Anda di halaman 1dari 16

Demand function in the Indian Two-Wheeler Market

Course Code: ECO515

Course Title: Managerial Economics

Course Instructor: Vishwas Gupta


Academic Task No.: Assignment-1

Academic Task Title: Indian two-wheeler industry

Enterprise
Ltd
Date
of Allotment:
08/31/2016

Date of submission: 10/10/2016

Students Roll no: A-11,A-12,A-14


Students Reg. no:11610173,11610201,11613292
1112324121321312121311161017321222dsrga324dsrga3242132121232111111191116102011116101201,116132
Evaluation Parameters: (Parameters on which student is to be evaluated- To be mentioned by students as
92
specified at the time of assigning the task by the instructor)
Learning Outcomes: After comprehensive analysis of the case, we could conclude that

demand analysis plays an important role in success of the firms and industry at whole; and
two wheeler automobile sectors is the backbone of the automobile sector in India

Declaration: I declare that this Assignment is my individual work. I have not copied it from any other
students work or from any other source except where due acknowledgement is made explicitly in the
text, nor has any part been written for me by any other person.
Students Signature
Evaluatorscomments (For Instructors use only)

General Observations

Suggestions for Improvement

Best part of assignment

Evaluators Signature and Date:

Marks Obtained:

Max. Marks: _________________

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

1- Introduction
1.1.Summary of the case
The case discusses the demand function in Indian two-wheeler industry. Its focus is on
how despite of overall recession during 1995-98, which adversely affected almost all the
industries in India, two wheeler segment of the automobiles could sustain and grow at a
satisfactory rate of 10% in 1995-96 and 12% in 1996-97.
The planners and economists blamed the lack of demand as well as supply side
bottlenecks, especially infrastructural bottleneck as the main reasons responsible for the
slowdown; but later the detailed study revealed that demand condition was the only
reason for slowdown in many industries.
The study conducted by analysts showed that demand in urban areas was high, but
steady; or in simple terms, a situation where it was not increasing at considerable rate;
and hence it could not be taken as a basic reason for the demand-driven growth in
industry. But in rural areas, where the government implemented the support policies in
terms of providing subsidies, input items of agriculture, such as power, fertilizers etc,
caused a noticeable growth in income of agriculturist, which in turn increased the middle
income people of the society and demand for two wheelers.
The case also shows that the future of two-wheeler industry is promising as long as the
rural income grows along with the middle-class population.
The liberalization policies of the country could attract a huge amount of investment from
the foreign MNCs, which awaken the government for applying the strict environmental
policies. Manufacturers of automobile industry are bound to comply with the
environmental norms introduced by the government.
Although, Indian companies have the capability of running the business by their own, but
the past history of the industry shows that joint ventures with foreign partners guarantee
their success in terms of dealing with international standards. Joint ventures encourage
the domestic firms to expand their operations.
1.2.Brief introduction of two-wheeler segment in Indian automobile industry
India is the second largest producer, and first biggest two wheeler market in the world,
and standing next to Japan and China in terms of numbers of two wheelers produced.
The Indian two wheeler segment contributes the largest volumes amongst all the
segments in automobile industry. This segment can be broadly categorized into 3 subsegments of scooters, motorcycles and mopeds.
Bikes are the major segment of two wheeler industry in India, the others are scooters and
mopeds.
There is a considerable expansion in sales of the scooter segment in last years as far as
the two-wheelers are concerned. The domestic motorcycle sales volume increased up to
10 percent, whereas the scooter segment recorded a growth of 30.7 percent in sales. But
the motorcycle segment lags behind in this regard. This is due to the fact that the recently

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

launched gearless scooters cater to the needs of both men and women, while motorbikes
are a segment preferred by men only. The growth momentum is also propelled by the fact
that the two-wheeler manufacturers in India have understood the markets needs and have
been able to deliver as expected.
1.3. Two wheeler market players in India:
The major players and their percentage market shares in Indian two-wheeler market are
as follow:

1.4.Demand analysis and its importance:


Demand analysis is a type of marketing strategy which is used to determine what type of
customers are willing to buy a particular product and how many units they are likely to
buy and at what price range. This information is then used to plan advertising strategies,
determine selling cost and make product modifications.
The importance of demand analysis in business decisions can be explained as follow:
Sales forecasting: Demand analysis help the managers to estimate the
approximate amount of future sales in advance.
Determining the price: Demand analysis also assists the companies for making
the rational decisions regarding determination of prices at different levels in
different times.

