With
its ‘mass friendly’ approach, the new Splendor NXG launch symbolizes the somewhat obsessive ‘entry level’ approach of Hero Honda. The 100cc segment is where the company’s legions lie and where most of its products are positioned. Like a number of private sector companies, even Hero Honda is market driven and a seemingly high focus on this segment makes it a volume player. But at a time when the market is graduating to higher segments, is it logical for any player to stick to the ‘soon to become’ obsolete sectors? Apparently yes! Anil Dua, VP (Sales and Marketing), Hero Honda valiantly told B&E, “Currently we have a 50% market share and that is a very good share to start with. The positioning of the Splendor NXG will be in the 100cc segment as we think that the 100cc is a very large segment and it can sustain more players easily.” To a certain extent we agree because as per an earlier B&E estimation, the 100cc segment forms the core of the market and the Indian consumer depends heavily on it for his daily commuter solutions. On the other hand, the premium segment contributes a miniscule 16.78% to the volumes. Even if we consider a steady growth trajectory of 36% (as per market reports), the premium segment will not be more than 25,00,000 in the next three years. This figure is not even half of the 100cc segment, which will hover close to 60,00,000 units and that too at a much slower 15% growth rate. In April 2006-07, HH sold 239,594 units (SIAM) in the less than 125cc segment, nearly 258% more than what arch rival Bajaj sold in the same period. With such high level of competency, its certainly not logical to think beyond a segment which contributes up to 93.3% towards Hero Honda’s total sales. However, the question that the company really needs to address is that how long can HH sustain this? Auto analyst Tutu Dhawan told B&E, “Hero Honda is very happy being an executive segment (less than 125cc) player, they don’t see much rational as a premium segment player. Hero Honda says that the premium segment forms just 10% (on average) of their market.”
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2007
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
For More IIPM Article, Visit Below....
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its ‘mass friendly’ approach, the new Splendor NXG launch symbolizes the somewhat obsessive ‘entry level’ approach of Hero Honda. The 100cc segment is where the company’s legions lie and where most of its products are positioned. Like a number of private sector companies, even Hero Honda is market driven and a seemingly high focus on this segment makes it a volume player. But at a time when the market is graduating to higher segments, is it logical for any player to stick to the ‘soon to become’ obsolete sectors? Apparently yes! Anil Dua, VP (Sales and Marketing), Hero Honda valiantly told B&E, “Currently we have a 50% market share and that is a very good share to start with. The positioning of the Splendor NXG will be in the 100cc segment as we think that the 100cc is a very large segment and it can sustain more players easily.” To a certain extent we agree because as per an earlier B&E estimation, the 100cc segment forms the core of the market and the Indian consumer depends heavily on it for his daily commuter solutions. On the other hand, the premium segment contributes a miniscule 16.78% to the volumes. Even if we consider a steady growth trajectory of 36% (as per market reports), the premium segment will not be more than 25,00,000 in the next three years. This figure is not even half of the 100cc segment, which will hover close to 60,00,000 units and that too at a much slower 15% growth rate. In April 2006-07, HH sold 239,594 units (SIAM) in the less than 125cc segment, nearly 258% more than what arch rival Bajaj sold in the same period. With such high level of competency, its certainly not logical to think beyond a segment which contributes up to 93.3% towards Hero Honda’s total sales. However, the question that the company really needs to address is that how long can HH sustain this? Auto analyst Tutu Dhawan told B&E, “Hero Honda is very happy being an executive segment (less than 125cc) player, they don’t see much rational as a premium segment player. Hero Honda says that the premium segment forms just 10% (on average) of their market.”For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2007
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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