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Target Market for Hero Impulse

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The target market for Hero Moto Corp. was to be analyzed and results were to be interpreted. For this descriptive research design was being utilized by doing this the presentation of important problem that is the target market was found by the use of surveys regarding the customer differentiation which actually had the basis of the buying ability of the consumer in analysis. Also it helps to analyze the unknown areas in the research by discovering the target market on basis of product variables.

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The survey was done so that the consumers were allocated various classes according to their spending and then analysis was done according to the price of the bike. Also we should concentrate on the factors which impact the demand for the bike. Overview of industry: The Indian two-wheeler industry recorded sales volumes of 3. 4 million units in Quarter 3, 2011-121, a growth of 11. 0% (Year over Year) but flat (Quarter over Quarter).

Although the YoY volume growth of the industry remained in double digits, the pace of growth during the last quarter was at its lowest gear in the last three years.

The deceleration in growth was contributed mainly by the motorcycles segment which grew at a much lower rate of 9. 2% (YoY) in Q3, 2011-12; even as the scooters segment continued to post 20%+ (YoY) expansion. Overall, ICRA expects the domestic two wheeler industry to report a volume growth of ~13% in 2011-12 as we expect growth to fade further in Q4, 2011-122 due to base effect.

In an environment where the northward movement of inflation, fuel prices and interest rates has been the nemesis of the Indian automobile industry at large, the two wheeler industry has been the most resilient reflected in its healthy volume growth of 15. 0% (YoY) in 9m, 2011-12. The growth has been supported by various structural positives associated with the domestic two wheeler industry including favourable demographic profile, moderate two wheeler penetration levels (in relation to several other emerging markets), under developed public transport system, growing urbanization and expected trong replacement demand, besides moderate share of financed purchases. ICRA (Internet Content Rating Association) expects these strengths, coupled with the Original Equipment Manufacturer’s thrust on exports, to aid the two wheeler industry to report a volume Compund Annual Growth Rate of 10-12% over the medium term to reach a size of 21-23 million units (domestic + exports) by 2015-16. [pic] 1. 1 Refers to domestic sales volumes 2. 2 The domestic two wheeler industry grew by 14. 8% (YoY) in 10m, 2011-12 TREND IN QUARTERLY SALES VOLUMES AND MARKET SHARE IN MOTORCYCLES Sales Volumes Analysis – Motorcycles

The domestic motorcycles segment recorded a volume growth of 9. 2% YoY in Q3, 2011-12 and as has been the trend over the last several quarters, the >125cc segment of motorcycles grew much faster than the 75-125cc segment. With this, the contribution of the >125 cc segment to the total motorcycles segment increased from 26% in 2009-10 to 29% in 9m, 2011- 12. Market Share Trends The Indian motorcycles segment continues to be dominated by Hero MotoCorp which has maintained its market share at over 55% in the domestic motorcycles segment over the last five quarters (Refer Chart 2). The top three players accounted for 89. % of the industry’s volumes in Q3, 2011-12 (92. 0% in 2007-08), with Honda Motorcycles reclaiming its spot as the third largest player, a position which it had lost out to TVS in the previous quarter after having retained it since Q4, 2009-10. In the 75-125cc segment of motorcycles (that represented 71% of total motorcycles sales volumes in 9m, 2011-12),

Hero MotoCorp continues to be a strong market leader with a share of 74. 2% in 9m, 2011-12 (70. 4% in 9m, 2010-11). In the >125cc segment of motorcycles, while Bajaj Auto continues to account for nearly half the segment’s volumes (49. % in 9m, 2011-12), Yamaha has been the fastest growing having improved its market share from 8. 1% in 9m, 2010-11 to 10. 1% in 9m, 2011-12. Short to Medium Term Outlook 1. ICRA expects the entry segment (bikes having price less than Rs. 40,000) volumes in the domestic market to grow at a much slower pace than the overall two wheeler industry and volume growth in this segment to be driven mainly by exports. This is because the segment is no longer a key focus area of OEMs due to limited scope for margin expansion and high interest rate sensitivity. 2.

While the executive segment (bikes in the Rs. 40,000-50,000 price range) is expected to maintain its steady growth, competition is likely to intensify following aggressive model refurbishment and new model launch plans of most OEMs. 3. The premium segment (bikes having price greater than Rs. 50,000) is expected to remain the fastest growing over the medium term, given the strong growth in purchasing power in the hands of middle-class urbanites, especially in the age group of 20-30 years. This should also translate into superior profit margins for players that are stronger in the premium segment.

