Strategic Thought Transformation - The IIPM Think Tank

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When Hero Honda (HH)
launched the Splendour in
1994, it was certainly not one
of those companies, management consultants
look at for giving examples.
With about 200,000 units a year HH
did not enjoy a very positive market
perception. But Splendour changed all
that for its alma mater. The bike’s name
proved to be more than just a name,
as the soldier showcasing his complete
armoury pulled out a company out of
oblivion single-handedly. Splendour’s
engineering was very similar to the
CD100 platform & was essentially a
bike for the fuel conscious. Though,
the bike was in line to its ‘fill–it-shutit-forget-it’
add campaign, which gave
a greater emphasis to fuel economy
& helped establish Hero Honda as a
credible brand; the bike offered something
which was not very synonymous
with the HH-style. After the launch
of the CD100 & other sleek models
Hero Honda understood the market
realities in India.
India at that time had just started
its reorganisation exercise after liberalisation
in 1991. This new phase
was characterised by high consumer
aspiration coupled with increased real
incomes. Through close market study
and analysis, Hero Honda understood
consumer requirements and perfected
its already fuel efficient 100cc engine
to offer more torque & power and fitted
it into a contemporarily designed
Splendour. The motorcycle was good
looking, highly fuel efficient & offered
decent power – all ingredients targeting
prevalent commuter requirements.
Instant success of Splendour meant
that Hero Honda grew at a phenomenal
450% over a span of ten years,
from 1989 to 1999. Today, the company
controls a 52% market share of the
Indian two wheeler market and is the
single largest two wheeler company in
the world. And splendidly, all because
of one product – Splendour!
Concept: Law of
Diminishing Returns
Escorts Yamaha was the tour de force
in the 1980s, as the company almost
succeeded in mesmerising the young
Indian. The small, yet peppy RX100
was a motorcycle with a difference, as
it was a lighter and superior alternative
to the pre-historic Yezdi 250. The
product instantaneously hit a chord
with the most progressive age group
of 18-25 and decisively became the
market leader. The Yamaha was a
product which not only commanded a
cult status in the market, but was used
as a virtual yardstick to measure any
new product launched. But despite the
iconic status, the bike had one inherent
flaw. The RX100 was a two stroke
motorcycle, which was fast all right,
but failed miserably at the fuel average
front. Factors like the unacceptable fuel
consumption and pollution figures were
eventually killing the product and this
was creating a lacuna in the market.
The 18-25 age group was slowly becoming
a deciding factor in zeroing in
on a product’s design and specification
in the 1990s, as this group started its
movement into the ‘sustainer’ population.
The computer education boom,
and the ITES/BPO era, increased individual
income levels in that particular
age group to unthought-of levels. As
18-25 age group was no longer much
of a liability for basic sustenance by
family members, individual disposable
incomes started to find their way not
only into the consumer products market,
but also in the capital markets,
giving a much needed impetus to investment
and return scenario. A better
understanding of the money issue at a
young age imprinted the importance of
the fuel factor in the young consumer’s
Many have aspired to be the world’s
largest, many less have just dreamt...
Hero Honda has done one better. The
corporation has gone beyond simply
being the world’s largest motorcycle
manufacturer, to creating benchmarks
on innovation that are followed to
the ‘t’ now by global behemoths
An IIPM Intelligence Unit Publication STRATEGIC INNOVATORS
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