Category: Honda

Marketing and Management Analysis of Honda Motors

This report gives a concise marketing and the management analysis of Honda Motors that internationally positions sixth in car industry. The essential of this task is to think about and basically investigate the distinctive key system identifying with Honda Motors. Through the various aspects of market division, we have made an endeavor to perceive the objective clients.

Stakeholders comprehended as the elements, additionally assume a key job in the organization’s decision-making procedure and exercises. Key spotlight is laid on Marketing Mix Strategy (4Ps-Product, Place, Promotion, Price), Sustainable Management Practices and we have likewise basically analysed every one of these parameters, to get a more profound comprehension of Honda Motors. It was likewise seen that these 4Ps and the key strategies profoundly impact the organization’s accomplishment. Through this report we have tended to the benefits and faults of the management rehearses pursued by Honda Motors.

Background

Honda Motor Co., Ltd, Japanese Multinational Corporation, known as a maker of Automobiles and Motorcycles, was found on 24th September 1948 by Mr. Soichiro Honda and Mr. Takeo Fujisawa.Honda in Japanese strict importance is root field or beginning field. Soichiro Honda had an incredible attached to racing just as he was an entrepreneur, and a maker. However, over all these he was a flawless visionary and has an exceptional inventive personality. He used to consider improved methods for assembling cylinder rings, built up a little business, and began fabricating field. Mr. Soichiro filled in as a specialist at Japanese tuning shop, Art Shokai, since in his young age. At that point in a self-trained designer, he structured his first drafts of piston plan and sold to Toyota, yet it was rejected. In light of deficiency of gasoline World War II, he was not ready to create in delivering the car. After that he set up The Honda Technical Research Institution in Japan of little motor for 2 bikes. Also, his first motorbike was Honda Cub; first car was T360 mini pick-up truck.

Mission Statement

Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction. 2030 Vision Statement:

1. To improve operational elements of worldwide headquarters.
2. To emphatically advance mutually complimentary inter regional relationship.
3. Serve individuals worldwide with the delight of growing their life’s potential.
4. Lead the headway of versatility and empower individuals wherever in the world to improve their everyday lives.

Honda’s Key Marketing Strategies

Honda pursues a holistic marketing for organization’s marketing purpose. Holistic marketing is the plan and usage of promoting activities, process and programs that mirrors the broadness and interdependencies of their effects (Keller and Kotler,2006). Holistic marketing perceives that ‘everything matters’ with marketing for example customers, employee, other companies, competition, as well as society as entire and that a broad, integrated viewpoint is essential.

Honda is certainly not a top-down organization, constrained by central station. Rather, Honda manufacturing units for all intents and purposes wherever around the globe work as self-ruling organizations, planning and creating vehicles dependent on local conditions and consumer behaviour.

Product Strategy

Automobiles

Honda’s line-up shifts by nation and may highlight vehicles restrictive to that region. Honda’s worldwide line-up comprises of the City, Fit, Civic, Accord, Insight, CR-V, and Odyssey. The automobiles are demographically segmented into top executive, executive and young executives.

Motorcycles

Being the biggest motorcycle maker in Japan, Honda began its generation in 1955. Honda achieved its top in 1892 for assembling right around 3 million motorcycle every year. Honda’s worldwide line-up consists of Gold Wing, CB1100, CBR1000RR, Rebel, VFR800F and Super Cub. The motorcycles are demographically segmented into teenagers and females.

Power product & Engine

The company started engine production in 1953 with H-type. Honda power equipment reached record sales in 2007 with 6,4 million units. Its quality completes line of generators for commercial and consumer applications.

Price Strategy

Honda Motors is a sales-oriented organisation, it emphasises more on sales of the products. Utilizes market penetration pricing strategy. According to Dean (1969) penetration pricing strategy is lowering pricing as an entering wedge to get into mass markets early.

Promotion Strategy

Honda has been exceptionally cautious and exact in their promotions. Honda promoted their products in greater part print media. The clients were constantly mindful of the organization strategies of giving most recent innovation and overhauling at whatever point vital and furthermore redesigning the whole model after certain time-frame. The promotion was increasingly focused to the organization’s mechanical progressions and eco-friendly picture which separated Honda from the competitors.

Honda focuses on personal selling. Personal selling is face‐to‐face connections with at least one imminent buyer, to make deals (Rowley,1998). The sales person assists customers in the process of vehicle selection by convincing the customers to choose Honda because of its quality.

Place Strategy

Honda uses agents and retailers as marketing channels for marketing at different locations. For cars and motorcycles Honda uses selective distribution method. For any one interested in jets and aircrafts engine Honda uses exclusive distribution.

Management Strategies

Life Cycle Assessment (LCA) is a critical tool to analyse the product life cycle for means of identifying the impact of products and operations on the environment. The product life cycle is separated into six distinct areas: development; purchasing; manufacturing; sales and service; in use; end of life.

Honda engineers considers environmental factors in every phase of development and design. They account for factors such as part remanufacturing, reducing the substances of concern and dismantling issues. Honda maintains a minimum 90% and 95% level of design recyclability for all Honda automobiles, powersport and power equipment respectively. With advanced government regulations Honda’s effort to reduce SOCs is consistent. All suppliers giving items, parts and materials to any Honda producing element are required to enter information into the International Material Data System to track the utilization of chemical compounds on a corporate-wide basis. The Honda Chemical Substances Management Standards is utilized to recognize the chemical that should never be utilized again, those for which an eliminate period has been distinguished and those that Honda is observing for potential disposal. All providers are relied upon to reference the SOC management manual for data in regard to Honda’s chemical management strategies to meet the most recent revealing necessities and regional prerequisites.

Honda aims to have a PVC free interior in all the automobiles. They are consistent in their efforts to search high quality and cost-effective substitute for PVC.

Honda made ‘Green Purchasing’ rules to help improve the natural effect all through Honda’s all-inclusive supply chain. Reduced CO2 emissions by avoiding unnecessary travel miles by:

• Every day load planning guaranteed on-time conveyance and putting smaller orders onto any available trailer space to make sure trucks were fully loaded before departure.
• Collaboration with suppliers and combining the routes helped them in reducing the emissions.
• Also, CNG filling stations were established on or close to Honda properties along the suppliers and logistic system, supporting the utilization of CNG as a fuel among the logistics partner.

