insider story_ how hero honda became hero motocorp - rediff

Download Insider Story_ How Hero Honda Became Hero MotoCorp - Rediff

Post on 22-Oct-2015

11 views

Category:

Documents

8 download

Embed Size (px)

DESCRIPTION

The Hero Honda Demerger Story

TRANSCRIPT

  • Print this article

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    On November 1, Hero MotoCorp, the newavatar of Hero Honda, announced that its dealerssold a record 650,000 motorcycles and scootersin October.Farmers had harvested their crops, and salariedpeople had got Diwali bonuses; the companyhad no reason to complain.Some days before that, it had declared itsfinancial results for the quarter ended September2011, the first full quarter without Honda as ashareholder, which showed that sale as well asprofit had hit at an all-time high.For several years, the Munjals, the promoters ofthe company, have been known as sharpbusinessmen but their success was alwayscredited to technology and innovation fromHonda. The ride without Honda was the real testof their skills.

    The Munjals and Honda had formed Hero Honda, a 26-26 joint venture, in the late-1980s. The first sign of discordbecame visible over ten years ago when Honda set up a 100 per cent arm, Honda Motorcycles and Scooters India.Finally, on December 16 last year, Hero Honda informed the stock markets that the partnership was over and Hondawould soon exit the company.Click NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    In the days that preceded the announcement,the Munjals had formed a core team of threepeople to assess if life was possible withoutHonda.The team, which was kept under wraps from therest of the world, could not go out for consumerresearch because that would have let the secretout.It had to rely on gut feel. What may have playedon this team's mind was Honda Motorcycles andScooters India's performance in the motorcyclemarket and Hero Honda's performance in thescooter market.Both had entered these markets in 2006; whileHonda had got 7 per cent of the motorcyclemarket, Hero Honda had grabbed over 17 percent of the scooter market which was dominated

    by the Honda Activa. Technology, the team concluded, was equal for all, and what really mattered to Indians was thetotal cost of ownership - low price tags, high fuel economy, inexpensive spares and high resale value.Click NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    http://ads.rediff.com/5c/inbusinessSS.rediff.com/business-slideshows-print.htm/1366971212/x02/default/empty.gif/6333454c76464c587866634141617173javascript:void(0);
  • On December 16, immediately after it hadinformed the stock markets that Honda will exitthe company and before answering calls fromanxious analysts and inquisitive journalists, HeroHonda Managing Director & CEO Pawan Munjaldid a live webcast to all employees, vendors anddealers. The dealers were the real strength ofthe Munjals.Chairman and family patriarch Brijmohan Lallwas on first-name terms with each of his 450dealers, and he had made it a practice tointerview all prospective dealers.The next day, the key hundred or so dealers werebrought to Delhi, and the father-son duoapprised them of the situation.Within ten days, each one of the 100,000 or somechanics and salesmen of the dealershipsand the 4,000-odd touch points (service centreset cetera) were given dockets on the subject, andtheir questions were answered by the company'semployees. Close to a year later, Hero MotoCorpclaims not a single dealer left it, in spite of thedoomsday projections.Click NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    And when the Munjals launched the newcompany name and brand identity at the O2arena in London on August 7, the presence ofthe army of dealers wasn't missed by observers.Somebody who was there says there were atleast 1,000 of them. Obviously, many dealersdidn't travel alone.With the dealers reassured, another core team offive was formed under Pawan Munjal to give thecompany a new name and a new brand identity.Though the Munjals had the option to use theHero Honda brand till June 2014, they decided toreplace it as early as possible.As it involved renewal, the project wascodenamed Yajna. The team gathered about tencase studies of companies that had gonethrough such rebranding.

    Click NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    There were some international cases in the lot, though the majority was Indian. Some were success stories, otherswere not.The job from here was to find the right specialist to rename the company and design a new brand, and then find anadvertising agency that could convey the makeover in an effective way.In the days that followed, the Munjals sent out feelers to brand specialists from across the world. One of the go-betweens contacted Charles Wright of Wolff Ollins, an Omnicom company.Wright perhaps knew that this was no small opportunity: Hero Honda (as it was called then) was the largest Indianmaker of two-wheelers.The very next day, he was in the Hero Honda office in a cramped south Delhi market (the Munjals don't move out of the

  • market apparently because they consider it luckyfor them) to meet Munjal and his brother, Sunil.Click NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    The two explained the situation to Wright - thereasons for the separation with Honda and theroadmap ahead. Many more conversationsfollowed.What seems to have swung the deal in WolffOllins's favour (there were at least three otherconsultants in the fray) was its work for TataDoCoMo.The Munjals wanted the new company name andbrand to reflect change with continuity as it wouldbe unwise to let go off Hero Honda's brandequity.The brief given to Wolff Ollins was that the newname and brand should highlight Indianengineering, and signal that the company nowplans to go global (earlier it could sell only inthose countries where Honda was absent) andbranch into new segments of the automobilemarket - three-wheelers, for instance.All primary data that the company had collectedover the years on brand health and consumerpsychographics were put at the disposal ofWright and his team of 20 drawn from the firm'soffices in London, New York and Dubai.Click NEXT to read more...

  • Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    This team, which of course included someIndians, flew to India to and interacted with thecompany's promoters, employees, dealers,vendors and customers to get a feel of the brand."The research," says Wright, "showed theaffection the brand has long enjoyed in thehearts of Indians and how this strong bond isborn of the way a two-wheeler transforms theeconomic and social circumstances of thecommon man."By mid-year, Wolff Ollins gave its output. Thename, it said, should be Hero MotoCorp - Hero tosignal continuity and MotoCorp to indicatemobility, modernity and technology.It kept the door open for the company to get intosegments other than two-wheelers. So far as thebrand was concerned, Wolff Ollins stuck to theblack and white of Hero Honda for continuity butgave it the shape of an "engineered" H: a red

    parallelogram with a black triangle and trapezium.The Hero next to it was in red, to signify warmth and friendliness, and all the letters were of the same size.Click NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    There were no sharp edges in the letters,which, says Hero MotoCorp Senior Vice-president (marketing and sales) Anil Dua,reflects the Indian feel. "Together, the two standfor Indian engineering."In March, the Munjals had appointed Law &Kenneth to devise the communication strategyfor the new identity. Its people were made to workwith the Wolff Ollins team to (1) create ownershipand reduce friction, and (2) cut the go-to-markettime.The baton was now passed to it. Law & Kennethcame out with the punch line, KXPPDLQKDLKHUR(there's a hero inside us). The Munjals liked it.They knew it had universal appeal. Everybodylikes to feel that he has it in him to reach his fullpotential, and thus there are better times tocome.The line was then passed on to lyricist IrshadKamil to write an anthem around it. Kamil hadmade a name for himself with his lyrics in filmslike &KDPHOL/RYH$DM. DO-DE: H0HWand $MDE3UHP. L* DMDE. DKDQLClick NEXT to read more...

    Insider Story: How Hero Honda became Hero MotoCorpLast updated on: November 7, 2011 17:25 IST

    Once the anthem was ready, A R Rahman was contracted to set it to music and sing it as well. Rahman was in LosAngeles where he composed the tune.An anxious Munjal went over every stanza and line with him on Skype. Once Rahman had done his job, film maker

  • Anurag Kashyap ( HY * XODDO%ODFN)ULGD\7KDW* LUOLQ

  • Source:

    http://www.business-standard.com/