“Marketing strategies of two wheeler dealers in Bangalore”

AUTOMOBILE SECTOR

Submitted by:

SUCHINDRA REDDY.N

UNDER THE GUIDANCE OF:

INTERNAL GUIDE EXTERNAL GUIDE

Prof.Narayana prasad

MSB Bangalore

MBA DEGREE

DEPARTMENT OF MANAGEMENT STUDIES

MSB Bangalore Formerly MAGNUS School of Business

Bangalore- 560025

2009

DECLARATION

I the student of MBA 3nd semester, from MSB Bangalore MAGNUS School of

Business declare that this project report titled Marketing strategies of two wheeler

dealers in Bangalore” is prepared by me of my sincere efforts.

This report is prepared under the valuable guidance of Prof.Narayana

Prasad Department of Management Studies.

I also declare that this report has not been submitted to any other

University or Institution for the award of any Degree, Diploma, Fellow ship or

other similar titles.

Place: Bangalore.

Date: Suchindra reddy.N

CHAPTER SCHEME:-

1 Executive Summary

2 Introductions

3 Industry Profile

4 Objectives

5 Methodologies

6 Data Collection

7 Bibliography

Marketing strategies of two wheelers dealers

1 EXECUTIVE SUMMARY

This report deals with Motor Bike Industry in India, who are the major players in two

wheeler industry and what are all the marketing strategies they are adopted. How

consumers recognize and rate different two wheelers in competitive scenario.

The project named “Marketing strategies of two wheeler dealers in Bangalore” is

undertaken to analyze how dealers utilizing the four p`s (product, place, price and promotion) of

marketing mix and what are all current trends is going on in two wheeler automobile industry.

Main aspects of the project are to analyze the different products and services

offered.

This survey will help the two wheeler sector to evaluate their product and the services

they deliver. This will act as a tool for the company to know their opportunities and

threats in the market. Expectations of the company from this survey are:

How to maximize the sales.

To improve the promotional activities.

Customize the product as per the customer’s needs.

This project is not concentrated to a particular area or factor. This project basically

includes all the factors which emphasize purchasing decision of a customer and his

choice.

The project is based on a Market Survey being conducted of the general customers &

thereby analyzing and recording their views about present strategies adopted by

dealers.

2 INTRODUCTION

Automobile is one of the largest industries in global market. Being the leader in product

and process technologies in the manufacturing sector, it has been recognized as one of

the drivers of economic growth. During the last decade, well directed efforts have been

made to provide a new look to the automobile policy for realizing the sector's full

potential for the economy. Aggressive marketing by the auto finance companies have

also played a significant role in boosting automobile demand, especially from the

population in the middle income group.

A Nations economy is well known from its transport system. For instant and rapid

growth in economy, a well-developed and well-networked transportation system is

essential. As India's transport network is developing at a fast pace, Indian Automobile

Industry is growing too. Also, the Automobile industry has strong backward and forward

linkages and hence provides employment to a large section of the population. Thus the

role of Automobile Industry is very essential in Indian economy. Various types of

vehicles are manufactured by the Automobile Industry. Indian Automobile Industry

includes the manufacturing of trucks, buses, passenger cars, defence vehicles, two-

wheelers.

The two-wheeler manufacturing is dominated by companies like TVS, Honda

Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc.

The automobile industry in the country is one of the key sectors of the economy in terms

of the employment opportunities that it offers. The industry directly employs close to

around 0.2 million people and indirectly employs around 10 million people. The

prospects of the industry also has a bearing on the auto-component industry which is

also a major sector in the Indian economy directly employing 0.25 million people.

All is not well with the automobile industry the world over currently with the slowdown

that has gripped most of the major economies of the world. The gap between the

manufacturing capacity volume and the assembly volume is growing by the day and has

worried the manufacturers. This state of affairs has triggered a lot of cutthroat

competition and consolidation in the industry. Cost reduction initiatives have come to be

the in thing in the global industry today. Towards this direction, many automobile

factories are being closed down.

The Indian automobile industry is a stark contrast to the global industry due to many of

the characteristics, which are peculiar to India. The Indian automobile industry is very

small in comparison to the global industry. Except for two wheelers and tractors

segments, the Indian industry cannot boast of big volumes vis-à-vis global numbers

OVERVIEW OF TWO WHEELER SECTOR

Two Wheeler Industry

The Indian two wheeler 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. scooterettes and step-thru's . In

the last four to five years, the two-wheeler market has witnessed a marked shift towards

motorcycles at the expense of scooters. In the rural areas, consumers have come to

prefer sturdier bikes to withstand the bad road conditions. In the process the share of

motorcycle segment has grown from 48% to 58%, the share of scooters declined

drastically from 33% to 25% , while that of mopeds declined by 2% from 19% to 17%

during the year 2000-01. The Euro emission norms effective from April 2000 led to the

existing players in the two- stroke segment to install catalytic converters. All the new

models are now being replaced by 4-stroke motorcycles. Excise duty on motorcycles

has been reduced from 32% to 24%, resulting in price reduction, which has aided in

propelling the demand for motorcycles.

Within the two-wheeler industry, motorcycle segment grew at a phenomenally high rate

of 35% as against a deceleration of 3% for scooters and 27% for mopeds. In fact,

motorcycle has been taking away the share of scooters and mopeds in a 4.3 million

two-wheeler market and surging ahead with its market share of 68%. The increasing

demand from semi-urban and rural segments may have caused this positive shift

towards motorcycles. Also, easy credit coupled with low interest rate regime,

constrained personal transport, increasing income levels in middle class and higher

aspirations of young people all seem to be the factors responsible for such high growth

in two-wheelers. The growth in two-wheelers has been robust enough to counter the

slow down and other factors constraining the overall business activity in the country.

Also, rationalization of excise duty in the Union Budget 2002-03 had a positive impact

on the demand for motorcycles. We also expect the motorcycles to continue to lead the

two-wheeler segment like in all other Asian countries. Available forecasts suggest that

this trend would continue for another couple of years and the industry would record

nearly double-digit average annual growth up to 2006.

During the year, there have been important developments in two-wheeler industry. The

competition has strengthened though there are hardly any new entrants into the

industry. There is an increasing emphasis on price and this has led to cost cutting

efforts all across the industry, thereby, making the customer an ultimate beneficiary.

The trend also saw introduction of new motorcycles with capacity ranging from 100 to

180cc bikes. We anticipate that many more new models will be launched during the

year and provide customers plenty of choice at competitive prices.