To Honda waste generation by manufacturing is an efficient use of raw materials. They aim to use raw material in an efficient manner to eliminate waste and implement reuse, recycle and energy recovery to avoid sending waste to landfills.

Honda has worked with different organizations to grow progressively proficient methods of transportation and have kept on embracing cleaner strategies for transport to reduce CO2 emissions. It has made an effort in expanding modal shift which involves the shipment by rail and ship which lead to an decrease in CO2 emissions by 27% and 65% respectively when compared to truck transportation.

Honda identified increments in fuel economy and decreases in tailpipe emissions as two of the most ideal approaches to diminish the GHG emissions produced by a vehicle over its lifecycle which occurs during its in-use phase.

The key component of Honda’s zero-waste-to-landfill strategy are its recycling programmes. The recycled materials include wheels (including aluminium and steels), engines, catalytic convertors and Nickle-metal hydride batteries. They use rescued materials from the li-on batteries for nickel-metal-hydride (NiMH) units. Honda takes the positive terminal material from the li-particle battery and reuses it as the negative cathode material of the NiMH battery. Electrolyte from the li-ion battery is additionally reused.

Sustainability at Honda

Sustainability means incorporation of economic, social and environmental performance (Lee and Farzipoor Sean 2015) into operational decisions. It is, in general terms, defined as economic practices which meet the needs of the present without compromising the ability of future generations to meet their own needs (WCED 1987). In order to achieve sustainable development, organisations must redesign their processes and adopt new technology, even though this might change the business models in supply chain management (Nidumolu, Prahalad, and Rangaswami 2009). Following are the sustainable practices by Honda Motors:

1. Collaborations with sustainable brands
2. Green consumption
3. Green Marketing
4. Green Purchasing
5. Innovative Methodology
6. Stakeholder Involvement
7. Sustainable distribution
8. Sustainable Technology
9. Total Quality Management

Honda has since a long time ago sought after its own innovative improvement and has immovably kept up the freedom of the organization, however at this point collaborating up with different enterprises has turned into another methodology for the maker. In the cutting-edge world, Honda perceives that creation more noteworthy utilization of outside thoughts and advances is unavoidable, with automakers around the globe racing to grow new items, for example, electric cars, self-driving vehicles, and cars with direct access to the web.

Honda has exchanged expendable transport bundling that was cardboard boxes and steel cases to reusable plastic compartments to eliminate utilization of steel cases.

Honda Motors publicize their items conveying the subject of new innovations that are naturally friendly, featuring enthusiastic tunes and youthful craftsman which occupies the interests of the clients.

Honda has a planned purchasing strategy which are environmentally concerned and serves to reduce the CO2 emissions during the process and also supports the suppliers to use the alternative fuel by establishing a CNG filling stations near to the suppliers and logistic partner.

Honda uses the programmed fuel injection feature for various vehicles in efforts to make the motor more fuel efficient and to minimize air and sound pollution.

Honda speaks concerning issues encompassing manageability exercises and exhibitions to the partners annually. Thinks about the need and requests of the stakeholders, while likewise giving a comprehension of changes and dangers in the social condition.

Honda oversees its LCA utilizing sustainable distribution while considering all the natural impacts amid its development, purchase, packaging, sales, use and disposal stages. The significant effect was seen from the modal shift in transportation for conveying the vehicles.

Honda brought hybrid vehicles into the market place, illustrating that impressively improved fuel economy can be accomplished at a sensible cost and in this way the hybridization is being built up as the cutting-edge car standard (Frank, 2007).

Honda Motor Company, has the motto, “From a global perspective, Honda undertake to respond to customer needs by producing low-priced products of superior performance”. Honda company voice their concerns about quality and they have a unique philosophy of people-based management (Mak,2000).

Success of Honda Motors on Sustainability

The focal point of ecological management has moved from the organisation level to the supply chain level (Linton, Klassen, and Jayaraman, 2007) in Honda Motors. Honda’s pricing strategies by using market penetration pricing had permitted them to attract a substantial quantity of purchasers and keep up an expansive piece of the pie. Their dimension of distribution for example selective and exclusive has helped them in securing the merchant services, promote item differentiation, support conniving conduct in assembling and expand price discrimination. They have accomplished in decreasing the CO2 discharges by the modal shift in transportation and by actualizing longer bearer vehicle for transport over little transporter vehicle clubbing the conveyance for 2 sellers together. The organization has executed activities with contemplations for the environment, safety, human rights, compliance and social obligations among others in association with its providers around the world. The organization reuses the batteries to make innovation that advances reusing of car li-particle batteries, particularly as interest begins to develop for vehicles fuelled by such units.

Conclusion

To conclude I would say that in spite of having a large infrastructure that is spread all over the world, Honda is managing its supply chain in a highly effective manner. Honda’s policy to localise the product is taking the company to higher platforms worldwide. Honda’s approach for a sustainable management is highly efficient with its efforts for consistent improvement. Its innovative methodology and sustainable technology is making it strong to distinguish from its competitors.

