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INTRODUCTION
The Indian two-wheeler industry is experiencing a major shift in its shape and structure. The established
players in the industry are taking a hard look at their portfolio of products and are in the process of
reshuffling them to meet the expectations of customers. The beneficiary is of course the consumer, who
has an increased array of products to choose from.

The last four-five years have brought about a great change in the consumer preferences for two-
wheelers. The market leaders of yesteryears are being driven to maintain their leadership position in the
forthcoming years. Those who have had a great going in the last few years are fighting hard to retain
their new supremacy. The two-wheeler industry is perhaps the most happening place in terms of new
models launched, upgraded products and innovative marketing techniques. Gone are the days of
regulation when the production of scooters and motorcycles was limited to two or three brands and the
number of products produced was decided by the Government; today the Indian two-wheeler market is
highly competitive with numerous players who offer anything and everything a consumer demands and
that too at affordable price. From a sellers market where one had to wait for a scooter for 12 years to the
days when you can just walk into any showroom and drive out in the vehicle of your choice, the market
of two-wheelers in India has come a long way. But this is only the beginning of the transformation.

Hero Honda Motors Ltd is one of the leading companies in the two-wheeler industry. At present, it is the
market leader in the motorcycle segment with around 57% the market share during FY 2006-07.During
the year, the company posted a 41.05% yoy rise in turnover to Rs.31, 686.5mn in motorcycles which
was driven by a 35.17% yoy rise in motorcycle sales volumes. The company has emerged as one of the
most successful players, much ahead of its competitors an account of its superior and reliable product
quality complemented with excellent marketing techniques. The company has been consistently
addressing the growing demand for motorcycles and has a cumulative customer base of over 4 million
customers which is expected to reach 5mln mark with the rural and semi-urban segment being the new
class of consumers.

The Indian two wheeler contributes the largest volumes amongst all the segments in automobile
industry. Though the segment can be broadly categorized into 3 sub-segments viz; scooters, motorcycles
and mopeds; some categories introduced in the market are a combination of two or more segments e.g.
cooperates and step-thru’s. The market primarily comprises five players in the two-wheeler segment

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with most of the companies having foreign collaborations with well-known Japanese firm’s earlier .But
most of the companies are now planning 100% subsidiaries in India.

Hero Honda has been an early-entrant in the 4 – stroke segment of the two wheeler industry. With a right
mix of product styling and pricing the company helped garner a larger market chunk of the 4 – stroke
market as compared to Bajaj Auto. A shifting consumer preference towards motorcycles also enabled
the fast growth of the company in the last few years. Of the total motorcycle sales, HHML has a
maximum of around 36.5% market share in the Western Zone and 28.6% in the Southern Zone which
has remained more or less consistent from FY2000 levels. In the Eastern Zone Hero Honda has a market
share 12%. The company has reported a fall in sales volume to 3,29,900 units from 4,79,630 units in
motorcycles for half-year ended September 2001 accompanied by decline in net sales by 29.2% to
Rs10.38 mln from Rs14.67mn.

Competition has intensified over the last couple of years altering the dynamics in the motorcycle
segment with various companies planning to cash in on this spurt in demand by calling off their JVs like
Suzuki Motors planning to break- off with TVS. Recently, Honda Corporation of Japan announced its
intentions to set up a 100% subsidiary to manufacture scooters and motorcycles. Other players in the two
wheeler industry include Bajaj Auto Ltd , Kinetic Motor Co Ltd , LML and Escorts Yamaha. Low –
interest regime has helped in reducing cost of loans, which will help in boosting sales of 2-wheelers,
since 80% of the two- wheelers are credit – stimulated.

THE INDUSTRY

The Indian two-wheeler industry is dominated by three players, Bajaj, Hero Honda and TVS Suzuki,
who account for 80 percent of the total two-wheeler market. The other players including Kinetic
Engineering, LML and others account for the remaining 20 percent of the market. The industry can be
divided into three broad segments: Scooters, motorcycles and mopeds. In the scooters segment Bajaj is
the market leader, Hero Honda is the market leader in the motorcycles segment and in the segment of
mopeds, TVS controls the major chunk of the market.

Most Indian players in the two-wheeler industry had been into some kind of strategic alliance, technical
collaboration or joint venture with foreign players, mainly Japanese firms. Hero-Honda, is a joint
venture between the Munjal-promoted Hero Group and Honda Motor Co. of Japan; TVS-Suzuki was an
alliance with TVS and Suzuki Motors (till September 2007); Bajaj-Kawasaki a joint venture between
Bajaj Motors and Kawasaki; and Yamaha-Escorts, a joint venture between Escorts and Yamaha Motor
Corp. (till June 2007).

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 HERO HONDA
The story of motorcycles in India is a good case study of how fortunes change overnight. Motorcycles in
India were hardly popular and Hero Honda was the only player, which had carved a niche for
motorcycles. Its market was small and limited while scooters ruled the roost but today, it is one of the
biggest success stories. Its established presence in the motorcycle segment had stood it in good stead in
this phase of boom in motorcycle sales. The fact that no other player commanded the brand name which
Hero Honda enjoyed in motorcycle segment also added up to its success. In addition most other players
such as Bajaj, TVS, LML etc., took time to assimilate the change in customer preferences and come up
with models to buck the trend. Meanwhile Hero-Honda's designs were ready on the platter. Its R&D had
been able to come up with models such as CBZ, Passion etc., in the premium segment to capture the hot
demand. Riding high on the expectations of consumers, Hero Honda has successfully crossed over the
one million units mark in motorcycle sales. Its popular model Splendor is the largest selling motorcycle
in the world.

To give a boost to its youthful image the company has chosen Saurav Ganguly and Hrithik Roshan as
brand ambassadors. The company has also embarked on in-film advertising in a forthcoming Hindi
movie. In order to expand its reach to rural areas, the company has recently launched a marketing
initiative in towns with a population of less than 50,000 in Uttar Pradesh. As a part of this initiative, it
started a mobile workshop and showroom, through which people will be able to gather knowledge about
the companies' vehicles and can also buy them. These mobile marketing efforts are focused on Splendor
and Joy.

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 The legend of Hero Honda

What started out as a Joint Venture between Hero Group, the world's largest bicycle manufacturers and
the Honda Motor Company of Japan, has today become the World's single largest two wheeler
Company. Coming into existence on January 19, 1984, Hero Honda Motors Limited gave India nothing
less than a revolution on two-wheels, made even more famous by the 'Fill it - Shut it - Forget it '
campaign. Driven by the trust of over 5 million customers, the Hero Honda product range today
commands a market share of 48% making it a veritable giant in the industry. Add to that technological
excellence, an expansive dealer network, and reliable after sales service, and you have one of the most
customer- friendly companies.

This is proved by the company's sales over the years:

1985-86 43,000 units

1989-90 96,200 units
1998-99 5,30,600 units
1999-00 7,61,210 units
2000-01 10,29,555 units
2001-02 14,25,195 units
2002-03 16,18,000 units
2003-04 19,54,554 units
2004-05 21,44,454 units
2005-06 22,46,878 units
2006-07 25,54,455 units

Customer satisfaction, a high quality product, the strength of Honda technology and the Hero group's
dynamism have helped HHML scale new frontiers and exceed limits.

In the words of Mr. Brijmohan Lall Munjal, the Chairman and Managing Director, "We will continue to
make every effort required for the development of the motorcycle industry, through new product
development, technological innovation, and investment in equipment and facilities and through and
through efficient management."

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 HISTORY OF COMPANY
1984

- The Company was incorporated on 19th January, at New Delhi. The Company Manufacture motor
cycles upto 100 cc capacity. The Company was promoted by Hero Cycles (P) Ltd. (HCPL).

- The Company entered into a technical-cum-financial collaboration agreement with Honda Motor Co.
Ltd., Japan (HML). As per this collaboration agreement, HML was to furnish complete technical
information and know-how and trade secrets and other relevant data.

- Hero Honda CD-100 is the first four stroke motorcycle to be introduced in India in 100cc range. Its
most attractive features are fuel efficiency and its light weight. CD-100 will be equipped with electronic
ignition system, illuminated speedometer, 4 speed gear box, neutral and flasher indicators, etc.

