Maximising profit cannot be the purpose of brands: Rohit Gothi, Hero Cycles
On Day 2 of IBC 2020, Rohit Gothi, Chief Executive Officer, Hero Cycles Ltd, spoke on ‘Purpose before profit’
e4m India Brand Conclave’s day two commenced with a keynote address by Rohit Gothi, Chief Executive Officer, Hero Cycles Ltd, where he spoke on the topic ‘Purpose before profit’.
Gothi commenced the session sharing that when he was choosing the topic for his presentation, he did not hesitate even once to speak on ‘Purpose before profit’ because it was relevant in the context of Hero.
He said last few months have disrupted the way we worked fundamentally. Everyone is seeking a balance and reorienting themselves at an organizational and an individual level.
“There is a sense of humility which has swept human beings because earlier we carried arrogance that we will overcome anything. But suddenly, a small microbe comes and disturbs the entire ecosystem. We have become socially responsible, sensitive to nature, and more aware of our surroundings. Most importantly, we have been trying to find what our real purpose is,” Gothi remarked.
He said that consumers are revealing a definite shift as words like social responsibility and inclusivity, which carried little value earlier in purchase preferences, have become very important. “We are trying to spend less but seeking value for money. We are looking at categories first and then going to the brand.”
He said that expectations from leaders, institutions, governments, and brands have increased manifold as the consumer wants brands to lead by example. He added that the Gen Z cohort, which was largely viewed as anti-capitalistic, has found a new voice which has given brands an opportunity to seek acceptance from this cohort.
“To a large extent, they believe that large corporations are profit-making machines. In their quest for profit, they create imbalances in the environment and the world of tomorrow. This is the time when we can talk to them and convey our real purpose and win back this set of millennials,” Gothi said.
He explained that there are many emerging dialogues on purpose today, including the ones which are marketing and communication gimmicks. “Brands are doing some innovation to talk to the consumer. Business is and was never about maximizing profit. Profit-making is extremely important but it is not only about profit. Maximising profit cannot be the purpose of brands.”
Gothi informed that brand Hero rolled out its first bicycle in 1956 and the vision of the founders was clear: mobility. “Two-wheeler penetration was low but the intention was how we can give wheels to a post-independence India.”
According to Gothi, It was not about manufacturing bicycles but providing mobility. He said that he still gets pushback if he grumbles about increasing margins of the company. “Durability, reliability, and affordability were the values when we started and there is a reason to them because in 50s and 60s, India’s growth momentum was not as it is today. It was mainly cycles which were moving the people.”
Gothi said that their profit will be fixed and whatever innovation they create or savings they incur on cost, they will pass it on to the end consumer so that penetration of two-wheelers improves in the country.
“The brand purpose was very clear even in the past campaigns, which is to provide accessibility to all its users across segments. The purpose through 50s, 60s, 70s, 80s, and 90s, was and is mobility,” Gothi averred.
He recounted an anecdote from a consumer insight immersion he was doing at India Gate where a woman, on being asked why she likes cycling, said that the exhilaration she felt when the wind touches her face was unmatched.
As things moved to 2000s and the pandemic, Gothi said that the company pivoted from mobility to sustainable mobility. “We realized the pollution and carbon emission is causing damage. It is important that a brand like Hero takes up the cause of sustainable mobility. That has been what we are trying to achieve in the last two-three years.”
He said that one cycle can offset 1.5 times more carbon dioxide emitted by a car. He also said that cycles can help with reducing congestion by 400 per cent. He added that studies conducted by the brand suggest that 40 per cent of commuting traffic traveling fewer than 7 km can contribute to 1.1 per cent of country’s GDP.
“The benefits will come in terms of health as India will be fit and there will be less pollution. So that is what we are seeking and that is our purpose now,” Gothi said.
According to him, the idea is to now convert as many bikes and cars as possible into an electric mode of transport. But charging infrastructure will be needed in the country before these products can be launched. “Despite our market share (42 per cent in bicycles and 80 per cent in e-bikes), we want to be a thought leader.”
The efforts are now being focused on facilitating the ecosystem, according to Gothi. He said that they have been lobbying at a policy level with various government bodies to build corridors for cycles and in two cities, they are investing in a track along with local bodies.
In the Q&A session, which followed after his presentation, Rohit Gothi said Hero Cycles is trying to make its manufacturing process compliant with sustainable practices, but it was not sustainable yet.
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