Hero Honda’s motorcycle diary

Hero Honda’s motorcycle diary
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First Published: Thu, Mar 26 2009. 12 14 AM IST

Updated: Thu, Mar 26 2009. 12 14 AM IST
Sawai Madhopur, Rajasthan: At his Hero Honda Motors Ltd dealership in the agricultural town of Bonli in Rajasthan, Girirad Prasad Gupta has kept the most important job in the family. Son Manoj Kumar Gupta is his rural sales executive.
At 28, Manoj Gupta already has a weather-beaten face. Ask him more about his job, and you begin to understand why.
Setting off at 7 each morning, he maintains a gruelling schedule. Riding his Hero Honda bike across small towns and villages around Bonli, in Sawai Madhopur district, he meets community leaders, including the localsarpanch (village head), schoolteachers, lawyers, doctors and insurance agents— anyone who plays a role in shaping buying decisions in their vicinity.
Also See Sawai Madhopur (Map)
He makes it a point to visit every village within 10km of the dealership at least once a month. Armed with pamphlets and brochures on Hero Honda bikes, he is ready to answer any questions on the products he sells.
Navin Gaur, Rural Sales Executive at Hero Honda’s Sawai Madhopur dealership
But unlike a regular salesman, Manoj Gupta doesn’t make an aggressive sales pitch during these visits. He is mostly content sitting and chatting with village folk. “Making a sale is great, but we aim to form a long-term relationship,” he says.
Rural sales ride more on word of mouth publicity than advertising, and Manoj Gupta says it’s more important to be seen as a friend of the villagers than as a bike salesman. “If they don’t buy from me today, that’s fine. I need to make sure they think of me next year when they’re planning on buying a bike,” he says.
The 521 rural sales executives on the rolls of Hero Honda dealers across the country have been instrumental in making its marketing campaign, “Har gaon, har aangan” (Hindi for every village, every home), a success. They are the company’s face across small towns such as Bonli, and have helped its dealerships win business.
Looking villagewards
Safely ensconced in the No.1 spot among motorcycle makers for the past eight years, it was only in 2007 that Hero Honda decided to focus on sales in rural areas by setting up a dedicated rural division. “We didn’t want to be complacent with our leadership position and started exploring what more we could do,” says Anil Dua, senior vice-president of sales and marketing at Hero Honda.
Hero Honda’s rural division was formed with the aim of penetrating deeper into small towns and villages across India. These are generally defined as settlements with a population of at least 20,000. For Hero Honda, the share of rural sales has been growing by 2-3 percentage points every year; rural areas make up at least 40% of the company’s sales.
While nearly one-fourth of India’s urban households own a scooter, motorcycle or moped, only 8% of rural households do so, according to the National Sample Survey Organisation, or NSSO.
Increased procurement prices for agricultural commodities offered by the government and the National Rural Employment Guarantee Act, promising a minimum 100 days of work every year to at least one adult member of each poor rural household, have put more money in the hands of rural consumers.
And Hero Honda is in place to take advantage of the increase in rural disposable incomes. “They have positioned themselves as a rural India story,” says S. Ramnath, vice-president at IDFC-SSKI Securities Ltd. “At just the right time.”
As two-wheeler sales across the country have slowed, the focus on rural areas has stood Hero Honda in good stead. The company has grown 12% so far this fiscal, while rival Bajaj Auto Ltd has seen sales fall by 23%.
Logistical nightmare
In the past two years, Hero Honda has increased the number of touch points, or outlets selling and servicing its bikes, from 2,000 to 3,000. This year’s aim: to reach 3,500 touch points.
Places such as Sawai Madhopur, with a population of about 200,000, present a unique challenge for Hero Honda. How does one keep the dealerships profitable and overcome the logistical nightmare of catering to more than 3,000 individual dealers and their representatives across the country? Such problems have deterred even car makers such as Maruti Suzuki India Ltd, the country’s largest, from setting up shop in Sawai Madhopur (Maruti Suzuki has a booking counter).
Pitch perfect: Brijesh Sharma (extreme right), who oversees Hero Honda’s safety initiative for Sawai Madhopur in Rajasthan, shares engine maintenance tips with Rajendra Prasad Mangal. Harikrishna Katragadda / Mint
Hero Honda’s dealerships in districts such as Sawai Madhopur are based on the so-called hub-and-spoke model. Within a district, the company’s main liaison is the dealer, typically located in the district headquarters. Under him are “authorized representatives”—smaller dealerships where locals can make purchases and also get their bikes serviced. “We realized that while someone might be willing to travel 50km to buy a bike, they don’t like to do that every time they need to get it serviced,” says Sandeep Mukherjee, sales manager at Hero Honda’s all India rural division.