Chart 1: Trend in Quarterly Sales Volumes of Motorcycles (Domestic) [pic] Chart 2: Trend in Market Share in Motorcycles Segment (Domestic) [pic] Competition analysis: Hero MotoCorp. Trend in Financial Performance of Hero MotoCorp: [pic] Revenues: In Q3, 2011-12, Hero MotoCorp’s revenues at Rs. 5,983. 6 Crore grew by 16. 9% YoY and 3. 4% QoQ, supported by 11. 3% YoY and 2. 9% QoQ increase in sales volumes and 5. 0% YoY and 0. 5% QoQ increase in average realizations. Till 2010-11, exports accounted for 2. 5% of the company’s sales volumes.

Although since the time Hero MotoCorp’s JV agreement with its erstwhile partner Honda (Japan) ceded in Dec 2010, the company has been unable to scale up its exports much; it is likely to get more aggressive on the exports front as and when its fourth manufacturing plant gets established (for which the company is mulling a location near one of the ports). Operating Profit Margins (OPM): Hero MotoCorp’s OPM at 15. 0% in Q3, 2011-12, declined marginally by 15 basis points (bps) QoQ but increased by 454 bps YoY.

The YoY expansion in HMCL’s core EBITDA margins, however, was relatively lower at 194 bps YoY on exclusion of the estimated royalty payments made by HMCL to its erstwhile partner Honda Motor Company (HMC, Japan) in Q3, 2010-11. Going forward, HMCL’s ability to sustain the scale required to absorb the additional expenses being incurred for creating a new corporate brand, introduction of new models, building of R&D capability and exploring overseas markets will govern its profitability. Net Profits: Hero MotoCorp’s Q3, 2011-12 PAT at Rs. 613. Crore grew by 42. 9% YoY and 1. 6% QoQ. Overall, the company’s revenues and PAT touched a record high in Q3, 2011-12. Bajaj Auto: Trend in Financial Performance of Bajaj Auto [pic] Revenues: In Q3, 2011-12, Bajaj Auto’s revenues at Rs. 5,063. 2 Crore grew by 21. 2% YoY but declined by 3. 9% QoQ) led by continued strong exports growth in both the two wheeler as well the three-wheeler (3W) segments; increase in average realization due to both price increase as well as favourable change in product mix; and favourable currency movement on exports.

The company management’s outlook on exports (~32% of two wheeler volumes in Q3, 2011-12) remains robust with a target to achieve export of 1. 5 million units in 2011-12E, reflecting a growth of 25% over 2010-11. Operating Profit Margins (OPM): Bajaj Auto’s OPM improved to 21. 0% in Q3, 2011-12, higher by 63 bps YoY and 89 bps QoQ. The improvement in margins was supported by relatively higher realizations from exports, operating leverage benefits and rationalization of spends on sales promotion.

The DEPB benefits were discontinued post September 2011; however, BAL has undertaken price increase on export models (besides price increase on domestic models), which should allow the company to sustain its margins going forward. Net Profits: In Q3, 2011-12, while Bajaj Auto’s OPBITDA growth at 25. 0% (YoY) was robust, the company’s PAT at Rs. 795. 2 Crore grew at a relatively lower rate of 19. 2% (YoY). This was due to the exceptional MTM loss of Rs. 58. 9 Crore recorded by the company in Q3, 2011-12 related to the valuation of forward exchange contracts.

This is a notional loss and would get reversed on maturity of the underlying contracts (assuming the company’s actual exports remain in line with its budgeted estimates during the term of the contract). TVS Motor Trend in Financial Performance of TVS [pic] Revenues: In Q3, 2011-12, TVS’ Net Sales at Rs. 1,762. 2 Crore grew by 7. 0% YoY but declined by 11. 5% QoQ. While the company’s total two wheeler volumes in Q3, 2011-12 grew by 0. 9% YoY and total three-wheeler (3W) volumes declined by 11. 0% YoY, the revenue growth was much higher by virtue of favourable change in product mix.

Thus, notwithstanding the increase in proportion of low-ticket mopeds in TVS’s domestic two wheeler sales volumes from 39% in Q3, 2010-11 to 41% in Q3, 2011-12, the increase in proportion of >100cc scooter (Wego) and >125cc motorcycles (mainly Apache RTR family) in its sales mix enabled it to improve its average realization YoY. Operating Profit Margins (OPM): TVS’ OPM at 6. 5% in Q3, 2011-12 was 44 bps higher YoY but 40 bps lower QoQ. While the company’s product mix in Q3, 2011-12 was in its favour on YoY basis, its relative deterioration on QoQ basis accordingly translated into movement in OPM.

