Customer Relationship Management by Sanjay Gupta

CONTENTS PAGE No.

CHAPTER 1 1.0 1.1 1.2 1.3 1.4

01 INTRODUCTION OBJECTIVE OF THE STUDY RESEARCH METHODOLOGY SAMPLE SIZE LIMITATION

CHAPTER 2 2.0

14 OVERVIEW OF LITERATURE

CHAPTER-3 3.0 3.1 3.2 3.3

25 COMPANY PROFILE INDUSTRY PROFILE PRODUCTS PROFILE DEALER PROFILE

CHAPTER-4 4.0

57 DATA ANALYSIS

CHAPTER-5 5.0 5.1 5.2 ANNEXURE:

79 FINDING SUGGESTIONS CONCLUTION QUESTIONNAIRE BIBLIOGROPHY

CHAPTER - I

INTRODUCTION

1.1. CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management is perhaps the most important concept of modern marketing. Until recently CRM has been defined narrowly as a customer data management activity. By this definition, it involves managing detailed information about individual customers and carefully managing customer “touch points” in order to maximize customer loyalty. More recently, however, customer relationship management has taken on a broader meaning. In this broader sense, customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping, and growing customers. RELATIONSHIP BUILDING BLOCKS: CUSTOMER VALUE AND SATISFACTION The key to building lasting customer relationships is to create superior customer value and satisfaction. Satisfied customers are more likely to be loyal customer and to give the company a larger share of their business.

CUSTOMER VALUE attracting and retaining customers can be a difficult task. Customers often face a bewildering array of products and services from which to choose. A customer buys from the firm that offers the highest customer perceived value the customer’s evaluation of the difference between all the benefits and all the benefits and all the costs of a marketing offer relative to those of competing offers.

CUSTOMER SATISFACTION customer satisfaction depends on the products perceived performance relative to a buyer expectation. If the products performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted. Outstanding marketing companies go out of their way to keep important customers satisfied. Highly satisfied customers make repeat purchases and tell other about their good experiences with the product. The key is match customer expectation with company performance. Smart companies aim to delight customers aim to delight customers by promising only what they can deliver, then delivering more than they promise. However, although the customer centered firm seeks to deliver high customer satisfaction relative to competitors, it does not attempt to maximize customer satisfaction. A company can always increase customer satisfaction by lowering its price or increasing its services. But this may result in lower profits. Thus the purpose of marketing is to generate customer value profitably.

This requires a very delicate

balance: the marketer must continue to generate more customer value and satisfaction but not “give away the house”. CAPTURING VALUE FROM CUSTOMERS The first four steps in the marketing process involve building customer relationships by creating and delivering superior customer value. The final step involves capturing value in return, in the form of current and future sales, market share, and profits. By creating superior customer value, the firm creates highly satisfied customers who stay loyal and buy more. This, in turn, means greater long run returns for the firm. Her, we discuss the outcomes of creating customer value: customer loyality and retention, share of market and share of customer, and customer equity.

CREATING CUSTOMER LOYALTY AND RETENTION Good customer relationship management creates customer delight.

In turn,

delighted customers remain loyal and talk favorable to others about the company and its products. Studies show big differences in the loyalty of customers who are less satisfied, some what satisfied, and completely satisfied. Even a slight drop from complete satisfaction can create an enormous drop in loyalty.

Thus the aim of customer

relationship management is to create not just customer satisfaction, but customer delight. Companies are realizing that losing a customer means losing more than a single sale. It means losing the entire stream of purchases that the customer would make over a lifetime of patronage. For example, here is a dramatic illustration of customer lifetime value: GROWING SHARE OF CUSTOMER Beyond simply retaining good customers to capture customer life time value, good customer relationship management can help marketers to increase their share of customer the share they get of the customers purchasing in their product categories. Many marketers are now spending less time figuring out how to increase share of market and more time trying to grow share of customer. Thus banks want to increase” share of wallet” supermarkets and restaurants want to get more share of stomach car companies want to increase share of garage and airlines want greater share of travel . BUILDING CUSTOMER EQUITY We can now see the importance of not just acquiring customers, but of keeping and growing them as well. Customer relationship management takes a long term view. Companies want not only to create profitable customers, but to “own” them for life., capture their customer lifetime value, and earn a greater share of their purchases.

