Anil Dua has quit as Hero MotoCorp's head of sales and marketing. He is likely to take up an assignment abroad. Mr Dua had joined the company (it was called Hero Honda then) in September 2006 from Hindustan Unilever. That was the month Bajaj Auto came within inches of dislodging the Munjal flagship from the top of the motorcycle market. There was panic in the company. If it was overtaken by Bajaj Auto, its brand equity would suffer serious erosion. The Munjals, to their credit, decided the time had come to focus on market share instead of profits or else there would, one day, be no profits to protect. Amongst the first things they did was get Mr Dua on board.
And that is when the company developed marketing savvy. At that time, it was the convention to split the motorcycle market into three segments: entry level (100 cc engine capacity), executive (125-135 cc) and premium (150 cc). Mr Dua's research showed that buyers looked not at the engine capacity but at the holistic experience - the imagery associated with the motorcycle. Motorcycles with the same engine capacity could talk to different customers. Also, the three segments weren't watertight: consumers moved easily between them. Hero then decided to look at the market from the consumer's point of view: how he brackets the motorcycles in the market. Focus shifted from the overall brand to individual motorcycles. Out went the Hero punch line of "Fill it, shut it, forget it" and in came new ones like "Always game" (for the Karizma) and "Thinking is such a waste of time" (CBZ Extreme).
Consumer research, of the kind that is carried out in the fast-moving consumer goods industry, started being done at Hero. Specialists were hired to talk to thousands of customers every month to gauge brand health. Backed with the knowledge that the target customers (aged between 18 and 35) relate to cricket, music, movies and adventure, a new communication strategy was adopted. Hero roped in film stars Hrithik Roshan and Priyanka Chopra as brand ambassadors, joined the Indian Premier League bandwagon and got associated with TV programmes like MTV Roadies.
In mid-2007, consumer finance companies began to pull the plug on two-wheelers, due to the sharp rise in bad loans. They overnight withdrew their representatives from motorcycle showrooms. As almost 70 per cent of all motorcycle purchases were on monthly instalments, this hit the industry hard. But Hero sales were flat. This brought home the realisation that it had a strong customer base in villages, where people do not buy motorcycles on instalments. Hero could leverage its strong brand equity in the rural markets to sell more. Thus, in 2007, the company set up its rural sales vertical under Mr Dua. Five hundred salesmen were co-opted for the initiative. They were given work targets and not sales targets: they had to fan out into villages and talk to decision-makers. Their waves were launched each harvest - when farmers have money in their pockets. Today, the rural market contributes almost half of the company's sales.
Hero was thus able to stave off the challenge from Bajaj Auto. In fact, the challenger corrected course and decided to focus on profits and not market share. (Today, Bajaj Auto is the country's most profitable two-wheeler company.)
This greatly boosted the confidence of the Munjals. It came in handy in 2011 when Honda decided to end the partnership with them. They had to decide fast. The Munjals formed a team of three - of which Mr Dua was a part - to assess if life was possible without Honda. This team couldn't have done open research, because that would have spilled the beans on Honda's departure. It, therefore, had to rely on gut feel. It noted that Honda had launched motorcycles on its own in 2006 and yet had a market share of only 7 per cent, while Hero scooters, which were also launched in 2006, had grabbed a share of 17 per cent (Honda was, and still remains, the undisputed leader in scooters). It was, therefore, decided to stay put in the market. Technology was equal for all and Hero could deliver everything the Indian buyers were looking for: low price tags, high fuel economy, inexpensive spares and good resale value.
The Munjals had the option to use the Hero Honda brand till June 2014, but they decided to replace it as early as possible. As it involved renewal, the project was codenamed Yajna. Wolff Ollins, an Omnicom company, was engaged to give the company a new identity. It came out with the name Hero MotoCorp. It was international sounding and did not confine the image to just two-wheelers. Law & Kenneth was hired to craft the new communication strategy. It came up with the line, Hum main hai Hero (There is a Hero in us). Lyricist Irshad Kamil expanded it into an anthem; A R Rehman set it to music; and Anurag Kashyap made it into a film. To unveil the new identity, the Munjals chose London because it is a blend of tradition and modernity. The dealers who were flown to London for the purpose came back impressed.
