hero honda - post demerger

Study of post-demerger Impact on Hero Group

A Market Research Project – FINAL REPORT

Submitted to: Prof. N. B. Kanagal

1

Prepared By:Group 1

Ayan Deb

Deeksha Narula

Harish Kumar

Prakash Singh Yadav

Sathappan S

Vivek Kumar Bhagbole

Table of ContentsExecutive Summary………………………………………………………………………………..….3

Mid-Term Study……………………………………………………………………………………….5

1. Refinement of the Problem 5

1.1 Marketing Research Decision 51.2 Management Research Problem 51.3 Process for developing MDP and MRP 6

2. Secondary Study 62.1 Qualitative Research 7

3. Research Design 93.1 Variables 93.2 Approach to collect Information 93.3 Scaling Techniques 93.4 Questionnaire Usage 10

4. Sampling Plan 105. Questionnaire Development 12 5.1 Information Checklist 12

Post Mid-Term Analysis......................................................................................................................136. Questionnaire Design……............................................................................................................13

7. Survey.............................................................................................................................................13

7.1 Survey Results – Key Statistics.................................................................................................147.2 Consumer Perception of Hero (pre and post-demerger)............................................................157.3 Consumer Perception of key competitors..................................................................................15

8. Data Analysis.................................................................................................................................17

8.1Factor Analysis...........................................................................................................................178.2 Multi-Dimensional Scaling.......................................................................................................198.3 Conjoint Analysis......................................................................................................................21

9. Hypothesis Testing.........................................................................................................................239.1 Consumer Perception................................................................................................................239.2 Consumer Attitude & Motivation.............................................................................................259.3 Consumer Decision Making Process........................................................................................269.4 Hero Ad-Campaign Effectiveness............................................................................................27

10. Inferences.......................................................................................................................................28

11. Recommendations..........................................................................................................................29

Appendices 31

2

Executive Summary

‘Hero Honda’ – many of us who grew up in the early 1990’s would not have realized until recently

that Hero and Honda are two separate entities, when the news about their demerger broke out. Hero

brand was established in Ludhiana as Hero Cycles in the year 1956. The brand became well known

for its engineering capacity, strong distribution network, quality commitment and local field

knowledge. In the year 1984, the Japanese multination, Honda Motor Company reached out to Hero

group to set up a joint venture Hero Honda Motors (HHM), with each entity holding 26% stake. The

technical capabilities of Honda and deep penetration network of Hero group, helped HHM to establish

itself as a clear market leader in the bikes category.

However, over the years both the partners felt constrained in their approach due to their joint venture.

Honda realized the need to launch separately, given its technical capabilities and the growing Indian

motor cycle industry and the Hero group wished to expand its reach beyond the Indian market. In

March 2011, the demerger was announced and Hero has group has rechristened itself as Hero

MotoCorp.

As students of Marketing Research, we decided to study the impact of this demerger on the Hero

group – particularly the Hero brand. Specifically, we limited the scope of our research to a Brand

Image Study where we looked into whether and how (if yes) has the consumer perception of the

“Hero MotoCorp” brand changed post the demerger. We also looked into whether there is any change

in the decision-making process for consumers while buying a Hero bike in the future and finally

analysed the Ad-Campaign Effectiveness of the “Hero Group” campaign.

After establishing the Marketing Decision Problem and the corresponding research questions and

hypotheses, we proceeded to conduct a secondary study wherein we analysed company reports,

analyst reports as well as news releases regarding the demerger. The key findings from this study

were that the Hero group is expected to retain its strong brand equity, dealership network, large

consumer base and healthy cost-structure in the medium term. The share price of Hero stock gained

immensely renewing confidence in the brand, however there were concerns regarding sustained

3

growth in the long-term. This is because Hero group will face increased competition from new

entrants and there were concerns regarding the technological capability of Hero without Honda.

We followed this by conducting qualitative research – primarily depth interviews and focus group

interviews. The key findings here were that even though consumers seemed upbeat about the new

“Hero” brand, there were huge concerns regarding the technological capabilities. The recent ad-

campaign launched by Hero received positive feedback.

In the next phase of our study, we designed the questionnaire which was used for conducting primary

research through an online survey. The results of the survey were used to conduct Factor Analysis,

Multi-dimensional Scaling (MDS) as well as Conjoint Analysis. We also tested the hypotheses

developed in the first phase using single sample z-tests as the sample size was larger than 30.

Economy (Mileage, Price etc), Reliability, Quality and Resale Value were the key factors consumers

keep in mind while buying a bike. On conducting the MDS, we found that the 2 dimensions on which

we could position Hero and its competitors were Brand Image and Style. We see that Hero Honda

ranked higher than Hero group on Brand Image which is an area of concern for Hero’s management

however Hero’s positioning on Style was found to be greater than that of Hero Honda.

The results from conjoint analysis were largely intuitive as Mileage (Economy) came out to be the

most important attribute.

Based on the results of the data analysis, we recommend that Hero group should focus on developing

their technical capabilities and quality standards in a big way. The consumers should be made aware

of their increased commitment to developing in-house R&D facilities post the demerger so that any

negative impact on the technology front can be mitigated.

Another key recommendation would be to increase brand equity of the models such as CBZ, Impulse

and disassociate them with “Hero Honda” brand as these models already have strong brand equity of

their own. Hero group should scale up their advertising and promotion activities since there is

inadequate awareness of the new “Hero” brand with the same ad-campaign as the campaign has

gotten rave reviews.

Lastly, Hero group should develop new models keeping Style and Quality in mind in order to attract

the growing youth segment of this country.

4

Mid-Term Study

1. Refinement of the Problem

1.1 Marketing Research Decision

Considering the long term association with the Hero Honda brand; after the demerger customer’s

perception may change depending on attitude, beliefs and learning about the new brand HERO

GROUP. Hence management decision problem is to discover change in customer perception about

new brand, if any particularly on the quality and technical capability aspects.

1.2 Management Research Problem

As the Management decision problem is a symptom, so the management research problems will

address different probable areas which needs attention. Some of the probable and their corresponding

marketing research problems are as follows:

S.NO Research Problem Research Sub Problem Research Hypotheses1 Are there any signs of

positivity in terms of consumer perceptions

after demerger?

Are consumers having any kind of perceptual defence for hero brand?

H0 : There is positive change in the perception after demerger

Is there Halo Effect (Demerger doesn’t matter at all to customers as long as Hero Group maintain the low price- high quality combination ) for the brand Hero?

H0 : There is a Halo Effect for Hero Brand

Hero A global Indian brand – Does this changes the perception of customers

H0 : An Indian global brand has positive impact on customer perception

2 Is the attitude of the customers towards Hero brand has changed after

demerger?

Analysis of impact on the attitude components: Affective, cognitive and conation

H0 : Attitude has been neutral after demerger

Is there any change in Motivational factor of the customer due to demerger

H0 : Motivation has not been affected by demerger

Customer value the Utilitarian and Value Expressive function most for motivation in 2 wheeler segment hence motivation is unaffected

3 Is there any change in customer decision

making process due to demerger?

