit.

45% of dealers used the free gifts followed by 35% of dealers discount as marketing tool to increase their sales.

97

 Avon cycles got the maximum no of complaints and hero cycles got the less no of complaints. I/3 of the dealers feels that electronics as a media is more effecting to promote their respect products. 79% of the dealers rate heros hi-end bi-cycles excellent in terms of quality. 60% of the dealers have said that they will prefer to sell hi-end bi-cycles. Majority of dealers have given the response that there is a bright future for hi-end bi-cycles Not only in sales hero is no-1 in terms of customer satisfaction and product range.

APPENDICS
98

QUSIONNAIRE

Q1: How long you have been associated with hero cycles (a) 0-5 years d) More than 15 years Q: 2 which company does you represent? (a) Hero Cycles (e)All of above (b) Atlas (f) Any other (c) Avon (d) Neelam (b) 5-10 years (c) 10-15 years (

Q: 3what kind of Customers prefer to buy Roadsters types of BI-Cycles? (a) Youngsters (b) Professional Racers (c) Both

Q: 5 what customers prefer while buying Roadsters bi-cycles? (a) Price (b) Comfort (c) Design (d) Colour

(e) Safety Measures (a) Standard

(f) Quality (b) Roadsters Cycles (c) Both

Q: 6 what type of Cycles have more sales?

Q: 7 Do you think brand name of a company affects the buying decision of a customer? (a) Yes (b) No (c) Cant Say

99

Q: 8 Do you think extensive advertisement affects the buying decision of a customer? (a) Yes (b) No (c) Cant Say

Q: 9 what kind of Marketing Strategies you have been following to increase the sale of Roadsters cycles? (a) Free gifts (b) Discount (c) Warranties (d) Repair

Q: 10 in which companys product (Roadsters cycles) you are getting maximum no of complaints? (a) Hero Cycles (e)All of above (b) Atlas (f) Any other (c) Avon (d) Neelam

Q: 11 According to you which media will be effective for advertisement? (a)Electronics (b) Print (c) Mouth to Mouth

(d) Boards, Holdings and Wall Painting Q: 12 which factors account for brand switching? (a) Price (b) After sale service (f) Quality (c) Design (d) Colours

(e) Safety Measures

(g) Salesmanship

Q: 13 How will you rate Heros Roadsters cycles as compare to others companys cycles? (a) Excellent (b) Good (c) Average (d) Poor

100

Q: 14 which brand you prefer to sell more? (a) Standard Q: 15 rating on the basis of Sale Hero Cycles -------Avon Atlas TI ---------------------Customer Satisfaction ------------------------------------PRODUCTroduct Range --------------------------------------------------(b) Roadsters (c) Both

Q: 16 Do you think there is a bright future of Roadsters cycles in the market? (a) Yes NAME OF DEALER: ADDRESS: CITY: (b) No (c) Cant Say SIGNATURE OF DEALER WITH STAMP

101

BIBLEOGRAPHY
http://www.entrepreneur.com/money/moneymanagement/financialanalysis/article 21940.html http://www.bized.co.uk/compfact/ratios/liquid1.htm http://www.rediff.com/money/2007/jun/11bspec.htm Gupta Shashi et al, Management Accounting and Business Finance, 2009, Kalyani Publishers, Ludhiana, Edition- 13, Pg- 4.1- 4..53. Panday, I.M.. Financial Management. New Delhi: Vikash Publications House. Sharma et al, Practical Problems In Management Accounting and Financial Management, 2010, Kalyani Publishers, Ludhiana, Edition -4, Pg 2.1- 2.96. Company Brochures http://herogroup.com/ http://www.herocycles.com/ http://en.wikipedia.org/wiki/Corporate_finance http://www.treasury.govt.nz/publicsector/workingcapital/chap2.asp http://www.planware.org/workingcapital.htm#6 http://www.iloveindia.com/

102