Businesses cannot consistently grow at 25-30 per cent. Each business has a tendency

to taper and plateau after attaining a particular size. An annual growth rate of 10-12 per

cent over a period of time is extremely healthy.

The TCS study rankings are conducted at the motorcycle segment-level to provide

comparisons among similar groups of motorcycles. Motorcycles ranking highest in their

respective segments for TCS are: Hero Honda CD100 SS (best standard motorcycle

segment); Hero Honda Splendor (best executive motorcycle segment); Bajaj Pulsar

(best premium motorcycle segment); and Royal Enfield Bullet Electra (best cruiser

motorcycle segment). "The relatively low score for the premium segment indicates that

most manufacturers have fallen short of meeting the high expectations of these buyers,"

states Mr. Lochan. "Bajaj Pulsar is one exception with segment-leading ratings across

all aspects of ownership experience, particularly on areas related to vehicle styling."

The feeling of freedom and being one with the Nature comes only from riding a two

wheeler. Indians prefer the two wheelers because of their small manageable size, low

maintenance, and pricing and easy loan repayments. Indian streets are full of people of

all age groups riding a two wheeler. Motorized two wheelers are seen as a symbol of

status by the populace. Two wheelers in India are the second largest producer and

manufacturer of two-wheelers in the world. It stands next only to Japan and China in

terms of the number of two-wheelers produced and domestic sales respectively. Indian

two-wheeler industry has got spectacular growth in the last few years. Indian two-

wheeler industry had a small beginning in the early 50's. The Automobile Products of

India (API) started manufacturing scooters in the country.

Bikes are a major segment of Indian two wheeler industry, the other two being scooters

and mopeds. Indian companies are among the largest two-wheeler manufacturers in the

world. In the initial stages, the scooter segment was dominated by API; it was later

overtaken by Bajaj Auto. Although various government and private enterprises entered

the fray for scooters, the only new player that has lasted till today is LML.

The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts

175cc bike. The two-wheeler market was opened to foreign competition in the mid-80s.

And the then market leaders - Escorts and Enfield - were caught unaware by the

onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With the

availability of fuel efficient low power bikes, demand swelled, resulting in Hero Honda -

then the only producer of four stroke bikes (100cc category), gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki

and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles

respectively. These two players initially started with assembly of CKD kits, and later on

progressed to indigenous manufacturing. In the 90s the major growth for motorcycle

segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25%

CAGR in the last five years.

The industry had a smooth ride in the 50s, 60s and 70s when the Government

prohibited new entries and strictly controlled capacity expansion. The industry saw a

sudden growth in the 80s. The industry witnessed a steady growth of 14% leading to a

peak volume of 1.9mn vehicles in 1990.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted

in a decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn

vehicles. Barring Hero Honda, all the major producers suffered from recession in FY93

and FY94. Hero Honda showed a marginal decline in 1992.

The reasons for recession in the sector were the incessant rise in fuel prices, high input

costs and reduced purchasing power due to significant rise in general price level and

credit crunch in consumer financing. Factors like increased production in 1992, due to

new entrants coupled with the recession in the industry resulted in company either

reporting losses or a fall in profits.

Evolution of Two-wheeler Industry in India:

Two-wheeler segment is one of the most important components of the

automobile sector that has undergone significant changes due to shift in policy

environment. The two-wheeler industry has been in existence in the country since 1955.

It consists of three segments viz. scooters, motorcycles and mopeds. In India there are

some MNC’s and Indian company dealing in automobile sector. The main key players

who are dealing in this sector are Hero Honda, Bajaj, Yamaha, Honda, and TVS. Hero

Honda is the biggest player in this sector in India as well as in the world and playing a

very important role in two wheeler automobile sector. Hero Honda, Bajaj and TVS are

the Indian companies and Yamaha & Honda are international automobile brand.

Bajaj is the first Indian two wheeler automobile company in the market since

1945 with the name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj

trading corporation private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains

license from the Government of India to manufacture two- and three-wheelers vehicles

in 1959.

Hero Honda Motors Limited was established in 1984, as a joint venture

between India's Hero Group (world's largest bicycle manufacturers) and Japan's Honda

Motor Company. And created the world's single largest two wheeler company and also

one of the most successful joint ventures worldwide. During the 80s, Hero Honda

became the first company in India. Over 19 million Hero Honda two wheelers running on

Indian roads today.

TVS Motors is the third largest company in the two-wheeler industry with a

market share of 16%. Infect, it is the only Indian company without a foreign collaboration

in the two-wheeler industry. When the company opted out of the collaboration with

Suzuki in 2002, many believed that TVS was headed towards extinction. But the

company proved the doomsayers wrong and came out with a very successful `TVS

Victor'. TVS Motors Ltd. originally incorporated in 1982 to manufacture two-wheelers in

collaboration with Suzuki Motors of Japan, TVS was one of the leaders in two-wheeler

industry.

Yamaha Motor Corporation is the auto mobile company of Japan

(1953) which works in India since 1955 and providing latest technology in India from last

two decades. Yamaha Motor India was incorporated in august 2001 as a 100%

subsidiary of Yamaha motor corporation, Japan

Honda motors of Japan is not a new name in the two wheeler scenario

in the country, they were in a tie up with the Firodias owned Kinetic group. However in

the late 90s they parted ways after problems arose over issues like introduction of new

models, advertising expenditure, marketing strategies and other related issues. In the

mid 80 Honda motors of Japan joined hands with the largest bicycle maker of India the

Hero cycles to create Hero Honda which in a couple of decades or so have gone on to

become the single largest motorcycle company in the world. Though Honda has come

on its own on the Indian market yet it will be providing technological support to Hero

Honda for the next ten years. Thus presenting a unique situation in which the company

will be in direct competition with the company which it has been associated for nearly

two decades. Honda Motorcycles and Scooters India limited, a 100% subsidiary of

Honda motor company Japan eventually entered the Indian market with Honda Unicorn

in 2004.

Market share of two wheeler automobile sector

35.60% 27.50%

16%

7%4%9.50%

Hero Honda

Bajaj Motors

TVS Motors

YamahaMotorsHonda Motors

Others

SEGMENTATION OF TWO WHEELER

A Two Wheeler Sector Sub-Segmenting in the three Segments.