Whether the brand associations with Hero Honda are stronger than associations with bike models such as CBZ/Impulse

H0 : Associations with bike models are stronger than brand Hero Honda

5

Need for RecognitionPre-demerger Behaviour Vs Post Demerger BehaviourEvaluation of Alternatives, if required

Psychological FieldMotivationPerceptionLearningAttitudePersonality

Experience

Customer Decision Making Process:

4 Does Hero needs to invest in consolidating

new brand and enhancing customer

loyalty

Whether the latest brand communication launched by Hero group is having the intended effect

H0 : Recent brand communication is effective

1.3 Process for developing MDP & MRP

2. Secondary Study

Key Findings

The termination of the joint venture between Hero Group of India and Honda of Japan will be done

in a phased manner till 2014.

Under the joint venture Hero Group was restricted to Indian markets but the termination would give

Hero Group would give them the advantage to export.

Hero is working on setting up its own R&D centre with European company to become self-reliant.

The company has earmarked up to Rs 800 crore as capital expenditure for 2011-12 financial year,

mainly for setting up its fourth plant and also for R&D activities.

The share price Hero group has gone up from Rs 1502 from Mar 2011 to present price of Rs 1984

per share.

6

Honda will continue transferring technology till 2014 for which its former Indian arm is expected to

pay 4-5% of annual sales as royalty till 2012. This could then go up to 8%, according to auto

industry sources.

In the last quarter, the company recorded a volume growth of 23.9% (YoY) in Q1 and the EBITA

margins were at 13.7%.

The market share has recorded sequential gains on monthly basis.

In the long-run, the competitive pressure is suspected to increase because of entry of new entrants,

frequent new product launches and technical limitations.

But in the medium run the company is expected to see the growth as the two wheeler industry itself

is expected to maintain a sales volume of CAGR of 10-12% over the period 2012-15.

Hero group will continue to own its strong brand equity, vast distribution network, established

supply chain and healthy cost structure.

Hero group is free to modify or use the platforms of all the existing products, including Splendor,

Passion, and CBZ to develop new models.

The CEO of Hero group, O P Munjal is focussing on new product development for expanding their

consumer base.

2.1 Qualitative ResearchWe have used the Focused Groups interviews and Depth Interviews for the qualitative analysis.

Focus Group Interview

Key Findings

Attribute Tested Findings

Typical Customer Profiling who prefers Hero

Most of the customers purchased Hero’s Bike as their first bike. Age Range: 18 to 32 years. Occupation : Student & Working Professionals (First Two years of career)

Key Attributes for purchase decision

Mileage, Price, Reliability, Low Maintenance & Resale Value are the most preferred attributes in deciding the purchase of a two wheeler.

Influencers for the decision

Family and Friends

Identification of Television Adds, Newspaper Add and Company Promotions are

7

Awareness Media preferred mode of exposure for two wheeler segment

Add Campaign Effectiveness Measurement

Global Statements like “DESH KI DHADKAN” has major impact of customers, also celebrity endorsement and event sponsorship has made Hero as one of the preferred brand

Demerger Influence (if Any)

Customer still value Hero as one of the most strongest brand and as long as Hero maintains readability and price range, external factors like demerger has no effect on customers perception and attitude towards brand Hero

Depth Interviews

Key Findings

The major reasons for demerger according to the young professionals in the Medium Segment are

Honda wanting to establish itself in the Indian market separately

The most important factors which are considered while buying a bike in the Premium/Medium

segment are Performance – Engine Capacity, Mileage; Looks and lastly Price

Within a segment (usually defined by Engine Capacity, for instance 150cc – 200cc is a segment)

people are generally price-insensitive

Reasons for not choosing a Hero bike are Hero bikes are not good in Looks as well as not superior

technology like competitors Yamaha etc

The demerger is likely to have a negative impact on the brand perception of Hero bikes primarily

on the technology front. Hero is considered to be a bicycle maker by most people and they feel

Hero bikes will miss the Honda technology advantage in the future

Impulse (latest bike launched post demerger) has a good consumer feedback

Hero’s ad-campaign “Hum mein hai Hero” (AR Rehman) is received well by consumers as they

find the slogan unique and the logo is considered to be better than the “Hero Honda” logo prior to

demerger

The ad-campaign is found to be unique and appeals to the individual consumer whereas the earlier

“Desh ki Dhadkan” campaign had a feeling of patriotism and oneness

Although consumers are aware about the demerger, they feel Hero should campaign more in order

to create awareness about the new “Hero” brand and logo

8

Focus should be on TV advertisements and Auto shows as these are the modes of communication

which are most important in building consumer perceptions about the brand

3. Research Design

3.1 Variables

As per the definition of Management Research Problem, we decided our hypothesis. These

hypotheses provide us on the variables which need to be studied in order to see the effect of demerger

on Hero Group. Following are the variables about which information is needed:

a) Consumer Perception

b) Price- Quality combination of Hero Group

c) Attitude and preferences of customers

d) Brand Recall

e) Brand Loyalty

f) Attributes considered by customers for selection of bikes

3.2 Approach to collect information

The approach that will be used for collection of information is through surveys. Surveys will be

floated through mails, telephonic interviews will be conducted. Hardcopy of surveys will also be used

as method of collecting information.

3.3 Scaling Techniques

Scaling is method of changing attributes (a series of qualitative facts) into variables (a quantitative

series). Scales to be used are rating scales, ranking scales, affirmative/denial options, and direct

answers.

Rating scales are used to rate a particular attribute from below average to excellent.

Ranking scales are used to rank particular options on a scale with higher number being better.

Some questions have simple yes/no options.

Direct answers demand the consumer to write a particular answer.

3.4 Questionnaire Usage

9

The survey will be short and precisely to the point. Telephonic interviews will be of 5-10 minutes.

Survey examines consumer knowledge, beliefs, preferences, satisfaction and measures their

magnitudes in the population. Panels of consumers can also be identified who may be contacted by

telephone, personal interviews or by mail questionnaire.

4. Sampling Plan

Sampling plays a vital role in any survey. We are interested in selecting a sample in such a way that

represents the target population in the best possible manner and thus eliminate the chances of a

random sampling error, as the Hero Group has a wide range of products in the 2 wheelers segment

that are targeted at specific segments we would like to capture the customer perceptions and

perspectives in each of them in order to avoid any biases. Also the finding from the survey needs to be

extrapolated to a larger group to establish the effect of the demerger of Hero Motor Co. and Honda

Motor Co. Thus in order to accommodate all the above we would undertake “stratified random

sampling” under probability sampling techniques. The stratum would be in line with the various Hero

Group customer segments thus being mutually exhaustive and adding them up would make it

collectively exhaustive. The strata would be economy segment, mid level segment and high end

segment based on the product line of the Hero Motor Corp.

We would like to collect samples from various locations in order to eliminate any regional bias and

non sampling errors, various survey methods like electronic interviewing (e-mail/internet), personal

interviewing and telephonic interviewing would be undertaken to get the desired number of samples.

