Summary

An overview of the micro environment concepts are mentioned in this report. It contains fundamental issues of marketing.
They are explained in general first and then are described in reference to the company. Hero Honda India ltd India's leading
motor cycle company is spoken about. This report explains the issues Hero Honda is facing in India.

Introduction

Marketing is a social and managerial process whereby individuals and groups obtain what they need and want through
creating and exchanging products and values with others (KOTLER & ARMSTRONG, 2004)
If a company has to succeed it has to understand the basic concepts of marketing, micro and macro. Firstly, I would speak
about marketing in general .i.e. its concepts and fundamental issues in marketing. Secondly, this assignment will talk about
nature and level of competition, competitive strategy profile, etc. Finally, I would talk about segmenting, targeting and
position issues relating to Hero Honda in India.

Marketing is a social and managerial process whereby individuals and groups obtain what they need and want through
creating and exchanging products and values with others (KOTLER & ARMSTRONG, 2004)

There are two main activities, which are most significant in marketing:
1.Matching the product with demand.
2.Transfer of ownership and possession at every stage in the flow of goods from the primary producers to ultimate
consumer.

What is Market?
The set of all actual and potential buyers of a product (Kotler & Armstrong, 2004)

Markets can be classified on the basis of:

a.Selling area- local, national, international markets.
b.Nature of exchange-cash / spot market, futures/forward market.
c.;Nature of goods sold-consumer, industrial goods market.
d.Period - short term, long term markets e.g. Money market, capital market.
e.Nature and magnitude of selling- wholesale and retail markets.

So we first need to identify which kind of market we are looking for.

Marketing management is carrying out tasks to achieve desired exchanges with target markets. There are five alternatives
concepts, under which organizations conduct their marketing activities, the production, product, selling, marketing, and
societal marketing concepts (COLL-KENNEDY & KIEL, 1999)

Production concept:
The production concept holds that consumers will favor products that are available and highly affordable. Therefore
management should focus on improving production and distribution efficiency (Kotler & Armstrong, 2004)

Product Concept:
The product concept holds that consumers will favor products that offer the most quality, performance, and innovative
features, thus, an organization should devote energy to making continuous product improvements. ( Kotler & Armstrong,
2004)

Selling Concept:
Many organizations follow the selling concept, which holds that consumers will not buy enough of the organizations
products unless it undertakes a large scale selling and promotion effort. (Kotler & Armstrong, 2004)

Marketing Concept:
The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target
markets and delivering the desired satisfaction more effectively and efficiently than competitors do. (COLL-KENNEDY&
KIEL, 1999)
The company needs to study its customer markets closely, the marketing concept states that to be successful, a company
must provide greater customer value and satisfaction than its competitors do.
They also must gain strategic advantage by positioning their offerings strongly against competitor's offerings in the minds
of consumers. No single competitive marketing strategy is best for all companies. Each firm should consider its own size
and industry position compared to those of its competitors.

Marketing Mix
Marketing mix include the set of controllable, tactical marketing tolls that the firm blends to produce the response it wants
in the target market. The marketing mix consists everything the firm can do to influence the demand for its product.

It can be collected into four groups of variables known as the five P's; PRODUCT, PRICE, PLACE, PROMOTION and
PEOPLE

Product means a bundle of attributes that a seller offers the potential buyer to satisfy the buyer's needs or wants. (Coll-
kenndy & kiel, 1999)

Price is the perceived value that is exchanged for something else. (Coll-kenndy & kiel, 1999)

Place is the marketing channel used and the physical delivery or logistics of getting a product to market. (Coll-kenndy &
kiel, 1999)

Promotion is a form of communication adopted by marketers in an attempt to inform, persuade and influence potential
buyers of a product to elicit a response. (Coll-kenndy & kiel, 1999)

People include all human actors who play a part in service delivery. They include the firm's personal. The customer and
other customers in the service environment. (Coll-kenndy & kiel, 1999)

An effective marketing program blends all of the marketing mix elements into a coordinated program designed to achieve
the company's marketing objective by delivering value to consumers. The marketing mix constitutes the company's tactical
toolkit for establishing strong positioning in target markets.

The marketing process

The strategic plan defines the company's overall mission and objectives. Target consumers stand in the center. The goal is to
build strong and profitable connections with these consumers. The company first identifies the total market, then divides it
into smaller segment, selects the most promising segments, and focuses on serving and satisfying these segments.
It designs a marketing mix made up of factors under its control product, process, place, and promotion. To find the best
marketing mix and put it into action, the company engages in marketing analysis, planning, implementation, and control.