Net Profits: While TVS recorded OPBITDA growth of 14. 6% YoY in Q3, 2011-12, the company’s PAT growth at 1. 4% YoY was much lower on account of higher tax rate and lower ‘other income’. Also, the company’s PAT in Q3, 2011-12 declined by 26. 1% on QoQ basis both due to negative revenue growth (QoQ) as well as decline in OPM on QoQ basis. Profile of the organization: [pic]Hero MotoCorp is putting forth an epic performance in the manufacture of two-wheeled motor vehicles. Serving the Indian market, Hero MotoCorp (formerly Hero Honda Motors Ltd. sells more than 3 million bikes annually with offerings ranging from fuel-efficient scooters to powerful motorcycles. The company, considered the largest two-wheeler manufacturing company in the world, exports to Africa, Asia, Eastern Europe, and Latin America. Hero MotoCorp started as a joint venture between Hero Group (run by the Munjal family) and Honda Motors. In mid-2011 Honda sold its 26% stake in Hero MotoCorp to Hero Group. CEO Pawan Munjal and the Munjal family own 52% of Hero MotoCorp.

Hero MotoCorp has three manufacturing facilities based at Dharuhera, Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per year. Hero MotoCorp has a large sales and service network with over 3,000 dealerships and service points across India. Hero Honda has a customer loyalty program since 2000, called the Hero Honda Passport Program. The company has a stated aim of achieving revenues of $10 billion and volumes of 10 million two-wheelers by 2016-17.

This in conjunction with new countries where they can now market their two-wheelers following the disengagement from Honda, Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets, and they expected to launch sales in Nigeria by end-2011 or early-2012. In addition, to cope with the new demand over the coming half decade, the company was going to build their fourth factory in South India and their fifth factory in Western India. There is no confirmation where the factories would be built. USP Wide product variety, excellent & high customer loyalty

Target Group Customers in the age 18-40 from middle class and upper class. Positioning Every person has a hero and a winner within one’s self Products 1. CBZ 2. Karizma 3. Passion 4. Pleasure 5. Splendor 6. Impulse Problems of the organization Termination of Honda joint venture In December 2010, the Board of Directors of the Hero Honda Group have decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner.

The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda. Under the joint venture Hero Group could not export to international markets (except Sri Lanka) and the termination would mean that Hero Group can now export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their bikes. So there are concerns that the Hero Group might not be able to sustain the performance of the Joint Venture alone. This has more or less impacted the image of the company and has raised question on the quality that will be provided hence forth.

Also the company had to spend additional Rs 200 crore for the new advertisement campaign which was started after the termination of tie-up. Research and Development gap:One of the terms put in the termination contract was that Honda will provide engine spares to the Hero Moto Corp. till 2014 and due to this alram has been triggered for Hero Moto Corp. for doing the innovations in the engine as well as to maintain the quality and appoin new suppliers. SWOT analysis of the organization Hero Moto Corp (Hero Honda) Strength 1. Huge brand equity and one of the biggest players in the two wheelers Indian market 2.

Excellent R&D, and wide variety of products in every segment. 3. Excellent distribution, over 3000 dealerships and service centers 4. Good and excellent rebranding from Hero Honda to Hero Moto Corp Weakness 1. Absence in the premium bike segment 2. High imports for its spare parts i. e. over 30% imports 3. Most of the products have similar features and low on design and innovation Opportunity 1. Two-wheeler segment is one of the most growing industries 2. Export of bikes is limited i. e. untapped international markets Threats 1. Strong competition from Indian as well as international brands 2.

Dependence on government policies and rising fuel prices 3. Better public transport will affect two-wheeler Objective of the study: To study target market for Hero Impulse. Scope of the Study: We have to understand the importance of target market for Hero Impulse so as to ensure that it is the best way to use for marketing investment. It is the most effective way to ensure that you are throwing away marketing investment and wasting time marketing to people who won’t buy from you. You cannot succeed and you cannot find financial freedom if you do not focus on target marketing.

You must be focused and you must be market specific. Without target marketing you will be a small business lost in a sea of competition. Know what they need — Talk to clients on a regular basis and make certain you understand what their needs are. Have them prioritize issues. Is accounting a major concern or is marketing a bigger issue? What’s immediate and what’s further down the road? Don’t focus on what you’d like to sell them. Listen carefully to what they say and, from there, identify those upselling opportunities that best match their requirements. Don’t sell products and services.