WHAT IS MARKETING Marketing, more than any other business function deals with customers. Although we will soon explore more-detailed definitions of marketing, perhaps the simplest definition is this one: Marketing is managing profitable customer relationships. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction. Wal-Mart has become the world Largest retailer, and the worlds largest company, by delivering its promise,” Always low prices. Always! “ At Disney theme parks ”imaginers” work wonders in their quest to “ make a dream come true today.” Dell , leads the personal computer industry by consistently making good on its promise to “be direct” Dell makes it easy for customers to customer design their own computer and have them delivered quickly to their doorsteps or desktops. These and other highly successful companies know that if they take care of their customers, market share and profits will follow. Sound marketing is critical to the success of every organization. Large for-profit firms such as procter & Gamble, Sony, Wall-mart, IBM, and Marriott use marketing. But so do not for profit organizations such as colleges, hospitals, museums, symphony orchestras, and even churches. MARKETING DEFINED What is marketing? Many people think of marketing only as selling and advertising and wonder every day we are bombarded with television commercials, direct ail offers, sales calls, and internet pitches. However, selling and advertising are only the tip of the marketing iceberg. Today marketing must be understood not in the old sense of making a sale” telling and selling” but in the new sense of satisfying customers needs. If the marketer does a good job of understanding consumer needs; develops products that provide superior value; and prices distributes, and promotes them effectively these products will sell very easily. Thus, selling and advertising are only part of a larger “marketing mix” a set of marketing tools that work together to satisfy customer needs and build customer needs and build customer relationships. 6

Broadly defined, marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.

In a narrower business context marketing involves building

profitable, value laden exchange relationships with customers.

Hence, we define

marketing as the process by which companies create value for customer and build strong customer relationship In order to capture value fro customers in return. Customer value and satisfaction Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among many marketing offers? Customers form expectations about the value and satisfaction that various marketing offers will deliver and buy accordingly satisfied customer buy again and tell others about their good experiences.

Dissatisfied customers often switch to competitors and disparage the

product to others. Marketers must be careful to set the right level of expectations. If they set expectations too high, buyers will be disappointed.

Customer value and customer

satisfaction are key building blocks for developing and managing customer relationships. We will revisit these core concepts later in the chapter.

OBJECTIVE OF THE STUDY:  The main objective was to study the customer behavior towards motor vehicle with special reference to Hero Honda motor cycles in the district of Hyderabad. The Various sub objectives were to find out the following:  To study the various methods of customer awareness regarding the product, PASSION Plus.  To find the market share of Passion plus according to the segmentation.  To find the ways to develop better relationship with the customers.  To find the source of awareness regarding the bike in the customers mind.  To find the tough competitors for the Passion plus in the market.  The factors affecting the customers buying decision regarding the purchase of motor Cycles.  The buyer’s opinion on the after sales services and attributes offered by the Passion plus manufacturing motorcycles.  To the customers preferences towards two wheelers.  To the satisfaction levels of customers about after sale service.

RESEARCH METHODOLOGY: The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. Developing the Research plan For collecting Information

Defining the Problem and Research Objectives

Implementing the Research planCollecting and Analyzing the data

Interpreting and reporting the findings

DEFINING THE PROBLEM: Defining the problem and research objectives is often the hardest step in the research process. The marketing problem on which the survey is expected to focus should be clearly defined. Before this clear definition is possible, it may be necessary to undertake some exploratory research into certain aspects of the client's business. Example, the sale organization methods of publicity, distribution arrangements etc., in an attempt to pinpoint areas of significance of the inquiry. Preparatory work of nature carried out conscientiously and objectively, is an essential element in the systematic study of marketing problems. Management and researchers should work closely together in this crucial task of developing survey objectives. DEVELOPEING RESEARCH PLAN: A research design is purely and simply the frame work of plan for a study that guides the collection and analysis of the data. It is a map or blue print according to which the research is to be collected. The research design specifies the methods for data collection and data analysis. The researcher specifically pinpoints that to carry out the research properly. 1. How the data be collected. 2. Which instruments for data collection would be used, and

3. What sampling plan would be used? The researcher has to carefully decide and make a choice from the group of different alternatives available to him.

FIELD WORK/DATA COLLECTION: This stage will be central point of the research activities. An effective sampling plan would have been devised in stage two and the efficiencies of various methods of collecting data would have been evaluated. At this stage, the survey methodology has to be put into proactive. Since time constraints an inevitable, it would be advisable to plan operations on a time schedule. Since so much of the efficiency of the company research progress depends on reliable and valid data being gathered by research, activities during this stage of research should be carefully planned and executed.