1985

- The Company embarked on its 2nd phase of expansion of increasing its installed capacity from 1,
20,000 to 1, 50,000 vehicles per annum by the addition of several critical aliminium and steel
components.

1989

- The Company introduced a new model "Sleek" during July.

- 850 No. of equity shares forfeited.

1990

- The Company was planning to launch a new model motor cycle-CD 100 SS suitable to semi-rural
conditions. In the domestic market the Company was reported to have a market share of 46%.

1995

- 14,420 bonus shares issued by way of consolidation of fractional coupons. - A new Technical
Collaboration Agreement has been signed with Honda Motor Co. Ltd., Japan for the period upto the year
2004 which includes technology related to models of higher Engine displacement.

- The Company allotted 39, 79,500 No. of Equity Shares of Rs. 10/- each as Bonus shares on 7th
February, by way of capitalisation of General Reserves.

1997

- Hero Honda Motors has launched its newest motorcycle, the Street, a 100 cc bike designed for use in
congested urban traffic conditions.

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- Hero Honda Motors Ltd (HHML) has set up a new motorcycle plant in Gurgaon, near Delhi for the
manufacture of the Honda Super Cub 100 cc stepthro bike.

- A new step thru model `Street-100' with unique feature was launched on 24th January.

1998

- The company proposes to increase the share capital to 5 crore equity shares of Rs. 10 each, 4 lakh
cumulative redeemable preference shares of Rs. 100 each and 4 lakh cumulative convertible preference
shares of Rs. 100 each with power to increase or reduce it from time to time.

2000

- Hero Honda Motors Ltd. and Tata Finance Ltd. have signed a national tie-up agreement. The Company
is the largest manufacturer of motorcycles in the country.

- The Company will relaunch its step thru Stree Smart on Baisakhi 13th April.

- The Company was ranked as the 9th Highest Value Creator among 12 industry groups within the
Bombay Stock Exchange top 100 companies over a five year period (1994-99).

2004
It is hero honda privilege to share with you that Hero Honda sold over 2 million motorcycles and
recorded a 23% growth over last year’s 1.68 million sales. Not only that, Company’s sales growth was
higher than the industry average of 14%. company also improved its market share to 48% and 37% in
motorcycles and two-wheelers respectively.
With 5 new launches, namely CD Dawn, Karizma, Splendor+, Passion Plus and Ambition 135 during
the year, the entire product range gave a fresh and contemporary image to the customers.

2006-2007

New Delhi, Friday, June 01, 2007: New Delhi, June 1, 2007: Hero Honda Motors Ltd. (HHML), the
world’s largest two-wheeler manufacturer, has yet again reported better-than-industry performance,
selling 2,85,109 units in the month of May 2007. This performance has come against a sales volume of
2, 62,544 in April 2007. The Company sold 3, 03,444 units in May 2006. Continuing with its new
product launch focus, HHML introduced the all-new Splendor NXG earlier this week. The Company,
which launched eight new models in the last financial year, has carried on with its strategy of supporting
the new product launches with 360 degrees communication and brand building initiatives. HHML
continues to strengthen its market share of 50 per cent in motorcycles achieved at the end of April, even
as the industry has witnessed a double digit decline in motorcycle sales in the month of May.

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8
BUSINESS
Hero Honda is the largest player in the motorcycle segment. Focused on contemporary design and style,
the company has a comprehensive range of bikes in its stable viz; CD-100DX, CD-100SS, Splendor,
Street Smart, Sleek, CBZ, Passion. However ‘Street ‘failed to evoke market fancy while sporty ‘CBZ
‘dropped down the popularity chart. Hence the company continues to rely on urban – centric ‘ Splendor
‘; its primary revenue spinner with the USP of fuel – efficiency, which accounts for over 60-70%of its
sales. The “Passion " launched in mid -Jan 2001has had a resounding success contributing to 26% of
total volumes and has not cannibalized the volumes of ‘ Splendor ‘. With the sale of over 1mn
motorcycles in 2000-01, the company has also become the largest volume seller among all Honda
Companies and ventures in the world.

The company has now shifted its focus towards launch of new products. HHML launched a 100cc
motorcycle ‘Joy ‘in FY2001delivering 65 to 70 km per liter in city driving conditions. The company
hopes to achieve a sale of 8,000 to 10,000 units of Joy per month. The company is also planning to
launch motorcycles in 200cc –300 cc category and is looking at the possibility of introducing a “luxury
motorcycle “in the same category. HHML has planned an additional capacity of 1.5mln unit’s pa at
Dharuhera plant by investing Rs3bn ($65mn) to meet the huge and increasing demand for motorcycles.

The Honda Motor Corporation of Japan has set the annual sales target of 1.75 mln 2-wheelers (25% of
worldwide target) for 2003 in India, to be contributed to the extent of 1.5 mln by HHML and the balance
by its wholly owned subsidiary Honda Motorcycles & Scooters India Pvt. Ltd. HMSI launched ‘Activa
‘the 4 stroke automatic medium-sized, 102-cc scooter in July 2001 and is looking at volumes of about
50,000 from its first product. It also plans to launch another scooter next year are also in the offing in
order to increase the sales volumes to 1 lakh units.

The current mix of Hero Honda’s urban to rural sales is about 40:60 and is estimated to remain at the
same level in the future too.

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 FOUR P’s OF MARKETING

PRODUCTS AND SERVICES

Designed with customer comfort in mind, with a contoured low-slung seat, specially designed
handlebar and a strong double-cradled tubular frame. This bike epitomizes riding pleasure. Truly, the
limousine of Indian two wheelers.

The Hero Honda Splendor is an excellent example of the term. Designed with customer comfort in
mind, with a contoured low-slung seat, specially designed handlebar and a strong double-cradled tubular
frame. This bike epitomizes riding pleasure. Truly, the limousine of Indian two Wheelers.

The 4-stroke, 100 cc driving machine from Hero Honda. A bike that will stop customer right in
there tracks. Both by its look and performance. True to its Honda lineage. Consider its newly designed
engine that gives you unprecedented fuel efficiency. While still delivering a punchy 7.5 PS. Next, feel
the ergonomics of it as you cruise along. A well-cushioned low-slung seat helps you rest and ride at the
same time. Not to mention the suspension, that works so well that probably you'll never find out what
happens between the tyres and that bumpy road. Needless to add, owning a Splendor means a lot of
other things too. Like getting all the admiring looks. Or the pride you feel in riding a bike that meets the
pollution control standards of the next decade, today.
That's

Splendor.
A bike that will be called a turning point in motorcycling. So check it out. Tomorrow has arrived, in
style!

PROMOTION

Hero Honda has roped in film actor Hrithik Roshan, Captain of Indian Cricket team Sourav
Ganguly, Mohammad Kaif, Harbhajan Singh, Zaheer Khan, Yuvraj Singh and Virender Sehwag as its
brand ambassadors.

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 They will endorse the company products, attend corporate and brand events and help promote its
"We Care" campaign comprising safety riding, environment and friendliness.

THE product line of the hero Honda say’s

“Hero Honda desh ki dhadkan”

Advertising of hero Honda is done through

• The yellow pages

• A press release
• Sponsoring a civic event or activity

Eg: Sponsored 'India-England Women's Cricket Series' in 2002

Sponsored 'India-England Test Series' in 2001

Sponsored '7th World Cup Cricket tournament' at England in 1999

• The newspaper
• Billboards or posters
• Flyers or handbills
• Direct mail advertising
• The radio

PRICE OF HERO HONDA

Determining price levels and pricing policies is the major factor affecting revenue. Factors such
as the demand for the good, the market price, and customer responsiveness to price changes influence
the price levels at hero Honda. Other factors such as a convenient location or more personalized
service allow hero Honda to charge a competitive price. Making sure your price is standards, however,
by checking to see what competitors' prices are of similar product.