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

Marketing decisions: Demand analysis forms the base for formulating the
marketing strategies. It collects the important data related tastes and preferences of
the customers which in turn helps the managers for choosing the right strategies to
attract the customers.
Production decisions: Demand analysis reduce the unnecessary cost associated
with production. It avoids the unrequired surplus and shortage of resources for
production.
Financial decisions: Surplus and shortage of finance, both are unfavorable
conditions for a business; because both of them associates cost with them. Either
cost of unnecessary accumulation of funds or stoppage due to shortage of
resources. Demand analysis helps the organizations to keep adequate amount of
finance for meeting its future financial obligations on prompt basis, it also avoids
the extra cost burden of finance.

2- Analysis of the case (Ideas):


As per our understanding from the case, we would prefer to explain the following points for
having a comprehensive analysis of the case:

Economic slowdown, and its impact on various industries, specifically Two-Wheelers


Reasons behind economic recession of 1995-98
Demand function of two-wheelers, and various factors affecting it
Market segmentation and its role in demand for two wheeler industry
Basis for market segmentation, and their consequences on business decisions
Role of government support in boosting the economy
Liberalization and its impact on industries (Two-Wheeler)
Environmental pollution, its policies and impact on Two-wheeler business
Joint venture, reasons behind its creation, and advantages
SWOT analysis of two-wheelers industry in India

2.1.Economic slowdown, and its impact on various industries, specifically on twowheelers:


Economic slowdown is negative economic growth within a specific period of time. It is
also a business cycle contraction which results in a general slowdown in economic
activities.
It has negative impact on all industries, it hinders the growth of economy, creates
unemployment, reduces overall consumption, and challenge the welfare of society.
There can be some industries, which due to many reasons may not be severely affected
by the recession.
Two-Wheeler segment of automobile industry can be a good example which could
sustain its growth during the very tough situation of 1995-98; the basic reason for its
impressive growth was increasing number of middle-income class people in society,

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

which increased the demand for two-wheelers in rural areas, and protected this segment
from the effects of the recession.
2.2.Reasons behind economic Slowdowns/recessions
There can be many reasons for economic recessions; the major ones are listed as follow:
Higher rate of interest: Because it limits the overall liquidity in economy or
money available to invest.
Increased inflation: Inflation refers to general rise in the prices of goods and
services over period of time. When inflation increases, it reduces the purchasing
power of the people, which hinders the growth of goods being produced, and
services being rendered.
Consumer negative perception about future: If consumers dont have positive
perception about the future of economy, they are less likely to spend money, and
it leads to recession.
Real wages reduction: Real wages refer to wages that have been adjusted to
inflation. When the inflation rate is increasing and there is no proportionate
increase in wages of the workers, it reduces the purchasing power, and causes
recession.
2.3.Demand function of two-wheeler industry and various affecting factors
Demand function is the amount of a product demanded for each combination of price and
the other affecting factors. It is simply shown as:
F (dx) = (price, contributing factors)
The major contributor factors, which affect the demand for two-wheelers are discussed as
follow:
Prices of Two-Wheelers: Same like all other normal commodities, increase in
price of two-wheelers will decrease, and decrease in prices will increase the
overall demand.
Income of consumers: Income changes and its impact on demand for two
wheelers, can be explained in three levels of the society:
High income individuals: increase or decrease in their income may have
very less effect on demand, since a large number of them dont prefer to
buy two-wheelers.
Middle income people: with increase in their income, demand usually
decreases; because they can afford other options such as cars to buy, rather
than buying two-wheelers.
Upper-lower income people: with increase in their income, the demand for
two wheelers increases, and with decrease, demand also decreases.
Financing options: The availability of various sources of finance, can lead to
increase in demand; where people dont have access to loans, banks and other
sources, most of them will be very conservative in their consumption pattern.
Advertising and marketing: It is usually claimed that advertisement creates
demand, and it is very true in two-wheelers. A research conducted in Chennai