DATA ANALYSIS AND EVALUATION: The data analysis and evaluation of the fourth step in the Research process. The data are first edited, ceded and tabulated for the purpose of analyzing them. The editing, coding and tabulating is a most when the interviewer has amassed a huge amount of data concerning the Research project at hand. The analysis can be conducted by using simple statistical tools like percentages, averages and measures dispersion. The collected data may be analyzed by using diagrams, graphs, charts, picture Etc., Finally meaning data may be extracted from the analysis thus conducted.

REPORTS PRESENTATION: The last state in the research process should be done thoroughly. During the preceding stage research will be planning how to present their findings. Tables, graphs and other diagram data to illustrate the principle findings of the researchers.

RESEARCH INSTRUMENTS Marketing research has a choice of two mail research instruments in collecting the primary data. They are questionnaires and mechanical devices. 10

QUESTIONNAIRE It is a formalized instrument for asking information directly from the respondent concerning behavior, demographic characteristics, level of knowledge and or attitude, belief, and feelings. Because of its flexibility, it is by and large the most common instrument used to collect the primary data. Questionnaires contain two types of questions or a combination of Closed-End questions and Open-End questions. Closed-end questions include all the possible answers, and subjects make choices among them. Open-end questions allow respondents to answer in their own words. In this research I used Closed-end questions and Open-end questions. In Closed-end I used multiple choice questions, Rating scale question and Dichotomous questions.

SAMPLING DESIGN After deciding the research approach and instruments research must design the sample from which the data is to be collected. Thus, the research has to decide whether he will conduct a census or a sample survey to collect the data needed for his study.

In this project sample survey method has been taken i.e. only a portion of whole population is surveyed.

SAMPLING SIZE Sampling size is the number of people being surveyed. In my research, 50 consumers are my sample size.

SAMPLING PROCEDURE In my survey, I selected consumers randomly in the petroleum outlet who visited for their two-wheelers. Therefore, it is random sample.

CONTACT METHOD Once the sampling plan has been determined, marketing research must decide how the consumer should be contacted. The choices are mail, telephone or personal interview. In my research I had done personal interviewing. It is most versatile of the three methods because we can ask more questions and can record additional observations about the respondent.

SECONDARY DATA: It is the data were collected for another purpose and already existing. Secondary data provide a starting point for research and offer the advantage of low cost and ready availability. The various sources from which secondary data is collected are 1. Company profile and records. 2. Magazines. 3. News papers 4. Reference books related to subject. The sample size of survey is only 100 respondents. 12

LIMITATIONS:

In undertaking the study, the researcher encountered certain problems. Firstly, the respondents were not available readily and the data collected as per the convenience of the respondents. Secondly, the organizational policies had its influence on the respondent’s opinions at the time of collection of data. Thirdly, the limitations of sampling had an effect on the study as it was concentrating on a particular segment of organizations. The sample size is restricted to 100 respondents only.  Due to certain constraints, the survey is limited to the twin cities to Hyderabad and Secunderabad.  The survey cannot be generalized to rural areas as it is limited to twin cities only.  Some respondents did not provide the requisite information pertaining to the questionnaire.

CHAPTER - II

OVERVIEW OF LITERATURE CUSTOMER RELATIONSHIP MANAGEMENT The concept of relationship marketing was first coined by Berry in 1983. He considered it to consist of attracting, maintaining and enhancing customer relationships within organizations. In the years that followed, companies were engaging more and more in a meaningful dialogue with individual customers. In doing so, new organizational forms as well as technologies where used, eventually resulting in what we know as Customer Relationship Marketing (CRM). The main difference between RM and CRM is that the first does not acknowledge the use of technology, where the latter uses Information Technology (IT) in implementing RM strategies. Customer relationship management (CRM) is a customer-centric business strategy with the goal of maximizing profitability, revenue, and customer satisfaction. Technologies that support this business purpose include the capture, storage and analysis of customer, vendor, partner, and internal process information. Functions that support this business purpose include sales, marketing, customer service, training, professional development,

performance

management,

human

resource

development,

and

compensation. Technology to support CRM initiatives must be integrated as part of an overall customer-centric strategy. Many CRM initiatives have failed because implementation was limited to software installation without alignment to a customercentric strategy.

The essence of CRM The exact meaning of CRM is still subject of heavy discussions. However, the overall goal can be seen as effectively managing differentiated relationships with all customers and communicating with them on an individual basis. Underlying thought is that companies realize that they can supercharge profits by acknowledging that different groups of customers vary widely in their behavior, desires, and responsiveness to marketing.