We conducted a pilot survey involving 10 person in each of the three segments, the dominaint

attribute that came forward vide the focused groups were mileage for economy segment, reliability for

mid level segment and style for high end segment, mileage as an attribute was open ended thus

everyone gave their expected level of mileage on the other hand reliability and style were rated in a

scale of 1-7.

Details of the calculations for the sample size have been provided below:

Sampling Technique - Stratified sampling

10

Sample Site - Samples from the four regions in India would be collected to get an unbiased sample.

Sampling Unit - In this case the sampling unit is basically all the potential customers, it will include

people who have used Hero Honda bikes and scooters as well as others.

Sample Size - It is the minimum number of sample that is required to statistically extrapolate the

results obtained vide the survey, we use a confidence level of 95% which pertains to a Z value of 1.96

i.e. .95 times of the actual number we will get results as per our predictions. We predict the standard

deviation and D value (difference between sample mean and population mean) from the observations

in the pilot survey.

The formula used is detailed below:

n = z^2 * ^2 / D^2

n: sample size, z: value associated with confidence level

: Standard deviation, D: difference between sample mean and population mean

The results are detailed below:

Segment Economy Segment

Mid Level Segment

High End Segment

Dominating Attrbute Mileage Reliability StylePilot Survey Values Scale (1-7) Scale (1-7)Sample Mean 77 5.2 3.5Sample S.D. 10.1 1.0 1.1Pop. Mean 83 6 4D (Sample – Pop. Mean) 6 .8 .5

Table 1 (pilot survey results)

The details of the pilot survey observations are given in Appendix C.

In all we would require a total sample of 35, 11from Economy Segment, 6 from Mid Level Segment

and 18 from High End Segment.

11

5. Questionnaire Development

5.1 Information Checklist

In order to evaluate/ further analyze the Hypothesis generated above, we need information which we

plan to obtain through a questionnaire (survey). The type of information needed along with the type of

interviewing method or source through which we would obtain this information is given below.

Specification of the Information Needed

Information Obtained (Y/N)

If yes, source of Information/Type of Interviewing method

If no, expected source of information/Type of Interviewing method

Reasons for Demerger Y Secondary Data & Depth Interview with Hero dealership owner

Status of Hero Group post Demerger

Y Secondary Data

Market Share and Market Price post demerger

Y Secondary Data

Buyer Behaviour for Hero bikes

Y Secondary Data & Qualitative Research

Exhaustive list of features & Attributes valued by customers

Y Focus Groups & Depth Interviews

Pruned list of features and Attributes from Exhaustive list

Y Sample survey

Impact of demerger on consumer perception of Hero Brand

N Primary-Questionnaire

Impact of demerger on customer decision-making

N Primary- Questionnaire

Brand Image Check of Hero post demerger


Awareness and recognition with new brand logo and campaign

N Primary-Questionnaire

Effectiveness of Hero’s recent ad-campaign


Post Mid-Term Analysis

12

6. Questionnaire Design

Based on the Secondary study and exploratory research conducted, we identified key areas of

information which we would require for data analysis and hypothesis testing in the final phase of our

report (as given in Information Check-list shown above).

Using this information, we developed a questionnaire as shown in Appendix A, which was to be

floated through an online survey.

In our questionnaire, we have used mainly structured questions with dichotomous, multiple-choice or

scale responses. We have also maintained the flow of the questionnaire from generic to specific so

that the respondent understands the context well before he proceeds to answer pointed questions.

7. Survey

We conducted an online survey ( Link : https://qasiatrial.asia.qualtrics.com/SE/?

SID=SV_eDpX9aMYo9jwdvK ) and received a total of 53 responses.

The scope of the survey was limited mostly to students – graduate and post-graduate and all 53

responses were obtained in an excel sheet which was used for analysis purposes.

7.1 Survey Results – Key Statistics

Age profile

Gender Profile

13

https://qasiatrial.asia.qualtrics.com/SE/?SID=SV_eDpX9aMYo9jwdvK

https://qasiatrial.asia.qualtrics.com/SE/?SID=SV_eDpX9aMYo9jwdvK

Income profile

7.2 Consumer Perception of Hero (pre and post-demerger)

Ratings given to Hero Honda before demerger on the basis of attributes

14

Ratings given to Hero Group after demerger on the basis of attributes

7.3 Consumer Perception of Key Competitors

15

Ratings of Bajaj Bikes as per attributes

Rating of Yamaha bikes as per attributes

Rating of TVS bikes as per attributes

16

8. Data Analysis

8.1 Factor Analysis

In order to understand the underlying factors which influence buying decisions of consumers with

respect to a bike, we decided to conduct a Common Factor Analysis. However, since the number of

variables which we have considered (13) is fairly large, we decided to use Principal Component

Factor Analysis as the results in both cases were the same.

The variables which we used are shown as follows:-

Variables Set

Mileage

Price

Low Maintenance

Easy Loan Facility

High Resale Value

Style / Looks

Brand Image

Technical Innovation

Reliability / Durability

Quality

Dealership Network

After Sales Service

Warranty Terms

First we conducted the Bartlett’s Test of sphericity to check whether the variables are uncorrelated in

the population. The chi-square test statistic was significant which allowed us to not reject the

hypothesis that the variables are uncorrelated (Appendix B). Next was the Kaiser-Meyer-Olkin

17

(KMO) measure of sampling adequacy to examine the appropriateness of the factor analysis. As the

KMO measure = 0.683 (>0.5) implies that the factor analysis is appropriate and can be used.

Based on the Initial Eigenvalues table obtained in Appendix B, we see that the first 4 components

were significant with Eigenvalues >1. These factors explain 71.945% of the Total Variance and

therefore can be considered as the principal factors. Another way of deciding the number of factors

would be to look at the Scree plot (shown below) which shows a distinct break after 4 signifying that

the top 4 factors are of greater importance.

Now after orthogonally rotating the factors using Varimax procedure, we get significant, non-zero

correlations of each variable with at most one factor. This enabled us to map the variables to factors

and name them appropriately as follows:-

Factor No. Name of the Factor Variables Associated with the Factor

1 Reliability Low Maintenance, Reliability

2 Quality Quality, After-Sales Service, Warranty

3 Economy Mileage, Price, Brand, Style

4 Resale Value High Resale Value, Easy Loan facility

Inference

18

Thus, we can summarize that consumers consider broadly 4 factors while purchasing a bike:

Reliability - How long the bike can survive without breaking down for the first time and

accordingly whether it requires a high level of maintenance or not

Quality – Whether the bike conforms to the quality and safety norms and also how good is

the after-sales service

Economy – Mileage (Fuel efficiency) and Price

Resale Value – Consumers are concerned with High Resale Value as they might consider

upgrading to a 4-wheeler in the future and therefore would want to buy a bike which

compensates them accordingly

8.2 Multi-Dimensional Scaling

The information provided by the MDS will help us determine the current image of Hero Moto vis a

vis other automobile (2 wheeler) brands, positioning Hero in the right space to target the groups of

customers with relatively homogeneous perceptions, and in a way, compare brand image of Hero vis a

vis other automobile (2 wheeler) brands in the market.