References

1. Dean, J. (1969). Pricing Pioneering Products. The Journal of Industrial Economics, 17(3), 165-179. doi:10.2307/2097492
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3. Frank, A.A., 2007. Plug-in Hybrid Vehicles for a Sustainable Future: Appropriately designed hybrid cars will help wean society off petroleum. The necessary technology is available now. American Scientist, 95(2), pp.158-165.
4. Global.honda. (2019). Honda Global | performance report. [online] Available at: https://global.honda/about/sustainability/performance.html [Accessed 11 May 2019].
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6. Joe, S. (2019). Honda Debuted its Own Battery Recycling Program – The Green Optimistic. [online] The Green Optimistic. Available at: https://www.greenoptimistic.com/honda-battery-recycling-program/#.XNaOSBQzbIU [Accessed 11 May 2019].
7. Keller, K.L. and Kotler, P., 2006. Holistic marketing. Does marketing need reform, pp.300-305.
8. Lang, J.T., 1984. Selective distribution. Fordham Int’l LJ, 8, p.323.
9. Limoubpratum, C., 2015. Factors Influencing Sustainable Distribution: a Framework of Co-opetition, Freight Consolidation, and Collaborative Freight Distribution in the Thailand’s Newspaper Industry (Doctoral dissertation, Victoria University).
10. Linton, J., R. Klassen, and V.Jayaraman. 2007. “Sustainable Supply Chains: An Introduction.” Journal of Operations Management25 (6): 1075–1082.10.1016/j.jom.2007.01.012
11. Luthra, S., Garg, D. and Haleem, A., 2015. Critical success factors of green supply chain management for achieving sustainability in Indian automobile industry. Production Planning & Control, 26(5), pp.339-362.
12. Mak, W.M., 2000. The Tao of people-based management. Total Quality Management, 11(4-6), pp.537-543.
13. Nedergaard, N. and Gyrd-Jones, R., 2013. Sustainable brand-based innovation: The role of corporate brands in driving sustainable innovation. Journal of brand management, 20(9), pp.762-778.
14. Nidumolu, R., C. K. Prahalad, and M. R. Rangaswami. 2009. “Why Sustainability is now the Key Driver of Innovation.” Harvard Business Review 87 (9): 56–64
15. Nikkei Asian Review. (2019). Honda breaks with tradition to bring in fresh ideas. [online] Available at: https://asia.nikkei.com/Business/Companies/Honda-breaks-with-tradition-to-bring-in-fresh-ideas [Accessed 11 May 2019].
16. Putra, S.W., Dimyati, M. and Irawan, B., Brand Equity and Green Marketing as a Predictor Decision to Purchase with Mediation Spectrum Considerations Honda Beat Series Consumers in Surabaya City.
17. Rowley, J., 1998. Promotion and marketing communications in the information marketplace. Library review, 47(8), pp.383-387.
18. Sukitsch, M., Engert, S. and Baumgartner, R., 2015. The implementation of corporate sustainability in the European automotive industry: An analysis of sustainability reports. Sustainability, 7(9), pp.11504-11531.
19. Telser, L.G., 1960. Why should manufacturers want fair trade?. The journal of law and economics, 3, pp.86-105.
20. World Commission on Environment and Development. 1987. Our Common Future: The Brundt Land Report. Oxford: Oxford University Press.

Overview of the Key Features of Honda Marketing Management

Operations and the industry processes and the characteristics of Honda’s market has a several key parts and sectors which are needed to be known like suppliers, marketing channels, competition, market attractiveness, and many other factors. So, the first one will be the suppliers, who is the main suppliers, their number, and what they do.

Honda is one of the biggest motorcycles manufactured company that working on manufacturing the internal combustion engines in the word specially in Japan under the name model of civic, the most famous car in Honda as longest-running for the Japanese automakers.

Honda became the first-choice car in Japan by 1986 which encouraged them to invest in the research and development to get involved in the robotics industry, and eventually Honda released the first electric car by 1999. This evolution opened the chance for Honda to establish new ventures in China, Mexico, and Argentina.

Marketing Channels

Functions of business set of independent of business units that are connected to each other also connected to the business manufacturing products consumption that followed by number of stages from the manufacturing to agencies to wholesalers and retailers to be delivered to the end customer to satisfy their needs or wants.

Honda is using a different channel of distribution like authorized showrooms and cars dealerships through service centers that has the authority to do direct selling agents, also the channel of-commerce sites to make the products of Honda available online to customers in several countries like US, Argentina, Brazil, and north America like Mexico however Honda cars have a wide range of selling in Canada as a long standing car with high stability and quality of several options and models.

Marketing Attractiveness

Visibility campaigns and branding strategies helped Honda to create TOMA ( top of mind awareness ) in the mind of customers through building high relationships with them with the high quality of products with different models including the high intensity of the cars and motorcycles stability also the after selling service that would help in the technical supports when the customers need it, otherwise thespare parts that are provided widely and cheaply in all it is markets. Honda has not stopped with this strategy but also they decided to enter new markets in different countries with different models and options to fit the different cultures, this opened a wide range for Honda to maximize their selling, also the web and tv advertising with slogans like “ the power of dream” which increasing the brand awareness and the attractiveness of customers through increasing the word of mouth between people.

Competition

Honda is a huge company known for manufacturing motorcycle, automobiles, aircrafts, and power equipment to deliver the full satisfaction to customers, and combustion engines with the strategy of maintaining the business operations from design the production process also they providing after selling service to maintain the customer satisfaction, otherwise the company has the idea of developing it is product through a huge number of research and development which is taking a big part of the production process, to ensure that every vehicle have been produced by the high level of technology. Honda company is controlling a huge share of the automobiles market in different countries, but also it has a huge number of strong competitors:

1. Ford for automobiles. Ford is a strong company for automobiles industry in US and in north America because it is providing a huge value of it is products that meets the security and quality that the user’s needs, otherwise the brand value of this company is about $19.771 billion as per the report of Brand Finance which is a sign for the successful of this company.
2. Mercedes Benz. Mercedes is a German international company that is represents the luxury and high quality also high performance of different designs and models of automobiles, the main strength of Mercedes is that it has a strong brand value and is a financially strong company with performing a great innovation of using the diesel engines, also Mercedes automobiles is now in more than 20 countries around the world.

Competitors Strengths and Weaknesses

Ford company strengths: 1) high value products; 2) strong production team; 3) expensive brand value. Ford company weaknesses: 1) not widely known in many countries; 2) don’t have after selling service; 3) limited number of varieties.

Mercedes strengths: 1) strong international company; 2) huge finance; 3) existed in more than 20 countries. Mercedes weaknesses: 1) is not strong involved in R&D; 2) required strongly in Europe only.

Honda Management

Money is made in Honda through the selling of different products from motorcycles, automobiles, power equipment and aircrafts in different countries that creates a huge number of sales with Civic sales were 50,000.In US, and the vice president and the executive president of manufacturing that allow them to control the industry with the help of managers at every sector like the finance department.

External Analysis of Honda: Opportunities and Threats

Pestel analysis of Honda:

Political Factors: these elements can influence Honda’s long-haul productivity. These components are spoken to in the accompanying:

-Incentives and Taxation: Tax rates change from country to another and that impact the product market cost which is going to affect purchasing buying power of Honda’s customers.

-is it safe to work there? There are a few nations in which Honda might want to put resources into and work there however would it be protected to produce its vehicles in there? For instance, it won’t be ok for Honda to put resources into some eastern/South American/European nations, for example, Yemen, Syria, El Salvador, Ukraine. These nations would be viewed as a gigantic market for Honda however because of it isn’t sheltered Honda won’t almost certainly construct and produce there. What’s more, as these nations simply rely upon bringing in the Honda vehicle and gets no opportunity of getting the vehicle made in their territories, this makes Honda a costly vehicle for them because of transportation.