CRM is the philosophy, policy and coordinating strategy connecting different players within an organization so as to coordinate their efforts in creating an overall valuable series of experiences, products and services for the customer. The different players within the organization are in identifiable groups: •

Customer Facing Operations - The people and the technology support of processes that affect a customer's experience at the frontline interface between the customer and the organization. This can include face to face, phone, IM, chat, email, web and combinations of all medium. Self-service kiosk and web selfservice are doing the job of vocals and they belong here.

•

Internal Collaborative Functional Operations - The people and technology support of processes at the policy and back office which ultimately affect the activities of the Customer Facing Operations concerning the building and maintaining of customer relationships. This can include IT, billing, invoicing, maintenance, planning, marketing, advertising, finance, services planning and manufacturing.

•

External Collaboration functions - The people and technology support of processes supporting an organization and its cultivation of customer relationships that are affected by the organization's own relationship with suppliers/vendors and retail outlets/distributors. Some would also include industry cooperative networks, e.g. lobbying groups, trade associations. This is the external network foundation which supports the internal Operations and Customer facing Operations.

•

Customer Advocates and Experience Designers - Creative designers of customer experience that meet customer relationship goals of delivering value to the customer and profit to the organization (or desired outcomes and achievement of goals for non-profit and government organizations).

•

Customer and Employee Surveyors and Analysts - Customer Relationships are both fact driven and impression driven - the quality of an interaction is as important as the information and outcome achieved, in determining whether the relationship is growing or shrinking in value to the participants.

Technology considerations: The technology requirements of a CRM strategy must be guided by an overall view of who is the customer and what value they are to get from engaging with the organization. The basic building blocks: A database for customer lifecycle (time series) information about each customer and prospect and their interactions with the organization, including order information, support information, requests, complaints, interviews and survey responses. Customer Intelligence - Translating customer needs and profitability projection into game plans for different segments or groups of customers, captured by customer interactions (Human, automated or combinations of both) into software that tracks whether that game plan is followed or not, and whether the desired outcomes are obtained. Business Modeling - Customer Relationship Strategy, Goals and outcomes: Numbers and description of whether goals were met and models of customer segments and game plans worked as hypothesized. Learning and Competency Management Systems - Customer Capacity and Competency Development - Training and improving processes and technology that enable the organization to get closer to achieving the desired results. Complex systems require practice in order to achieve desired outcomes, especially when humans and technology are interacting. Iteration is the key to refining, improving and innovating to stay ahead of the competition in Customer Relationship Management. (Successful tools, technology and practices will be copied by the competition as soon as they are proven successful.) Analytics and quality monitoring - Voice recognition, video pattern matching, statistical analysis, activity-based costing to ultimately determine profitability of customer relationship policies and activities over the lifecycle of each group of customers sharing a defined set of characteristics.

Collaboration and Social networks - Profiling and interactive technology that allows the customers to interact with the business and their fellow customers and others: prospective customers, strategic partners. The building blocks can be implemented over time separately, but eventually need to be dynamically coordinated. The ongoing alignment of the basic building blocks distinguishes an elegant seamless CRM implementation which successfully builds mutually valuable relationships.

Operational CRM: Operational CRM provides support to "front office" business processes, including sales, marketing and service. Each interaction with a customer is generally added to a customer's contact history, and staff can retrieve information on customers from the database when necessary. One of the main benefits of this contact history is that customers can interact with different people or different contact channels in a company over time without having to describe the history of their interaction each time. Consequently, many call centers use some kind of CRM software to support their call center agents. Operational CRM processes customer data for a variety of purposes: • • •

Managing Campaigns Enterprise Marketing Automation Sales Force Automation

Analytical CRM: Analytical CRM analyzes customer data for a variety of purposes: • • • •

Design and execution of targeted marketing campaigns to optimize marketing effectiveness Design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention Analysis of customer behavior to aid product and service decision making (e.g. pricing, new product development etc.) Management decisions, e.g. financial forecasting and customer profitability analysis 18

Collaborative CRM The function of the Customer Interaction System or Collaborative Customer Relationship Management is to coordinate the multi-channel service and support given to the customer by providing the infrastructure for responsive and effective support to customer issues, questions, complaints, etc. Collaborative CRM aims to get various departments within a business, such as sales, technical support and marketing, to share the useful information that they collect from interactions with customers. Feedback from a technical support center, for example, could be used to inform marketing staffers about specific services and features requested by customers.

