MD | 09 Feb 2004
“We plan to expand our global activities by setting up another unit. I expect the industry to bounce back and see some more activities”
The wheel of fortune is turning full circle for Hero Cycles. Emerging largely unscathed from a difficult year 2003, the bicycle major has stepped on the pedal to grow the markets, domestic and overseas. Managing Director, Hero Corporate Services Ltd, Sunil Kant Munjal, presently responsible for the growth and diversification of the Hero Group, delineates the group’s future strategies for the bicycle industry in an interview with Shubha Kumble. Following are excerpts of the interview:
Q. Hero Cycles looks at two distinct segments, rural and urban. Do you communicate differently to each of them?
We have a large market that uses bicycles as a mode of transportation. Besides, there is the urban youth market where the use is more recreational. If you look at the way we have addressed the markets through our advertisements and communications, you will see that both these segments are addressed differently. One is very clearly targeted at the large market, namely the rural market where bicycles are mainly a mode of transportation, and the other is more contemporary-styled, meant for the youth.
Q. But wouldn’t the use of dual positioning confuse the customer?
Not at all. As you know, Hero is one of the largest companies in the world and indeed the largest company in India. Hero is the umbrella brand and under which there are several brands that cater to the niche markets. For instance, Hero Jet is clearly the brand for the transportation segment. So it talks of being more reliable and has tougher-looking bicycles meant for the rural market. But, the Ranger addresses niche markets.
Q. What sets you apart from competition?
We have the highest reach. Our distribution network is the widest. Along with this, we have the ability to regularly turn out products that based on proper research. The feedback we receive from our customers is systematically used to design our next offerings.
Q. How severe was year 2003 on the bicycle industry? What were the key constraints?
Year 2003 was very tough on the bicycle industry, mainly due to the heavy taxes that were imposed on the industry in the early part of the year. It had its impact on the customers and consequentially the industry growth suffered.
Q. What are your expectations hereon?
We look forward to good growth. Further, we plan to expand our global activities by setting up another unit. I expect the industry to bounce back and see some more activities.
Q. Will this translate into a higher advertising budget?
The advertising budget is made keeping in mind a variety of factors like the work environment, business requirements, needs, etc. No single factor will wholly determine the budget. But since the budget tends to grow year on year, we should see an appropriate rise in the budget this year too.
Q. How important is China to Hero Cycles at this juncture?
We export to 90 countries with the UK being the biggest export market for us. We compete with a number of countries. And China has been our competitor for a number of years now. But apart from competition, the country also holds a huge potential as a market. We plan to look at China as both source as well as market in the future.
Q. How would you define the USP of Hero Cycles?
The single biggest factor is that we constantly listen to our customers; try and understand what they tell us, and at times try and understand what they actually don’t say. Then we implement those. That helps us. Apart from this, we also have an ability to get good people and retain them. We believe in developing excellent work relationships.
Q. Do you think the bicycle market is stagnating?
No. I would not say that. Last year was a slow year for reasons I have mentioned earlier. But we have seen growth year and year and that is a good sign.