SPLENDOR
Prices (in Rupees)
Rural areas Ex. Showroom Price On Road Price
Palghar (maharashtra) 40,589 45,140
Malegaon(maharashtra) 40,613 46,000
Fathoda(goa) 40,723 44,813
Erode(tamil nadu) 40,076 42,287

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 Eranakulum (kerala) 41,831 45,763
Muzaffarpur(bihar) 40,322 44,122

PLACE

The manufacturer and wholesaler must decide how to distribute their products. Working
through established distributors or manufacturers' agent generally is most feasible for small
manufacturers. Small retailers should consider cost and traffic flow as two major factors in location site
selection, especially since advertising and rent can be reciprocal. In other words, low-cost, low-customer
traffic location means customer must spend more on advertising to build traffic.

The nature of the product or service also is important in location decisions. If purchases are
made largely on impulse (e.g., flavored popcorn), then high customer traffic and visibility are critical.
On the other hand, location is less a concern for products or services that customers are willing to go out
of their way to find (e.g., restaurant suppliers).

S’4 Concept

Sales

Hero Honda each and every packing has a hologram, which can be identified by the features like: Sales

1985-86 43,000 units

1989-90 96,200 units
1998-99 5,30,600 units
1999-00 7,61,210 units
2000-01 10,29,555 units
2001-02 14,25,195 units
2002-03 16,18,000 units
2003-04 19,54,554 units
2004-05 21,44,454 units
2005-06 22,46,878 units
2006-07 25,54,455 units

Service

Hero honda constant endeavors is to support the company's mandate of providing highest level of
customer satisfaction by taking CARE of your motorcycle service & maintenance through our vast

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network of more than 1000 committed dealers & service outlets spread across the country.
hero honda state-of-the-art authorized workshop have well laid out standards for motorcycle
servicing supported by fully equipped infrastructure in terms of quality precision instruments ,
pneumatic tools & a team of highly trained service technicians. Having your motorcycle serviced at an
authorized workshop ensures highest standards of service quality and reliability.

Customer Service

Hero Honda keeps on taking always-new initiatives to maintain its leadership on service as well as
enhance customer satisfaction level on an ongoing basis. Some of the new initiatives related to customer
service are as follows: -

· Service Advisors at dealership

· Service Plus Scheme for customers

· Pre Paid Reply cards

· Automated Mobile Workshops

· Mega Millennium Camps

· On the job training programmers

· Local Mechanics Training

There are many more initiatives, which we keep on taking along with our dealers to keep our
customers always in our mind on top priority

Service Your Bike

Hero Honda has always taken a lead in terms of defining service standards in two wheeler industry with
an aim to provide "Total Customer Satisfaction" for their valuable customers across the country and also
internationally. We are constantly endeavoring to improve the quality of our service facilities at our
Dealerships. The first and foremost step to achieve this was creating Automated Workshops at our
Authorized Dealerships and Service Centers across the country.

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SPARES - FEATURES & BENEFITS

The performance and safety of your bike not only depends on the world-class design and workmanship
assured by Hero Honda but also on the parts being used in the assembly line.

Even the finest components manufactured need replacement from time to time. And to ensure the
continued impeccable performance of your vehicle, the spare parts should also be made and replaced as
good as the components fitted by Hero Honda.

To ensure this, we manufacture and procure the replacement parts according to the specifications and
standards set by Honda motor co and us.

As a responsible Hero Honda bike owner, we recommend that for your safety, long life and high
performance of your bike, use only Hero Honda genuine parts.

Safety

Safety Education to motorcycle customers shall be an integral part of Hero Honda's motorcycle delivery
process at the showroom. Customers shall be educated on Safe Riding techniques through various audio
visual aids. Safety Instructors shall be imparting riding skills as well as education to the customers.
Dealers shall also conduct a major programmed in their respective towns with the association of local
traffic police on a regular basis on safety education and correct riding techniques.

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 SWOT ANALYSIS
Strengths:
-Technological support from Honda Motors, Japan.
-The company has a deeply penetrated dealer network.
-The company provides good after sales service through its well established dealer network.
-The company enjoys a huge market share and well established brands like Splendor, CD100, CBZ,
etc.

Weaknesses:
-Hero Honda depends on Honda for new products and this is a big weakness considering it from the
post 2005 point of view. The reason being that the technological tie-up between Hero Honda and Honda
Motors of Japan will cease to exist.
-The company doesn't have a product catering to Rs. 25,000 - Rs. 30,000 segment, and the company
might suffer on account of this as the imported motorcycles and foreign players' motorcycles are
expected to cater to this particular segment of the market. This can result in fall in the market share of
the company.
-The company imports about 31% of its spares requirements. This makes the company vulnerable to
the import policies of the government. it also exposes them to the exchange rate risk.

Opportunities:
-The motorcycle segment is growing at the rate of 33%, which provides a great opportunity for the
company to cash on. Also it is experiencing a shift in the customer preference from 4-stroke mobikes to
2-stroke mobikes. This again provides an excellent opportunity to Hero Honda to leverage its market
share and market leadership for sustained profitability.

Threats:

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The technical collaboration with Honda is valid only till 2005 and this is a serious threat as they have
been dependant on Honda for technology. Also Honda has set up its 100% subsidiary in India which
shall start producing motorcycles from 2004. This will further increase the competition.
The company has plans to foray into the scooter segment, which can also be a major threat for the future
prospects of the company. The reason being that the consumers are shifting from scooters to motorcycles
and at this hour moving from motorcycles to scooters doesn't sound logical.

MISSION STATEMENT

IN PURSUIT OF EXCELLENCE

Hero Honda, 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 our 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 company to excellence in the
new millennium".

HERO HONDA POLICIES

Some of the policies followed by Hero Honda are: -

Environment Policy:

Hero Honda are committed to demonstrate excellence in our environmental performance on a continual
basis, as an intrinsic element of our corporate philosophy.

To achieve this we commit ourselves to:

• Integrate environmental attributes and cleaner production in all our business processes
and practices with specific consideration to substitution of hazardous chemicals, where viable
and strengthen the greening of supply chain;

• Continue product innovations to improve environmental compatibility;

• Comply with all applicable environmental legislation and also controlling our
environmental discharges through the principles of "alara" (as low as reasonably achievable);

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 • Institutionalize resource conservation, in particular, in the areas of oil, water, electrical
energy, paints and chemicals;

• Enhance environmental awareness of our employees and dealers / vendors, while

promoting their involvement in ensuring sound environmental management;

they shall communicate this policy to all our employees and would make it available to interested
parties.”

Quality Policy

Excellence in quality is the core value of Hero Honda's philosophy. We are committed at all levels to
achieve high quality in whatever they do, particularly in our products and services which will meet and
exceed customer's growing aspirations through:

• Innovation in products processes and services.

• Continuous improvement in our total quality management systems.

• Teamwork & responsibility.

The policy shall be applied equally, fairly & without exception.

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Board of Directors

The Board of Directors of the Hero Honda Group Comprises of: -

Mr. Brijmohan Lall Munjal Chairman

Mr. Pawan Munjal Managing Director

Mr. Akio Kazausa Joint Managing Director

Mr. Kazumi Yanagida Director
Mr. Satyanand Munjal Director
Mr. Om Prakash Munjal Director
Mr. M P Wadhawan Director
Mr. S P Virmani Director
Mr. O P Gupta Director
Mr. M. Sudo Director
Mr. S Toshida Director
Mr. N N Vohara Director
Mr. Pradeep Dinodia Director
Gen. ( Retd.) V P Malik Director

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The Hero Honda’s table

Hero Honda company has a comprehensive range of bikes in its stable viz; CD-100, CD-100SS ,
Splendor , Street Smart , Sleek , CBZ , Passion.

CD100
Features:
The Original Fill it, Shut it, Forget it Bike
India's first 4-Stroke bike is still India's foremost.
And the reasons for its popularity are apparent.
Economy. Reliability. And the capability to go
on and on, year after year.

The 4-Stroke Engine: The CD100's 4-stroke

engine is derived from Honda's tough Econo
series range of engines, which have proved their mettle for the last 35 years. Worldwide.

Phenomenal Fuel Efficiency: A marvel of 4-stroke technology, ensuring complete combustion of fuel.
Giving you an unbelievable average of 80 kms/litre.

Economical & Easy to Maintain: Optimal oil utilization of 50 ml for every 1000 kms. And separate oil
circulation in the engine, instead of it being burnt with petrol. Hence, no carbon deposits on piston rings,
spark plug and silencer to worry about.