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

shows that a great majority of youngsters dont buy two-wheelers because they
need it, but because they want it.
Prices of substitutes especially cars: Demand for two-wheelers is also affected
by the price of other substitute, such as cars. Introduction of new cars with lower
prices can affect attract the customers toward them and encourage them to forgo
the decision of buying two wheelers.
Demographic drivers: Changing lifestyle of the people can also affect the
demand for two-wheelers. With a huge difference from the past, now many people
buy two-wheelers for entertainment, rather than to satisfy their need.
Availability of credit for vehicle purchase: The availability and cost of finance
affects the demand for two-wheelers as the trend for increased credit purchases for
consumer durables have increased over the past few years.
New models/offerings: People in all developing countries, especially India, are
highly attracted towards new models. Sales of two-wheelers increases when a new
model hits the market.
Government policies: For example, decisions regarding prices of petrol which are
subsidized by the government can also affect the demand for two-wheelers. When
the government reduces the subsidy, the prices of petrol will increase and this
affect the sales of two-wheelers in market.
Mass transport system: If the plan of having mass transportation system is
implemented, it will reduce the demand for two-wheeler segment in India.

2.4.Market segmentation and its role in demand for Two-Wheelers:


Market segmentation is the process of dividing the entire market into specific group who
share a similar set of need, wants, and characteristics.
The market is usually segmented on the basis of following variables:
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
Gender segmentation
For two-wheelers Geographical, Income and demographic segmentation plays important
role.
In this case:
Geographical segmentation divides the entire market into two segments:
Rural Consumers
Urban Consumers
From demographic segmentation, gender segmentation divides the whole market
into two segments:
Male consumers
Female consumers
Income segmentation divides the market into following three segments:
High income level consumers
Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

Middle income level consumers


Upper-low income level consumer

Importance of market segmentation for two-wheelers:


There are several reason behind market segmentation of Two-Wheelers; important points are
listed as follow:

Focus of the company on a specific segment: segmentation acts as an effective method


of concentrating the focus of company to a specific market segment; and this better focus
will definitely lead to higher revenues, higher profits and better quality production.
Enhancing the competitiveness: When a company focusses on a specific segment, its
competitiveness will increase in that market. If the company is focusing on youth, so the
brand equity of it within youth community will e high. It will increase the market shares
and attract new potential customers of the same segment.
Expansion of Market: Market segmentation helps the companies to expand their
operation and selling points. When a specific market it targeted, and it reached to success,
then the nearby markets can be targeted, and by this way the returns on business will
increase.
Retention of the customers: Market segmentation helps the companies to understand the
wants, desires and preferences of the customers in a specific segment, and try to satisfy
them. This increase the customer loyalty to brand.
Effective marketing strategies: Market segmentation paves the ground for better
reading and understanding of peoples minds. And then marketing the product in way
which can attract them towards buying it.
Increases profitability: with increase in competitiveness, brand equity, customer
retention and effective marketing strategies, without doubt, profitability increases.

2.5.Role of government support in boosting the economy:


Going through the case, we understood that government can play important role in
boosting the economy. The plans of government to support the back warded segment of
the society will distribute the wealth among people, increase the overall demand,
consumption, and production and will strengthen the economy to resist against
recessions.
2.6. Liberalization and its impact on industries (Two-Wheeler)
Liberalization can be simply defined as, relaxation of government restrictions. The
liberalization of Indian economy had its impact on various industries, but here we would
prefer to note down the points related to Two-Wheeler segment of automobile industry.
Appearance of a wider range of products to the customers
Increase in flow of investments from industrially advanced countries
Better quality products in two-wheelers
Wider range of options to choose from

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

Technological development through learning from working with international


expert companies.
Tough competition for domestic companies
Rapid growth in contribution of automobile industry to total GDP of the country