Socio-cultural factors

Demographics & numerous nations: Each nation has its own statistic changes which impacts the vehicle’s business, in addition to that, they are financially steady however the development, for the most part, occurs in the nations in which they are not monetarily steady so that does not so much help Honda/all vehicle organizations to open new markets in these countries like: India.

Age structure/Family structure: Honda as an organization is entirely adaptable organization were, they produce vehicles focusing on specific ages. For instance, Honda produces the CR-Z display and different games releases autos focusing on ages from 18-28. Furthermore, the SUV vehicles focusing on families where they need gigantic autos for transportation

Economic factors: Honda as an organization does about fare to the entire world. As Honda fabricate numerous sorts of vehicles, Cheap and costly ones with the goal that implies they have a market in every nation.

Tariffs: Tariffs can influence the organization’s business in a specific area. For instance, nation like Nepal includes a high duty rate of 11.66% (Source: World Bank, 2016 information) while the salary of every individual isn’t that high, that is done intentionally to urge individuals to purchase the residential items. So, obstructs the street before Honda to contend there as individuals there would lean toward purchasing Suzuki and Tata engine vehicles.

The stability of Honda’ home country currency and fluctuations in exchange rates has an impact on the company producing process in addition to the exports and imports of Honda

Technological forces: Advancement now a days accept an imperative occupation in the field of vehicle’s industry. There are certain inventive parts impacting Honda execution, and they are:

Competitors development upgrades: it’s a fundamental thought facing Honda as they need to fit the front line progresses which are from contenders.

New Technology influence on the cost structure: new progressions have more effect on the cost structure of the association as they need to spend more to get the new examples in vehicles development.

Environmental Factors: Distinctive markets have diverse standards or natural principles which can affect the gainfulness of an association in those business sectors, these variables include:

Weather Conditions: the climate varies from a nation to another so that affects the organization method for creating their vehicles, for instance the center eastern part has its own particular autos as they can bear the cost of the high temperature contrasted and the cool nations need another sort of autos.

Demanding towards sustainable power source and green items is as of now expanding: Honda faces the expanding of the green items in this way, people extraordinarily in Europe and North America are earth neighborly, that is the reason they mean to buy vehicles which does not hurt the earth like more the autos that is utilized by electric vitality more than fuel vitality.

Legal factors: Honda ought to comprehend numerous lawful elements to enter any new market as: wellbeing and safety laws, Patents and the work laws.

Industry and Market characteristics

Value chain analysis:

In bound logistics:

Honda has a worldwide suppliers with an extraordinary stable relationship, since they may embrace in the nick of time fabricating reasoning that control and diminish raw material use and conveying cost.

Operations:

Honda’s utilizing high level of technological methods to guarantee the most outstanding quality outcomes, in other hand it utilizes human sources in assembling lines, as they may suggest new ideas and options that could be used in the future products.

Outbound logistics:

Honda has promised to provide the customer with the highest quality of products with the highest value required from the customers, also introducing the products that are highly friendly with the environment. As well as Honda is tied by providing prospective packaging to the spare parts with the preservation of engines as after selling service. Honda is developing the business operations to retain customer satisfaction and spreading the brand globally to guarantee that the customers had a great experience in using Honda products. Otherwise Honda is reducing the time of delivering products to the minimum to sustain the Just in time inventory system toward the customer which will create a high efficiency in products.

Marketing and sales:

Honda is playing the role of satisfying customer needs and wants through provide the customers with experienced cars to represent the customer experience toward the cars which is so important to consider the result of these experiments to the buyers from customers, police cars that might be bought from Honda, also the retailers dealership to make it available customer to reach, on the other hand for the transportation companies like Uber. Honda is marketing their products through heavy marketing campaigns and advertising, also Honda is enjoying the advantage of the variety of products on their website which will allow customers to choose according to their demands. Also developing the technology in the production process which the new trend nowadays.

Services:

Honda’s primary concern is the after-sale service by giving the administration focuses and make the vehicle parts affordable for the clients to be found and they offer free oil and tire change for one after purchasing it’s vehicle beside the engine services, promotions and offers with discounts, likewise they offer a café in the administration services center to guarantee that they give their clients the best customer service while they’re waiting for their vehicle to complete its service.

How is money made:

Money is made through selling different products in different markets with specific features that co-op with the demands of the customers which are defined by their cultures in order to satisfy their needs and wants with give them the sense of great experience in Honda products through selling motorcycles and automobiles to different types of buyers.

Porter’s 5 forces:

Bargaining power of Customers:

Today the internet has a lot of information about any kind of vehicles which allowed any person who looks to buy a new or even a used car find all the specific features and defects in any products so the customer now is very well-educated about any kind of product in the market in addition to that these customers has many choices now a days in the market which will make them able to transfer to any other competitors in the markets. So the buyer power is high as they are well educated about Honda vehicles and has many other alternatives as Toyota, Hyundai and Chevrolet.

Threat of new entrants:

Honda is a very strong vehicle brand which has a high valuable reputation in the market, beside that the brand name is well-known as many people across the world know what is Honda and its position in the global market, So the other new entrants not easy for them to reach Honda’s class level of vehicles even in the long-term, Honda is a global company works in many different countries around the world, and they meet many countries government policies which are way difficult for any new company to meet all of these policies in all of these countries, therefore the threat of new entrants is very low as its difficult for any new company to compete with Honda.

Supplier bargaining power:

Honda is a huge company in the field of vehicles manufacturing. Honda is like all other big companies, they tend to deal with the international popular suppliers like all other companies do. But sometimes it comes to a point were the international suppliers are not able enough to satisfy the just in time need due to many requests from other several companies too. The JIT product delivery is very essential for a company like Honda. That’s why Honda might need to deal with local suppliers too in order to get what they are missing of supplies. The local suppliers might exploit the chance of dealing with Honda and take in consideration that they are in need of these supplies urgently and increase the price of the supplies. On the other hand, there are also many other local suppliers in front of Honda to start dealing with if one is too expensive. So that the supplier bargaining power would be assessed as, Moderate.