Vijay Motors in Sawai Madhopur has 10 authorized representatives scattered across the district. Sandeep Aggarwal, its owner, is constantly in touch with them, running promotional activities in villages, holding service camps and helping them tie up with banks for financing and so on.
“Dealers understand their area the best, and so we leave local activities to them,” says Akhilesh Sharma, Hero Honda’s sales manager in Rajasthan. “The company does provide broad guidelines,” he adds.
Aggarwal, for instance, noticed that prospective buyers would scout around in the belief that they may be able to get a better price at another dealership. To counter this tendency, he has put up in excess of 500 price lists across his district at places such as tea shops, the village tailor and the panchayat (village council) office. “It’s very important to convince village buyers that there’s no better deal available,” he says.
Cutting costs
In adapting its model for rural India, Hero Honda has also cut costs wherever possible.
Walk into one of the 10 dealer shops across Sawai Madhopur and the stark difference from a city showroom is noticeable. At Girirad Prasad’s Gupta Motors, there is none of the glitz of a city showroom.
The entrance is through a cramped room that doubles up as a front office. Inside, the bikes are placed in a small room with whitewashed walls and the heat is almost stifling.
A visitor at a sales camp organized by the company at the Kirni village panchayat office; and bikes on display at the event. Harikrishna Katragadda / Mint
Buyers are left free to walk around, touch and feel the bikes, and are rarely pushed into a sale unless they express interest. But step into the workshop and the picture changes. The company has spared no effort in setting up a neat, clean and efficient workshop.
Keeping costs low is key to running a profitable business, says Gupta. He sells between 20 and 25 bikes a month, and makes most of his money on servicing them. An initial investment of Rs15 lakh to set up his outlet nets him about Rs3 lakh in profit each year. He couldn’t have made this much in any other business in his town, he says.
Bonli being an agricultural town with few investment avenues, bank fixed deposits are the preferred choice for most people to park their savings.
At Kirni village, Aggarwal is holding a promotional event.
A few bikes have been trucked in for the day and are on display at the panchayat office. Villagers take them for test drives and ask Navin Gaur, a rural sales representative, questions on the products. Rajendra Prasad Mangal, 29, who owns a medical shop and is on a tight budget, asks which bike would be best for his needs. Gaur suggests he stick to a 100cc bike as it’s the most fuel efficient.
A few feet away, Brijesh Sharma, who oversees the company’s safety initiative for the district, explains why bike riders must always wear a helmet. He also lays out a few tips on engine maintenance, the best way to shift gears and signalling while turning.
Creating goodwill
Activities such as the one in Kirni have contributed to building goodwill between village folk and the company.
After waiting for almost a year, insurance agent Vishnu Kumar bought a Hero Honda Splendor Plus last month. He says the frequent service camps the company organizes at Kirni played a major role in making up his mind. “Other companies never do this, and we know Honda (Hero Honda) won’t abandon us,” he says.
Kumar has seen his business double after he bought his Splendor. “I can now take my clients to Sawai Madhopur and back when they need to purchase their insurance policies,” he says.
With at least 100 people mulling around the small panchayat office and its grounds, Rajendra Prasad Singhal has dropped by to find a buyer for his used bike. Over the years he has bought eight Hero Honda motorcycles and says he plans to buy another one once he finds a buyer for his Passion Plus. Unable to get his asking price of Rs38,000, he leaves empty-handed.
Back in Bonli, a Bajaj Auto dealership bears an almost deserted look. The owner, Govind Bajaj, sells as many as 15 bikes a month and says that his business has fallen in the last few months because banks stopped giving out loans to bike buyers (most Hero Honda buyers prefer to pay in cash).
Unlike his counterparts at Hero Honda, he doesn’t travel outside Bonli to market his motorcycles to buyers. “We keep telling the company to assist us in such activities but they don’t listen to us,” he says.
More competition could give Hero Honda a run for its money. For some such as Hajji Suleman Khan, working on his farmland an hour north of Sawai Madhopur, Hero Honda is now the preferred choice. Asked what attracts him to the company, he says, “Sir, it’s the only name I’ve ever heard of.”
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First Published: Thu, Mar 26 2009. 12 14 AM IST