1. Motorcycle

2. Scooter

3. Mopeds

Segment-wise Analysis of Indian Two Wheeler Market

Segment Description share in 2001-

02

Share in 2006-

07

CAGR

A1 Scooter with

engine

capacity less

than 75 cc

5% 0% 33.99%

A2 Scooter with

engine

capacity

between

75-125 cc

(Scooterette)

5% 10% 32.9%

A3 Scooter with

engine

capacity

between

125-250 cc

12% 1% -27.7%

B1 Motorcycle 62% 66% 14.9%

with engine

capacity

between

75-125 cc

B2 Motorcycle

with engine

capacity

between

75-125 cc

5% 17% 44.8%

B3 Motorcycle

with engine

capacity

between

75-125 cc

1% 1% 5.7%

C1 Mopeds 10% 5% -2.7%

Financing ratios.

The sentiment towards the two-wheeler segment has been badly hit in FY08 due to the

rise in interest rates and resultant loan defaults on the part of the customers. With banks

financing

ratio bajaj auto

hero

honda Tvs motors

12 months

back 58% 71% 65%

Current 50% 59% 50%

Drop 8,00bps

1200bp

s 1500bps

having been forced to slow down lending for the purchase of two-wheelers, the

incremental volume growth of most motorcycle majors such as Bajaj Auto, TVS Motors

and Hero Honda has taken a beating.

Destination India

India is on every major global automobile player’s roadmap, and it isn’t hard to see why:

India is the second largest two-wheeler market in the world

The auto component industry has come of age and now forms an important component

of the Indian economy. In recent years, it has grown more impressively, fetch double

digit growth. More interestingly, it has captured attention as well as business from

leading auto makers of the world. The industry plays a crucial role in the automobile

sector. Manufacturing vehicles typically involve assembling a large number of

components out-sourced from number of ancillaries or component manufacturers.

Competitiveness with quality as a theme has been the watchword for the Indian industry

and especially the auto component industry ever since the Indian economy was opened

up to the world in the early 1990s. While economic revival, lower interest rates and

better road infrastructure are driving domestic demand for automobiles and, therefore,

components, increasing outsourcing by global automobile majors is creating a huge

export opportunity for Indian component manufacturers.

Growth Prospects and Key Drivers of the Indian Two Wheelers Industry

The growth witnessed by the Indian two wheeler industry indicates the growing demand

for low cost personal transportation solutions amongst the 300 million Indian middle

class consumers. Despite this spectacular growth rate, the two wheeler penetration

(number of two wheelers per 1000 inhabitants) in India remains lower than other Asian

countries. This fact provides an opportunity for continued growth in the market. India

has the lowest Penetration of two wheelers as compared to countries like Taiwan,

Thailand, Malaysia, Vietnam, Indonesia and China. In the present scenario, growth in

the two wheeler Industry will be driven by several factors:

Rise in India’s Young Working Population

With the rising levels of per capita income of people, the Indian two wheeler market

offers a huge potential for Growth. This growth is relevant in the light of the fact that 70

per cent of India’s population is below the age of 35 Years and 150 million people will

be added to the working Population in the next five years. The number of women in the

urban work force is also increasing; this will lead to the Growth of gearless scooters.

Rise of India’s Rural Economy and Growth in Middle Income Households

The growth prospects of the Indian rural economy offer a significant opportunity for the

motorcycle industry in India. The penetration of motorcycles amongst rural households

with income levels greater than US$ 2,200 per annum has already increased to over 50

per cent. The current target Segment for two wheelers, i.e., households belonging to the

Income category of US$ 2,200–12,000 is expected to grow at a CAGR of 10 per cent.

Greater Affordability of Vehicles

The growth in two-wheeler sales in India has been driven by an increase in affordability

of these vehicles. An analysis of the price trends indicates that prices have more or less

stagnated in the past. This has been part of the marketing strategy adopted by the

manufacturers to gain volume, as well as conscious efforts adopted to bring down costs.

The operating expenses of leading manufacturers have declined by around 15 per cent

in the last five years. With greater avenues of financing, the customer’s capacity to own

a two wheeler has improved.

Rapid Product Introduction and Shorter Product Life Cycle

The last five years have witnessed a sharp increase in new product launches in the two-

wheeler industry. It is estimated that close to 50 new products have been launched by

manufacturers during this period, filling up all price points and targeted at various

consumer segments.

Inadequate Public Transport Systems in most Urban Areas

The economic boom witnessed in the country and the increased migration to urban

areas have increased the traffic congestion in Indian cities and worsened the existing

infrastructure bottlenecks. Inadequate urban planning has meant that transport systems

have not kept pace with the economic boom and the growing urban population. This has

increased the dependence on personal modes of transport and the two wheelers market

has benefited from this infrastructure gap.

Challenges faced by the industry

Despite the high growth achieved in the past and the high potential in the future, the

two-wheelers market faces some challenges.

Rising Customer Expectations

The growth witnessed by the Indian two wheeler industry has attracted a number of new

entrants to the market and it is expected that the Indian industry will become more

competitive in the future. The plethora of products introduced in the past has also raised

customer expectations with respect to reliability, styling, performance and economy.

Environmental and Safety Concerns

The increasing demand for two wheelers will need to be managed to address issues

relating to overcrowding of roads. Another problem is the insufficient infrastructure for

inspection to ensure adherence to emission norms. As the industry grows, it is important

to regulate the sale of used two wheelers in a more organised manner for which a

mechanism needs to be evolved. Unregulated sale of two wheelers, especially in the

rural areas, are likely to create issues related to emissions and safety of vehicles.

Creation of Distribution Infrastructure

Leading companies need to ensure that on one hand they build adequate infrastructure

in terms of dealerships and servicing stations in the urban areas and on the other

ensure that their distribution infrastructure also reaches the rural areas

OBJECTIVE OF THIS STUDY

This study is done in keeping following objectives in view.

1 To Understand the Marketing Strategies of scooters and motor bikes

dealers in Bangalore.

2 To gain valuable insight into the two wheeler sector.

3 To study the current trends in two wheeler sector.

4

RESEARCH METHODOLOGY AND RESEARCH DESIGN:

The aim is to bring a clear picture of the procedure followed in the study.

Sample Size :

Total sample size was 12.The response taken by interview as well as

questionnaire.

Sample frame:

Since the research was localized, the sample frame consisted of local

dealers from Bangalore

Primary Data: - The Primary Data is to be collected through

1. Questionnaire

2. Personal interview

Secondary Data:- The secondary data is to be collected from

dealers

service centers

Internal Reports

Documents

Journals & Magazines

Websites

Research Design: - The primary data and secondary data will be studied and

analyzed appropriately and interpreted to extract certain facts .Whenever

necessary statistical tools and financial tools like tabulation, graphs will be

used to present the findings effectively .