Threat of substitutes:

Nowadays, there is a significant boost in gas prices as it is an exclusive source which is going to come to an end. Even though, the people using cars are taking also in consideration the money they pay for parking too, and the money they pay for the vehicle’s annually / monthly services. That’s why people nowadays go for public transportations as it is considered much cheaper. So that, the power of substitutes would be assessed as: High

Rivalry among the Existing Competitors:

There are several competitors in the global market such as General Motors, Toyota, Volkswagen, Mitsubishi, Nissan, and Ford are targeting the same customer segments and have their global market characteristics. These mentioned companies provide the same kind of technology and applies it to their vehicles. Whoever of these companies will be able to apply the latest technologies with the least price would be able to take the market’s lead. So that the rivalry among existing competitors would be assessed as high.

Consumer/buyer markets characteristics:

It is very important to analyze the market characteristics to identify the attractiveness of Honda let’s start with a chart shows the revenues and sales of Honda in many different regions to understand the Geographic markets and which region has the highest sales and lowest sales through the last years

Global Market Size: (Geographically)

[image: https://lh3.googleusercontent.com/ZvqfYjxMxE1AaxSj6j0cWIut4mQVoETxa_5_XzsroT1hUk-9JOquljClNXRowYfVIsPVlabyEFAxG1FfIFJkUvtS0Kl0-guENebf6BJHTIbz2pLD8MQ7KinwkFtXbqx–A]

Referring to the chart above shows that the company most sales focuses on North America nation compared to other nations as there is a smoothly increase in the sales through the past years and the sales in Asia countries enjoys a very high stable level of sales such as China , and the sales in japan which is the host country of Honda decrease as it means that interest in the Japanese market is gradually decreasing.

North America has 56% of the total revenues and according to the researches by (Source: Company’s filings) the market in North America is focusing primarily on specific models as Honda HR-V and Civic which indicates that this market looks for the high-middle class of cars as high features which middle price and SUV trucks to be suitable with the weather and long drives but Honda doesn’t have the highest market share in North America because they are facing a very strong GM ( General Motors ) which has the highest market share in North America , in contrast with the host country has 12% of the total revenues of the company which is way lower than it was in 2012 by 19% (Source: Company’s filings) but Honda is not alone who is suffering a sales decline in their host country, Nissan and Toyota has reported the same decline in their sales[footnoteRef:1] [1: PARKER, J. (2016, June 20). Honda Motor Company: Understanding Key Business Segments. Retrieved from https://articles.marketrealist.com/2016/06/honda-motor-company-understanding-key-business-segments/]

Market demographic characteristics:

There are main elements any company should use in order to analyze their demographic characteristics such as age, income and gender so through this analysis, it will show which gender or age prefers to buy which kind of cars and then Honda will be able to recognize which cars they should produce in order to target a specific kind of people. so starting by the age and gender group indicators globally:

Ages

SUV

Sedan

Truck

Electric

Hybrid

24 or younger

less than 1%

1%

less than 1%

less than 1%

less than 1%

25 to 54

43%

51%

50%

46%

54%

54 to 64

26%

21%

23%

22%

22%

64 and up

31%

27%

26%

32%

23%

Gender

SUV

Sedan

Truck

Electric

Hybrid

Male

57%

56%

86%

75%

75%

Female

43%

44%

14%

25%

25%

Source: Hedges Company (January 2019)

So as the table above shows that there is a significant low of the group age between 24 or younger buyers as refers to the students between the high school and university education so Honda doesn’t care too much about this market segment as not all of the people in that age have their own driving license or even if they have, there are many choices for them other than Honda to buy. Secondly, the table shows that the vehicle industry has too much demand for the people who their ages between 25 to 54 on many types of vehicles but there are simple ratios between the types of vehicles, from the age of 54 to up they have closely different proportions in type of cars percentages. Secondly, the gender group indicators show that female buyers are lower than male gender and there is a very low percentage of female compared with male in buying trucks, electric and hybrid cars which indicate that females prefer the SUV and sedan cars more than any other car types. The income average of the people different from country to another and its necessary for any company to enter any market and provide a new product to study the people income to be able to provide a car that could be suitable and affordable for the consumer market needs.

Behavioral and psychographic characteristics: there are many ways that Honda use to attract their consumers to buy their vehicles and in order to reach the attractiveness of the market, nowadays most of people they care about the new technologies and features with a low price, some of the people looking for luxurious cars which will suit their attitudes and their class level, other people looking for motor performance as they want a modified car to be as super cars so in terms of all of these attitudes and behaviors through many people in the market so Honda should study the consumer market in terms of the above characteristics which are Geographic, Demographic, Behavioristic and psychographic.

Internal Analysis

(Strength and weaknesses)

Organizational performance to-date for Honda Company

Organizational performance

Honda operates in the worldwide market with 134 manufacturing amenities in 28 international locations and at 31 R&D facilities in 15 countries, about 167000 Honda personnel and associates serve 23 million customers worldwide annually. Honda’s international operations are divided into 6 administrative regions responsible for operating.[footnoteRef:2] Hiring and engaging the human beings and philanthropic initiatives locally in the communities that Honda operates. Honda is pushing the independence of their neighborhood administration and income operations, at the equal time with integrating and forward-looking plan for each region. They operate beneath the conduct suggestions that assist member companies and mates in evaluating and managing risks, complying with legal guidelines and regulations, preserving a high degree of transparency in operational level, that’s all to maximize the global client satisfaction. [2: Essays, UK. (November 2018). Analysis of Honda’s Business Strategy. Retrieved from https://www.ukessays.com/essays/business/honda-is-the-worlds-biggest-and-leading-manufacturer-of-motorcycles-business-essay.php?vref=1]

Organizational health

Honda is working on the strong intensive motivation toward the work through rewarding system and badges for employees of the month, also doing an annual convocation in order to reduce the number of employees turn over and build a strong organizational structure, on the other hand the managers maintain the utilization of work and attach them to the resources to develop the rhythm of the job. Employees are submitted to hard trainings to achieve the core values of the operations which are the most important aspects to reach the organizational goals. As for the management system Honda have a strong schema for the management to hire all the employees in the right place that fit with their abilities and assigned them to tasks according to their capability and power for doing the work whether it is individual tasks or in group tasks. As a result, the main goal for Honda organization is to gather all the employees to do the job in a followed tune.

Honda current strategy

Goals:

• Market Domination: Honda’s current goal is to dominate the affordable vehicle’s market and apply the latest innovations to their vehicles.
• Provide a unique after sale service: Through the customer service agents, Supply the market with the vehicle’s spare parts needed for repairs and add vehicle repair shops specialized in repairing the Honda vehicles.