Strategy: Several commercial CRM software packages are available which vary in their approach to CRM. However, as mentioned above, CRM is not just a technology but rather a comprehensive customer-centric approach to an organization's philosophy in dealing with its customers. This includes policies and processes, front-of-house customer service, employee training, marketing, systems and information management. Hence, it is important that any CRM implementation considerations stretch beyond technology, towards the broader organizational requirements. The objectives of a CRM strategy must consider a company’s specific situation and its customers' needs and expectations. Information gained through CRM initiatives can support the development of marketing strategy by developing the organization's knowledge in areas such as identifying customer segments, improving customer retention, improving product offerings

and by identifying the organization's most

profitable customers. CRM strategies can vary in size, complexity and scope. Some companies consider a CRM strategy to only focus on the management of a team of salespeople. However, other CRM strategies can cover customer interaction across the entire organization. Many commercial CRM software packages that are available provide features that serve sales, marketing, event management, project management and finance.

Successes: While there are numerous reports of "failed" implementations of various types of CRM projects, these are often the result of unrealistic high expectations and exaggerated claims by CRM vendors. Many of these "failures" are also related to data quality and availability. Data cleaning is a major issue. If the company CRM strategy is to track life-cycle revenues, costs, margins and interactions between individual customers, this must be reflected in all business processes. Data must be extracted from multiple sources (e.g., departmental/divisional databases, including sales, manufacturing, supply chain, logistics, finance, service, etc.), requiring an integrated, and comprehensive business processing system to be in place with defined structures and data quality. If not, interfaces must be developed and implemented to extract data from different systems. This creates a demand far beyond customer satisfaction to understand the full businessto-business relationship. For this reason, CRM is more than a sales or customer interaction system. The experience from many companies is that a clear CRM requirement with regard to reports (e.g., input and output requirements) is of vital importance before starting any implementation. With a proper demand specification, a great deal of time and money can be saved based on realistic expectations of systems capability. A well operating CRM system can be an extremely powerful tool for management and customer strategies.

Privacy and data security One of the primary functions of CRM software is to collect information about customers. When gathering data as part of a CRM solution, a company must consider customer privacy and data security with respect to legal and cultural environments. Some customers prefer assurance that their data is not shared with third parties without their consent and that it cannot be illicitly accessed by third parti

Customer relationship management is perhaps the most important concept of modern marketing. Until recently CRM has been defined narrowly as a customer data management activity. By this definition, it involves managing detailed information about individual customers and carefully managing customer “touch points” in order to maximize customer loyalty. More recently, however, customer relationship management has taken on a broader meaning. In this broader sense, customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping, and growing customers. EXCHANGES AND RELATIONSHIPS Marketing occurs when people decide to satisfy need and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return. In the broadest sense, the marketer tries to bring about a response to some marketing offer. The response may be more than simply buying or trading products and services. A political candidate, for instance, wants votes, a church wants membership, and a social action group wants idea acceptance. Marketing consists of actions taken a build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object. Beyond simply attracting new customers and creating is to retain customer and grow their business with the company.

Marketers want to build strong relationships by

consistently delivering superior customer value.

We will expand on the important

concept customer relationship management later in the chapter.

SELECTING CUSTOMERS TO SERVE The company must first decide who it will serve. It does this by dividing the market in to segments of customers (market segmentation) and selecting which segments it will go after (target marketing) .some people think of marketing management as finding as many customers as possible and increasing demand. But marketing manager know that

they cannot serve all customers in every way. By trying to serve all customers, they may not serve any customers well. Instead, the company wants to select only customer that it can serve well and profitably. For example, Nordstrom stores profitable target families with more modest means. Some marketers may even seek fewer customers and reduced demand. For example, many power companies have trouble meeting demand during peak usage periods. In these and other cases of excess demand, demand, and companies may practice reduce the number of customers or to shift their demand temporarily or permanently? For instance, to reduce demand for space on congested expressways Washington, D.C., the metropolitan Washington council of Governments has set up a web site encouraging commuters to carpool and use mass transit. Thus marketing managers must decide which customers they want to target, and on the level, timing and nature of their demand. Simply put, marketing management

customer management and demand management. MARKETING MANAGEMENT ORIENTATIONS Marketing management wants to design strategies that will build profitable relationships with target consumers. But what philosophy should guide these marketing strategies? What weight should be given to the interests of customers, the organizations and society? Very often, these interests conflict. There are five alternative concepts under which organizations design and carry out their marketing strategies the productions, product, selling, marketing, and societal marketing concepts.

THE PRODUCTION CONCEPT The production concept holds that consumers will favor products that are available and highly affordable. Therefore, management should focus on improving productions and distribution efficiency. This concept is one of the oldest orientations that guide sellers.