EXPECTATIONS OF THE COMPANY FROM THIS SURVEY:

This survey will help the two wheeler sector to evaluate their product and the

services they deliver. This will act as a tool for the company to know their opportunities

and threats in the market. Expectations of the company from this survey are:

1) How to maximize the sales.

2) To improve the promotional activities.

3) Customize the product as per the customer’s needs.

LIMITATIONS OF THE STUDY:

The study limited to the extent of available data.

An in depth study might not be done because of time constraints.

The study is restricted to Two-wheeler dealers in Bangalore city only.

Marketing Mechanism

Promotion

Promotion concerns the message the firm sends out to potential consumers. It

provides information and persuades people, it creates awareness, stimulates demand

and differentiates the product and influences public behavior. Promotion won’t make a

bad product that no one wants a success; although the absence of promotion might htat

a good product is not successful, promotion includes all the activities or tools a

company uses to communicate or promote its product in the market.

Promotional tools or promotion mix

1. PERSONAL SELLING: It involves personal confrontation either by phone or face, it

is an expensive and time-consuming tool of promoting the product.

2. ADVERTISING: It is defined as a paid non-personal communication with a target

(usually mass) market. It is cost effective and can reach a large number of people. It

can also be used for long term or short term objectives.

There are various forms or mediums through which can advertise.

A. Broadcast Media:

Television

Radio

Cinema

B. Print media:

Newspapers

Magazines

Leaflets

C. Outdoor media:

Posters and billboards.

3. PUBLIC RELATIONS AN PUBLICITY:

Public relations are an umbrella term and refer to the totality of the organization’s

behavior with respect to the society in which it operates. The maybe regarded as good

or bad and is reflected in the company’s reputation and image.

4. SPONSORSHIP:

Sponsorship can be seen as a part of public relations and it is certainly the case that

some sponsorship goes on to generate positive publicity for the organization.

5. DIRECT MARKETING:

It is an interactive system of marketing which uses one or more advertising media to

affect a measurable response at any locations.

6. DIRECT MARKETING INCLUDES:

Direct mail.

Telemarketing.

Door to door selling.

Direct response advertising: ‘phone now’ or ‘fill in the coupon ads’

Home shopping of various types.

Factors that guide a marketer’s decision in selecting a promotion mix:

a) Nature of product

b) Overall marketing strategy

c) Buyer readiness stage

d) Product life cycle stage

7. SPONSORSHIPS:

The company has not left any stone untamed in sponsoring the major events both

globally and domestically. The biggest of all is the sponsorship of the “WORLD CUP” for

which Hero Honda has the credit of being the only two-wheeler company in the world to

do so. Besides this, the company has also sponsored events like “Master Golf”,

television academy awards, etc,

Thus the company has gained a lot of reputation by doing so.

8. DISCOUNTS/OFFERS:

The company has started giving discounts and other offers to the customers on the

purchase of a new bike, for instance, with the World Cup offer, in which the consumer

was to get a 1 gm gold coin with every purchase.

But after all these schemes and benefits may be because of cut-throat competition in

the segment with heavyweight competition such as Bajaj, kinetic, Yamaha, and TVS the

company (HERO HONDA) officially says:

“Our aim is to proactively and consistently deliver value to the customer. We are

giving back to the customer after becoming successful. Most companies give discounts

only when their products are not doing well in the market. There is lost of competition in

the segment, especially from Bajaj. But the reason for Hero Honda’s success it that we

are consumer-focused while other companies such as Bajaj tends to be more

competitor-focused.

PROMOTION POLICY:

Company gives advertisement in different media vehicles time to tome. Like in

TV. Magazines, newspaper, etc.

Hero Honda also organizes free service camps every year.

Hero Honda also takes art in trade fair.

Hero Honda with the help of ICICI Bank provides loan to the customers & also

provide easy monthly installment scheme to customers.

Hero Honda gives huge commission to their dealers.

No. of players in the two wheeler automobile sector (India):

Hero Honda motors ltd.

Bajaj auto ltd.

TVS motors company ltd.

Yamaha motors India

Honda motorcycle and scooters India

Royal Enfield

Suzuki Motors

LML

MARKETING MIX PLAN

Demographic Segmentation

Income: Our customer survey indicates that the segments available for the

Hero Honda bike are the people with monthly income of Rs. 10,000 and

above.

Age: The main segmented group for the motorcycle are 18 years and above.

Occupation: All kinds of people are taken into account. Students,

professionals, Govt. Servants, etc.

Geographic Segmentation: The potential customers are basically from every

regions of India.

Psychographic segmentation: People purchasing bikes are very stylish,

brand conscious.

Behavioral segmentation: This segmentation is done considering user

status, benefit wise.

Targeting

The proposed targeting people in the age group of 18 years and above with a

monthly income of Rs. 10,000 and above, who are adventurous, enthusiasts

and socializing and who are either students or retired individuals or may be

employed as professionals, government servants or having their own business,

but mostly male.

Positioning

The image that Hero Honda creates in the mind of the customers is the faith.

The add shown by it says “Desh ka Dhadkan”. That means it’s a member of the

Indian family. It represents the Indian culture and society.

The objectives can be achieved through the implementation of suitable marketing

strategy by the organisation. It is the marketing logic that is formulated keeping in mind

the needs of the consumers and also strategies of the competitors. The 4 factors

affect it are:

Product - The tangible offer to the market, which includes the product quality, design,

features, branding and packaging. The product is perfectly designed and all the

switch are well placed, which provides a good riding condition

Price – Pricing is an important component of marketing mix of firm. Determining

the prices of different products of a firm is a very difficult task of the marketing

manager. Price denotes money value of a product. It represents the amount of

money for which a product can be exchanged. In other words, prices represent

the money which the buyer pays to the seller for a product price represents the

exchange value of goods and services in terms of money. Price is all around.

Price factor has very well been touched by the manufactures. The manufactures

(Hero Honda) are charging very comparatively cheaper prices then their

competitors. The pricing strategy of the company is very set. They price their

product according to the cost of production and also by keeping an eye on the

price of the competitors of that segment & demand of the product in the market.

The pricing strategies adopted by Hero Honda Ltd.

The management of a firm decide to fix the price at the competitive level. This

method is adopted by Hero Honda because the bike market is highly

competitive.

The amount of money that customer pays for the product. The price of the product

should commensurate with its perceived value. If does not, the buyers will turn to

competitors products.

Place – Includes the various activities the company undertakes to make the product

accessible and available to a large number of target customers.

There are about many regional offices located in major cities through out the

country.

There are more than 10,000 dealers through out the country.

For the product distribution the company distributes its products through

authorized dealers.

The variety products are easily available in showrooms.