2.7. Environmental pollution, its policies and impact on Two-wheeler business


One of the great challenges to deal with nowadays is increasing air pollution. As per one
article from (TIMES OF INDIA), two-wheelers contribute 41% of total air pollution in
Bangalore, and same is the other country.
There are many reasons behind this rapid increase in air pollution:
Absence of effective, efficient and well networked transport system in India.
Lack of public widened transportation system across India
Faulty traffic management systems and frequent jams.
No stringent enforcement of various standards/norms for checking/curbing
pollution.
Bad road conditions.
Adulterated fuels.
Older vehicles.
Inferior technology used for production etc
But from last few years government has taken some initiatives to control the pollution.
Bharat stage emission standards, can be a good example. Bharat stage emission standards
are emission standards instituted by the Government of India to regulate the output of air
pollutants from motor vehicles. The standards, based on European regulations were first
introduced in 2000. Progressively stringent norms have been rolled out since then. All
new vehicles manufactured after the implementation of the norms have to be compliant
with the regulations. Since October 2010, Bharat stage III norms have been enforced
across the country. In 13 major cities including Delhi, Mumbai, Kolkata, Chennai etc.,
Bharat stage IV emission norms have been in place since April 2010.
This will force the entire automobile industry to produce ecofriendly products, and
strictly follow the environmental norms of the government.
2.8.SWOT analysis of two-wheelers industry in India:
SWOT stands for Strengths, weaknesses, opportunities and threats. This analysis helps us
to understand about all these four aspects of a company, industry or sometime the whole
economy. To have a clear understanding about Indian Two-Wheelers segment of
automobile industry, we preferred to do the SWOT its SWOT.
Strengths:
Evolving industry
Increase in demand of luxury motor bikes
Domestic large market
Lower labor cost
Weaknesses:
Low productivity

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

Too many taxes charged by the government


Low investment in research and development
Opportunities:
Producing fuel-efficient two-wheelers
Strategic alliance
Changing lifestyle of the customers
Market expansion
Threats:
Intense competition
Volatility of fuel prices
High fixed cost and investment in Research and development
3- Practical application of concepts in real world:
We have already discussed various issues related to the case, here we would explain how
these concepts are applicable in real world and how they help in rational decision making.
We will here bring few examples of real application:
3.1.Application of Demand analysis concept:
The basic purpose of all business organizations is profit maximization; and this is
possible only if the available resources are optimally utilized, and outputs are sold at a
profitable price in the market. These all depend upon authentic analysis of demand.
Demand analysis helps in estimating the adequate amount of outputs to be produced,
different quantities to be distributed to different markets, and fix the price at which they
have to be sold.
It is usually used for following purposes:
Forecasting the basic requirements of the customers in the market
Estimating the approximate amount of sales in future
Deciding about price of the commodities
Predicting the success and failure possibility of the business
Determination of sources for financing the future requirements
3.2.Application of Market Segmentation concept:
Almost all the companies who are in business of two-wheelers, classify the markets into
different segments, target a specific segment, and satisfy the needs of that particular
segment.
For example, here we give 5 companies, and their targeted segments:
Hero Moto Corp Ltd
Hero Moto Corp caters to a wide consumer base. It has segmented its market
based on income and age. It caters to youth of all income groups. Its highest
selling bike Splendor is a favorite in sub urban and rural India. It portrays itself as
the most efficient bike range to cater to Indian Roads.
Yamaha Motor Company Limited

Case Based Presentation, First Assignment,

Managerial Economics

Demand function in the Indian Two-Wheeler Market

Yamaha caters to the market of tier I and tier II cities. It caters to males between
the age group of 18 to 35. It caters to upper middle class families. It has high pick
up and speed. It is the most innovative and most stylish bike manufacturers.
Therefore, it is youth centric.
Bajaj Auto Ltd.
Bajaj caters to the mass consumer. It caters to middle-middle and upper middle
income group of consumers. It does not have the rural support. It still lags behind
in the rural areas. It caters to aspiring young men of the country.
TVS Motor Company
The range of TVS bikes are less. It caters to the lower middle class and the
middle-middle class income groups. It caters to the youth. It segments itself on
the basis of gender as well as it caters to male.
Harley Davidson
It caters to tier I and tier II cities. It caters to touring enthusiastic and outdoor
oriented male of high income groups between the ages of 27 to 45. It caters to
innovators or achievers who are self-employed business men and are ready to buy
the product. They want to but it for leisure riding, planning weekend rides etc.
3.3.Application of strategic alliance (Joint Venture) concept:
Strategic alliance is an agreement between two or more parties to pursue a set of agreed
upon objectives needed while remaining independent organizations.
Many times companies enter into joint venture and start a new company or new project;
now the question maybe, why joint venture?
There can be many reasons; we divide them into following groups:
Internal Reasons to Form a JV
Spreading Costs
Connection to Technological Resources
Improving Access to New Help Economies of scale
External Reasons to Form a JV
Develop Stronger Innovative Product
Improve Speed to Market
Strategic Move Against Competition
Strategic Reasons
Synergistic Reasons
Share and Improve Technology and
Diversification
4- Questions of the case and their answers:
Question #1: Comment on the role of market segmentation on the demand for two-wheelers?
Ans:

