Hero Group now goes for image makeover

The Hero Group is planning a complete image makeover for Hero Honda Motors Ltd (HHML), the world's largest two-wheeler company by sales, after it buys out the Japanese partner Honda Motor Co's stake in the joint venture.

The Munjal family promoted Hero Group has contracted ad agency JWT to devise a solo brand strategy to help the market leader retain its position in the domestic market even after the Honda name is dropped. Though Hero can use the Hero Honda joint corporate brand till 2014, it would go for a gradual shift to the new brand through a fresh campaign and corporate look.

Senior officials in JWT said the details of the campaign are confidential. However, an official confirmed that something major is brewing.

“We've been asked to regroup and work on a completely new strategy. It is early and a lot is needed to be done,” he said.

A person privy to the development told Business Line, “The Hero Honda brand is well established as a leader in two-wheelers and a new brand strategy is to be addressed next. There will be a fresh corporate identity, with a new logo and colours. The shift would be a gradual process heading towards 2014.” Company officials were not available for comment.

After almost a year of speculation, the Hero Group announced on Thursday that it would buy Honda's 26 per cent stake in Hero Honda for an undisclosed amount. The value of the deal is estimated to be around $2 billion. The company also signed a fresh agreement with Honda for new technology, and permitted the group to seek tie-ups elsewhere.

Bike brands

Industry sources said the company is considering a brand strategy focusing on popular bike brands, rather than the corporate brand. Such a campaign would play on the higher acceptance and brand recall of the products.

Its highest selling models – Splendor and Passion – give Hero Honda close to a 70 per cent share in the 75-125cc mass bike segment, but its total two-wheeler market share has dropped to 44 per cent in April-November, 2011, from 48 per cent in 2009-10. Incidentally, Hero's move mirrors that of rival Bajaj Auto which is following a conscious strategy to promote its Pulsar and Discover brands.

Brand expert Mr Giraj Sharma from BehindTheMoon Consultants said that the company needs to use the three-year period to build a new umbrella brand on the same value systems that Hero Honda has been known for.

“They need a two-faceted strategy – pushing the product brands for the time being, but building the corporate brand in the background for later products. These old brands may not last them very long. It will be a challenge as a lot of years had been invested behind the Hero Honda brand, especially now when Honda will compete in the same categories.”