I want to present a case study about Branding and Re-Branding businesses.

A case of Hero-Honda partnership in India, before and after. When the brand was Hero-Honda, it was selling two wheelers in India like hot cakes.Now, after the demerger of Hero and Honda, both are having their own brand Hero MotoCorp and Honda respectively.

Post demerger, what I have observed is remarkable. As far as I know Hero Bikes are very rarely seen on the roads, but Honda bikes are selling in quantities just as before when the company was Hero-Honda.

Now, I want to give additional information in respect of both the companies. Hero used to make bicycles in India and it still makes. Later on it expanded and entered into partnership with Honda (a car manufacturer).Now, after their demerger, Hero MotoCorp and Honda are selling their own two wheelers independently.

My point is that, as of today, young people are becoming brand conscious and would not like to buy a bike from a bicycle manufacturer (Hero, an Indian Company). But, everyone would like to buy a bike from a car manufacturer (Honda).

As on date, Honda sells its cars in India on large scale. At the same time Hero sells bicycles in India at this very moment. (Natural inclination of the buyer is to buy from a car manufacturer, and I think this is what is happening).

Now, given a choice to a customer to buy a two-wheeler, what you think who stands more chance to get the customer?

From my perception, its Honda and not Hero.

So, to conclude, at this juncture, it is imperative for Hero to re-brand its two-wheeler division. At least the brand name should be different for bicycles and two-wheelers. There is no need to stick to the word Hero. If that word is not there, sky is not going to fall. They can establish their own separate Brand with a nee Avatar. That’s the beauty of newness and innovation.

I hope this message reaches the company and they take appropriate steps to re-brand themselves to face the foreign competition. Or else, in few years, they will witness the results.

The reason explained in above article can be just one of the reason but it can be crucial for the company’s success.

Below is some data which may interest you and will also testify the logic given in above article.

Source: http://www.xbhp.com/talkies/news/28871-march-2014-two-wheeler-sales-figures-xbhp-news.html

Company Units Sold in March 2013 Units Sold in March 2014 % Growth
Hero MotoCorp 468,283 524,028 11.9
Honda Motorcycle & Scooter India (HMSI) 252,787 392,148 55.0
Suzuki Motorcycle India Ltd (SMIL) 25,717 30,594 19.0
Bajaj Auto 267,037 270,591 1.33
TVS Motor Company 167,583 196,826 17.44
Yamaha Motors India 50,473 61,239 21.33
Mahindra Two Wheelers 19,591 7774 152.00

 The biggest challenge in front of Hero MotoCorp is to face the complacency. If the company remains complacent about its past success and growth rate of 11.9%, its still going to lose the market share.

I conclude my article with one powerful sentence which I have read somewhere “If you keep doing what you were doing, you will keep getting what you were getting” – Anonymous. Surviving the failure is easier than surviving slow growth. You never be aware about the fact that you are in problem (especially when there is positive growth seen from the financials and turnover units) or whether you are doing good. But one thing is definite; you are not doing the best.

Disclaimer: This article is written and published just to give a management/leadership insight into the case. I am neither related either to Hero or Honda or any other vehicle manufacturers in any waynor I hold any security of any nature in any of the above mentioned companies. I am not even connected as consultant to any of the vehicle manufactures. The article should not be taken as an advice to buy or sell any securities. The views are purely personal views.

(Written by CA Rajesh Pabari – for feedback kindly contact carajeshpabari@gmail.com or WhatsApp on +919022780919)

Read More Articles from CA Rajesh Pabari

More Under CA, CS, CMA

Posted Under

Category : CA, CS, CMA (3826)
Type : Articles (17583)
Tags : CA Rajesh Pabari (27)

0 responses to “A Case Study on Branding and Re-Branding your Business – Hero Moto Corp”

  1. ramesh says:

    40% of customer doesn’t consider a 2 wheel he is buying is from car Co. Orfrom bicycle Co. .and 40% of people don’t know it’s origin from bicycle or car co as its not a high end market…leave about 20%of market meanwhile….focus on 80% customers. Choice of customer purely depends primarily on availability of spares and secondary performance and maintenance.
    Even the best bike have no market means the dealers or centralised spares stockist zone wise is not good that is what happening with hero and dealers terminating the business.if spare is available the dealer is going to get margin and labour charge .if not loss of labour and spares margin..this effects a lot and pains the dealer in overcoming high maintaince. .the Co has to concentrate the Base level market and many things…being put up in automobile market this is what I observed…and the company has to take all data if any dealer wash out this will come to know where they stand…some terms should be replaced to safe guard the dealers. ..

  2. Ganesh says:

    Hi,

    Why cant you advise how Honda being a Car Manufacturer turned two-wheeler manufactured affected by the common brand name?

  3. CA Rajesh Pabari says:

    Yes, rightly observed. It has potential, but innovation and creativity is the key. Branding also matters. I hope they do the needful to remain number one. Purpose of writing this article was to reach them through this platform and help the Indian company.

  4. Rakesh says:

    There is other way to look at it. If there has been no JV between them, Hero would have been selling only cycles. But now they are selling Bykes and competing with the world’s best car manufacturer in the two wheeler segment. If without the Hero band, I douby if they would have achieved half the nos.

    Hero has just come out of the transition phase and yet to come with their USP product. So.. I strongly believe the % will grow when their fresh products are introduced in the market. wrt branding, just becos Tata sells salt & Tea,i dont think people will hesitate to buy Tata Cars.

  5. Kunal Dhotre says:

    Hi Sir,
    I think there was lot of potential in a motercycle company (Hero) , which was identified by a car making company (Honda). Although currently it might look tough for hero, but strongly believe it will be a million dollar company one day only because of its continuous improvement and innovation. We still remember the theme song, HUM MAI HAI HERO….

    Kunal Dhotre

  6. Shazi says:

    Dear Sir,

    The similar things happen with us like we always want to be in a comfortable environment and fear to take up new challenges and find our colleague going ahead of us at the end of the year when appraisal are done
    I like the powerfu sentence you ended your article with

    Regards
    Shazi

Leave a Reply

Your email address will not be published. Required fields are marked *

Featured Posts