Built For Strength and Endurance: The CD100 is the only Indian bike using a T-bone frame of high
quality pressed tensile steel. Moreover, having less welded joints and fewer stress points, it emerges
unrivalled in terms of strength, durability and safety.

Smokeless Exhaust: CD100 is the only 100cc bike, which satisfies pollution limits and is well within
the stipulated carbon monoxide emission levels.

Nationwide Service Support: Backing the technological excellence of the CD 100 is an extensive and
well-equipped sales and service network, well spread out across the country.

Other Thoughtful Features: An improved, easy-to-read, illuminated speedometer. With a colour-

marked 'Economy Zone' indicating cruising range. Pillion-step mounted on chassis frame for pillion
rider's comfort. Double tube rear shock absorbers for better riding comfort. A range of exciting colours.

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 CD100SS
Features:
Tough And Rugged

Wider tyres. Higher ground clearance. A special engine guard.

This bike any way you look at it represents toughness. And the
ability to handle even off road, dirt track conditions with ease.
All this with the economy and comfort you have always
associated Hero Honda with.

Extra Strength. Matchless Fuel Economy: Say goodbye to

your commuting troubles. And get ready to take on the toughest
riding conditions, while continuing to enjoy the legendary fuel economy. The CDlOOSS adds a new
dimension of strength to Hero Honda's world famous 4-stroke technology; the CD100 SS adds a new
dimension of strength. Special modifications have been incorporated to prepare the bike for the rough
and the tough.

Larger reinforced shock absorbers: To soak up bumps on unkind roads. To protect your bike, and
insulate you from discomfort.

Wider tyres: To grip the road, no matter in what condition. Improved cornering stability and safety.

Heavier body weight: To ensure balance and strength. The 103 kilo dry weight makes the ride
exceptionally stable.

Engine guard: To protect your engines from the assault of sand, mud and stones. Therefore improving
performance.

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 ℵ SPLENDOR:
Features:

Designed to Excel

The Hero Honda Splendor is an excellent example of the term. Designed with your comfort in mind,
with a contoured low-slung seat, specially designed handle-bar and a strong double-cradled tubular
frame. This bike epitomizes riding pleasure. Truly, the limousine of Indian two Wheelers.

The 4-stroke, 100 cc driving machine from Hero Honda. A bike that will stop you right in your tracks.
Both by its look and performance. True to its Honda lineage. Consider its newly designed engine that
gives you unprecedented fuel efficiency.
While still delivering a punchy 7.5 PS. Next,
feel the ergonomics of it as you cruise along.
A well-cushioned low-slung seat helps you
rest and ride at the same time. Not to mention
the suspension, that works so well that
probably you'll never find out what happens
between the tyres and that bumpy road.
Needless to add, owning a Splendor means a lot of other things too. Like getting all the admiring looks.
Or the pride you feel in riding a bike that meets the pollution control standards of the next decade, today.

That's Splendor, a bike that will be called a turning point in motorcycling. So check it out. Tomorrow
has arrived, in style!

ℵ STREET SMART
Features of Street Smart:

City Riding Made Easy

Another example of technology coming up with brilliant solutions to

frustrating, everyday problems. The Street Smart is the ideal city bike.
With a unique 'City Clutch' and Rotary Gears, it is specially equipped to
let you handle stop-start city traffic with ease.

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Presenting Hero Honda Street Smart. A bike from the world's favorite Honda Cub family. This 4-stroke,
100cc bike from Hero Honda delivers great pick-up, with remarkable economy. Rotary gears and Auto-
clutch make it amazingly maneuverable. So you can smile your way in and out of crowded traffic. From
zipping down to the bazaar, to going on picnics, the sheer convenience of riding makes Street Smart the
smartest choice for the entire family. Choose one today, and join the world's largest and happiest family
of riders.

Stylish Front Shield: The Street Smart comes with trendy front shield, making it sturdier, safer and
smarter.

Storage Box: There's enough space in here for whatever you'll need to carry. From Sunday shopping to
office lunch.

Rotary Gears: Specially designed to take you from the fourth to neutral by simply avoiding the third,
second and the first. Perfect for today's stop-and-go traffic.

Unique 'City Clutch': A unique in-built auto-clutch. Hence, no clutch levers making gear changing a
simple foot-tapping affair.

Automatic Decompression: Easy start is yet another unique feature. One gentle nudge and the engine
comes alive. Self-start model also available, which helps reduce load on the battery and enhances its life.

ℵ DAWN

Features of dawn:

Hero Honda 'Dawn' comes with a special Rough Road Package

Control (TPFC) system: Tough track suspension : 'Dawn' is provided with a unique double-acting
suspension that soaks up bumps on rough roads. This gives much better riding comfort.

Double tubular frame : Its tubular double-cradle frame imparts

extra stability and strength to the bike.

Broad rear tyre: 'Dawn' has a broad rear tyre, which gives you
better grip and stability on all kind of roads. Whatever the
terrain, it is always 'ready for the rough'.

22
 CBZ

Features:

Transient Power Fuel Control (TPFC) system: For quick

acceleration, providing a sudden surge when required. A feature
which is used in some of the most advanced cars.

Tachometer and Trip meter: Tachometer displays the engine

rotation speed. And a first time feature the Trip meter measures the
distance traveled in a trip.

Dynamic vibration dampers: The dampers incorporated in the

handlebar, ensure that your ride is smooth and easy.

Air injection system: Injects fresh air into the exhaust port, to meet the emission norms.

Gear Box: Equipped with five gears and a 156cc engine that generates 12.5 bhp power. Enough to take
it from 0 - 60kmph in just five seconds and touch the top speed of 100kmph.

Unique Trapezoidal Headlight: Gives the CBZ a distinctly stylish look. Provided with 35 watts of
power these headlights help give you a clear view of the road, even in the darkest of nights.

Zero Crank Case Evaporative Emission: An advanced pollution control feature which is the first of its
kind in India. Keeping alive the Hero Honda tradition of environment friendly bikes.

Multi Lever Locking Seat: Provides storage space It also doubles as an anti theft mechanism for the
CDI unit, RR unit and the battery, by allowing the side covers to be opened only after unlocking the seat.

Adjustable Rear-Shock absorbers: They have been provided for extra comfort, and can be easily
adjusted into five positions.

Hydraulic Vibration Dampers: The hydraulic dampers have been incorporated into the handlebars to
ensure that your ride is smooth and steady.

23
PASSION

Features of Passion:

DESIGN

• Contoured Fuel Tank

• Multi- reflector Trapezoidal Headlight and Tail-
light
• Streamlined Side Cowl

SAFETY

• Position Lamp
• Side Reflector
• Wider Wheel Base

COMFORT

• Adjustable Rear Cushion

• Wide & Comfortable Seat
• Broad Rear Tyre
• Double Cradle Tubular frame

CONVENIENCE

• Large Storage Space with Locking Facility

• Helmet Holder
• Lockable Seat

24
 RURAL MARKETING- CHALLENGES AND OPPORTUNITIES

The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-
thirds of countries consumers live in rural areas and almost half of the national income is generated here.
It is only natural that rural markets form an important part of the total market of India. Our nation is
classified in around 450 districts, and approximately 630000 villages which can be sorted in different
parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest
towns, etc.

The success of a brand in the Indian rural market is as unpredictable as rain. It has always been difficult
to gauge the rural market. Many brands, which should have been successful, have failed miserably.
More often than not, people attribute rural market success to luck. Therefore, marketers need to
understand the social dynamics and attitude variations within each village though nationally it follows a
consistent pattern.

While the rural market certainly offers a big attraction to marketers, it would be naive to think that any
company can easily enter the market and walk away with sizable share. Actually the market bristles with
variety of problems. The main problems in rural marketing are:

 Physical Distribution

 Channel Management

 Promotion and Marketing Communication

The problems of physical distribution and channel management adversely affect the service as well as
the cost aspect. The existent market structure consists of primary rural market and retail sales outlet. The
structure involves stock points in feeder towns to service these retail outlets at the village levels. But it
becomes difficult maintaining the required service level in the delivery of the product at retail level.