Offer solutions — Now that you know what your customers need and what you can offer to address those issues, try to lay out a variety of alternatives. Educate them — If you offer a client three different upsell options, make certain they fully understand how each alternative functions and their varied advantages. That means genuine education, not a sales shtick. Quantify — One of the most compelling strategies to successful upselling is quantifying cost versus benefit.. Stretch the timeline — An even more effective means of quantifying is illustrating how the upsell will benefit the client over the long term.

Follow through — Training and support after the sale solidifies your relationship with a client, which builds a level of trust and leads to additional upselling opportunities in the future. Also we need to know what are the demand drivers for the sales of bike in market. Managerial usefulness of Study: The study ensures: 1. Proper preplanning. 2. Product designing 3. Financial investment at right places. 4. Ensure that the strategies employed are in the right direction. 5. The process also helps in changing of the plans whenever required. Limitations of the study 1. The interviewed sample may not answer the questions true to their beliefs. . The study fails to provide any clear information on the buying behavior of the customer. 3. The data is large and it is difficult to interlink within various variables together (age, income, region). Literature Review Target marketing is a better use of your most valuable resources, i. e. time and money, to generate additional revenue. Market segmentation essentially means a subset of a market. Market segmentation refers to slicing the entire market of various parameters, which would help marketing and manufacturing companies in selecting a target group for a specific product.

Market segmentation cuts the market on the basis of certain characteristics which are similar to the needs which the product aims to fulfill and helps in fulfilling the needs of a potential customer. Apart from just the needs of a customer, there are other parameters which too are essential while segmenting the market. Some of the important points can be listed below: • Identifiable: The parameters of the segment must be measurable and identifiable. • Accessible: The segment should be accessible to communications and advertising done by the company. Substantial: The segment should be big enough to make sure the resources are optimally utilized and not wasted. • Durable: The segmented market must be able to withstand market fluctuations and should be stable. Thus, these are certain points which are essential which must be found, evaluated and analyzed before segmentation is performed. There are primarily 2 kinds of segmentation which can be done, namely consumer segmentation (business to consumer) and industrial segmentation (business to business). Consumer segmentation involves large number of people or potential customers and smaller investment per customer.

Segmentation of the consumer markets can be done on the basis of the following customer characteristics: • Geographic Segmentation: This can be done on the basis of region, population, urban/ rural market or climatic variations. • Demographic Segmentation: This kind of segmentation analyses the market on the parameters like age, gender, occupation, income, education, ethnicity, religion etc. • Psycho-graphic Segmentation: Personal human traits like activities, interests, values, attitudes etc of the potential customer group are studied for segmentation. Behavioral segmentation: Another set of parameters for segmentation are based on behavior patterns like brand loyalty, usage rate, occasions etc. Methodology and Research Design Step 1:- Setting of Objective:- Objectives have been set as target market for Hero Impulse. Step 2:- Collection of Primary Data This data will be collected by- 1. Product information and market information i. e. consumer information. 2. The customers (20 nos. ) were differentiated on the basis of the age group, bike specification, bike requirement and buying behavior the age roup of 20-39 was selected for the target market study. 3. Asking questions to different consumers from different age groups discuss with them about the product specifications and their needs. Questionnaire designing phase: In this the psychometric analysis of the consumer was done first and then later the specified consumers were faced for the technical questionnaire. Step 3:- Collection of Secondary data This data will be collected from- 1. Reference books 2. From newspapers & magazines related to the automotive Industry. 3. From internet websites. . Census data collection. Step 4:- Sorting & compiling the information collected above. Step 5:- Analysis of Primary & Secondary data. Step 6:- Presentation of finding. Research Design: It is a descriptive type of research design in which the description of the market has to be given based on some variables. Descriptive research attempts to describe systematically a situation, problem, phenomenon, service or programme, or provides information about , say, living condition of a community, or describes attitudes towards an issue.

In this process the age and gender of the consumer was a dependent variable. The psychometric characters of the consumer, their taste in bikes are independent variables. The control here is gender male and the age group of 20-39 selected and subjected for questionnaire which was done in two phases first: psychometric analysis and second: technical. Assumptions: The customer market segmentation was done on the basis of the age and demographics only and the income variable was neglected as there is very large range of data and also there is no link established so far in the two variables.