Promotion – The fourth marketing mix tool, includes all the activities the company

undertakes to communicate and promote its products to the target market. It consists of

advertising, sales promotion, public relations, and direct and online marketing.

Promotion represents all of the communications that a marketer may use in the

marketplace. Promotion has four distinct elements - advertising, public relations,

Personal selling and sales promotion. A certain amount of crossover occurs when

promotion uses the four principal elements together, which is common in any promotion.

Advertising covers any communication that is paid for, from television and cinema

commercials, radio and Internet adverts through print media and billboards. One of the

most notable means of promotion today is the Promotional Product, as in useful items

distributed to targeted audiences with no obligation attached. This category has grown

each year for the past decade while most other forms have suffered. It is the only form

of advertising that targets all five senses and has the recipient thanking the giver. Public

relations are where the communication is not directly paid for and includes press

releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and

events. Word of mouth is any apparently informal communication about the product by

ordinary individuals, satisfied customers or people specifically engaged to create word

of mouth momentum. Sales staff often plays an important role in word of mouth and

Public Relations.

The various promotional activities adopted by the Hero Honda

Company.

The company has 100crore rupees for its promotional activities out of which

75% is sponsored by the company and 25% from the dealers.

They may sign a celebrity for its promotional activities in recent futures.

The company provides six free services to its customers in comparison to

its competitors.

The company provides good services facilities to its customers through

dealer’s service station.

Dealers encourage its customers by giving discount, providing 0%

interest loan schemes, prices, coupons etc.

The various promotional activities adopted by Hero Honda bikes are as

follows

Credit & finance schemes

Free services to the consumers

Advertisements on Televisions, Newspapers, Magazines

Road Shows

Free trials for the new consumers

RESULTS

Companies data shows that the company produces approximately 1,

11,000 vehicles per month. Out of which they sales 60,000 motor cycles

per month.

The company has more demand of its product in western region.

The company has 21 regional offices throughout India out of which 10

contains training centers.

The main objective of these offices is to pay emphasis to human resource

development and provide good services to its customers.

Customer:

The results from customer survey are as follows:

1. Customers prefer because of their fuel efficiency.

2. Customers prefer because of their performance.

3. Customers prefer because they are value added product.

4. Customers also prefer because they are stylish.

Marketing MIX in two wheelers

4’PS OF MARKETING OF HERO HONDA

PRODUCTS

Hero Honda, which has a technology tie-up with Japan's Honda Motors, was currently

discussing the feasibility of manufacturing scooters for the Indian market, Mr. Munjal

said. However, the company has a binding clause with Honda's scooter manufacturing

Indian subsidiary, preventing it from making scooters till 2004.

Hero Honda Motors, India's largest motorcycle company, has launched the premium

segment 223cc motorcycle Karizma priced at Rs 79,000 (ex-showroom, Delhi). Many of

the products which the company has started with have been phased off. Now the

existing products are Karizma, Ambition, CBZ, Splendor, Splendor+, Passion, Passion

Plus, CD 100 SS, CD 100 and CD Dawn. Among these we are going to analyze only

three – (1) CBZ, (2) Ambition and (3) Splendor (4) Splendor +.

CBZ

Ambition

Splendor

Splendor +

The TCS study examines customer evaluations at three distinct ownership periods: 1 to

6 months, 7 to 18 months, and 25 to 36 months. This helps in understanding the

differences in satisfaction during initial ownership, in-warranty and post-warranty

ownership periods. Satisfaction ratings decline as the length of vehicle ownership

increases. However, Hero Honda Splendor is among the few models to maintain

consistency across the three ownership periods.

PRICING

Pricing is a important component of marketing mix of the firm. Determining the prices of

different products of a firm is very difficult task of the marketing manager. Price denotes

money value of a product. If represent the amount of money for which a product can be

exchange. In other words, prices represents the money which the buyer pays to the

seller for a product price represent the exchange value of goods and services in terms

of money. Price is all around.

Price factor has very well been touched by the manufacturers. The manufacturers are

charging very comparatively cheaper price i.e. Rs 45000 approx. The pricing strategy of

the company is very set. They price their product according to the cost of production

and also by keeping an eye on the price of the competitors of that segment and demand

of the product in the market.

A pricing strategy that ensured an average manufacturer margin that game dealer an

adequate return and created a reputation with consumers like “a company selling a

good quality product at a reasonable price. Industry focus them selves the low cost

producer with good quality and aimed to maintain the price advantage in every market

of two wheelers.

Hero Honda group ensures an easily affordable pricing through excellent transportation

to common man. I fixes customer centric pricing that provide customer total satisfaction.

Hero Honda’s pricing objectives are: List price, Discount, Financing schemes, Credit

terms, and Maximize profits

Hero Honda group ensures an easily affordable pricing through excellent transportation

to common man. It fixes customer centric pricing that provides the customer with total

satisfaction.

PLACE

HERO HONDA HAS direct contact with the dealers. There are no middlemen involved.

The dealers directly sell to the customers. The channel is of 1st level which has only the

dealers as the link between the customers and the company.

What Does Customer Want?

The customers of Hero Honda, according to the Asst. Manager (Sales) are very

particular about the colors that Hero Honda offers in its wide variety of scooters. He said

that the customers are very much aware of their purchase. Gone are the days when the

sales people could influence the buyer to buy a particular product. Almost 90-93% of the

customer, whoever comes to the showroom? Usually comes after he/she had made a

decision. So, the work of the sales person is less. The rest 7-10% have some doubts

with regard to the purchase of Hero Honda. It is here, where the sales persons have to

do some work in convincing the customers about the scooter. The sales person in this

regard conveys the customers about the mileage, strokes and also the parameters that

the customers enquire.

How Is The Price Determined According To The Change?

Manufacturer, on the basis of the cost of production determines the price and the

factors like tax and others. Usually the sales tax on the two wheelers is 8% but in Hero

Honda it 4%. This is because Delhi Government has found out that the pollution from

Hero Honda is very less due to the catalytic converter which every model of Hero

Honda have. The government has identified that by using the catalytic converter Hero

Honda is helping the environment which is a social cause. Hero Honda Bikes not only

have market in India, but also in abroad. To maintain the differences in market of the

different companies it takes the help of the local manufacturers or the dealers outside

for the distribution of their scooters smoothly.

PROMOTION BY HERO HONDA

Advertisement, local events sponsorship and promotions and inviting a prominent

personality for the inaugural or first like delivery function would contribute effectively in

generating a wider local interest and attention.