PRODUCT CONCEPT The idea that consumers will favor products that offer the most in quality, performance, and features and that the organizations should therefore devote its energy to making continuous product improvements.

SELLING CONCEPTS The idea that consumers will not buy enough of the firms’ products unless it undertakes a large scale selling and promotions efforts.

MARKETING CONCEPTS The marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

THE SOCIETAL MARKETING CONCEPT A principle of enlightened marketing that holds that a company should make good marketing decisions by considering consumers wants the companies’ requirements, consumers’ long-run interests, and society’s long run interests.

BUILDING CUSTOMER RELATIONSHIPS The first three steps in the marketing process understanding the marketplace and customer needs, designing a customer driven marketing strategy, and constructing marketing programs all lead up to the fourth and most important step building profitable customer relationships

It needs to be emphasized at the very outset that there is no unified, tested and universally established theory buying behavior. What we have today are certain ideas on buying behavior. Some of these ideas are taken their cue from economics, others from psychology, and yet other is drawn simultaneously from several of the social sciences. Professional researchers as well as business firms have studied the subject extensively, contributing to a large assortment of knowledge on buyer behavior. However, a universally accepted theory on the subject is yet to emerge. It is with this understanding of the limitations of buyer behavior studies that we have to precede further. Buying behavior concerned with the activities and actions of people and organizations that purchase and use economic goods and services, including the influences on these activities and actions.

The Consumer’s Environment The many environmental influences combine to form a total life setting for consumers. Purchasing and using product and services are among the ways in which people respond to and interact with the world about them. Marketing managers must understand the live setting of consumers to fully appreciate what consumers are trying to accomplish with particular purchase. Only then can a company demonstrate the relevance of its marketing offer to customers by showing how it will help them deal with their life setting. Ultimately, convincing customers of the product offer’s relevance is crucial to sales growth in markets. Marketing stimuli consist of the four Ps: product, price, place and promotion. Other stimuli include major forces and events in the buyer’s environment: economic, technological, political, and cultural. All these inputs enter the buyer’s black box where they are turned into a set of observable buyer responses: product choice, brand choice, dealer choice, purchase timing and purchase amount. The marketer want to understand how the stimuli are changed into response inside the consumer’s black box, which has two parts: First, the buyer’s characteristics influence how he or she perceives and reacts to the stimuli; Second, the buyer’s decision process itself affect the buyer’s behavior.

CHAPTER - III

COMPANY PROFILE: Hero Honda Motors Ltd.

"Desh ki DhaDkan"

Hero Honda is the World's No.1 two-wheeler manufacturing company having the trust of more than 5 million customers. The company is a joint venture of Hero Cycles of India and Honda Motor of Japan. Achiever, CBZ, CD Dawn, Karizma, Passion, Pleasure and Splendor are its famous brands on Indian roads.

Type Public company BSE:HEROHONDA M Founded January 19, 1984 in Gurgaon, Haryana, India Headquarters New Delhi, India Brijmohan Lal Munjal, Founder Key people

Industry Products Revenue Slogan Website

Mr. Brijmohan Lal Munjal, Chairman Mr. Toshiaki Nakagawa, Joint Managing Director Mr. Pawan Munjal, Managing Director, CEO Automotive Motorcycles, Scooters U$ 2.8 billion Desh Ki Dhadkan www.Herohonda.com

Hero Honda 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.

Brijmohan Lall Munjal – The king of the Road The venerated patriarch and visionary of the Hero Group, Mr. Brijmohan Lall Munjal is a first generation entrepreneur who started very small and through sheer hard work and perseverance has today made his two-wheeler venture the world’s no.1 Two Wheeler Company. 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.Hero, the brand name synonymous with two-wheelers in India, is a multi-unit, multi-product, geographically diversified, Group of Companies – the reflection of the steely ambition and indomitable grit of the Munjal Family…

Mission Statement Of Brij Mohan Lall Munjal “It’s our mission to strive for synergy between technology, systems and human resources to produce products and services. Hero Honda has a reputation of being the most fuel-efficient and the largest selling Indian motorcycle. Its commitment of providing the customer with excellence is selfevident. A rich background of producing high value products at a reasonable price led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer. It was this affinity in working cultures of Honda Motor Company of Japan and the Hero Group that resulted in the setting up of Hero Honda Motors Ltd. A relationship so harmonious that Hero Honda has managed to achieve indigenization of over 95 percent, a Honda record worldwide. Tactical promotions and excellent marketing helped Hero Honda establish itself as an 27

intelligent purchase. Its unique features like fuel conservation, safety riding courses and mobile workshops helped the group reach in the interiors of the country. Finance services helped facilitate purchase, as did an efficient dealer network across the country. Well-entrenched in the domestic market, Hero Honda Motors Ltd. turned its attention overseas, and exports have been steadily on the rise. Over the years, the Company has received its share of accolades, including the National Productivity Council's Award (1990-91), and the Economic Times - Harvard Business School Association of India Award, against 200 contenders.