We have chosen 5 brands (Hero Honda, Bajaj Auto, Yamaha, TVS, Hero-Post Demerger) that

represent different bands in the market. Including more brands might have diluted our overall findings

since some brands are not as prevalent in India (e.g. Harley Davidson).

The input for MDS was obtained from the responses to Question No. 7 & 11 in the Questionnaire (see

Appendix C). The data on all possible pairs, called similarity judgments, are used to perform a no

metric MDS procedure, which assumes that the input data are ordinal. The distances in the spatial

map can be assumed to be interval scaled. This procedure finds map whose rank orders of estimated

distances between brands best preserve or reproduce the input rank orders.

In order to determine the number of dimensions to be used for our spatial map, we used the stress

measures in the summary tables (see Appendix C). These stress measures help determine the level of

fit of the data. The lower the stress levels, the better the fit. The indicative stress measures are below

0.2, indicating that the two-dimensional spatial map best fits the input data. We can use more

19

dimensions, which increase the overall, but for purposes of our research, two dimensions are most

appropriate.

Now that we have chosen these two dimensions, we have to label them. Labeling dimensions requires

subjective judgment based on a number of guidelines. The ratings of the brands on a number of

attributes, as described in our factor analysis, can serve as a basis for determining the dimensions of

each axis.

Based on a subjective analysis, the two dimensions were labeled as “Style” on the vertical dimension

to “Brand Image” on the horizontal axis. The spatial map is shown below, along with the distances

between each of the brands in the spatial map.

V2 Hero Honda

V3 Bajaj Auto

V4 Yamaha

V5 TVS Motor

V6 Hero-Post Demerger

Inference

20

Brand Image

Style

Bajaj

Hero Honda

Hero Motocorp

Yamaha

TVS

Post demerger the Brand Image of Hero group has reduced considerably probably due to concerns

on the technical capabilities and quality of Hero bikes without the expertise of Honda

However, on Style dimension, Hero brand has gained positively after the split from Honda. This

can be explained by the fact that consumers perceive Impulse (bike launched post demerger) to be

far more stylish than the earlier models such as CBZ.

Looking at competitors, Bajaj is the strongest competitor for Hero group in the years to come as

according to consumer perceptions, it ranks very highly on both the Brand Image as well as Style

aspects

Yamaha on the other hand scores very highly on the Style dimension and will be the strongest

competitor for Hero in the premium segment

8.3 Conjoint Analysis

A conjoint analysis was conducted to determine the relative importance that consumers attach to key

attributes while buying a bike. This method helps us in finding out the most preferred attribute level

mix for each of the key attributes identified which can then allow us to infer the gaps in Hero’s

current strategy.

The three key attributes identified along with their levels are shown as follows:-

Bike Attributes and Levels

Attribute Level No. Description

Mileage 1 High (above 50 Kms/litre)

2 Low (Below 50 Kms/Litre)

Reliability 1 High

2 Low

Style 1 Superior

2 Moderate

21

An orthogonal design was created with 23 = 8 profiles and the respondents were asked to rank these in

order of preference. The results of the conjoint analysis are shown in Appendix D and the relative

importance of the attributes is as follows:-

Mileage; 46.67%

Reliability; 33.33%

Style; 20.00%

Relative Importance of Attributes

In order to assess the reliability of the conjoint analysis results, we checked the R-square value =

0.988 which is considerably high signifying a good fit of multiple regression.

Inference

The results of the conjoint analysis proved to be highly intuitive as Mileage (Fuel efficiency) which is

an Economy-related attribute proved to be the most important with Reliability and Style aspects as

second and third. An interesting observation is that even though Style is the least important attribute,

it does constitute for 20% implying that there might be a growing segment of consumers paying more

attention to Style (further analysis would be required to justify this). This implies that Hero bikes,

which have always been fuel-efficient (high mileage) and reliable do not score very highly on the

Style quotient and thus could consider expanding their presence in this space.

Limitations of this Analysis

Our conjoint analysis is based on the assumption that the 3 attributes identified above are the most

important (as reflected in the Pilot survey conducted in the Mid-term report). However, this may not

be the case as there may be more important attributes which have been missed out and thus is a major

limitation of this analysis.

22

The other assumptions made are the part-worth utilities are not unique and that the consumers

evaluate the profiles in terms of these attributes and make trade-offs.

9. Hypothesis Testing

We have tried to look at look at various possible issues concerning the Hero brand post demerger;

they are the consumer perception, attitude, motivation after the split of Honda group Hero and the

strength of associations related to Hero brand viz a viz the associations with bike models and finally

the effectiveness of recent Hero communications and campaigns.

9.1 Consumer Perception

1) Whether there is positive change in the consumer perception post demerger?

If more than 50% of population thinks that the demerger the Hero group would have a positive impact

there would be a favourable change in consumer perception towards Hero Group

H0: π = 0 .5 i.e. there is no positive change in consumer perception post demerger

H1: π > 0.5 i.e. there is a positive change in consumer perception post demerger

For testing the null hypothesis we floated a question probing whether the consumers think that there is

in fact a positive change post the Hero demerger.

The details of the response and statistic test are detailed below:

N (no of respondents) = 45

P (sample proportion) = .42

σ (standard deviation) = .07

t statistic = -1.04

p value = .15

For a single tailed test at 95% confidence we get a p value of 15% which is unable to reject the

hypothesis.

Thus we conclude that there has been no positive impact after the demerger at 95% level of

significance.

23

2) Whether there is halo effect for brand Hero?

If more than 50% of population think that the demerger won’t have any significance till the price and

quality of the product is constant i.e. the brand equity remains constant or increases

H0: π = 0.5

H1: π < 0.5

For testing the null hypothesis we floated a question probing whether the demerger from Honda

would impact Brand Equity of Hero bikes or not.





t statistic = -.40

p value = .34


hypothesis.

Thus, there is no halo effect for the Hero brand at 95% level of significance.

3) Whether a global Indian brand has positive impact on customer perception?

If more than 50% of population think that after becoming a global brand Hero would have a positive

impact on consumer perception.

H0: π = 0.5 i.e. there will be no impact on consumer perception if Hero becomes a global brand

H1: π > 0.5 i.e. there will be positive impact on consumer perception if Hero becomes a global brand

For testing the null hypothesis we floated a question probing whether after the demerger as Hero

would be able to sell products across the globe, it would have a positive impact on consumer

perception.



24



t statistic = 4.02

p value = .0001

For a single tailed test at 95% confidence we get a p value of .01% , thus the null hypothesis can be

rejected.

This implies that by becoming a global player Hero would be able to install a positive perception

amongst its consumers at 95% level of significance.

9.2 Consumer Attitude& Motivation

Whether the consumer attitude post demerger towards the brand has been neutral?

