Hero Honda's Rural Marketing Initiatives in India

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Case Details:

Case Code : MKTG219
Case Length : 15 Pages
Period : 2007-2008
Pub Date : 2009
Teaching Note :Not Available
Organization : Hero Honda Motors Limited.
Industry : Automobiles
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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"The majority of India lives in rural areas and the government is pumping in a lot of money through various programmes. Hero Honda is focusing a lot on rural markets. Going forward, a substantial industry growth is expected to come from these markets."¹

- Pawan Munjal, MD and CEO, Hero Honda Motors Limited, in May 2009.

"They [Hero Honda] have positioned themselves as a rural India story, at just the right time."²

- S. Ramnath, Vice President at IDFC-SSKI Securities Limited³, in March 2009.

"The penetration of two-wheelers in rural areas is estimated to be less than 10 per cent and around 25 per cent in urban areas. This makes us optimistic about the market." ⁴

- Anil Dua, Senior Vice President for Sales and Marketing, Hero Honda Motors Limited, in January 2009.

Introduction

In April 2009, India-based Hero Honda Motors Limited (Hero Honda) announced that it was planning to develop a low-priced motorcycle. The company said that the motorcycle would be launched specifically for rural consumers and was likely to be priced between Rs. 12,500 and Rs. 15,000⁵. Pawan Munjal (Munjal), Managing Director and Chief Executive Officer of Hero Honda, said, "This (a low-price bike) has been on our horizon for a long time but we haven't been able to come up with a solution till now. But this is not the end and we hope to come up with a solution... we continue to work on this."⁶

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1] "Hero Honda Looking to Gain Market Share," http://in.reuters.com, May 08, 2009.
2] Samar Srivastava, "Hero Honda's Motorcycle Diary," http://www.livemint.com, March 26, 2009.
3] Mumbai, India - based IDFC SSKi Securities provides corporate finance and institutional securities services.
4] Priyanka Vyas, "Hero Honda Boost Production at Haridwar," http://www.thehindubusinessline.com, January 18, 2009.
5] Rs. or INR refers to Indian Rupee. As of June 25, 2009, 1 US$ ≈ INR 48.60.
6] Sindhu Bhattacharya, "Hero Honda Working On a 'Nano' Bike'," http://www.dnaindia.com, April 23, 2009.


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