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The secret behind Hero Honda's success
New segments
Traditionally, the motorcycle market has been seen as three distinct segments: Entry (100 cc engine capacity, 65 per cent of the market), executive (125-135 cc, 20 per cent of the market) and premium (150 cc, 15 per cent).
All three have different price points; entry-level bikes are for the rural markets, while the other two are sold and bought in the urban markets. Hero Honda, conventional wisdom said, is strong in the entry segment with a market share of 80 per cent and weak in the other two where its share ranges between 15 per cent and 20 per cent. Hero Honda found that these are not watertight categories. Customers, for instance, trade freely between a top-end 100 cc motorcycle and a low-end 125 cc motorcycle or between a premium 125 cc motorcycle and a basic 150 cc motorcycle.
While a customer does look at the engine capacity, what he seeks is a holistic experience. So, Hero Honda decided to look at the motorcycle market not from engine capacity but from the customer's point of view - how he brackets the products available in the market through his demographic and psychographic profile. This took the company to unchartered waters of consumer profiling - what is his lifestyle and attitude, what is it that he holds dear in life and so on. The segments, in Hero Honda's scheme of things, are: Entry (35 per cent of the market), deluxe (50 per cent) and premium (15 per cent).
Hero Honda Vice-president (sales and marketing) Anil Dua, who joined Hero Honda around September 2006 from Hindustan Unilever, says the company has a lion's share of the first two segments and a "growing" share of the premium segment. Powered by 
Image: Models pose with the 125 cc 'Glamour' Hero Honda motorcycle
Photograph: Jayanta Shaw/Reuters
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