Should Hero go for a new logo?

Last couple of years has seen a lot of rebranding exercise. Godrej, Shoppers Stop, India Post, CEAT Tyres, Essar, Bajaj, Videocon and the latest being Airtel. Some have been praised, some not. But that is not the topic of discussion here. The 26 years relationship between the Hero Group and the Honda Group has been finally ended with the announcement of the Munjals buying the 26% stake from the Honda group. Tensions had been simmering and it was inevitable after Honda could no longer be happy with the 26% stake and started their own set up in India with Honda Motorcycle & Scooter India Pvt. Ltd.

This opens up the market for other Indian motorcycle players since Hero Honda was the largest player in terms of volume of sales. Now with both breaking up, Hero can enter segments where Honda was present and Honda can enter segments where Hero was present. Increase competition could lead to price wars in the immediate future with both brands wanting to gain market share and build an individual brand identity. Here is the catch.

Honda has an individual identity in India. Hero does not. It has always been in the company of Honda and has leveraged the Honda name for Japanese technology in the minds of the Indian consumers, directly or indirectly. Thus should Hero go for a corporate rebranding exercise with its logo if not the name? Hero can now also export its motorbikes to the developing nations which are such a big market. Baja Auto would testify to that with its huge exports. Changing name would not be a good idea but creating a new logo would seem to be good.

With the Honda name gone, Hero would need to tell the consumer about its technological expertise and R&D facilities as well. It would need to spend on increasing its product mix with only the hero name with the individual brand name. a factor which would hinder Hero also would be its existing products which are strong names such as CBZ, Splendor, Karizma in the urban markets whereas the other good names such as Passion, CD 100 which are strong in the rural markets. They would bear the Hero Honda name. Hero would need to launch new bikes to not just take on market competition but also the competition within. Not in the short term but in the long term where it would slowly need to take away these big brands and move its own brands ahead without losing on the cash inflow which these current brands would bring. A sort of catch 22 situation.

The same problem doesn’t arise for Honda since it doesn’t mind taking on these brands since the name is only attached and the earning they get is only through royalty which isn’t much high compared to what Hero would be getting form Hero Honda

It could also lead to dealer poaching by Honda from the Hero Honda’s intensive penetration although it is said that it’s a mutual understanding that it should not happen. Price would be an advantage to Hero vis-à-vis Honda. The spare part availability and its lower price would be of a greater advantage to Hero than Honda.

Speaking from a broader perspective with long term focus, it’s a good thing for both Hero and Honda with opening up of newer markets for both. A new logo by Hero would seem to be a natural step ahead with its own identity creation. Just some food for thought would be, can Hero think on the lines of what Bajaj is thinking i.e. change over to a house of brands with individual brand names. Bajaj has strong brand equity with Bajaj name with lot of hindrance from the other Bajaj players in the family. It would take a lot of gumption to do that. Hero on the other hand would do well to go ahead with it this and take a head start over its immediate competitor.