Value proposition:

• Affordable prices: Honda’s value proposition is to provide its customers with the best products with the cheapest prices.
• After sale services: It is represented in the services in which Honda does provide for its customers after they purchase their vehicles, like free oil change and tires replacement for One year after the duration of purchase.
• Ecological products: Provide ecofriendly vehicles, Like the hybrid electric vehicles. which meets the demands of its customers in North America and Europe.
• Latest technology: Honda tends to innovate and create the latest technologies and apply it to their vehicles.

Core activities:

• Services:
  • Honda offers after sale services for their customers by giving promotions and free services (Ex: free oil change, engine service, tire change, brakes and maintenance) to reach the best level of customer satisfaction.
• Resources and capabilities:
  • Honda produce motorcycles and automobiles as it’s not a single market focus and that’s due to its expertise in development and manufacture of engines.
  • Honda’s current resources mainly concerns in (Human resources, tangible resources and intangible resources)
  • Honda’s current capabilities concerned in (Corporate functions, information management, research and development, operations, design, marketing, sales and distribution and service).
• -Values:
  • Honda respects the three joys of (Selling, creating and buying), also Honda set The Individual concept of fairness and equality in every Honda operation around the world. A diversity of ideas and talent is the purpose of what makes Honda great.

Product market focus:

• Customers: Honda’s main customers are the people who are willing to buy cars with relatively low prices
• Products: Honda tends to manufacture several types of vehicles like the sports cars, Family cars and Hybrid electric vehicles which means that they have a wide variety of products.
• Markets: Honda mainly tends to localize not globalize, they aim to take the lead of the North American market. By manufacturing the vehicles which meets demand of the local people in North America.
• Channels: Honda tends to reach its customers through online ordering, and retailer where they are the ones responsible for the distribution.

Diamond-E framework

Resources

Human resources

1. Honda is hiring sufficient and skilled employees like accountants and marketers for business activities and high level of engineers for manufacturing activities. Honda also providing training, experience, adaptability, and loyalty for employees.

Tangible resources

1. Financial resources: starting with a big capital for business and manufacturing process, after that the generation of internal funds.
2. Physical resources: Honda is a source of materials and assets for itself and a supplier at the same time, for example: providing tar materials, iron and non-iron metals, steel plates, liquid aluminum, consumable supplies, and hardware equipment parts for its final products. Honda use recycling of useful old equipment and material resources like aluminum, iron and resin that can be used from scraped cars.

Intangible resources:

1. providing intangible technologies like patents, copyrights, and research and development facilities.
2. Providing a good reputation like customer loyalty and reputation

[image: Supplying raw materials, Manufacturing, Sales, Recycling][footnoteRef:3] [3: Honda. (2019). Our Business. Retrieved March 20, 2019, from http://americas.hondatrading.com/en/business/index.html?fbclid=IwAR3vhcsW6Kn-kXQI59A_Ry7HmsAFGrngAODyWzpLjPqXUsOOxbkAECn3PKM]

Capabilities

Corporate functions

1. International management for instance: in North America like U. S and Canada, in Europe, and Middle East…. Etc.
2. Strategic innovation: there are strategies for doing developments and technologies.
3. Management development: developing the management options with the changing that happens in markets.
4. Financial control.

Information management: Using good IT employees to collect economic, technological and financial information from markets.

Research and development of Fast cycle new products and research every year.

Operations

1. Operating efficiency: the company focus on how to measure management ability to generate sales (revenue) and costs (expenses).
2. Continuous improvement of products every year.
3. Flexibility and speed of response with the changes that happens inside and outside Honda.

Design

1. New styles every year.
2. New tangible and intangible technology every year.
3. New safety functions of products for example cars and other labor machines.

Marketing

1. Honda brand management.
2. Building a reputation for Honda quality.

Sales and distribution

1. Effective sales promotions and execution.
2. Speed of distribution.
3. Efficient, fast order processing.

Service: Providing customer services like resolve any issues or concerns for customers, present a solution for the customer, understand all the customer needs.

Competitive advantage

• Honda localize don’t globalize: Honda not a very top, or a very down company, it provides customers with products and designs based on local conditions and consumer behavior to achieve the goals of providing all types of products to all types of customers.
• Robots: Honda is using robots for employment in dangerous areas because it is a way to maintain productivity and reduce costs.
• Engineers: Honda employee’s priority is for engineers, even the company CEOs are professional engineers. That because they have large knowledge about manufacturing and designing, and the technical products that the company sell and managing the supply chain. They more know about research and development imagination activities.
• Factory flexibility: Honda can produce multiple autos on a single production line, one after another in a short time. By contrast, it can take months for Honda’s competitors revise a factory for a new vehicle.
• Fuel efficiency: Honda is a leader in helping the customers to save their money against the high price of gas energy. [footnoteRef:4] [4: Rothfeder, J. (2014, July 29). 5 Brilliant Strategies That Make Honda One Of The World’s Most Innovative Companies. Retrieved March 20, 2019, from https://www.businessinsider.com/strategies-that-make-honda-innovative-2014-7?fbclid=IwAR0P9I4AYNnafd-vtgyGaJ6PpEbSFFtwQAf8D4unuY3LGR4Td8G-mxmqGUU]

SWOT Analysis

Strengths

Weaknesses

• Localize don’t globalize
• Fuel efficiency
• Robots Employment
• Hiring efficient professional engineers
• Factory flexibility in changing lines of production
• Strong brand awareness
• After sales services
• Pricing options
• Dependence on North America to generate most of the revenue as we mentioned in the analysis 56% of the total revenue
• Hondas’ R&D is assessed to be relatively low compared to its competitors

Opportunities

Threats

• Honda has a great opportunity to expand and compete in the rest of the world as they compete in North America.
• Honda has to give attention to the B2G business. And start supplying governments with civil protection cars like, [ Police cars, Ambulance cars and firefighting cars]
• The demand on the automobiles is highly increasing.
• Competition among existing competitors.
• Threat of substitutes, like public transports.
• As fuel prices are relatively high, this caused a threat and decreased the demand of customer’s to buy new vehicles.
• Rising Japanese yen exchange rate
• Natural disasters.

Analysis of Marketing Strategy Plan for Honda for Upcoming Motorcycle Model

1.0 Introduction

[bookmark: _Toc36383668][bookmark: _Toc16449]The purpose of this report is to build a marketing strategy plan for Honda, for their upcoming motorcycle model CBR1000RR-R Fire blade. So, it can enter those target segments in which Honda can create Superior customer value and gain a competitive advantage over rivals.