Connecting with Consumers

To succeed in today's competitive market place, companies must be consumer centered, winning customers from
competitors than keeping and growing them by delivering greater value. But before it can satisfy consumers a company
must first understand their needs and wants. Thus sound marketing requires a careful analysis of consumers. Companies
know that they cannot connect profitably all consumers in a given market-at least not all consumer in the same way. Thus
each company must divide up the total market, choose the best segments and designs strategies for profitably serving chosen
segments better than its competitors do. This process involves three steps: Market Segmentation, Market Targeting and
Market Positioning.(Kotler & Armstrong, 2004)

Market Segmentation
The market consists of many types of customers, products, and needs, and the marketer has to determine which segments
offer the best opportunity for achieving company objectives.
The process of dividing a market into distinct groups of buyers with different need, characteristics, or behavior who might
require separate products or marketing mixes is called market segmentation. A market segment consists of consumers who
respond in a similar way to a given set of marketing efforts (Kotler & Armstrong, 2004)

Market Targeting
After a company has defined market segments, it can enter one or many segments of a given market. Market targeting
involves evaluating each market segment's attractiveness and selection one or more segment to enter. A company should
target segment in which it can profitably generate the greatest customer value and sustain overtime.
A company with limited resources might decide to serve only one or few special segments or "market niches". This strategy
limits sales but can be very profitable. Most companies enter a new market by saving a single segment, and if this proves
successful, they add segments (Kotler & Armstrong, 2004)

Market Positioning
After a company has decided which market segments to enter it must decide what position it wants to occupy in those
segments. A products position is the place the product occupies relative to competitors in consumer's minds. Market
positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the
minds of target consumers. Thus marketer plans positions that distinguish their products from competing brands and gives
them the greatest strategic advantage in their target markets. In positioning its product, the company first identifies possible
competitive advantage on which to build the position. To gain competitive advantage, the company must offer greater value
to chosen target segments, either by charging lower prices than competitors do or by offering more benefits to justify higher
prices( Kotler &Armstrong, 2004)

Delivering customer value and satisfaction:

Value chain is major tool for identifying ways to create more customer value. Every firm performs a group of activities to
design, produce, market, deliver and support the firm's products. The value chain groups these activities into 5 primary
activities and 4 support activities.
a.Primary activities involving the sequence of
1.Bringing materials into the business (inbound logistics)
2.Operating on them (operations)
3.Sending them out (out bound logistics)
4.Marketing them (marketing and sales)
5.Servicing them (services)

b.Support activities:
1.Procurement
2.HRM
3.Technology development
4.Firm infrastructure.

(Kotler & Armstrong, 2004)

Evaluation Market Segments

While evaluating segments, three factors should be considered. They are segment size and growth, segment structural
attractiveness, company objectives and resources. (Kotler & Armstrong, 2004)

Segment size and growth: The Company must first collect and analyze data on current segment sales, growth rates and
expected profitability for various segments. It would choose a segment that would have the right size and growth
characteristics. (Kotler & Armstrong, 2004)
1.
Segment structural attractiveness: A segment becomes less attractive by the presence of the following factors: strong and
aggressive competitors already existing, existence of substitute products that would limit prices and profits, relative power
of buyer (bargain power) would force prices down, powerful suppliers who can control process or reduce the quality or
quantity of ordered goods and services. (Kotler & Armstrong, 2004)
2.
Company objectives and resources: A company must also consider the own objectives and resources in relation to that
segment. If it fits the company's objectives, the company must then decide whether it possesses the skills and resources
needed to succeed in the segment otherwise it should not enter. The company should enter segments only where it can offer
superior value and gain advantages over competition. (Kotler & Armstrong, 2004)

Elements of POSITIONING:
There are four distinct variables that affect the position of given product. These are:
a.The Product itself.
b.The Company behind it.
c.The Competition and
d.The Consumers.
(Kotler & Armstrong, 2004)

Orientation of the company

Started as a Joint Venture between Hero Group, the world's largest bicycle manufacturers and the Honda Motor Company
of Japan. Today it has become the World's single largest two wheeler Company. Coming into existence on January 19,
1984, Hero Honda Motors Limited gave India nothing less than a revolution on two-wheels made even more famous by the
'Fill it - Shut it - Forget it ' campaign. Driven by the trust of over 5 million customers, the Hero Honda product range today
commands a market share of 48% making it a veritable giant in the industry. Add to that technological excellence, an
expansive dealer network, and reliable after sales service, and you have one of the most customer- friendly companies
(www.herohonda.com retrieved on 18/04/2005)

(http://www.herohonda.com/site/about_us/History.asp)

Needs
When a person feels deprived of something it is called a need (Coll-Kennedy & kiel, 1999)
Needs are nothing but basic necessities of an individual. Hero Honda in India has understood the basic necessities of the
people. They for a fact know public transport in India is not so good. Obviously people would look for alternatives; the next
best thing is a two wheeler. Hero Honda in this again has different bikes for different sections.