Founder

Munjal Brothers: Mr. Satyanand Munjal, Mr. Brijmohan Lall Munjal and Mr. O. P. Munjal.

Year of Establishment

1984 (The Hero Group was established in 1956)

Mission

"Its our mission to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of our customers. While doing so, we maintain the highest standards of ethics and societal responsibilities." - Mr Brijmohan Lall Munjal, Chairman & MD

Foundational Work

Before the establishment of the Hero Group in 1956, Munjal Brothers use to manufacture bicycle components in the early 1940's.

Industry

Automotive - Two Wheelers

Business Group

The Hero Group

Capitalization Ratio

Hero Group - 26% Honda Motor Co., Ltd. - 26% Others - 48% (listing)

Listings & its codes

BSE - Code: 500182 NSE - Code: HERO HONDA Bloomberg - Code: HH@IN

No. of Sales Outlets

1500+

Joint Venture

The Hero Group (India) with Honda Motor Co., Ltd.

(Japan) Registered & Corporate Office

34, Community Centre Basant Lok, Vasant Vihar New Delhi - 110057 Tel.: +(91)-(11)-26142451 - 59 Fax: +(91)-(11)-26143321 / 3198 / 1830; 26152453 / 2132

Work Station

69 Km Stone New Delhi-Jaipur Highway Daruhera - 121106, Haryana

Website

www.herohonda.com www.herogroup.com

Sales Performance Dec'05 Domestic

Dec'06

Apr'07-Dec'08

Apr'08-Dec'09

2225250

238822

1892540

2155479

5501

6282

43441

72815

Exports

Financials at a Glance (Rupees in Crores)

Particulars Total Income

2004-05 2005-06 2006-07 2007-08 2008-09 3191

4539

5195

5997

7563

Profit before Tax

377

694

885

1072

1217

Profit after Tax

247

463

581

728

810

116

134

175

202

Net Fixed Assets

454

491

517

589

715

OPBIT*/Net sales-%

13.2

15.0

16.7

16.8

15.7

OPBT**/Net Sales*(%)

11.7

13.9

15.5

15.6

14.6

Dividend Per Share ( Rs)

3.0

17.0

18.0

26.7

75.5

69.8

61.9

56.3

Total Debt

Dividend Payout (%)

Outlook Honda will continue to provide Hero Honda with full and latest technological support. Both of them will develop and expand the two-wheeler business in the country. They agree to strengthen model line up. Honda Motor Co. Ltd., Japan, renewed its Technical Collaboration Agreement for another 10 years, uptill 2014. The previous renewal was in 1994 after the establishment in 1984. Honda has strengthened its R&D facilities in India and together with R&D in Japan, it will continue to provide Hero Honda with the Leading Edge Honda Technology. According to Mr. Brijmohan Lall, Chairman, Hero Honda Motors Limited, Hero Honda is a 'Showcase' of an ideal partnership where both the partners have combined their unique strengths and have successfully created the 'World's No. 1' two-wheeler company.

Company Flashback Two-wheelers in India is a synonymous to the brand Hero Honda, a unit of Hero Group. Established in 1984 as a joint venture of The Hero Group (India) and Honda Motor Co. Ltd. (Japan), Hero Honda is the 'world's No. 1' two-wheeler company. Driven by the trust of over 5 million customers, the product range of Hero Honda commands a market share of approximately 50%. Starting with a sale figure of only 43,000 units in 1985-86, the company has reached a high of 26, 21, 400 units in 200405. According to Pawan Munjal, Managing Director and CEO of Hero Honda, the gap with its nearest rival, Bajaj Auto, is over a million units in 2004-05. On a compounded annual growth rate (CAGR) basis, the sales volume of the company have been growing at 33% for the last 6 years (as stated in 2003-04) and the net sales value at 36% over the same period. Parallel to it, the profit of the company have been growing at 50% CAGR. The company enjoys debt free status since March 01 and had zero level of contingent liabilities as of 31st March 03. The entire long term debt of Rs. 116 Cr. as on

31st March 03 represents an interest free loan from the Government of Haryana on account of sales tax deferment, and has no costs attached to it.