One of the ways could be using company delivery vans which can serve two purposes- it can take the
products to the customers in every nook and corner of the market and it also enables the firm to establish
direct contact with them and thereby facilitate sales promotion. However, only the bigwigs can adopt
this channel. The companies with relatively fewer resources can go in for syndicated distribution where
a tie-up between non-competitive marketers can be established to facilitate distribution.

25
As a general rule, rural marketing involves more intensive personal selling efforts compared to urban
marketing. Marketers need to understand the psyche of the rural consumers and then act accordingly. To
effectively tap the rural market a brand must associate itself with the same things the rural folks do. This
can be done by utilizing the various rural folk media to reach them in their own language and in large
numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, melas and
other activities where they assemble.

One very fine example can be quoted of Escorts where they focused on deeper penetration .In
September-98 they established rural marketing sales. They did not rely on T.V or press advertisements
rather concentrated on focused approach depending on geographical and market parameters like fares,
melas etc. Looking at the ‘kuchha’ roads of village they positioned their mobike as tough vehicle. Their
advertisements showed Dharmendra riding Escort with the punchline ‘Jandar Sawari, Shandar Sawari’.
Thus, they achieved whopping sales of 95000 vehicles annually.

One more example, which can be quoted in this regard, is of HLL. A year back HLL started ‘Operation
Bharat’ to tap the rural markets. Under this operation it passed out low–priced sample packets of its
toothpaste, fairness cream, Clinic plus shampoo, and Ponds cream to twenty million households.

Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be
said that the future is very promising for those who can understand the dynamics of rural markets and
exploit them to their best advantage.

26
 Marketing In Rural India:

The Indian society is a complex social system with different castes, classes, creeds and tribes. The high
rate of illiteracy added to the inadequacy of mass media impedes reach almost to 80% of India's
population who reside in village. Mass media is too glamorous, interpersonal and unreliable in contrast
with the familiar performance of traditional artist whom the villager could not only see and hear, but
even touch. Besides this villagers are more conservative buyers then their urban counterparts. Their
desire to innovate with new product is restricted.

Traditional media can be used to reach these people in the marketing of new concept. The traditional
media with its effective reach, powerful input and personalized communication system will help in
realizing the goal. Besides this when the advertisement is couched in entertainment it goes down easily
with the villager.

Advantages of traditional media:-

The accessibility is high.
Involves more then one sense.
Interest arousal capability is high.
Less operational liability ¨ Minimum cost.

Disadvantages of traditional media:-

Range of mode choice is narrow.
Potential for cognitive gain retention is possible but restricted.
Depends on the skill of the performer But for optimum effect all elements in the rural communication
system will have to be orcheastered into a united whole.
Companies like Bajaj, Rajdoot, HLL, Nirma are the few companies which have used these methods to
the fullest extent.

Few companies which have used traditional media effectively & the strategy behind it are :-

The Strategy: Dabur address the rural marketing for its Gripe water to both men and women.

27
The Lesson: Rural women make the decisions .Its the men who buy.

The Strategy: Reckitt and Colemen uses NGO's in rural areas to educate customers about product
benefits.
The Lesson: Establishes one to one communication channels.

The Strategy: BBLIL markets its rural brands through magic shows and skits.
The Lesson: Use local idioms to convey your message in a meaningful context.

The Strategy: Hero Honda has established mobile service centers to take care of rural customers.
The Lesson: Reinforce product quality through service indicators.

28
 HERO HONDA IN THE RURAL MARKET.
In the rural market, consumers prefer motorcycles for their sturdiness and ability to sustain bad road
conditions. The stricter environment norms such as the euro emission norms are forcing companies to
install catalytic converters in the existing vehicles or go in for four-stroke engines to reduce pollution.
This has added up to the costs of scooters while most motorcycles are in tandem with these new norms.

The success of the motorcycle is more of a rural phenomenon. According to analysts, the entire age
profile of the consumer has undergone a change and the buyers / target consumers are now younger.
``So, in effect, the entire demographics now are in favour of the motorcycle segment. It is not unusual
that a large chunk of motorcycle sales are from the rural areas. Hero Honda, derives 60 per cent of its
sales from the rural segment.”

In order to promote its brand in the rural market, Hero Honda has recently launched a marketing
initiative in towns with a population of less than 50,000 in Uttar Pradesh. The initiative would involve a
mobile showroom and workshop, through which people will be able to gather knowledge about the
vehicles and also buy them. The concentration will be mainly on promoting the company's two major
brands: Splendor and Joy.

With these initiatives, Hero Honda is targeting sales of 1.3 million two-wheelers this fiscal. The festival
season has also showed an improvement in sales for Hero Honda despite the current downtrend. A factor
driving sales could be the company's offering of a two-year warranty (for which it claims to spend
approximately Rs 10-15 crore annually) and its hugely successful consumer loyalty programme.

Hero Honda makes practically nothing at its plant. The only operation done at its Dharuhera works other
than the assembly of motorcycles is engine assembly.

Hero Honda has an enormous advantage as in it has a product for each of the market segments. The CD
100 is the basic no-frills model with fuel efficiency and reliability as USP; the CD 100 SS is the
upgraded durable model positioned in the rural market; Sleek the glamorous bike for the urban youth
and the Splendor is the premium product with better features and targeted at the urban market.

Analysts believe that the biggest advantage Hero Honda enjoys is its brand image as a fuel-efficient
bike. The company expects to leverage on the strong brand image when its earliest customers start
looking for replacements.

29
A recent research report says that on the back of large volumes, Hero Honda has developed strong
vendors like Munjal Showa, Hi-Tech Gears, International Instruments and others from whom it sources
more than 80 per cent of its components. This has also helped the company to lower its import content.

Hero Honda makes practically nothing at its plant. The only operation done at its Dharuhera works other
than the assembly of motorcycles is engine assembly.

A Dream Turned into Reality

“Quote”
they must do something for the community from whose
Land we generate our wealth.
“Unquote”
This famous quote of Hero Honda’s CMD, Mr.Brijmohan Lall Munjal set the ball rolling for the Rural
Development of the area around Dharuhera (Haryana) in the year 1990 and 10 years later, the dream, the
vision has turned into reality.
Setting up of an Integrated Rural Development Centre called “Raman Kant Munjal Foundation”
in 40 acres land along Delhi Jaipur Highway (NH-5) near Dharuhera. This Nodal Agency was set up in
1992 and is responsible for initiating and undertaking all the activities & project related to Rural
Development & for the Uplift of the Community.
Some of the salient features of their Social & Community Development Projects which have been
undertaken since the last seven years are listed below :-
Raman Munjal Vidya Mandir : Raman Munjal Vidya Mandir of Raman Kant Munjal foundation was
started in 1992 with three classes (UKG,I& II) and 55 students with the aim to impart education that is
holistic in approach especially to the students of rural area.
Raman Munjal Memorial Hospital : A multi specialty 30 bed hospital, to be upgraded to 100 bed unit
having state of the art equipment providing quality health care to the rural population of the catchment
area of 20 KM around Dharuhera, apart from providing immediate life saving medical aid to the
Accident & Trauma victims of National highway No-8 .

Raman Munjal Sports Complex: A modern sports complex primarily to promote rural sports is likely
to be planned in near future with sports academies in Volley ball and Basket ball, in collaboration with

30
National Sports Authority of India. Out door Basket ball & Volley ball courts in addition to Hockey &
Football playgrounds are already being utilized by the local population.

Vocational Training Centre: In order to help local rural people, specially women, the Company has set
up a Vocational Training Centre. So far 13 batches comprising of nearly 150 women have been trained
in tailoring, embroidery and knitting. The Company has helped women trained at this center to set up a
production unit to stitch uniforms for its employees thus creating income generation opportunities for
them. Most of the women are now self employed.

Adult Literacy Mission: This Scheme was launched on 21st September, 1999 covering the nearby
villages of Malpura, Kapriwas & Sidhrawali wherein 36 adults were enrolled. We are now in the
process of imparting Adult Literacy Capsules to another 100 adults by involving Village Heads
and other prominent villagers to motivate the illiterate adults. The program is a regular feature,
only village keeps changing.