Wants
A need that is shaped by a person's knowledge, culture and personality is a want. (Coll-Kennedy & Kiel, 1999)
Every person wants more, once a need is satisfied then arises a want. Hero Honda in India has understood people's wants
properly. They know transport facility is not so good so they know a need will arise and then to a want. One type of bike
will do but since different people have different tastes so wants arise from tastes.

Demands

Demand is the human want backed by power (Kotler & Armstrong, 2004). Once a want is satisfied then comes a demand.
India is developing country, where people have lower income. Hero Honda has understood this and made bikes according to
the Indian interest, mainly focusing on the lower income group.
Products

Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It
includes physical objects, services, persons, places, organisations and an idea is called a market. ((Kotler & Armstrong,
2004)

Market place

Hero Honda has made a mark for itself in the two wheeler segment. It has identified customer needs, wants and demands
that it could master itself. These are some of the facts about Hero Honda.

In 2004, Hero Honda makes 33% more compared to the previous year.

In 2003, it was ranked 3rd in the Indian companies.

In 2003 march, hero Honda makes a land mark crosses Rs. 50000 crore (us $ 1 billion) sales turn over.

(www.herohonda.com retrieved on 18/04/2005)

(http://www.herohonda.com/site/press/index.asp?Sec=Archives&YR=2003)

Major competitive issues facing the firm.

One of the oldest industries in its segment herohonda has been facing a stiff competition. Bajaj being the major compitetor
for Hero Honda, kinetic, TVS and Yamaha are fast catching up. In India people mostly look for fuel efficiency bikes, hero
Honda has got a large variety of bikes such as

Cd100
Splendor
Passion
Karizma

These are top selling bikes for Hero Honda. Bajaj not far away it too has got a large variety of bikes when compared to Hero
Honda. The major threats to Hero Honda from Bajaj are

Boxer
Ct100
Pulsar
Eliminator

Apart from this, Hero Honda in India has been struggling in its power bike segment. Nevertheless it has introduced
Karizma; Yamaha is leading in this segment.

Company's strategies

As mentioned before, Hero Honda commands a market share of 48%. The reason Hero Honda is being so successful is
because it mainly concentrates on customer satisfaction. I remember when I bought a bike; I was very confused of which
company bike to buy. I finally bought a Hero Honda. It came up with a concept where they issued a passport with which u
could get points every time you give the bike for service. Those points could be redeemed later on. This was one of its
strategies which attracted a large number of customers.

Recognizing social responsibility, the group contributes actively towards the welfare of the society through its numerous
social initiatives. The group has setup and is involved with:

Schools
Colleges
Hospitals
Vocational training centers
Promotion of sports and sports persons
In development activities and improving of infrastructure in rural and urban areas. (www.herogroup.com retrieved on
18/04/2005)

(http://www.herogroup.com/Hero%20Group_presn_04.pdf)

Apart from these the company advertises rigorously making people aware of their latest releases and so on....

Hero Honda being a joint venture company, it has an advantage here. If one company comes out with an idea the joint
venture company can always use it

People in India are huge fans of cricket. Hero Honda actually sponsor's the Indian cricket making this as one of the
company's strategies.

It was Hero Honda that came up with the first eco-friendly bike in India attracting more people towards its product.

Segmenting & Targeting

In India Hero Honda mainly emphasis on the two wheeler segment. Different people with different tastes, so again here
Hero Honda has to put forward its bikes in such a way where it has to have a different bike in every segment of its field. For
this reason it has various bikes. For fuel efficiency a different bike, for style a different bike and so on.....

India is a huge country in terms of population. It is the second largest populated in the world. There are many people with
different choices and tastes. Hero Honda has targeted these people in such a way; it introduced a different bike for a
different set of people. For people who want more mileage from their bikes, for them it introduced a bike named Hero
Honda cd100, for people who want mileage and style they introduced Hero Honda splendor, for people who just want to
look stylish with their bikes for them they introduced Hero Honda passion, people who wanted style, mileage, power for
them they introduced the Hero Honda cbz and finally for people who wanted power and style for them they introduced Hero
Honda karizma.
Apart from all these people who don't have much income and wants to own a bike, for them they have various finance
schemes. Like buy now and pay later, etc.

Conclusion

From the above report we could easily say Hero Honda in India understood the concepts of marketing very well. We can
also say Hero Honda is keeping a close look on the market and they are changing with time and introducing models in
accordance with the taste of each individual. This is the sole reason Hero Honda in India, is able to be the market leader in
the two wheeler segment.

Referencing

Kotler, P. & Armstrong, G. (2004). Principles of marketing (10th ed.). NSW: Prentice Hall
Kennedy, J. M. & Kiel, G.C (1999). Marketing- A Strategic Approach (Beta ed.). Australia: Australian Print Group

(18/04/2005) www.herohonda.com

(18/04/2005) www.herogroup.com