Hero Honda’s latest DKD –2 commercial its two brand starring its Ambassador and

India’s heart throbs, Hritik Roshan and Sourav Ganguly, truly reflects the multi fact roles

that today’s new generation plays. The commercial reflecting the charisma and vibrancy

of these two stars, takes Desh Ki Dhadkan to dazzling new heights. It is young, colorful

and vibrant and represents the icons of contemporary times. And it will go a long way in

strengthening the leadership status of the product by the mile.

The new commercial is powerful film repeat with an impressive storyline. The effort to

pack the story, drama and impact in just 60 seconds was phenomenal challenge itself.

The idea was born itself. The idea was born out of the very essence of “Hero and

Stars”. Keeping in mind would cause on the drama and impact it would cause on the

audience. It is a commercial packed with action where today’s heart throbs, Hritik and

sourav, are seen tackling new roles. The story being in a field adjoining a hill with two

cool men, Hritik and Sourav on Hero Honda bikes and Passion respectively.

Both Sameer and Aditya win lifetime opportunity act with Hritik and Sourav, the two star

heartthrobs of millions in India and all four will be seen in action in the new commercial

DKD-2.

These are some of the Slogan for every product (Bike) and these are following:-

CD-100 : Fill it, shut it, Forget it.

CD100SS : Tough and Rugged.

Splendor : Designed to Excel.

Street Smart : License to enjoy.

Passion : When style matters, Bike born in studio not in factory.

CBZ : Motorcycling Unplugged.

Hero Honda : Leading the way.

4’PS OF MARKETING OF TVS MOTOR COMPANY

PRODUCTS

Centra

Fiero F2

Fiero FX

Max 100/R

Samurai

Scooty

Scooty Pep

Spectra

Star

Star City

Star DLX

Suzuki Fiero

Victor

Victor Edge Disc

Victor Edge Drum

Victor GLX

Victor GX

XL Super

XL Super H

With the Apache, TVS is now set to redefine the 150 CC segment. With this launch TVS

aims at strengthening its position in the premium segment of the motorcycle and

consolidate further on total volumes.

ADVERTISEMENT OF TVS MOTORS

TWO-WHEELER major, TVS Motor Company, has come up with an improved

performance for the first quarter of this fiscal. The company continues to ride on the

success of the recently-launched four-stroke model, Victor. For the quarter ended June

2002, the turnover increased about 54 per cent to Rs 629.97 crore.

The `Victor' ride: The sharp spurt in motorcycle sales volume has been the key driver of

revenues. The sustained demand growth for Victor, coupled with the recovery in sales

volume of the two-stroke model, Max 100, aided an 88 per cent jump in motorcycle

sales volume.

Victor's success has improved the company's product-mix. An indigenously developed

product, the profit margin on Victor is relatively high, compared to Fiero and other

brands. This, in turn, has pushed up the operating profit margin to 9.23 per cent from

7.38 per cent in the corresponding previous quarter.

The margin expansion would have been even better, but for the increase in staff cost

and other expenditure. TVS Motor had signed up Sachin Tendulkar as its brand

ambassador. Notably, other expenditure (including advertisement and promotional

costs) increased to Rs 98.66 crore from Rs 69.42 crore.

The post-tax earnings increased 149 per cent to Rs 26.78 crore. The growth in net profit

was stunted by a rise in taxation provision to Rs 12.26 crore from Rs 3 crore in the

2000-01 first quarter. Deferred taxation of Rs 3.34 crore also played a part in pulling

down the bottom-line for TVS Motor.

PROMOTION OF TVS MOTORS

Promotions at all cities hosting the matches will give everyone a chance to be a part of

the fun filled experience surrounding this event. TVS customers will get an opportunity

to participate in 'pitch on wheels', which is a 'hit wicket get ticket promotion" which

began on October 19. 'Pitch on wheels' is a promotional activity wherein a vehicle

promoting the match would make a round of the whole city prior to each match. The

spectators at the stadium too will be treated to a whole lot of entertainment in the form

of music and dance during breaks in the games. There would also be lucky draws for

everyone in the stadium with TVS bikes as prizes

How does TVS Motor create value for its customers and measure satisfaction

levels?

In addition to continuous innovation to improve the performance, features and durability

of our two-wheelers, we also benchmark the sales of the products and service

processes to offer better value to the customer. Customer service is provided through a

large network of fully equipped dealers, authorized and certified service points. The

service network is equipped with state of the art workshops, hydraulic and pneumatic

equipment, carbon emission devices, etc. A network of authorized spare parts stockiest

has also been set-up to ensure timely supplies.

We commission customer satisfaction surveys through specialist agencies on a

continuous basis to monitor the feedback, which is benchmarked to improve product

performance and satisfaction. The company was ranked second in overall customer

satisfaction and TVS Centra emerged as the top choice in the executive segment.

Since dealers are the first customers, a comprehensive dealer management system

(DMS) is being introduced to improve dealership sales and services processes. Regular

meetings of select groups of dealers, designated as 'presidents club' and 'antenna club',

are conducted to obtain feedback on customer's expectations and solve customer

problems.

ADVERTISING STRATEGY

Currently the number one company in terms of sales and has been dominant in the

two-wheeler segment since the past decade. Since the inception of hero Honda, the

company has been using television as a major role for its publicity. Though hero Honda

was dominant in sales it lacked the skills of creating a spectacular ad till now. Though it

had a vast range of mobiles, its advertising strategy was not up to the mark. For its

publicity hero Honda has been using many famous celebrities like Saurav Ganguly, the

captain of Indian cricket team, Hritik Roshan and other famous personalities as their

brand ambassadors. Thus, hero Honda has been spending huge amounts on its

publicity.

ADVERTISING STRATEGY BAJAJ

Bajaj is always known for its outstanding ads over the period of time. Since its

inception, Bajaj has come out with variety of ads and were always successful in their

advertisements. Scooters were well known by the brand name of Bajaj. Be it any

scooter, one used to recognize it by the brand name Bajaj. This was the identity a

decade ago which the Bajaj has still maintained. Bajaj is always known for its ads

without well-known brand ambassadors which is again a plus point to its cart as it saves

a huge cost in terms of brand ambassadors unlike Hero Honda and TVS. Prior, Bajaj

used to convey the feeling of ‘Indianness’ in its ads. With a punch line ‘Hamara Bajaj’

Bajaj drove into everybody’s hearts and the title song of ‘Naye Bharat Ki Naye Tasveer’

added a great value to its mobikes and scooters.