1.1 Company Background

Honda Motors ltd , is a Japanese base company, established by Soichiro Honda in 1946, first started by producing combustion engines (Miller, 2008) then began manufacturing motorcycles with complete engine design in 1949, with the name of dreams by 1964 it becomes the biggest selling luxury motorcycle in the globe (Grant, 2003). The rapid growth of the company gives a benefit to competing with the other companies. There are some crucial values that hold the company through mission, vision, and also the Honda concept. In 1982 Honda founded its first US. Subsidiary by the name of American Honda company who also manufacture motorcycle. Honda has 368 subsidiaries by the end of 2018. By 2019 its production of motorcycles reaches up to 400 million. The overall motorcycle industry is estimated to increase by 9% per year from 2015 to 2020 for which a study has discovered that 75% of existing bike rider lovers would opt for luxury motorcycles that are more sophisticated (Global Motorcycle Infotainment System, 2016).

1.2 product offering

The Honda company mainly manufactures motorcycles and cars, but also further expands their products offering worldwide such as scooters, power equipment, engines, ATVs, and Gardening equipment. Honda has been engaged in artificial intelligence, such as robot study, and launched their ASIM robot in 2000. As there are other companies such as Toyota, Mercedes Benz, and Nissan, offering similar products in the identified target market. So, Honda motors develop the diversification products of Honda financial facilities. Now by 2020 Honda once again differentiated itself by launching the new sporty motorcycle model ‘’Honda Fireblade’’ CBR1000RR-R and creating a new history of the born-to race. Honda invests 5% of its profit in R&D (Honda,n.d.).

2.0 Segmentation, Targeting, and positioning (STP)

The STP model is used to describe the target market suggested for Honda. So, in this case, Honda must carefully design their customer-driven marketing strategies that can help to develop a competitive advantage over competitors (Kotler, 2016).

2.1 Segmentation

Market segmentation is the process of identifying, evaluating, and choosing identical groups of individuals, regardless of whether they are buyers or not, with the intention of creating and implementing competitive strategies towards them ( Sarabia, 1996) customer attributes within each segment are distinct from those shared by other segments ( Recklies, 2018). As there is no one way of segmenting a market so marketers need to use various segmentation factors such as geography, demographics, psychographics, and behavior (FURSE, D.H. & GREENBERG, B.A., 1975)

Honda is offering one product type, to the market that its targets. For that cause, Honda uses more advanced methods that help in segmenting. First is grouping techniques are intended at clustering groups of buyers that are identical to their segmenting range into the same segments. Honda motors implement this method in every part of the world to measure demographic attributes which is one of the most repeatably used types of market segmentation (Beane, & Ennis, 1987).

For the “CBR1000RR-R Fireblade” model Honda can emphasize on factors such as income, wealth, and age. Firstly, income and wealth are factors that should be intimately observed because they will give the perception of the buying power of buyers.

The “CBR1000RR-R Fireblade” some consumers might find it expensive and those who have low discretionary salaries cannot buy it. Hence, it would be recommended for Honda to target medium to high-income buyers. Secondly, as product usage requires a certain age limit it’s the main key in promoting the products more so for this model.

For example, the sporty outlook of the CBR1000RR-R “Fireblade” motorcycle more probably appeals to the younger consumer the millennial in the age group of 20-30. Another method of dividing the target market is geographical, this is one of the most fundamental types of segmentation. It segments the target market based on region, population, or climate. A factor of geographic segmentation involves the region of the buyers.

This could play a crucial role in the victory of Honda“CBR1000RR-R Fireblade” as the survey has shown the ownership of motorcycles is more general in Asia and Europe, while it is uncommon in the Middle East and Africa (Poushter, 2018) The segmentation can also happen according to weather that various countries have. For example, in a few countries, there is excess rainfall, which makes the roads, slide and makes the traveling risk for motorcycles. Hence the possibility that the individual goes for motorcycles over the car is low. Even though Honda has created numerous safety characteristic that exists because of its electric system that assures safety, however of the climate affects the state of the roads.

2.2 Identification of target market & reasoning

Target marketing is the process of accessing all market segments and selecting the segment that is most profitable and appealing to the company to enter with their specific products or service (Law, 2016). Based on the above analyses, the most appealing target market would be the demographic segment. Demographic segmentation is one of the simplest methods to arrange people into groups and also it can be measured more exactly compared to other segmentation variables (Schiffman, & Wisenblit, 2014).

The First reason behind choosing the demographics is that is not difficult to identify the target market segment as it can be known in terms of buyers’ age, income, gender, social class and religion (Schiffman, & Wisenblit, 2014). Honda aims to target eco-friendly middle-high income gainers who are youth.

The Second, justification for choosing the demographic segment is because it is a considerable segment. The demographic segment is significant in size to uphold the resources to be an effective target. For instance, in Malaysia, there are a total of 14.8 million enrolled vehicles in the year 2005 lots of them are motorcycles (Hays, 2015).

The third reason for selecting a demographic segment is that it is persistent and growing. For instance, the motorcycle industry is anticipated to increase by 9% per year from 2015 to 2020 (Global Motorcycle Infotainment System, 2016). However, in China, research supported by National geographic in 2009, demonstrated that consumer interest is growing to be environmentally friendly in comparison to the past years ( Kan, 2010). Based on the information that the demographic segment is consistent and growing, this will assist the marketers of Honda to prevent any uncertain market trends and have cause to anticipate the demand for motorcycles.

The last justification for choosing the demographic segment is because it is appropriate to the company objectives and resources. For instance, Honda is targeting medium to high-income buyers as the company is manufacturing lavish motorcycle models which are high-priced. A company should select a market segment that matches the Firms long-term objective (Plengdut, 2017).

In a nutshell, Honda has a market segment that is acknowledged, considerable, consistent, increasing, reachable, and appropriate to its resources and goals.

2.3 Positioning

Positioning is the process of arranging the company offering to take a clear and different place in the target market,s mind ( Kotler, 2000).

Honda positioning map

High price

Honda

High-quality low quality

Low price

Fig 1 Diagram of Honda positioning (Hamza, Rana,2019)

Honda kept the global viewpoint in positioning itself. As the company believes in supplying quality offerings, so Honda can charge a reasonable price for its Worldwide customer satisfaction. (Global Honda,2010).