Marriages of Under Privileged Girls, particularly from backward classes have been organized as per
the local customs from time to time by providing financial help and other support to the respective
families.

Rural Health Care: Besides setting up a modern hospital as mentioned above, the company has
provided extensive health care services to the local community at their door step. A series of Free Health
Care & Medical Camps have been organized in the last 7 years or so and has now become a regular
feature.

Adoption of Village for Integrated Development: The Company has adopted 10 villages located
within 10 km radius of our factory for integrated rural development. Some of the developmental
activities undertaken in these villages are as under :

Drinking Water: Southern Haryana being water scarce area, the Company has installed 75 deep bore
hand pumps in the adjoining villages to provide clean drinking water.

Construction of Roads: The Company has constructed approx. 5 km of metalled roads and connected
these villages to the National Highway (NH –8).

31
Introduction

For the purpose of this project, Bajaj has chosen the two-wheeler industry. Bajaj to manufacture and sell
mopeds in the semi-urban and rural areas of selected districts in Maharashtra.

It assume that there is no player of mopeds in the rural market and hence it will have the first-mover
advantage. But this also means that we will have to create awareness of the concept of a moped. This
will be done through our promotion strategy.

It has assumed ourselves to be Bajaj Auto Ltd. Being a major player in the Indian 2-wheeler industry; it
has the required resources to launch the moped successfully in the Indian rural market. Also, since it is
already into the business of a similar product, it knows and recognizes the pulse of the Indian customer,
urban, as well as rural.

32
It plans to call our moped ‘HAWK’. It will have a 4-stroke 75 CC Diesel Engine with a maximum of
5bhp @ 5500 RPM. This extra power will be useful for it in the rural market for the various uses the
rural customers will find for it. It will have additional features suited to the rural markets and also
special accessories that will help the customer get the most out of his moped. It will be a true ‘Value-for-
money’ product and will be available in varied colours suited to the rural market.

It has chosen to launch HAWK in Maharashtra. bajaj have 2 manufacturing plants already in
Maharashtra and we plan to launch it only in a select few districts in Maharashtra, which are near to our
plant.

Its Target Market is the semi-urban and rural customer whose income is in the range of Rs.25000 –
77,000 per annum and age group is 18 – 40 years.

It plans to sell HAWK on the basis of the following points:

• Moped is cheaper than a bike.
• A Diesel-run moped will be more economical than a petrol-run moped
• Under-utilisation of the high capacity bikes in rural areas.
• More Status-for-Money
• Easy to learn, ride and economical.

The marketing strategy that it has decided to follow is as follows:

The pricing will be at Rs.15000 per HAWK for the base model without any accessories. The price, being
a major determinant of the buying decision, has to be reasonable and justifiable by the features in order
to be able to sell successfully. It will also provide credit financing schemes to the customers whereby
they can get a HAWK for as less as Rs.999 (down-payment) and an EMI of Rs.825 for the next 18
months.

The distribution of HAWK will be managed mostly by the existing Bajaj dealer network. There is a
network of 30 dealers in Maharashtra. It will be developing a new system of sub-dealers over a period of
time. it will also use intermediary agents like mechanics and petrol pump owners to help increase the
awareness about HAWK.

33
Going by the urban industry trend and the rural customer buying patterns, we have chosen to launch the
product in the month of January. Bajaj will also use a mix of other promotion techniques like test-
drives, road shows, fairs and exhibitions, contests and also the concept of ‘Influencer Selling’.

Its advertising efforts will be first oriented towards creating awareness about our product and about the
concept of a high power moped for the rural market. The advertising media we will use are:
• Television – Advertisements on Doordarshan and local language channels
• Wall paintings & hoardings in strategic locations
• Newspapers in local languages for mass awareness
• Slide shows in Theatres
• Posters and paintings on ST buses, bus stops, railway stations, and other such public places.
• Radio advertisements before and after news on AIR

Its After Sales Service will include a 1-year warranty on spare parts and free servicing for the first 3
times (not including cost of parts).

It has estimated monthly sales for the first year of launch. And aggregate sales for the first three years
after launch. These estimates are also in line with the industry sales trends.

it expect to sell 4800 units in Year I with a Profit of Rs.56 lakhs in Year I. its fixed expenses for the
purpose of this project would be around Rs.3.5 crores. Its Break-Even Sales is 25,000 units approx. and
it plans to achieve it by the end of Year III.

After being successful in these areas, it plans to expand further in the region, launch a new variant, and
also expand to other high-density states.

34
Industry Structure

The Indian two-wheelers industry can be broadly classified into three major segments - scooters,
motorcycles and mopeds. The domestic two wheeler sales of 3.778mn in FY2006 constitute scooter
sales of 33.4% (39% in FY2005), motorcycles 47.7% (41% in FY2005) and mopeds 17.6% (20% in
FY2005).

All these figures are for the urban market. We assume that there is no player in the rural market for
mopeds.

The demand for scooters is on the wane and witnessed a 20% YOY fall in FY2002. With the gradual
shift in demand, sales in the scooter segment are expected to fall further, while on the other side
motorcycle and moped segments will record continued growth in the future.

Moped Sales Trends (Urban Market)

Year 1998 1999 2000 2001 2002 2003

Moped Sales (Units)
389305 409141 435645 470812 495326 519839

The demand for mopeds to grow at a modest rate of 8% in FY01. The demand for mopeds will increase
from 0.435mn in FY2006 to 0.470mn in FY07.

For mopeds, southern and western regions of India are the major contributors with nearly 52% and 28%
of the overall moped sales. The major players in the moped segment are TVS, Kinetic Engineering, BAL
and Majestic Auto Ltd.

Two wheelers are the entry-level personal transport vehicles for a very large percentage of India's
population. Their low prices and operating costs relative to cars make them an ideal buy for almost 40
per cent of India's households. The poor state of public transport in India and the increasing urbanization
are also contributors to demand for 2-wheelers. The improved ruggedness of motorcycles has increased
its penetration in rural markets.

Competition is intense in all segments of the two-wheeler industry with fuel efficiency and price being
crucial considerations for success. Export prospects for all categories of two wheelers are good.

35
 Moped Sales Figures
Bajaj Auto
Limited
manufactures
1,000,000

900,000 scooterettes
800,000
and not
e
m
lu
o
V 700,000
s
le
a
S 600,000
mopeds.
500,000

400,000 Hence, they

300,000

200,000
are now
100,000
planning to
0

92 93 94 95 96 97 98 99 00 01 02 03 04 05
launch
Year
mopeds.

With regards
to conforming to Y2K norms, all manufacturers have fitted their mopeds with catalytic converters and
are not planning to roll out four-stroke mopeds. The fitting of catalytic converters has lead to 15 to 20%
increase in the prices of the mopeds from the present levels. The increased prices are also partly
responsible for mopeds sales to stagnate, as consumers in the segment are price sensitive.

Board of Directors

36
Board of Directors
Rahul Bajaj Chairman
Madhur Bajaj Vice Chairman & Whole-Time Director
Rajiv Bajaj Managing Director
Sanjiv Bajaj Executive Director
D.S. Mehta Whole-Time Director
Kantikumar R. Podar Director
Shekhar Bajaj Director
D.J. Balaji Rao Director
J.N. Godrej Director
S.H. Khan Director
Mrs. Suman Kirloskar Director
Naresh Chandra Director
Nanoo Pamnani Director
Manish Kejriwal Director
P Murari Director
Niraj Bajaj Director

Committees of the Board

Audit Committee
S.H. Khan Chairman
D.J. Balaji Rao
J.N. Godrej
Naresh Chandra
Nanoo Pamnani

37
About the Company

Bajaj Auto Limited are a leading manufacturer of 2 wheelers in India. Bajaj have plant located at Akurdi
near Pune and Waluj near Aurangabad. bajaj are planning to increase our market share in the 2-wheeler
segment. Bajaj have the required resources and technical expertise along with goodwill they have built
over the years among the Indian consumer.

In the recent past, a manufacturers’ ability at product innovation and opening new market niches have
also been crucial for the growth. Bajaj technical collaboration with Kawasaki of Japan has helped us to
design a new moped for the semi urban and rural Indian consumer. Improvement in product range,
access to vehicle financing schemes and deficiencies in rural personal transport will aid market
expansion.