If more than 50% of the population have seen and liked the new hero ad and think that it is creative

and increases brand equity then we can deduct that the consumers have a positive attitude towards the

ad and thus the brand and thus the post demerger effect is neutral.

H0: π = 0.5 i.e. the consumer attitude post demerger has been neutral

H1: π not equal to 0.5 i.e. the consumer attitude post demerger has changed.

For testing the null hypothesis we floated 3 questions:

“I have seen the recent AR Rehman - Hero ad-campaign”

“I like the “Hum mein hai Hero” slogan of Hero brand”

“Hero campaign is creative and increases brand equity”





t statistic = 2.53

p value = .01

For a single tailed test at 95% confidence we get a p value of 1%, thus we can reject the null

hypothesis.

25

This implies that post demerger, the consumer attitude towards the brand has undergone

change.

Whether consumer motivation has been affected by demerger or not?

If more than 50% of population indicate that they would be interested in purchasing a Hero bike post

demerger, this reiterates the fact that the consumer motivation has not been affected by the demerger.

H0: π > = 0.5 i.e. consumer motivation towards purchasing a Hero bike has not changed

H1: π < .5 i.e. consumer motivation has been affected due to the demerger

For testing the null hypothesis we floated the question:

“Would the demerger from Honda affect your purchase decision of a Hero bike”





t statistic = -.75

p value = .23


hypothesis thus consumers might be still motivated to purchase a Hero bike.

Thus, we can say that consumer motivation to buying a Hero bike in the future has not been

significantly impacted (at 95% level of significance) due to the demerger from Honda.

9.3 Consumer decision making process

Whether Brand associations are independent of demerger?

If 50% or more of population indicate that the brand equity of bikes, CBZ/Impulse for instance is

greater than the brand Hero Honda, then we can conclude that brand associations are independent of

demerger.

H0: π >= 0.5

H1: π < .5

For testing the null hypothesis we floated the question:

26

“Brand Equity of models – CBZ, Impulse is greater than Brand Equity of Hero Honda brand”





t statistic = .745

p value = .23


hypothesis.

Thus, we can conclude that associations with models of bikes (CBZ, Impulse etc) are more as

compared to the brand and these associations are independent of the demerger i.e. have not

been impacted by the demerger at 95% level of significance.

9.4 Hero Ad-Campaign Effectiveness

Whether recent Hero brand communications have been effective?

If more than 50% of the population have seen and found the recent advertisements to be effective then

we can conclude that the Hero brand communication is not having their intended effect.

H0: π = 0.5

H1: π > 0.5

For testing the null hypothesis we floated 2 questions:

“I have seen the recent AR Rehman - Hero ad-campaign”

“Hero campaign is creative and increases brand equity”





t statistic = 2.37

p value = .01

27

For a single tailed test at 95% confidence we get a p value of 1%, thus we can reject the null

hypothesis.

This implies that the recent Hero communications has been having the necessary effect intended

and the Ad-Campaign is effective.

10. Inferences

On the basis of the hypothesis results inferences can be drawn on the effects of demerger. As seen

above hypothesis relating to positive change in perception was rejected thus nullifying any positive

change. Similarly, hypothesis relating to Halo effect was rejected and positive impact on consumer

perception by building a global brand was accepted. This concludes the absence of positive impact

without a global brand. Later, it is seen that hypothesis relating to neutral impact on consumers was

also rejected. Taking all these hypothesis results in consideration it can be said that there is some

negative impact on consumer perception due to demerger. In the next hypothesis, impact on

motivation has been rejected and therefore people still seem to be motivated to buy Hero bike. This

means that due to negative impact on consumer perception, those consumers who have been

contemplating to buy a bike may not prefer Hero bike. On the other hand, those who have decided

already to buy a Hero bike will not change their decision. This is inferred from the point that

motivation has not been affected. With our next hypothesis, regarding association with bike models

rather than Hero brand it was inferred that people are more connected to bike models than brand.

Therefore, impact due to demerger is lessened because existing models are not going to change.

Lastly, it is seen that already existent ad campaigns are effective by having the intended effect on

consumers. So here, Hero group needs to increase its promotion effects using the same campaign as

the consumers are receiving the ad-campaign positively.

11. Recommendations

28

Development of technology – It is clear from the factor analysis that quality and technology

are the major attributes that play a vital role in the decision among of consumers. Actually

quality and technology are closely related and quality infact is derived from usage of superior

technology in bikes. Also Bajaj the biggest competitor for Hero Group is rated very high on

quality, so Hero group needs to communicate to the consumers that it has been developing in-

house technology post demerger with Honda and is lowering its dependency on a third party

for technology input. Thus Hero group needs to include more information on the features

(affective component) in its brand communication so that the information requirement of

consumers in a durable category like motorbikes is sufficiently met. This will be helpful in

establishing the brand image of Hero.

Global Expansion - Being a global player translates into a positive consumer perception

about the brand, thus Hero should try to expand its operations in other markets, and this needs

to be communicated to the end users. This will have a impact on the way they evaluate the

brand and thus improve the brand image of Hero.

Drop Honda inscription - As the associations with the bike models are more stronger than

the brand Hero Honda, the company can look to slowly remove the name Hero Honda from

the bikes and bring in Hero while maintaining bike brand like Splender, Karizma and CBZ

etc. This will have a dual benefit because all the recent communications include the name of

Hero, and if any associations are formed with the Hero brand like style which is clearly the

case as derived from the MDS analysis, thus models will endow the brand personality formed

in conjugation with Hero which is relevant for the target segment category.

Introduction of new models - Introduction of new models like Impulse will be helpful in

capturing the attention of youth which forms a major chunk of the target segment in the 2

wheelers market, the existing association with style for Hero group will be instrumental in

capturing the youth segment and improve sales.

Increase information (cognitive component) - The attitude towards the ad has been

favourable but the attitude toward the brand and consumer motivation (purchase intention)

29

has not increased, one of the reasons could be more focus on building emotional connect vide

tagline like “hum mein hain hero” (affective component) in a category like durables where

the affective component is of prime importance thus Hero needs to lay emphasis on features

and technology used in the development of bikes. As per the learn-feel-do model, the

consumers need the necessary knowledge of the brand in the category before they make a

connect with it and finally undertake a purchase.

