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.
|Company||Units Sold in March 2013||Units Sold in March 2014||% Growth|
|Honda Motorcycle & Scooter India (HMSI)||252,787||392,148||55.0|
|Suzuki Motorcycle India Ltd (SMIL)||25,717||30,594||19.0|
|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 firstname.lastname@example.org or WhatsApp on +919022780919)