Case Based Presentation, First Assignment,

Managerial Economics

10

Demand function in the Indian Two-Wheeler Market

Market segmentation plays an important role in demand analysis for two-wheelers. The major
ones can be listed as follow:

Focus of the company on a specific segment: segmentation acts as an effective method


of concentrating the focus of company to a specific market segment; and this better focus
will definitely lead to higher revenues, higher profits and better quality production.
Enhancing the competitiveness: When a company focuses on a specific segment, its
competitiveness will increase in that market. If the company is focusing on youth, so the
brand equity of it within youth community will e high. It will increase the market shares
and attract new potential customers of the same segment.
Expansion of Market: Market segmentation helps the companies to expand their
operation and selling points. When a specific market it targeted, and it reached to success,
then the nearby markets can be targeted, and by this way the returns on business will
increase.
Retention of the customers: Market segmentation helps the companies to understand the
wants, desires and preferences of the customers in a specific segment, and try to satisfy
them. This increase the customer loyalty to brand.
Effective marketing strategies: Market segmentation paves the ground for better
reading and understanding of peoples minds. And then marketing the product in way
which can attract them towards buying it.
Increases profitability: with increase in competitiveness, brand equity, customer
retention and effective marketing strategies, without doubt, profitability increases.

Question #2: Critically analyze how various factors will affect the demand function of twowheelers.
Ans:
Same like all other normal commodities there are many factors that affect the demand function
of two-wheelers market at large; the important ones are listed as follow:

Prices of Two-Wheelers: Same like all other normal commodities, increase in


price of two-wheelers will decrease, and decrease in prices will increase the
overall demand.
Income of consumers: Income changes and its impact on demand for two
wheelers, can be explained in three levels of the society:
High income individuals: increase or decrease in their income may have
very less effect on demand, since a large number of them dont prefer to
buy two-wheelers.
Middle income people: with increase in their income, demand usually
decreases; because they can afford other options such as cars to buy, rather
than buying two-wheelers.
Upper-lower income people: with increase in their income, the demand for
two wheelers increases, and with decrease, demand also decreases.

Case Based Presentation, First Assignment,

Managerial Economics

11

Demand function in the Indian Two-Wheeler Market

Financing options: The availability of various sources of finance, can lead to


increase in demand; where people dont have access to loans, banks and other
sources, most of them will be very conservative in their consumption pattern.
Advertising and marketing: It is usually claimed that advertisement creates
demand, and it is very true in two-wheelers. A research conducted in Chennai
shows that a great majority of youngsters dont buy two-wheelers because they
need it, but because they want it.
Prices of substitutes especially cars: Demand for two-wheelers is also affected
by the price of other substitute, such as cars. Introduction of new cars with lower
prices can affect attract the customers toward them and encourage them to forgo
the decision of buying two wheelers.
Demographic drivers: Changing lifestyle of the people can also affect the
demand for two-wheelers. With a huge difference from the past, now many people
buy two-wheelers for entertainment, rather than to satisfy their need.
Availability of credit for vehicle purchase: The availability and cost of finance
affects the demand for two-wheelers as the trend for increased credit purchases for
consumer durables have increased over the past few years.
New models/offerings: People in all developing countries, especially India, are
highly attracted towards new models. Sales of two-wheelers increases when a new
model hits the market.
Government policies: For example, decisions regarding prices of petrol which are
subsidized by the government can also affect the demand for two-wheelers. When
the government reduces the subsidy, the prices of petrol will increase and this
affect the sales of two-wheelers in market.
Mass transport system: If the plan of having mass transportation system is
implemented, it will reduce the demand for two-wheeler segment in India.

