Honda's Marketing Strategies in India

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Case Details:

Case Code : MKTG098
Case Length : 19 Pages
Period : 1998-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Honda Motors
Industry : Automobile (Two Wheelers)
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Its symbol, the Wings, represents the company's unwavering dedication in achieving goals that are unique and above all, conforming to international norms. These wings are now in India as Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI), a wholly owned subsidiary of Honda Motor Company Ltd., Japan. These wings are here to initiate a change and make a difference in the Indian two-wheeler industry."

- www.honda2wheelersindia.com.

The Launch

In September 2004, Honda Motorcycle and Scooters India Limited (HMSI), the wholly owned subsidiary of the Japan-based Honda Motor Company Limited (HMCL),¹ launched its first 150cc motorcycle named 'Unicorn.'

Priced at Rs 50,043 (ex-showroom price, Delhi), Unicorn had a four stroke 13.3 bhp engine with five gears.

The new bike was available in five colours and was designed to achieve a speed of 0 to 60 kmph in five seconds. Unicorn was promoted with the caption "Be a wing rider." (Refer Exhibit I for a visual of Unicorn).

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Targeted at youth, Unicorn looked sportier than all the existing motorcycles in the premium segment and was pitted against Bajaj Pulsar, the leader with 75 percent market share in that segment. The other bikes in this segment were TVS Fiero, LML's Graptor and Hero Honda's CBZ (Refer Exhibit II for a comparison of leading motorcycle models in India). HMSI expected sales of 56,000 units of Unicorn in the first year of launch.

The Indian two-wheeler industry, traditionally considered a scooter market, witnessed a gradual migration towards motorcycles from the 1990's. When HMSI was incorporated in late 1999, the Indian motorcycle market was booming, compared to the scooter market.

Still, SI announced that it would initially concentrate only on the scooter market and would enter the motorcycle market in 2004, the year when the HMCL joint venture agreement with the Hero Group² was due for revalidation. HMSI was credited for reviving the scooters market in India. Within three years of commercial operation, HMSI emerged as the market leader in the scooters segment.

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1] The Tokyo- headquartered HMCL is one of the leading manufacturers of automobiles and power products and the largest manufacturer of two-wheelers in the world. It has more than 120 manufacturing facilities in 30 countries worldwide, manufacturing a wide range of automobiles. The extensive range of business has brought the company into contact with over 17 million customers annually.

2] The Hero Group of Companies was started by the Munjal brothers in 1956. Their first venture was Hero Cycles Limited. Hero is today a multi-unit, multi-product, geographically diversified group of companies. Apart from rolling their own steel, making components such as wheels for their bicycles, the group diversified into other ventures like product designing, IT-enabled services, finance and insurance. The group comprises 18 companies, 300 ancillary suppliers, over 5,000 outlets and 23,000 employees. For the fiscal 2003-04, the group's turnover was US$ 2.2 bn.