A couple of years back, Bajaj had introduced an advertisement which promoted

all the different ranges it had, wherein they had shown each product they had with a

feeling of Indianness. Example: Eliminator passes-by a rangoli and drives slowly

sideways without disturbing it. People on boxer pass-by a temple and bend their head to

give a little offering. Such ads had revealing Indian culture had a great effect on Indians

and Bajaj was successful in most of its ads.

But recently, Bajaj had changed its brand logo along with its punch line i.e.

‘Hamara Bajaj’ got converted to ‘Inspiring Confidence’. The reason for this change as

told by the company officials was to keep pace with the new technologies in the fast

moving world. Even though it had changed its punch line, it didn’t have much effect on

its brand image.

A year back, Bajaj introduced

DTSi technology upgrading its always

successful PULSAR 150cc and

180cc. Though Bajaj had changed its

identity it still dominates for its

creativity in ads.

PULSAR 150cc (Definitely Male)

The concept of Definitely Male was well accepted by the people and Bajaj came out

with some astonishing ads. Though the DTSi technology was new, people accepted it

very well. It easily conveyed the message it wanted to. The following picture strips

conveys the advertisement:

Getting on to his bike, a man gets all set to make a

move. As he puts his helmet on, a message

appears on the windshield, 'Partially sunny from

16:37 hrs.'

While the biker cruises through the city, some army

men are out for their jog. Just before they cross a

road, a zebra crossing forms ahead them and

disappears after them, while the biker waits

patiently.

Brand Image create By Bajaj

Brand image create by Bajaj through his pro bike showroom which display his premium

bikes range such as pulsar 220, Avenger, Pulsar 180 etc.

BAJAJ’s Pro Bike Showroom

The Bajaj Prebaking showrooms will definitely be one of the

integral elements in his overall brand strategy to reinforce

the image of Bajaj being a manufacturer of quality

performance motorcycles in the country. It's the retail

experience a dedicated biker feels when he or she steps into a Probiking outlet. It's a

new space they have created and there's a lot of work to be completed.

BAJAJ PULSAR ‘DEFINATELY MALE’

Bajaj pulsar make an image of that there bike is only for guys. Through his Definitely

Male Campaign they shows behave of a young guys. This Advertisement helped lot

Bajaj to create brand positioning.

Chatting merrily, three girls

Walk by a line of motorbikes.

One's dupatta skims over the

bikes and then gets stuck...

...making her turn in

Consternation. She pulls it away

Slowly to reveal...

... The logo, "Pulsar". MVO: Bajaj

Pulsar, definitely male

TRENDS IN TWO WHEELER INDUSTRY

Mo-tor-

cycles83%

Scooters

12%

Mopeds5%

Breakup of the Industry by Segment

MotorcyclesScootersMopeds

Mopeds

Over the last 15 years, moped’s contribution in overall 2-wheelers has declined

significantly and now it remains a marginal category with just one manufacturer for the

product. Its contribution in the 2-wheelers industry now stands at 5% and we expect that

this segment will continue to be marginalised. The only player in this segment is TVS

Motor.

Scooters

Advent of fuel efficient motorcycles in the Indian 2-wheelers industry led to decline of

Scooters. However, over the last five years, it has made a recovery and is emerging as

a niche segment targeted towards women commuters. One of the reasons for this is the

increasing need of mobility for the women commuters especially in the urban areas is

due to higher number of college going girls and greater participation of women in urban

work force. The product itself has gone for a complete revamp and now this category

mainly consists of gearless products. This segment is now dominated by Japanese

manufacturers with HMSI having the leadership. HH, which is a late entrant in this

segment, has also cornered a sizeable marketshare in the scooter segment. Another

development in this segment is the launch of battery operated scooters. However, given

the high replacement cost for the batteries, this has remained a marginal segment.

Motor cycles and bikes

Executive Segment

Executive segment is the largest motorcycle segment and this is the stronghold of

market leader HH. Competitors have tried to challenge HH in this segment, however all

such challenges have fizzled out over time. With higher growth in economy segment,

the contribution of this segment had come below 50% in FY06. However over the last

three years, it has made a strong come back and now accounts for almost 60% of the

motorcycle share.

Premium Segment

This segment was creation of HH with 'CBZ'; however major boost to the segment was

given by BJAUT through 'Pulsar' which has dominated the segment. HH has remained a

marginal player in this segment and one of the reasons for this is presence of HMSI in

this segment. This segment remains a small segment in the Indian market with

contribution of around 23% to the motorcycle industry. This is the performance segment

and customers pay a premium for the novelty. Hence constant upgradation in the

product is a requisite for success in this segment.

Dealers said the customer preference is shifting away from entry-level (100cc) bikes

towards executive and premium bikes. Bajaj Auto will be the largest long-term

beneficiary of this changing trend owing to its strong dominance in the executive and

premium segments.

MARKETSHARE OF 125-250 CC MOTORCYCLES (2007-08)

BAJAJ AUTO (PULSAR)63%

YAMAHA (RX 135)

4%

TVS (APACHE)14%

SUZUKI (ZEUS)

5%HONDA

(UNICON)11%

HERO HONDA (CBZ)4%

TWO WHEELER DEALERS IN BANGALORE

The Bangalore automobile market is one of the fastest growing segments of the

manufacturing sector in the recent years. And the role of the two wheelers in achieving

this impressive growth cannot be ignored. All the leading players in the Indian two

wheeler segment such as Hero Honda, Bajaj Auto, TVS Motor, Yamaha Motor and

Kinetic Motor have continuously been working on enhancing their product value and

customer care facilities. An important aspect of their sales promotion has been the

dealer network.

The dealers play a very important role in the sales promotion of the company's products

and talking of the two wheelers, one really cannot hope of a better way of reaching out

to the customers' except with a strong dealers network.

The two wheeler companies offer dealership to a selected few based on certain

parameters like sound financial background, availability of space in a prime location in

the town/city and a decent understanding of the two wheeler business. Motor cycle

dealers act as a link between the company and the potential customers. All the leading

players from the Indian two wheeler market have set up a network of dealers' spanning

over the towns and cities almost all over the country.

A two wheeler dealer provides a detailed insight into a two wheeler, their brands and

range of options, financing and other relevant information as expected from a

customer's perspective. While the company in its advertisements and promotional

campaigns highlights on the broad features of the product, the customer is expected to

get detailed information on everything that s/he wishes to know on the concerned two

wheeler from the dealer. Further, the dealer is expected to help and encourage the

customer on identifying the best possible two wheeler that will meet her/his needs and

how best to acquire them. In addition to, the financing options, if and when needed and

how best to secure them, is also arranged by the dealers. A dealer in proper loop with

the manufacturer can start various promotional programmers like two wheeler for sale,

zero percent finance, exchange offers etc.