Service Statement Hero Honda’s constant endeavor 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 network of more than 1000 committed dealers & service outlets spread across the country. Hero Honda’s state-of-the-heart 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.

KEY POLICIES Environment policy: Towards creating and preserving a cleaner environment Hero Honda Motors Ltd. Manufacturer of two-wheelers is committed to prevention of pollution, continual improvement of our environment performance and compliance with all applicable environmental legislation and regulations. Towards this, we shall strive to: •

Create proactive environmental management systems that address all environmentally significant aspects related to our products and process.

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Minimize the generation of waste and conserve resources through better technology and practices, and

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Promote environmental awareness amongst our employees and motivate them to fulfill our commitments.

Hero Honda pledges towards creating and preserving cleaner environment.

Quality policy: Hero Honda continues to firmly believe in providing the customer value for money, for years of their products and services. This they shall maintain and improve.

In decision-making, quality, safety and service they give much consideration for productivity, cost and delivery. Quality shall be built into every aspect of their work life and business operations. Quality improvements and customer satisfaction shall be the responsibility of every employee.

TPM POLICY Hero Honda adopts Total productivity maintenance as a means of creating a safe and participative work environment in which all employees target the elimination of losses in order to continuously enhance the capacity, flexibility, reliability and capability of its processes, leading to higher morale and greater organizational profitability.

HERO HONDA BRAND Their Brand Identity: Hero Honda Brand is the visual expression of their thoughts and actions. It conveys to everyone that their intention is to constantly inspire confidence. Their customers are the primary audience for their brand. Indeed, their brand identity is shaped as much always reinforces the distinctiveness and the power of their brand. They can do this by living upon brand essence and by continuously seeking to enhance their customer’s experience. In doing so, they ensure a special place for ourselves in the hearts and the minds of their customers.

Brand Essence:  Our Brand Essence is the soul of our brand.  Our Brand essence encapsulates our mission at Hero Honda.  It is the singular representation of our terms of endearment with or customers.  It provides the basis on which we grow profitably in the market.  Our Brand Essence is Excitement.  Hero Honda strives to inspire confidence through excitement engineering.  Blending together youthful creativity and competitive technology to exceed the spoken and the implicit expectations of our customers.  By challenging the given. By exploring the unknown and there by stretching ourselves toward tomorrow, today.

Brand Values: We live our brand by its values of learning, innovation, perfection, speed and Transparency. Hero Honda will inspire confidence through excitement engineering.

Learning: Learning is how we ensure proactively. It is a value that embraces knowledge as the platform for building well informed, reasoned a decisive action.

Innovation: Innovation is how we create the future. It is a value that provokes us to reach beyond the obvious in pursuit of that which exceeds the ordinary.

Perfection: Perfection is how we set new standards. It is a value exhibits our determination to excel by endeavoring to establish new benchmarks all the time. Speed: Speed is how we convey clear conviction. It is a value that keeps us sharply responsive, mirroring our commitment towards our goals and processes. Transparency: Transparency is how we characterize ourselves. It is a value that makes us worthy of credibility through integrity, of thrust through Sensitivity and of loyalty interdependence.

Hero Group Companies Are: •

Hero Honda Motors Limited

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Hero Cycles Limited

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Hero Auto Limited

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Munjal Showa Limited

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Majestic Auto Limited

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Hero Exports

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Munjal Auto Industries Limited

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Sunbeam Auto Limited

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Munjal Casting

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Highway Industries Limited

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Rockman Cycle Industries Limited

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Hero Cycles Cold Rolling Division

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Munjal Auto Components

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Satyam Auto Components Limited

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Hero Global Design

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Hero Honda Fin lease Limited

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Easy Bill Limited

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Munjal Sales Corporations

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Hero Financial Services Limited

BOARD OF DIRECTORS

No. Name of the Directors

Designation

Mr. Brijmohan Lall Munjal

Chairman & Whole-time Director

Mr. Pawan Munjal

Managing Director & CEO

Mr. Toshiaki Nakagawa

Joint Managing Director

Mr. Sumihisa Fukuda

Technical Director

Mr. Om Prakash Munjal

Non-executive Director

Mr. Sunil Kant Munjal

Non-executive Director

Mr. Masahiro Takedagawa

Non-executive Director

Mr. Satoshi Matsuzawa Non-executive Director (Alternate Director to Mr. Takashi Nagai)

Mr. Pradeep Dinodia