The 20 consumers who were interviewed on the basis of the age are a reflection in which the actual market consumers will behave in reality irrespective of the various segments to which they belong. Data Collection: The Product Hero Impulse. Price: 66800/- USP: India’s first transroad-On road, Off Road Bike, 55 kmpl, powerful shock absorbers. Segment Upper Middle-class people who want a bike that is stylish and gives a good mileage Target Group Young and Adventurous Men from the age bracket of 25-35 Positioning Positioned as India’s first on road and off road bike

SWOT Analysis for product. Strength 1. First brand from the stable of Hero MotoCorp after the split 2. Great positioning combining the adventurous side and executive class 3. Great technical specifications and features Weakness 1. Priced on a slightly higher side when compared to other in the segment 2. Limited target audience due to Off Road and adventurous positioning Opportunity 1. Expansion in Tier 2 cities 2. Can create a new segment in the market 3. More variants of the bike e. g. high performance versions Threats 1. New entrant 2. Pre-established Competitors 3.

Low cost bikes Market: DEMAND DRIVERS FOR THE TWO WHEELER INDUSTRY On one hand, growing economic well-being reflected in rising per capital GDP is likely to make two wheelers more affordable; on the other, various fundamental drivers such as low two wheeler penetration (in relation to several other emerging markets), favourable demographics, growing urbanization and swelling replacement demand are expected to enable the growth momentum to sustain over the medium term. [pic] Defining of population: Favorable demographic profile to continue to feed the consumption cycle

A large youth population potentially offers a sizeable market for new bikes. As per ICRA’s estimates (based on Census 2001 and Census 2011 data), around 33% of India’s population of 1. 2 billion (in 2011) belongs to the age bracket of 20-40 years. Within this, the population of males, which is the key target segment for motorcycles, is estimated to be 206 million; and the population of females, which is the key target segment for scooters, is estimated to be 189 million, suggesting existence of large size of the addressable market.

In the due course considering the price of the bike, demographics in India and the rate of income the following results can be interpreted as shown in figure. [pic] Thus out of the above the define population is of males in the age 20-39 years which is 206 million. Sample Selection: Now out of these 60 individuals from which 3 belonging to each age were selected and then they are subjected for the questionnaire. First psychometric test for their personality:

This test was taken as a control measure so that there will be less and accurate samples irrespective of other factors the personality grading was done so that the consumer can distinguished on the basis of his personality and later can be judged on his choices accordingly. This test contained the questions which differentiated the consumer’s personality divide into various groups as below: |Extraversion – How “energetic” one is. | |People who score high on this factor like to work in cooperation with others, are talkative, enthusiastic and seek | |excitement.

People who score low on this factor prefer to work alone, and can be perceived as cold, difficult to understand, | |even a bit eccentric. | |Agreeableness – One’s level of orientation towards other people. | |Those who score high on this factor are usually co-operative, can be submissive, and are concerned with the well-being of | |others. People who score low on this factor may be challenging, competitive, sometimes even argumentative. | |Conscientiousness – How “structured” one is. | |People who score high on this factor are usually productive and disciplined and “single tasking”.

People who score low on | |this factor are often less structured, less productive, but can be more flexible, inventive, and capable of multitasking. | |Neuroticism – Tendency to worry. | |People who score low on this factor are usually calm, relaxed and rational. They may sometimes be perceived as lazy and | |incapable of taking things seriously. People who score high on this factor are alert, anxious, sometimes worried. | |Openness to Experience – Tendency to be speculative and imaginative. | |People who score high on this factor are neophile and curious and sometimes unrealistic.

People who score low on this factor | |are down-to-earth and practical and sometimes obstructive of change. | Out of these only those were selected who did not belong to the class of Neuroticism. Data Analysis Personality Test Results: |Personality traits |Number of consumers | |Extraversion |18 | |Agreeableness |6 | |Conscientiousness |9 | |Neuroticism |9 | |Openness to Experience |18 | Second test technical questionnaire: The consumers belonging to neuroticism were neglected and then the remaining 51 were subjected for the technical questionnaire.

The selected consumers were subjected for the technical questionnaire which consisted of the comparative analysis of the consumers liking to buy Hero Impulse. Pattern: 1. Introduction to the specifications of Impulse. 2. Comparison was made between the consumer’s bike and Impulse. 3. Question whether the consumer will switch from the previous bike to Impulse. 4. These candidates were asked to score the various variables on a scale 1 to 10. The test results were evaluated and later the following findings were proposed.

Cite this Target Market for Hero Impulse

Target Market for Hero Impulse. (2016, Oct 28). Retrieved from https://graduateway.com/target-market-for-hero-impulse/

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