Appendices

30

Appendix AQuestionnaire floated through Online Survey

Study of post demerger impact on Hero Group Study

1 Name(Optional)

2 Age

< 25 years (1) 25-40 years (2) above 40 years (3)

3 Gender

Male (1) Female (2)

4 Income Group

Less than 5 lakhs per annum (1) 5-10 lakhs per annum (2) 10 lakhs & above per annum (3)

5 Where do you stay?(City)

6 Rate the following ECONOMY related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

Mileage (1) Price (3)

Low Maintenance

(5)

Easy Loan Facility (7)

High Resale Value (9)

31

Rate the following PERFORMANCE related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

Style / Looks (1)

Brand Image (2)

Technical Innovatio

n (3)

Rate the following RELIABILITY related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

Reliability /

Durability (1)

Quality (2)

32

Rate the following SERVICE related features in order of preference or importance to you while buying a bike: (1-Least Important, 9-Most Important)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

Dealership Network

(1)

After Sales

Service (2)

Warranty Terms (3)

Easy Loan Facility

(4)

33

7 How did you rate Hero Honda bikes (prior to demerger) according to the following attributes: (1-Poor, 9-Excellent)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)

Performance – Mileage

(1)

Quality (2) Value for Money (3)

Style/ Looks (4)

After Sales Service (5)

Brand Image (6)

Reliability (7)

Technology (8)

8 How do you rate Bajaj bikes according to the following attributes: (1-Poor, 9-Excellent)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)


(1)


Style/ Looks (4)


Brand Image (6)

Reliability (7)

Technology (8)

34

9 How do you rate Yamaha bikes according to the following attributes: (1-Poor, 9-Excellent)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)


(1)


Style/ Looks (4)


Brand Image (6)

Reliability (7)

Technology (8)

10 How do you rate TVS bikes according to the following attributes: (1-Poor, 9-Excellent)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)


(1)


Style/ Looks (4)


Brand Image (6)

Reliability (7)

Technology (8)

35

11 Post the demerger how do you rate Hero bikes according to the following attributes: (1-Poor, 9-Excellent)

1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 7 (7) 8 (8) 9 (9)


(1)


Style/ Looks (4)


Brand Image (6)

Reliability (7)

Technology (8)

36

12 Few more questions specific to Hero Group:

1. Would you buy a Hero bike in the future? (1)

Agree (1) Disagree (2)

2. Would the demerger from Honda affect your purchase decision of a Hero bike? (2)


3. Would this impact be positive? (3)


4. Post demerger Hero bikes would be sold across the globe ,

this would positively impact Hero’s brand (4)


5. Brand Equity of models – CBZ, Impulse is greater than Brand Equity of Hero Honda

brand (5)


6. Hero brand for bikes will be confused with Hero Brand for

bicycles (6) Agree (1) Disagree (2)

7. Demerger from Honda would not impact Brand Equity of

Hero bikes (7) Agree (1) Disagree (2)

8. New Hero logo is better than earlier Hero Honda logo (8)


9.There is adequate awareness of Hero Brand post demerger

(9) Agree (1) Disagree (2)

10. I have seen the recent AR Rehman - Hero ad-campaign


11. I like the “Hum mein hai Hero” slogan of Hero brand


12. I prefer the earlier “Desh ki Dhadkan” campaign (12)


13. Hero’s TV ads do not compare with those of

competitors (13) Agree (1) Disagree (2)

14. Hero campaign is creative and increases brand equity (14)


37

13 Please rank the following bikes in order of preference: (1-most preferred, 8-least preferred)

______ High Mileage, High Reliability, Superior Style (1)______ High Mileage, High Reliability, Moderate Style (2)______ High Mileage, Low Reliability, Superior Style (3)______ High Mileage, Low Reliability, Moderate Style (4)______ Low Mileage, High Reliability, Superior Style (5)______ Low Mileage, High Reliability, Moderate Style (6)______ Low Mileage, Low Reliability, Superior Style (7)______ Low Mileage, Low Reliability, Moderate Style (8)

Appendix B

Factor Analysis Results (SPSS)

Correlation Matrix

V1 V2 V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13

Correlatio

n

V1 1.00

0.445 .295 .082 .169 .512 .501 .129 .204 .450 .115 .495 .429

V2 .445 1.000 .237 .001 .100 .259 .354 .321 .255 .103 .071 -.082 .018

V3.295 .237

1.00

0.127 .135 .111 .113 .548 .654 .197 .601 .240 .345

V4 .082 .001 .127 1.000 .739 .150 .252 .099 .053 .106 .169 .292 .367

V5 .169 .100 .135 .739 1.000 .304 .371 .286 .044 .000 .169 .379 .209

V6.512 .259 .111 .150 .304

1.00

0.550 .209 .154 .349 .002 .395 .361

V7 .501 .354 .113 .252 .371 .550 1.000 .226 .063 .244 -.005 .338 .174

V8.129 .321 .548 .099 .286 .209 .226

1.00

0.621 .144 .354 .129 .279

V9 .204 .255 .654 .053 .044 .154 .063 .621 1.000 .373 .637 .234 .356

V10.450 .103 .197 .106 .000 .349 .244 .144 .373

1.00

0.225 .448 .456

V11 .115 .071 .601 .169 .169 .002 -.005 .354 .637 .225 1.000 .271 .278

V12.495 -.082 .240 .292 .379 .395 .338 .129 .234 .448 .271

1.00

0.444

V13 .429 .018 .345 .367 .209 .361 .174 .279 .356 .456 .278 .444 1.000

38

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .683

Bartlett's Test of Sphericity Approx. Chi-Square 207.263

Df 78

Sig. .000

Communalities

Initial Extraction

V1 1.000 .739

V2 1.000 .750

V3 1.000 .722

V4 1.000 .813

V5 1.000 .888

V6 1.000 .631

V7 1.000 .689

V8 1.000 .671

V9 1.000 .817

V10 1.000 .663

V11 1.000 .682

V12 1.000 .684

V13 1.000 .604

Extraction Method: Principal

Component Analysis.

Total Variance Explained

Component

Initial Eigenvalues

Extraction Sums of Squared

Loadings

Rotation Sums of Squared

Loadings

Total

% of

Variance

Cumulative

% Total

% of

Variance

Cumulative

% Total

% of

Variance

Cumulative

%

1 4.281 32.930 32.930 4.281 32.930 32.930 2.806 21.586 21.586

2 2.092 16.092 49.021 2.092 16.092 49.021 2.439 18.762 40.348

3 1.602 12.321 61.342 1.602 12.321 61.342 2.146 16.505 56.853

4 1.378 10.603 71.945 1.378 10.603 71.945 1.962 15.092 71.945

5 .680 5.234 77.179

39

6 .668 5.135 82.314

7 .554 4.265 86.579

8 .443 3.407 89.986

9 .410 3.155 93.141

10 .315 2.421 95.562

11 .246 1.890 97.453

12 .204 1.572 99.024

13 .127 .976 100.000

Extraction Method: Principal Component

Analysis.

Component Matrixa

Component

1 2 3 4

V1 .664 .312 -.439 -.085

V2 .382 -.008 -.489 .605

V3 .638 -.552 .036 .092

V4 .425 .329 .711 .133

V5 .488 .379 .617 .355

V6 .590 .455 -.272 .033

V7 .547 .502 -.208 .308

V8 .587 -.416 .024 .391

V9 .647 -.629 -.055 -.009

V10 .574 .059 -.260 -.513

V11 .532 -.574 .244 -.095

V12 .640 .274 .143 -.424

V13 .660 .041 .116 -.392

Extraction Method: Principal Component Analysis.

a. 4 components extracted.