Product Features

Product
Bajaj are launching a new moped under the brand name “HAWK” for our rural customers. Bajaj are
assuming that there are no mopeds in the rural market; whereas they are a popular product in the urban
market. Bajaj want to enter the market where the concept of moped is not known much.

Features of HAWK

Engine Characteristics:
4-Stroke – A 4-Stroke engine will be required to meet the Indian emission norms and also for fuel
efficiency.

75 CC – This will be because for two-wheelers above 75 CC, the excise duty increase is 8% i.e. 24%
from 16%.

Diesel Engine – This is because Diesel will be available easily (as it is used by tractors) and is also a
cheaper fuel than petrol. The power and mileage of a diesel engine are also greater than that of a
petrol engine.

5 bhp @ 5500 RPM – This is a highly powerful engine to provide adequate load-bearing capacity.

Sturdy design with special shock absorbers for rural conditions

Lightweight body to make it easy to handle

38
Small Battery & Dynamo to power Lights and Horn
Durable tyres for bad road conditions in the rural area

Accessories

• 2-wheel trolley
o This will be an attachment which can be removed / fitted as per requirements and doing
this would be very easy. The trolley will be attached to the moped by 2 rods with hinges
at different places to enable the free movement of the trolley and the moped. Milk
transporters can use this attachment to transport milk to co-operatives. He can also use
the moped to leave his children to school. It can also be used by farmers to transport their
produce to the near by market or urban markets, usually the farmers come to trade in the
towns or the cities.
• Hooks for milk cans: Steel S-shaped hooks
• Rear view mirrors (one or two as per requirement)
• Saree guard
• Accident guard

Colours

Bajaj plan to increase the production for Brown colour mopeds. They think it is the most suitable for
rural roads than other colours like red and green. The dust will be less visible in brown colour. Other
colours can be blue, dark green or red. They are not planning to have black colour for our mopeds as
black considered as a taboo to rural consumers.

SWOT on Bajaj

Strengths
• Bajaj already has a huge capacity of manufacturing motorbikes, a part of which it can use
for the manufacturing of the moped to be launched in the rural market.
• It has an existing network of authorized dealers. There are around 30 authorized dealers
for Bajaj in Maharashtra. These dealers are located in the districts of Ahmednagar, Akola,
Alibaug, Amravati, Aurangabad, Baramati, Buldhana, Chandrapur, Dhule, Gondia,
Jalgaon, Kolhapur, Khopargaon, Latur, Malegaon, Mumbai, Nagpur, Nanded, Nashik,

39
 Navi Mumbai, Pharbani, Phaltan, Pune, Ratnagiri, Sangli, Satara, Sholapur, Thane,
Ulhasnagar, Wardha, Yavatmal.
Bajaj can use this strong established network to distribute our product.
• With such a huge network, the rural consumer will not face the problem of availability of
spares and services.
• Bajaj Auto Limited has the technical collaboration with Kawasaki of Japan, which will
help us with the technological expertise needed for making the product suitable for Indian
rural markets.

Weaknesses
• Bajaj does not have experience/expertise in manufacturing a moped suitable for the rural
market.

Opportunities
• There are a considerable number of people ready to opt for an advanced means of
transport over a bullock cart or a bicycle.
• Through its product innovation like an extension trolley, it can show the customer an
additional number of uses of the moped.
• In spite of additional features over other mopeds, the reasonable pricing will attract a
larger number of customers.

Threats
• There are already other mopeds like the TVS existing in the urban markets, which can be
also a distant competition in the rural markets. The market share of TVS in the moped
market is at 53.3%.
• There is a constantly increasing threat from Chinese imports. They offer almost the same
products at ridiculously low prices.

40
Why Maharashtra?

Bajaj Auto Ltd. has 2 plants, both located in Maharashtra (one near Pune and the other near
Aurangabad). Bajaj want to launch our mopeds in Maharashtra first and then move on to the other states
only after bajaj establish a stronghold in the semi-urban and rural markets there.

Bajaj do not want to launch there product in any distant market or high-density area like Uttar Pradesh,
Tamil Nadu, etc. as they do not want to take a huge risk; i.e. if the product is launched in a high density
area and is not successful, it will create a bad impression about the product in the market and it will not
be possible to introduce the product in any other market again.

Also, as has always been the tradition of Bajaj, bajaj will launch the product in Maharashtra first.

41
42
Target market

Bajaj target customer is in the income group of Rs. 25,001 to Rs. 50,000 (Low Middle income group),
and Rs. 51,000 to Rs. 77,000 (Middle income group).

The age of the target customer is from 18 years to 40 years.

Mopeds are entry-level vehicles. The demand for mopeds is predominantly from low to middle income
families and also among college students, who graduate from bicycles to motorized vehicles.

Why should a low income earner go for a moped over the bike

• A moped is much cheaper as compared to bikes, which range between Rs 40,000 – Rs 70,000. A
moped is only Rs 15,000 – Rs 20,000 and hence will be a more affordable solution to the rural
customers’ needs.

• Mopeds, which we offer, will run on diesel and hence it would be a more feasible option than
petrol-run bikes.

• Motorbikes are very strong and are capable of carrying very high loads. But the high capacity,
which the motorbikes provide is not required in the rural markets in daily life. Whereas the
moped provides just the right power and strength which is required and so can be fully utilized
thus giving value for money.

• Mopeds give more status for money to the low-income farmer who wants an up-gradation for a
cycle but can’t afford a bike.

• A moped is the most economical means of motorizes two-wheeler transport in India. It does not
take any special skills to ride one, and can be pedaled like a bicycle if it runs out of petrol.
Simplicity is the key. It is the vehicle almost every cycle rider upgrades to.

Marketing Strategies

43
Pricing:

HAWK will be priced at Rs.15,000 which is a very reasonable price as compared to the price of a bike
which is around Rs.40,000 – Rs.70,000. This is very essential as for a product to be successful
in the minds of the customers. It has to be very price competitive because the rural customer is
very price-sensitive.

A major portion of the population of Maharashtra lives in the semi-urban and rural area. The people in
this region are very price-conscious and when they buy a big product such as a moped; the
price factor has a large impact on the purchase decision.

They will also be giving credit facilities to the customers in terms of an EMI of Rs. 825 and down
payment of Rs. 999.

Distribution:

Bajaj will be initially setting up authorised dealers for ‘HAWK’ in the following districts: Thane,
Raigarh, Pune, Ahmadnagar, Satara, Nashik, Aurangabad, Solapur, Beed, Jalna, Ratnagiri, and Sangli.

The distribution of HAWK will be done through the existing Bajaj Authorized Dealers. At present, there
are 30 such Authorized Dealers in Maharashtra. These showrooms cover an area of 50 to 75 kms radius
around them and will be serving all the big and small villages in their respective range.

Mechanics from different villages would be appointed as the commission agents because a mechanic is
the person who has informal relations with all people in the village and is trusted to have technical
knowledge in case of repair of tractors, cars, scooters, mopeds and other vehicles.

If a certain customer is in a small village, he will get assistance from the local mechanics or the Petrol
Pumps located in his area.

The actual delivery of the product will be given at the authorized dealers showroom.

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Promotion:

The promotion strategy has to suit the rural market and the rural customer. Above that, bajaj have a
product like a moped. Such a product has its customer between the absolute lower income group and the
upper/upper-middle level income group. Therefore the promotion has to suit this particular group of
target customers. The promotion strategy will include the following:

• Time of the launch: The promotion campaign will start during the month of January, which
comes just before Gudi Padwa, which is in March. It is an auspicious festival in Maharashtra
when the people buy new products, as it is the start of a new year. There promotion campaign
will have to be well before the actual time of harvest (when the customer actually buys) in order
to create adequate awareness of our product.

From the above graph, Bajaj can see the general trend in Moped sales in the urban segment. They
observe that in the months of February and March, the moped sales experience an upsurge. There
promotion efforts, which will start in January, will create enough awareness of HAWK till March
to capitalize on this hike. Also, soon after the month of June, sales experience another upward
trend. Our sales will be steady in the first year even between March and July on account of the
novelty factor associated with our product.