Question #3: Discuss, how despite overall recession in the industry the two-wheeler segment has
maintained an impressive performance.
Ans:
As per our understanding from the case, following were the basic reasons for two-wheeler
industrys survival despite of all pitfalls in other industries:

Strong demand conditions for two-wheelers


Right segmentation strategies also played important role in its success
Increasing number of middle-income people of the society
Governments support policy, in terms of inputs for agriculture like power, fertilizer etc,
from agriculturists in rural areas. Which resulted in the growing per capita real income of
these agriculturist. And this growing income of rural population provided a huge market
for the two-wheeler industry.

Question #4: How signification is the role of manufacturers in a demand-driven industry like
the two-wheeler industry?
Case Based Presentation, First Assignment,

Managerial Economics

12

Demand function in the Indian Two-Wheeler Market

Ans:
Demand Driven Industry follows the proactive technique for the manufacturing of their goods
rather than going for the conventional supply chain method of manufacturing. The manufacturers
play a pivot role in Demand Driven Industries as:

Production as per demand: The manufacturers can study the demands of customers and
end-users and, accordingly manage their sourcing of raw materials and components.
Manufacturers can take care of inventory tracking and proper distribution of two
wheelers across the channels within time. Also this helps the manufacturers to produce as
per the demands which in turn help them not leading to either surplus or shortage.
Demand shaping: It can help manufacturers to sense the demand in the particular
segment and to focus on that particular segment or category to improve the marketing
strategy and shape up the demand of two wheelers in that segment.
Introduction of new innovations: Manufacturers should consult the end-users of two
wheelers and based upon the feedback received, they should try to bring new innovations
and technology into the two wheelers to break to monotony and at the same time
fulfilling the demands of their customers.
Focus on the margins: The manufacturers can further investigate and should come up
with the ideas of limiting the components and compact the design of two wheelers which
would ultimately make the two wheelers cost effective as well.
Customers Satisfaction and services: The role of the manufacturer should not end up to
the selling of their wheeler only; also they should be responsible for the post sale
customer satisfaction as well.

Question #5: How do you think JVs can help boost a demand-driven industry like that of the
two-wheeler?
Ans:
Joint venture means that when two companies work in collaboration to catalyze the prospects of
both the companies. The Joint Ventures boost the industry in the following ways:

International Exposure: The collaboration with other industries to form JVs would
enhance the concepts of the production and would imbibe new technologies into
manufacturing of two wheelers. For example, On June 26, Hero Honda, for the first time
in India, launched the fuel injection (fi) technology in two-wheelers under the brand
name Glamour fi. The motorcycle does not have a carburetor. Instead, fuel is directly
delivered to the pre-combustion chamber with the help of a fuel injector. Experts say the
process reduces emissions significantly and improves fuel efficiency.
Increased Resources: When two or more companies combine together to work for a
common objective, both of them would be in a situation to access greater resources,
including specialized staff, technology and finance

Case Based Presentation, First Assignment,

Managerial Economics

13

Demand function in the Indian Two-Wheeler Market

5- Conclusion
After comprehensive analysis of the case, we could conclude that demand analysis plays an
important role in success of the firms and industry at whole; effective segmentation, clear
understanding about patterns of market movements and planning accordingly can help the
businesses to survive and grow at impressive performance rate.
Apart from that we understood that economic slowdown may have many reason behind, they
can either be from demand or supply side.
The industries which have diverse strong demand in market may not be severely affected, no
matter how tough the situation comes. Two-wheelers segment of automobile industry is a
good example of it.
Besides these all, we realized that if the government support the less opportunist segment of
the society, it could reduce the dependency of economy on few pillars, shorten the inequality
gap and protect the economy from collapsing down in challenging situations.
6- Recommendations
After completion of and comprehensive analysis of the case work the we came to some
conclusions which could help the company in development & improvement of service
process. This is helpful in future development of the company. The following points come in
the suggestion parts which came after the analysis and conclusion of the case:

The company should improve the quality of the product.


