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Hitching a ride on rural markets

As two-wheeler sales have slowed, focus on villages has kept Hero Honda in top gear, reports Samar Srivastava.

business Updated: Mar 26, 2009 01:27 IST
Samar Srivastava
Samar Srivastava
Hindustan Times

At his Hero Honda Motors Ltd dealership in the agricultural town of Bonli, Girirad Prasad Gupta has kept the most important job in the family. Son Manoj Kumar is his rural sales executive.

At 28, Manoj has a weatherbeaten face. Setting off at 7 each morning, he keeps 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 local sarpanch, school teachers, lawyers, doctors and insurance agents — anyone who plays a role in shaping buying decisions.

But unlike a regular salesman, Manoj doesn’t make an aggressive sales pitch. He is mostly content sitting and chatting. “Making a sale is great, but we aim to form a long-term relationship,” he says.

“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 Gaaon Har Aangan (every village, every home), a success.

Safely ensconced in the number one spot among motorcycle makers for the past eight years, it was only in 2007 that Hero Honda decided to focus on rural areas.

Hero Honda’s rural division was formed with the aim of penetrating deeper into small towns and villages. For Hero Honda, the share of rural sales has been growing by two to three percentage points every year; rural areas make up over 40% the company’s sales.

Increased procurement prices for agricultural commodities offered by the government and the National Rural Employment Guarantee Act have put more money in the hands of rural consumers.

And Hero Honda is in place to take advantage of the disposable incomes. “They have positioned themselves as a rural India story,” says Ramnath S, vice-president at IDFC-SSKI Securities Pvt. Ltd. “At just the right time.”

As two-wheeler sales across the country have slowed, the focus on rural areas has kept Hero Honda in good stead. The company has grown 12 per cent this fiscal, rival Bajaj has seen sales fall by 23 per cent.

In the past two years, the company has increased the number of touchpoints, or outlets selling and servicing its bikes, from 2,000 to 3,000. This year’s target: 3,500 touchpoints.

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 located in the district headquarters. Under him are authorised representatives —smaller dealerships where locals can make purchases and also get their bikes serviced.

“We realized that while someone might be willing to travel 50 km 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 authorised representatives in 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. “Dealers understand their area the best and so we leave local activities to them,” says Akhilesh Sharma, Hero Honda’s sales manager in Rajasthan.

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 it, he’s put up more than 500 price lists across his district at places like tea stalls, the village tailor and the panchayat office. “It’s very important to convince village buyers that there’s no better deal available,” he says.

In adapting its model for rural India, Hero Honda has also cut costs wherever possible. 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. Rajendra Prasad Mangal, 29, owns a medical shop and is on a tight budget and asks which bike would be best for his needs.

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.

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.

More competition could give Hero Honda a run for its money. For some like 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.”

First Published: Mar 26, 2009 01:22 IST