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• Finance Scheme: Bajaj will be providing finance for the customers who are not in a position to
make cash payments. The loan period shall range upto 18 months. The down payment will be
Rs.999 while the EMI will be Rs.825. We will be able to recover 12 % p.a. interest on the loan
given.

• Test Drives: Dealers will have a demo bike and we will create an awareness campaign in nearby
towns and villages for the test drive. This awareness will be created through various promotion
schemes such as distribution of pamphlets, recommendation by mechanics etc.

• Road shows: Bajaj will conduct a pyramid show in which 19 people ride on a single moped, the
total weight being almost 1000 kgs. This will help us to gain customer assurance on the strength
and durability of the product. These men will also be educating the people about the various uses
of the product and its benefits over the other brands. They are the people who will come in direct
contact with the customers.

• Co-operative Societies: The members of Co-operatives such as Dairy co-operative will be our
direct customers. We will be targeting them by providing test rides, information brochures, and
benefits of the moped just outside the co-operative collection centers, where they come to sell
their produce.

• Melas & Weekly Bazaars: In the melas or social gatherings in the village, bajaj intend to put up
stalls and give demo rides to prospective customers.

• Petrol Pumps: Bajaj will be keeping brochures of HAWK with the petrol pump owners, as there
is an extensive network of petrol pumps in Maharashtra. Bajaj will be numbering these brochures
and having a special coupon in them, which will avail the customer of Rs.300 discount on the
purchase of a HAWK. The petrol pump dealer will, in turn get Rs.100 for his promotion efforts
per customer. This will be an introductory offer.

• Contests (Cycle Race): Bajaj shall organize certain contests like cycle races. Such contests can
be organized during a festival, during the pre-harvest time or any time of the year. baja can
award the winner of the contest a Bajaj HAWK. This will create awareness about our customer
among a group of our target customers.

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 • Influencer Selling – Hire purchase: Bajaj will give the HAWK on a 15-day trial basis to the
influencers in a village like doctors, big farmers, Panchayat members, etc. After the trial period,
we will give him an option to buy a new HAWK. This concept of ‘try-before-you-buy’ will
increase the product visibility in the initial stages and also give the customer confidence in
HAWK.

Advertising

Television:
Since television is nowadays present in virtually all the households in the country, it is a potential
and an effective medium of targeting the customers and also to communicate the product as well as the
features of the product to the target customers. Since it is an audio-visual medium of communication
(advertising), it is one of the most effective mediums.

Bajaj plan to screen our advertisements on channels like Doordarshan, which is the most
common channel in India and is present an all the TV sets irrespective of the presence of any other
satellite channels. Apart from Doordarshan, Bajaj also plan to show our advertisements on regional
language channels like the Zee Alfa Marathi, DD Marathi etc. Since our launch is in Maharashtra, it
would be only logical to screen our ads on such local language channels.

The timings will be thoroughly studied and selected. Since it is a male usage product, the product
will be screened on programs with majority of male viewers. Apart from that family dramas/programs
will also have the commercials of our moped.

Wall Paintings:
Walls in villages are usually used for advertising of local products. This is a very effective
medium and they will use it extensively. The walls of large shops, fences of a factory, walls of godowns,
etc. in a village and the walls of dhabas and other such shops on village roads will be painted.

Newspapers:
Newspapers are one of the most effective forms of media available for advertising. Any person
with the basic literacy i.e., the ability to read can read a newspaper. Therefore, even the lower income

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group people who own a bicycle and are the potential users of a moped as their next (graduating) means
of transport can be targeted through this medium. Bajaj have identified the following newspapers for our
initial advertising campaign in Maharashtra:

o Dainik Aikya - news in Marathi

o Lokmat Times - daily news paper with national, regional, Marathi, sports, entertainment,
art and culture news
o Pudhari - news in Marathi
o Sakal - provides news and features in Marathi
o Loksatta – daily news in Marathi

Hoardings:
Hoardings can be easily put up on highways near towns. These hoardings will be seen everyday
by lots of people and mainly, the semi-urban customer, because of his frequent visits to the nearby
towns. Merely showing the product on the hoarding gives a lot of eyeballs.

Bajaj will also put up hoardings carrying messages issued in public interest near accident-prone
zones, railway crossings, and town/village entrance (gate).

Theatres/Cinema Halls:
Before the start of the movie and during intervals, bajaj will be showing there advertisements in
the theatres to increase awareness. In rural areas, even the cinema advertisements are quite popular
amongst the village folk.

S T Buses & Railway stations:

The ST buses are the major mode of public transport in rural areas. Almost all the people
residing in the rural areas use the ST buses as a means of transport. The network of ST buses is very
dense. They connect almost all the districts and villages in a state with each other. Hence, if the sides
and the back of the ST buses are used to advertise our product, it will receive a wider visibility. Also, the
bus stands will be used to advertise HAWK.

Due to the heavy traffic of people traveling and waiting at bus stops and railway stations
everyday, an advertisement at these places will also fetch a lot of visibility for the product.

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Radio:
In the semi-urban and rural areas, even after the penetration of the television, many people still
prefer to listen to the radio at night for the daily news. Hence, we will give advertisements before and
after the news and other such popular programs on AIR (All India Radio).

After Sales Service

Bajaj will be providing After Sales Service through the village mechanics, petrol pump workers
and at the dealers’ workshops. There will be special workshops and training sessions organized to
educate the mechanics to provide good service to the customers. The mopeds come with a 1-year
warranty on spare parts and free servicing for the first 3 times (not including cost of parts).

Financial Projections

Sales Projections

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Projected Monthly Sales for the First Year of the launch of HAWK

Month Sales Month Sales

January 260 July 425

February 350 August 425

March 450 September 450
April 400 October 425

May 375 November 450

June 375 December 415

Annual Projections

– Total Sales in Year I – 4800 units (monthly distribution as above)

– Total Sales in Year II – 7300 units (after expanding to other areas)
– Total Sales in Year III – 12500 units (extensive market penetration)

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Projected Profit & Loss Account & Break-Even Analysis for Year I

Unit Sales 4800

Price / Unit (Rs.) 15000

% Of
Particulars Rupees
Net Sales

Gross Sales 72000000

Excise Duty 16% 11520000
Net Sales 100% 60480000
Raw Materials 51% 36720000
Salaries & Wages 7% 4233600
Power & Fuel 2% 1209600
Advertising/ Promotion Expenses 10% 6048000
Other Expenses 11% 6652800
Cost of Sales 91% 54864000

Final Contribution 9% 5616000

Total Fixed Outlay 35000000

Contribution / Unit 1392.86

Break-Even Sales (Units) 25128

From the above Break-Even Analysis, we can safely conclude that we will achieve Break-Even in Year
III.

Future Plans

• After successfully launching the product, Bajaj can move on to the other high-usage areas in
Maharashtra where HAWK would be used.

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 • Bajaj also plan to introduce another high-end variant of HAWK directly competing with the
motorbike segment once the basic model takes off.

• Bajaj S will then expand to other high-density states like Uttar Pradesh, Punjab, Gujarat and
Tamil Nadu.

Village survey report

For variety of purpose, I have visited the following places laying south and north Mumbai respectively
and carried out rural market survey of two wheelers

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KARLA
Vaaksai
Vergoan

PALGHAR
Shirgauon
Mahim
Saatpadi

Mostly the interviews have been males or between the age group of twenty to fifty
Occupations of villagers extend right from farming, agriculture, poultry, small time business, STD PCO
ISD XEROX, gas agency, temple etc.
People are large known of scooters and bikes of company like hero Honda, Bajaj, TVS, Yamaha, and
Kawasaki.

They aware of the brands-CBZ, M80, hero Honda Street, victor, Karisma, Pulser, Boxer.
In KARLA and its nearby villages Kawasaki is most popular while in palghar, hero Honda, splendor has
capture majority market share.
On an average, at least per person per family owns bike
Two wheelers are the most preferred for road transport due to poor and narrow roads

BIBLIOGRAPHY

1) Hero Honda.

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2) Bajaj Auto limited
3) Internet
4) www.automartindia.com
5) www.economictimes.com
6) The Fpj business journal
7) Village survey done

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