The company should improve its promotional activities through advertisement, free
gifts coupons etc. Since the price of the product is also an important factor which
influence the purchasing decision so the company should design the products price
according to the customer affordance level.
Company should instruct the sales representatives not to make extra ordinary
commitments on behalf of the company for sale.
The distribution channel should be arranged according to the convenient of the
customer.
No matter how much on organization progresses it always lack something. These are
shortcoming of every company. After completing my report on new Hero Honda
motors Ltd. I have some suggestions to offer. The suggestions can be proved useful
for the company as they have feasibility and viability.
Hero Honda Motors only manufacture a wide rand of 4-stroke bike. But in my
opinion 2-stroke bikes have a better pick up. So in order to letter to the need of a large
segment of customers, who want a better pick up bike, Hero Honda go into the
manufacture of 2-stroke bikes.
The company has always targeted urban sector of Indian population. But in the rural
sector escorts; Rajdoot enjoys a great market share. So, therefore Hero Honda should
target this upcoming market. .
The company should work more on public relation.
Case Based Presentation, First Assignment,

Managerial Economics

14

Demand function in the Indian Two-Wheeler Market

References:

Study on Two Wheeler Market Segmentation and its Strategy in India by Saillaja .V,
Research Scholar, Bharathiar University, Coimbatore, India
Indian Two Wheeler Auto Industry and Concurrent Engineering, By: Dr. V.Venkata
Ramana, V.Visweswara Reddy, T.Govardhan Reddy
Indian two wheeler market: rural India shines, a case study on the sales of two wheelers in
rural Indian, by: Abhimanyu Upadhyay , Research Scholar, CCS University, Meerut
The Evolution and Structure of the Two-wheeler Industry in India, By: Sunila George, IIM
Bangalore, Raghbendra Jha, ANU, Canberra, Hari K. Nagarajan, IIM Bangalore and
NCAER, Delhi
Customer perception towards major brands of two wheelers in Jaipur city and its impact on
Buying decision, By: Nutan Sharma1, Research Scholar, Jaipur National University, Jaipur,
India
Factors explaining emerging economies growth slowdown, By: K. Buysse, E. Vincent
Trade Chakra,Globalization, [Online] Available: http:// www.tradechakra.com/indianeconomy/globalization.html
two-wheeler industry: growth drivers intact - ICRA
www.yes.honda.co.in/honda-motorcycle-scooter.aspx
http://en.wikipedia.org/wiki/Motorcycle
http://en.wikipedia.org/wiki/Bajaj_Auto
www.indianmba.com/Occasional_Papers/OP48/op48.html
www.ijrmet.com/vol2issue2/amarjit1.pdf
www.marketing91.com/swot-analysis-of-automobile-industry/
www.team-bhp.com
targetmarketsegmentation.com/segmentation.../example-of-demand-analysis
https://en.wikipedia.org/wiki/Automotive_industry_in_India

Case Based Presentation, First Assignment,

Managerial Economics

15

Demand function in the Indian Two-Wheeler Market

Table of contents
1. Introduction
1.1. Summary of the case
1.2. Brief introduction of two-wheeler segment in Indian automobile industry
1.3. Two wheeler market players in India
1.4. Demand analysis and its importance
2. Analysis of the case (Ideas)
2.1. Economic slowdown, and its impact on various industries, specifically on two-wheelers
2.2. Reasons behind economic Slowdowns/recessions
2.3. Demand function of two-wheeler industry and various affecting factors
2.4. Market segmentation and its role in demand for Two-Wheelers
2.5. Role of government support in boosting the economy
2.6. Liberalization and its impact on industries (Two-Wheeler)
2.7. Environmental pollution, its policies and impact on Two-wheeler business
2.8. SWOT analysis of two-wheelers industry in India
3. Practical application of concepts in real world:
3.1. Application of Demand analysis concept:
3.2. Application of Market Segmentation concept:
3.3. Application of strategic alliance (Joint Venture) concept:
4. Questions of the case and their answers
5. Conclusion
6. Recommendations
7. References:

Case Based Presentation, First Assignment,

Managerial Economics

16