Strategic Thought Transformation - The IIPM Think Tank
Strategic Thought Transformation - The IIPM Think Tank
Strategic Thought Transformation - The IIPM Think Tank
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
X X X X X X X X X X X X X X X X X X X X<br />
When Hero Honda (HH)<br />
launched the Splendour in<br />
1994, it was certainly not one<br />
of those companies, management consultants<br />
look at for giving examples.<br />
With about 200,000 units a year HH<br />
did not enjoy a very positive market<br />
perception. But Splendour changed all<br />
that for its alma mater. <strong>The</strong> bike’s name<br />
proved to be more than just a name,<br />
as the soldier showcasing his complete<br />
armoury pulled out a company out of<br />
oblivion single-handedly. Splendour’s<br />
engineering was very similar to the<br />
CD100 platform & was essentially a<br />
bike for the fuel conscious. Though,<br />
the bike was in line to its ‘fill–it-shutit-forget-it’<br />
add campaign, which gave<br />
a greater emphasis to fuel economy<br />
& helped establish Hero Honda as a<br />
credible brand; the bike offered something<br />
which was not very synonymous<br />
with the HH-style. After the launch<br />
of the CD100 & other sleek models<br />
Hero Honda understood the market<br />
realities in India.<br />
India at that time had just started<br />
its reorganisation exercise after liberalisation<br />
in 1991. This new phase<br />
was characterised by high consumer<br />
aspiration coupled with increased real<br />
incomes. Through close market study<br />
and analysis, Hero Honda understood<br />
consumer requirements and perfected<br />
its already fuel efficient 100cc engine<br />
to offer more torque & power and fitted<br />
it into a contemporarily designed<br />
Splendour. <strong>The</strong> motorcycle was good<br />
looking, highly fuel efficient & offered<br />
decent power – all ingredients targeting<br />
prevalent commuter requirements.<br />
Instant success of Splendour meant<br />
that Hero Honda grew at a phenomenal<br />
450% over a span of ten years,<br />
from 1989 to 1999. Today, the company<br />
controls a 52% market share of the<br />
Indian two wheeler market and is the<br />
single largest two wheeler company in<br />
the world. And splendidly, all because<br />
of one product – Splendour!<br />
Concept: Law of<br />
Diminishing Returns<br />
Escorts Yamaha was the tour de force<br />
in the 1980s, as the company almost<br />
succeeded in mesmerising the young<br />
Indian. <strong>The</strong> small, yet peppy RX100<br />
was a motorcycle with a difference, as<br />
it was a lighter and superior alternative<br />
to the pre-historic Yezdi 250. <strong>The</strong><br />
product instantaneously hit a chord<br />
with the most progressive age group<br />
of 18-25 and decisively became the<br />
market leader. <strong>The</strong> Yamaha was a<br />
product which not only commanded a<br />
cult status in the market, but was used<br />
as a virtual yardstick to measure any<br />
new product launched. But despite the<br />
iconic status, the bike had one inherent<br />
flaw. <strong>The</strong> RX100 was a two stroke<br />
motorcycle, which was fast all right,<br />
but failed miserably at the fuel average<br />
front. Factors like the unacceptable fuel<br />
consumption and pollution figures were<br />
eventually killing the product and this<br />
was creating a lacuna in the market.<br />
<strong>The</strong> 18-25 age group was slowly becoming<br />
a deciding factor in zeroing in<br />
on a product’s design and specification<br />
in the 1990s, as this group started its<br />
movement into the ‘sustainer’ population.<br />
<strong>The</strong> computer education boom,<br />
and the ITES/BPO era, increased individual<br />
income levels in that particular<br />
age group to unthought-of levels. As<br />
18-25 age group was no longer much<br />
of a liability for basic sustenance by<br />
family members, individual disposable<br />
incomes started to find their way not<br />
only into the consumer products market,<br />
but also in the capital markets,<br />
giving a much needed impetus to investment<br />
and return scenario. A better<br />
understanding of the money issue at a<br />
young age imprinted the importance of<br />
the fuel factor in the young consumer’s<br />
Many have aspired to be the world’s<br />
largest, many less have just dreamt...<br />
Hero Honda has done one better. <strong>The</strong><br />
corporation has gone beyond simply<br />
being the world’s largest motorcycle<br />
manufacturer, to creating benchmarks<br />
on innovation that are followed to<br />
the ‘t’ now by global behemoths<br />
An <strong>IIPM</strong> Intelligence Unit Publication STRATEGIC INNOVATORS<br />
9