Rotated Component Matrixa

Component

1 2 3 4

V1 .086 .583 .625 -.031

40

V2 .290 -.183 .789 -.098

V3 .826 .161 .103 .049

V4 .072 .160 -.016 .884

V5 .099 .051 .210 .912

V6 -.035 .469 .617 .169

V7 -.044 .241 .733 .302

V8 .739 -.059 .308 .161

V9 .867 .233 .073 -.080

V10 .175 .770 .143 -.139

V11 .768 .213 -.178 .120

V12 .095 .754 .074 .318

V13 .294 .685 .025 .220


Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 5 iterations.

Component Transformation Matrix

Compo

nent 1 2 3 4

1 .581 .590 .449 .335

2 -.791 .257 .389 .398

3 .088 -.106 -.576 .806

4 .172 -.758 .562 .283



Component Score Coefficient Matrix

Component

1 2 3 4

V1 -.063 .206 .251 -.127

V2 .104 -.249 .461 -.093

V3 .309 -.033 -.011 -.018

V4 -.011 -.021 -.096 .481

V5 .001 -.122 .044 .493

41

V6 -.102 .137 .258 .003

V7 -.088 -.018 .351 .097

V8 .287 -.187 .135 .059

V9 .321 .020 -.033 -.098

V10 -.023 .385 -.044 -.180

V11 .291 .039 -.177 .036

V12 -.062 .345 -.106 .087

V13 .032 .304 -.125 .037



Appendix C

Multi-Dimensional Scaling

Similarity Table

Hero

Honda Bajaj Yamaha TVS HeroHero

Honda 0 1.9 3 3.7 1.3Bajaj 1.9 0 2.2 3.9 1.6

Yamaha 3.0 2.2 0 2.2 2TVS 3.7 3.9 2.2 0 2.7

Hero 1.3 1.6 2.0 2.7 0

Attributes Table

Mileage QualityValue for

money StyleAfter sales

serviceBrand Image

Reliability

Technology

Hero Honda 7.5 7.2 7.5 6.1 6.9 7.5 7.5 6.7Bajaj 6.9 7.2 7.0 7.5 6.8 7.5 7.0 7.5

Yamaha 5.9 6.7 5.9 6.9 5.9 6.7 6.3 6.9TVS 6.5 5.9 5.9 5.8 5.7 5.6 5.8 5.8

Hero 7.2 6.9 6.8 6.6 6.8 6.8 6.8 6.4

Output of MDS (SPSS)

Raw (unscaled) Data for Subject 1

1 2 3 4 5

1 .000 2 1.912 .000 3 3.047 2.221 .000

42

4 3.734 3.882 2.246 .000 5 1.341 1.607 2.006 2.686 .000

Iteration history for the 2 dimensional solution (in squared distances)

Young's S-stress formula 1 is used.

Iteration S-stress Improvement

1 .01594 2 .01255 .00340 3 .01215 .00040

Iterations stopped because S-stress improvement is less than .001000

Stress and squared correlation (RSQ) in distances RSQ values are the proportion of variance of the scaled data (disparities) in the partition (row, matrix, or entire data) which is accounted for by their corresponding distances.

Stress values are Kruskal's stress formula 1.

For matrix Stress = .01069 RSQ = .99900

Configuration derived in 2 dimensions

Stimulus Coordinates

Dimension

Stimulus Stimulus 1 2 Number Name

1 V2 1.2294 -.8624 2 V3 1.1698 .7247 3 V4 -.7076 .9451 4 V5 -2.0064 -.4602 5 V6 .3147 -.3472 Optimally scaled data (disparities) for subject 1

1 2 3 4 5

1 .000 2 1.605 .000 3 2.637 1.885 .000 4 3.262 3.396 1.908 .000

5 1.086 1.327 1.690 2.309 .000

43

Appendix D

Orthogonal Design for Conjoint Analysis

ProfilesPreference

High Mileage

Low Mileage

High Reliability

Low Reliability

Superior Style

Moderate Style

High Mileage, High Reliability, Superior Style 8 1 0 1 0 1 0High Mileage, High Reliability, Moderate Style 7 1 0 1 0 0 1High Mileage, Low Reliability, Superior Style 6 1 0 0 1 1 0High Mileage, Low Reliability, Moderate Style 4 1 0 0 1 0 1Low Mileage, High Reliability, Superior Style 5 0 1 1 0 1 0Low Mileage, High Reliability, Moderate Style 3 0 1 1 0 0 1Low Mileage, Low 2 0 1 0 1 1 0

44

Reliability, Superior StyleLow Mileage, Low Reliability, Moderate Style 1 0 1 0 1 0 1

Results of Conjoint Analysis in Excel

AttributeAverage Desirability

Deviation

Regression Coefficient

Relative Importance

Mileage 3.5 46.67%High 6.25 1.75

Low 2.75 -1.75Reliability

2.5 33.33%High 5.75 1.25Low 3.25 -1.25

Style 1.5 20.00%Superior 5.25 0.75

Moderate 3.75 -0.75

SUMMARY OUTPUT

Regression Statistics

Multiple R0.9940

3

R Square0.9880

95Adjusted R Square

0.229167

Standard Error

0.353553

Observations 8

ANOVA

df SS MS FSignifica

nce F

Regression 6 41.56.916

667110.66

66670.07263

6523Residual 4 0.5 0.125Total 10 42

Coeffici

entsStandard

Error t Stat P-valueLower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept 4.25 0.25 177.0211

E-053.55588

87244.94411

1283.55588

87244.94411

128X Variable 1 0 0 65535 #NUM! 0 0 0 0X Variable 2 -3.5 0.25 -14 0.0001

5101-

4.19411-

2.80588-

4.19411-

2.80588

45

128 872 128 872

X Variable 3 2.5 0.25 100.0005

621.80588

87243.19411

1281.80588

87243.19411

128X Variable 4 0 0 65535 #NUM! 0 0 0 0

X Variable 5 1.5 0.25 60.0038

82540.80588

87242.19411

1280.80588

87242.19411

128X Variable 6 0 0 65535 #NUM! 0 0 0 0

Appendix E

Focus Group Discussion Transcript

The Focus Group has the following participants:

Participant 1 Arnab Biswas

Participant 2 Abhishek Kundan

Participant 3 Sheeti Kanth Das

Participant 4 Vamsi Goutam

Participant 5 Ajay Singh

Moderators Group-1 RMD (2011-13)

MODERATOR: The purpose of today’s discussion is to understand the perception and attitude of customers towards new brand Hero. We would like to know about your choice criteria and what makes you decide that Hero is the right choice. We would also like to understand the effect of demerger on your preference choices.

Participant 1 Hero Honda Karizma ZMR

Participant 2 Hero Honda Splendor

Participant 3 Hero Honda Splendor

Participant 4 Hero Honda Passion Pro

Participant 5 Hero Honda CBZ Star

Note: All participant chosen was having Hero Group bikes as we are evaluating perception changes for hero Brand

A few excerpts of the focus group interviews are as follows (Edited):

Moderator: When did you purchased your first bike and was it a Hero group’s bike?

