Life after Honda: The Munjals want to build on their ‘trust equity’ as they set the ball rolling for a new corporate identity and logo.
A day after the formal announcement of the termination of the joint venture with Honda, the Munjals held an important meeting with those who matter the most to them. The 4,500-and-growing dealer network is the backbone of the big Munjal family and the message of continuity had to go to them.
As the Hero group patriarch and Chairman Brijmohan Lall Munjal and his son Pawan addressed the dealers, the message was simple. “We will be what we have been for the last 25 years. The family that has done business together and has grown together will continue to do so.” The response from the dealers was enthusiastic, says a person who attended the meeting.
The Munjals seem to have already done a lot of homework on life after Honda. At the heart of the game plan will be the “3A strategy”: Availability, accessibility and affordability. And that’s what the mandate will be for the new marketing and branding communication juggernaut that will roll out over the next six months.
“We will build on the trust equity that has been at the core for the last 25 years. We need to just embellish it,” says Suhel Seth, Managing Partner, Counselage India and marketing consultant to the Munjals. A global pitch will follow soon and next week a team will be in London to meet international designers for a new corporate identity and logo.
Is everything going to get wiped clean and a new Hero will emerge? Not quite. The strategy will be two pronged: At a product level, the focus will not be on the corporate mother brand Hero but on individual products like the flagships Splendor, CBZ, Passion or Hunk. Seth says products such as Splendor and Passion have already acquired substantial brand equity.
Piyush Pandey, chairman Ogilvy and Mather (South Asia), says “how Hero Honda fares going ahead would depend on the products they introduce. They have to invest substantially on launching new models. So long, it has been a shared brand.”
There is also a plan to exploit the equity that BM Munjal himself carries. It need not be for the consumers, but for the dealers there is no better brand to highlight continuity than the man himself, company officials say.
And that will be the critical link. “The challenge for Hero would now be to communicate and demonstrate a sense of continuity. The anxiety comes in on the technological front and future product line-up. If they manage to keep the product pipeline fresh and meet consumer requirements, they should be okay. Others have met and overcome challenges in the same category,” feels Santosh Desai, CEO, Future Brands.
But Desai says Honda not being there would certainly create anxiety.
Brand Consultant Anand Halve of Chlorophyll agrees with this. He sees an urban-rural divide in brand perception. Honda, says Halve, has launched products independently of Hero and has acquired a meaningful presence in the Indian market. Besides, the company has gained respect with cars such as Civic and City. “It will have an edge in urban centres where consumers associate the Honda name with quality and technology,” he says.
Some others are more circumspect. Nabankur Gupta, Founder, Nobby Brand Architects, says “in the short term, I feel Hero will lose more from a brand point of view. The conjunctive branding is too strong for Hero. For new customers, Hero’s association with cycles will dilute the brand perception”.
But most auto industry players don’t agree with this. “The industry has seen many JVs fail. Neither TVS, nor Bajaj etc have collapsed after the break-up with their partners. “Hero too can develop its own R&D like we all have. In any case, it still has four years to go,” says Rahul Bajaj, chairman Bajaj Auto.
Hero Honda officials extend this argument further to say Hero will now get to spread across geographies, spread in rural markets in India and work out a new template for dealer engagement.
The real challenge for Hero of course would come from its soon-to-be former ally. While it will lose in the short-term, Honda is known to have fought back spectacularly well.
Honda found itself in a similar situation a decade ago when it parted ways with the Kinetic group but roared back with a vengeance in the gearless scooter space. The results are there for everyone to see.