Marketing strategies of two wheeler dealers in Bangalore

It’s the best time of the year to find great deals. Taking advantage of the festive season,

manufacturers and retailers everywhere are rolling out the red carpet for customers.

The two-wheeler market is no exception. With competition heating up, bike and scooter

manufacturers and finance companies are doing all they can to attract customers. If you

already had a mean machine on your shopping list, here are some good reasons to go

get it now. The festival season spells better offers in terms of discounts, freebies and

attractive loan schemes. More importantly, with a possibility of an interest rate hike, it is

better to take advantage of prevailing rates.

OFFERS FROM DEALARS AND BANKERS

There is the low-down on the offers. Bajaj Auto, along with ICICI, is offering its

Pulsar customers free registration and insurance through its dealers. It also has a

tie-up with HDFC, where Pulsar customers will get 200 liters of fuel free in

Mumbai till the end of this month.

Market leader Hero Honda, which sells over two Lakh bikes every month, is

wooing customers by offering a free Reliance phone connection worth

approximately Rs 3,500 with any bike model. An HDFC account holder also gets

free insurance regardless of the model.

In some cities, HDFC is also offering free registration or a dinner set to Hero

Honda customers. Registration costs are roughly Rs 2,900 — the amount you

save as a customer.

ICICI is offering free registration and insurance in all metros; mobile handsets,

mobile accessories, mobile connection or a camera in cities in Bangalore and

Chandigarh; free travel bags or dinner sets in Madhya Pradesh.

Tamil Nadu residents can also opt for a free domestic holiday. ICICI’s promotion

for Hero Honda customers also includes a lower interest rate. At 13 per cent for

Hero Honda customers, equated monthly installments on a Rs 40,000 loan for 36

months have fallen from Rs 1,445 to Rs 1,348.

Hosur-based TVS is running a Sona Looto offer for customers buying the Victor,

Fiero or Centra. Each customer will get a 3-gm gold coin worth Rs 1,800 with the

bike.

The nationwide promotion also involves a scratch card contest and 25 lucky

winners will be able to get into a Tanishq showroom and grab as much gold as

they can in one minute. Of course, there’s an upper limit: you can’t walk away

with jewellery worth more than Rs 2.5 lakh

INTEREST RATES AND DISCOUNTS

There are also better interest rates and discounts. For example, Honda, a relatively new

entrant in the motorcycle market, has tied up with ICICI to offer an 8.4 per cent interest

rate and up to 96 per cent of the value of its Unicorn model. This is compared to the 13-

16 per cent interest rate that ICICI offers on two-wheeler loans. HDFC’s tie-up with

Honda Unicorn customers includes a 100 per cent finance on the bike at a 16-18 per

cent rate. The difference between ICICI’s and HDFC’s rate is that ICICI’s rate is flat

rate, meaning that 8.4 per cent will be charged on the loan amount for the entire tenure

rather than a simple interest reducing balance calculation. However, you should also

consider public sector banks for two-wheeler loans. A low cost of funds means that

public sector bank rates range between 10.5-12 per cent, compared to the 13-18 per

cent range offered by private sector banks. Also, processing fees are a percentage

point lower. However, there are no changes in the 12 per cent interest rate on two-

wheeler loans. Like other players, BOB offers loans up to Rs 1 lakh for any two-wheeler

for a duration of up to 60 months. However, BOB does not levy any prepayment penalty

and the outstanding interest is computed on a monthly rest.

HDFC is also leveraging its existing customer base. For existing customers, the

bank is waiving the last two equated monthly installments and the 2 per cent

processing fee, regardless of the model.

SBI has introduced a concessional rate of 10.5 per cent on two-wheeler loans as

compared to the usual 11 per cent. A customer can get an in-principal approval

till the 15th of this month and choose a model till the year end for final sanction.

TVS has also tied up with financiers like HDFC and ICICI to offer a 14-inch LG

colour TV (in some states the offer is for a 20-inch colour TV

Dealer check

I visited few dealers to have a understanding at the grass root level and here are

the key findings of the same

Our dealer check suggests that cash sales as part of overall sales has jumped to

approx 70-75% as compared to a mere 40% a year back. While, number of

financed vehicles have dropped down to 25-30% as against 60% a year back.

Financing norms have become very stringent in the last one year. Financers

are now doing a Cybil check and family background, residential proof etc have

been stressed on to a comparatively higher extent.

Interest rates for two wheelers have not taken a dip as against normal

player interest rates which have cooled down to a certain extent. Due to increase in

number of defaults financers prefer higher interest rates in order to keep customers at

bay. interest rates have eased up from 14.5% to 13.5% now.

Dealers have also agreed to the fact that sales volumes are not going to jump

significantly unless financing norms and interest rates are eased up. price cuts might

offer temporary boost to sales but the long term problem still lies in the roots of

financing and not pricing.

Two wheeler auto majors are feeling the pinch of rising input costs and

weakening Sales. in order to push the margins the companies have reduced

dealer commissions.

Due to the slowdown, two wheeler companies have stressed on cost

cutting measures. our meetings with dealers suggest that companies are cutting down

on unnecessary day to day costs like lesser consumption of electricity, rationalization of

staff. The earlier planned expenditure like expansion /renovation of showroom has also

kept on hold. but most of the dealers said they would sustain in this market even if two

wheeler market doesn’t pick up of next 5-6 months.

Number of footfalls in the showrooms has dropped down significantly. one of our

dealer said that footfalls have dropped down to 20-25/day as against 50/day previously

thereby reporting a 50% fall in demand in urban areas.

Companies had offered restricted discounts on selective models during the

last festive season in 2007. However, in the recent festive season companies have

strategically launched new awaited models in order to push sales without any discounts

on the promotions.

Companies are facing stiff cost pressure and in order to cut down expenses

companies are cutting down on vendor bases.

Companies have been passing on all necessary benefits to the customers when

it comes to reduction in prices. apart from this companies are now focusing on

attracting customers by tying up with financers thereby making financing easier.

BIBLIOGRAPHY

MAGAZINES

AME BUSINESS MAGAZINE.

AUTO MAGAZINE.

BUSINESS INDIA

FINANCIAL EXPRESS

BUSINESS LINE

OVER DRIVE MAGAZINE.

WEBSITES

WWW. INDIAINFOLINE.COM

WWW. HEROHONDA.COM

WWW.TVSMOTOR.COM

WWW.ECONOMICTIMES.COM

WWW.GOOGLE.COM