P1: I purchased it in the first year of graduation and yes it was Hero Honda Karizma ZMR

P2: I also purchased Hero Honda’s bike and it was Splender

46

P3: It was a repeat purchase for me as I already had a Hero bike in my family and it was our satisfaction level which influenced us to go for Hero Honda again.

Similar answers were given by other panel members

Moderator: Ok, coming on to the second question, what are the key attributes you look for while selecting a bike?

P1: For me style quotient with affordable price is most important as I believe bike is a status symbol in student’s category.

P4: I am a mileage man, for me most important is mileage and service, with Hero Honda it’s easy to find both.

Moderator: Who are influencers in your decision?

P2: My dad and other family member.

P5: My core friend group and to an extent some involvement of family.

Moderator: From where do you get news and new offerings of Hero group?

P1: Mostly from television advertisement and sometimes friends also tell new thing about bikes as they get expose to a medium which i am not.

P2: At all service dates I visit dealer’s service department and get news about new promotional scheme also newspaper gives good information about new bikes and features.

Moderator: According to you how effective is Hero Group advertisement campaign (Advertisement video was shown on laptop to all members http://www.youtube.com/watch?v=qezk3QDURXg)

P3: I am aware about these add as it feature Mr. A R Rehman and it was shown on television number of times.

P5: i am aware about this one and also that punch line “Hero Honda- Desh Ki Dhadkan”.

Moderator: Are you aware of Hero Honda demerger and does it influences your preference?

P2: Yes I am aware but it does not make any difference to me as long as they maintain their core competencies (Interrupted by moderator)

What core competencies you are talking about

P2: I mean Low price and high reliability

P5: For me also it does not matter as Hero is capable enough to carry its legacy in terms of providing bike which suits Indian consumers, in fact I am happy that Hero is independent and now a Global brand.

Appendix F

Depth Interview Transcripts

47

http://www.youtube.com/watch?v=qezk3QDURXg

http://www.youtube.com/watch?v=qezk3QDURXg

#Transcript 1

The candidate is Arnab Biswas, who is currently pursuing his MBA at IIM Bangalore.

a) Are you aware of the Hero Honda demerger?

Yes

b) Why do you think the demerger happened?

It was part of the deal when Honda entered the market (3-4 yr deal)

c) Which factors did you consider while buying your bike?

Power – Engine Capacity, Looks. Within a segment not very price-sensitive (segment defined on

the basis of engine capacity)

d) How important is brand identity/brand image while buying a bike?

Very important

e) Which bike are you using currently?

Yamaha R15

f) If not Hero then why?

I am fond of new technology, Yamaha etc making premium bikes since many years. Assurance of

quality

g) Do you think the demerger would impact your decision of buying a Hero bike in the future?

How?

Yes coz Honda stands for superior technology in foreign markets. After demerger perception of

technology would decline.

h) Are there any concerns which you may have with the Hero brand post demerger?

Hero started with making cycles so consumers may have that impression still. They don’t know

how to make bikes, they are good with dealership so reach to consumers is good.

i) What do you think about the latest Hero Impulse recently launched?

Impulse is very good for interior of India. Good bike.

j) Have you seen the recent AR Rehman - Hero advertisement campaign?

Yes, it is unique. I like it.

k) Do you like the new Hero logo?

Yes it is different. Better than “Hero Honda” logo.

l) How would you compare the current “Hum main hain Hero” slogan with the earlier “Desh ki

Dhadkan”?

Desh ki Dhadkan was much better caught up with World Cup fever

m) Do you think Hero needs to campaign more to increase awareness about the new brand and logo?

Yes focus more on TV advertisements. Viewers’ first impression is created through tv ads. Focus

on auto shows, go for reviews.

48

# Transcript 2

Interviewed Syed Azhar, Sales Manager of Sri Sai Ram Motors, a Hero dealership at Bannerghatta

Road, Bangalore.

a) What were the reasons for the demerger?

Hero not getting approval from Honda to expand abroad, introduce new models etc

Hero Honda was No. 1 producer in India however exporting only to Sri Lanka and Bangladesh

b) What has been the post demerger impact on Hero?

No impact on sales, in fact growth has increased to 11%

Share price gained substantially post demerger

Technology contract with Honda till 2014 so impact would be limited till then

c) How has Hero tried to create brand awareness of Hero brand?

Aggressive campaigning, creative modes – roped in AR Rehman, 10 billion hearts etc

They are trying to develop brand equity of individual models such as CBZ, Impulse. Trying to

delink Hero Honda brand from the models so that models sell by themselves

d) Any concerns consumers have expressed post demerger?

Worried about quality and technology since Hero is known to have originally been a bicycle

producer

Technology was all Honda’s so unless Hero develops in-house R&D and technology this concern

may remain

Appendix G

49

Calculation of Sample Size using Pilot Survey

References

http://heromotocorp.com/

http://motoroids.com/news/honda-to-exit-hero-honda-by-march-2011.html

http://en.wikipedia.org/wiki/Hero_MotoCorp

http://www.thehindubusinessline.com/companies/article2304663.ece

http://heromotocorp.com/impulse

http://trak.in/tags/business/2011/03/18/hero-honda-rebranding-new-logo/

http://trak.in/tags/business/2010/12/18/hero-honda-divorce-brand-identity/

http://www.wheelosphere.org/hero-motocorp-logo-maestro-impulse-1251/

http://www.carblogindia.com/hero-group-brand-identity-budget-100-crore/

http://www.moneycontrol.com/news/business/jv-termination-experts-predict-hero-groups-

future_505636.html

50

http://www.moneycontrol.com/news/business/jv-termination-experts-predict-hero-groups-future_505636.html

http://www.moneycontrol.com/news/business/jv-termination-experts-predict-hero-groups-future_505636.html

http://www.carblogindia.com/hero-group-brand-identity-budget-100-crore/

http://www.wheelosphere.org/hero-motocorp-logo-maestro-impulse-1251/

http://trak.in/tags/business/2010/12/18/hero-honda-divorce-brand-identity/

http://trak.in/tags/business/2011/03/18/hero-honda-rebranding-new-logo/

http://heromotocorp.com/impulse

http://www.thehindubusinessline.com/companies/article2304663.ece

http://en.wikipedia.org/wiki/Hero_MotoCorp

http://motoroids.com/news/honda-to-exit-hero-honda-by-march-2011.html

http://heromotocorp.com/

http://blogs.hindustantimes.com/car-nama/2011/08/18/hero-honda-%E2%89%A0-hero-

motocorp/

http://www.iitk.ac.in/ime/MBA_IITK/avantgarde/?p=344

51

http://www.iitk.ac.in/ime/MBA_IITK/avantgarde/?p=344

http://blogs.hindustantimes.com/car-nama/2011/08/18/hero-honda-%E2%89%A0-hero-motocorp/

http://blogs.hindustantimes.com/car-nama/2011/08/18/hero-honda-%E2%89%A0-hero-motocorp/

hero honda - post demerger

Documents

desh ki dhadkan

easy loan

single tailed

recent ar

recent hero

strong brand

increases

principal