Hero (it still operates from a cramped commercial complex in south Delhi because the Munjals are superstitious about it, though the shareholders like the fact that money hasn't been spent on a fancy office) is still the market leader with a 41.3 per cent share of the market in 2013-14. Its biggest challenger is Honda (24 per cent). It is gaining market share at a fast clip. Hero will have to use all the marketing muscle it has gained in the last eight years for this fight
And that is when the company developed marketing savvy. At that time, it was the convention to split the motorcycle market into three segments: entry level (100 cc engine capacity), executive (125-135 cc) and premium (150 cc). Mr Dua's research showed that buyers looked not at the engine capacity but at the holistic experience - the imagery associated with the motorcycle. Motorcycles with the same engine capacity could talk to different customers. Also, the three segments weren't watertight: consumers moved easily between them. Hero then decided to look at the market from the consumer's point of view: how he brackets the motorcycles in the market. Focus shifted from the overall brand to individual motorcycles. Out went the Hero punch line of "Fill it, shut it, forget it" and in came new ones like "Always game" (for the Karizma) and "Thinking is such a waste of time" (CBZ Extreme).
Consumer research, of the kind that is carried out in the fast-moving consumer goods industry, started being done at Hero. Specialists were hired to talk to thousands of customers every month to gauge brand health. Backed with the knowledge that the target customers (aged between 18 and 35) relate to cricket, music, movies and adventure, a new communication strategy was adopted. Hero roped in film stars Hrithik Roshan and Priyanka Chopra as brand ambassadors, joined the Indian Premier League bandwagon and got associated with TV programmes like MTV Roadies.
In mid-2007, consumer finance companies began to pull the plug on two-wheelers, due to the sharp rise in bad loans. They overnight withdrew their representatives from motorcycle showrooms. As almost 70 per cent of all motorcycle purchases were on monthly instalments, this hit the industry hard. But Hero sales were flat. This brought home the realisation that it had a strong customer base in villages, where people do not buy motorcycles on instalments. Hero could leverage its strong brand equity in the rural markets to sell more. Thus, in 2007, the company set up its rural sales vertical under Mr Dua. Five hundred salesmen were co-opted for the initiative. They were given work targets and not sales targets: they had to fan out into villages and talk to decision-makers. Their waves were launched each harvest - when farmers have money in their pockets. Today, the rural market contributes almost half of the company's sales.
Hero was thus able to stave off the challenge from Bajaj Auto. In fact, the challenger corrected course and decided to focus on profits and not market share. (Today, Bajaj Auto is the country's most profitable two-wheeler company.)
This greatly boosted the confidence of the Munjals. It came in handy in 2011 when Honda decided to end the partnership with them. They had to decide fast. The Munjals formed a team of three - of which Mr Dua was a part - to assess if life was possible without Honda. This team couldn't have done open research, because that would have spilled the beans on Honda's departure. It, therefore, had to rely on gut feel. It noted that Honda had launched motorcycles on its own in 2006 and yet had a market share of only 7 per cent, while Hero scooters, which were also launched in 2006, had grabbed a share of 17 per cent (Honda was, and still remains, the undisputed leader in scooters). It was, therefore, decided to stay put in the market. Technology was equal for all and Hero could deliver everything the Indian buyers were looking for: low price tags, high fuel economy, inexpensive spares and good resale value.
The Munjals had the option to use the Hero Honda brand till June 2014, but they decided to replace it as early as possible. As it involved renewal, the project was codenamed Yajna. Wolff Ollins, an Omnicom company, was engaged to give the company a new identity. It came out with the name Hero MotoCorp. It was international sounding and did not confine the image to just two-wheelers. Law & Kenneth was hired to craft the new communication strategy. It came up with the line, Hum main hai Hero (There is a Hero in us). Lyricist Irshad Kamil expanded it into an anthem; A R Rehman set it to music; and Anurag Kashyap made it into a film. To unveil the new identity, the Munjals chose London because it is a blend of tradition and modernity. The dealers who were flown to London for the purpose came back impressed.
Hero (it still operates from a cramped commercial complex in south Delhi because the Munjals are superstitious about it, though the shareholders like the fact that money hasn't been spent on a fancy office) is still the market leader with a 41.3 per cent share of the market in 2013-14. Its biggest challenger is Honda (24 per cent). It is gaining market share at a fast clip. Hero will have to use all the marketing muscle it has gained in the last eight years for this fight