In a nutshell, there are many benefits of STP, Firstly of all, it helps the companies to obtain an excellent understanding of the customers’ needs and wants as well as a competitor, and tailored their marketing programs according to it (Camerilli, 2016).On the other side, it has drawback also if there is extra segments it will not lead to excellent financial performance and homogeneity also be exceeded(Hunt,&Arnett, 2004).

3.0 Marketing Mix

3.1 Product

Motorcycles are often seen, as exposing riders to a greater amount of danger and a higher possibility of injuries or even died in relation to driving a car (Huber, 2017). Even an elevated death number is not sufficient to dissuade people from purchasing a motorcycle. While keeping in mind these numbers, Honda Motors has taken measures in ensuring less danger of accidents and death when customers ride motorcycles. Every “CBR1000RR-R Fireblade motorcycle model comes equipped with safety features such as an Anti-lock braking system (ABS), and mechanical stability control (MSC) system. A secure motorcycle does not mean that it functions slow, as Honda always put a performance on the top. Even when manufacturing and designing “CBR1000RR-R Fireblade” motorcycles. Honda is offering this model in two electronic variants as “CBR1000RR-R Fireblade and another is” CBR1000RR-R Fireblade SP. Both will be accessible in two color designs HRC- motivated Grand Prix red and Matte pearl black. It is developed with the most powerful embedded four-cylinder engine that Honda has ever developed. Honda uses the same bore and stroke as it for “RC213V-S. This “CBR1000RR-R Fireblade” provides the full power of 160KW at 14500rpm, a high torque of 113Nm at 12500pm(Honda,2019).

3.2 price

The “CBR1000RR-R Fireblade”will cost between Rm 91,999, and Rm 114,999 in Malaysia for instance, but it’s different from country to country. The company uses the premier positioning against its rivals. At this price level, Honda thinks that its products are worthy to charge higher than its competitors as it uses the best features the industry has to cater at a reasonable price for this category of motorcycle and can simply match and outperform its rivals. The Company also firmly believes that because of its unique attributes it will be the best seller in the industry (Honda Global, 2019).

3.4 place

Honda Motors intends to have its own service centers, in every capital of each country across the world, in order to reach its customers. Where they market their products and customers can come and familiarize themselves in the environment of Honda Motors, by testing the bikes rides before buying. The staff has been highly trained to provide a high standard of work that generates quality products. Honda motors have distributed plants internationally that best helps to work with the retailer’s indirect distribution channels to sell their products that’s how Honda decreases cost and saving can be passed on to its customers ( Honda,n.d.).

3.5 Promotion

Honda Motors advertise “CBR1000RR-R Fireblade” as broadly as possible, Honda can hold events locally to advertise the “CBR1000RR-R Fireblade”in either their service centers or main shopping malls. Honda can also advertise this new model by having displays in few hit movies as hero vehicles of the said movie. Honda should advertise this bike model in sports events by supporting some sporting teams. Honda should promote this in lifestyle magazines as well as newspapers with the intention to sell this product to customers in their 20s,30s and 40s who have the desire for motorbikes along with sufficient income. Honda motors use a utilitarian method for advertisement, which is obtained by giving customers the chance to for a test ride their products and then make their mind on purchasing based on the happiness the products brings to them (Darmadi,2014).

4.0 branding

Honda adopts a brand positioning strategy over the years to establish strong brand equity. Honda has successfully positioned their brand in the mind of the target customers at three levels as at lowest level, Honda place the brand on product qualities by providing most powerful engines and unique safety features in both motorbikes and cars. But attributes alone are not enough for customers they want more in terms of product benefits. So, Honda goes beyond the characteristics and come up with an eco-friendly and low-emission system in its products. As Honda is one of the strong brands so it will not stop until the benefit positioning. Honda also position itself at an emotional level by connecting customers on powerful belief and values the brand holds such as using the concept of “power of dreams “those dreams go on as Honda brings them to life and move the community forward (Honda official portal,2012).

5.0 Marketing Audit

Today, companies such as Honda in this case realize the significance of marketing audits, which allow them to evaluate the external and internal environment and also enable them to plan appropriate marketing strategies to consider these environments (Chirilă & Funar 2010).

5.1 External environment analysis

5.2 Swot

By looking at Swot analysis of Honda we are analyzing the internal factors such as strengths and weaknesses as well as external factors like a threat and opportunities it faces in the market environment.

Strength

Honda is one of the leading producers of motorcycles and automobiles in the globe, furthermore, the company has earned recognition for being consistent in building competencies in design and production over its rival product offering, which help Honda to be steady in its sales over the past year (Honda annual report,2010).

Weakness

Although a broad geographical presence, Honda is heavily relying on a single area which may hamper the company’s sale in a situation of economic downfall. Secondly, it’s harder for Honda to keep their cost low on non-luxury products compared to other manufacturers models (Honda, 2012).

Opportunities

As Honda recorded a huge sale all over the world so it intends to grow its production volume as it expects increasing demands for its products in the developing markets of South America and Latin America. In the coming future Honda is planning to set up plants in Canada and US and also further committed to developing a sophisticated production system by lowering its environmental footprint (Honda annual report, 2010).

Threat

There are many factors that have a negative effect on Honda’s operations such as when there is an economic downfall the fuel price automatically increases which may cause loss of customers for Honda. Secondly, Honda is facing threats from the breach of environmental regulations (Honda annual report, 2019).

5.3 Competitors Analysis

Honda faces strong competition in the automobile and motorcycle industry, from the top domestic player like Toyota, Nissan Motors, and Suzuki. The other rivals include Hyundai motors US-based Ford as we Europe BMW, Fiat, and Volkswagen. Although Toyota is the main rival of Honda that holds the world automotive industry market share of 10.24% against Honda who is only able to capture 5.46% (Statistics, 2019) Another basic rival is Nissan motors a Japan-based holds market share of 5.15%.

6.0 Conclusion

Overall Honda Motors should provide more innovative products to decrease human problems in their life. Life without Honda, has no meaning, stay with Honda dreamers comes real.

References

1. www.honda.com/history
2. Global. Honda/products/Honda Jet/history.html
3. Dibb, Sally; Stern, Philip; Wensley, Robin.Marketing Intelligence & Planning; Bradford Vol. 20, Iss. 2, (2002): 113-119.
4. THOENI, A.T., MARSHALL, G.W. and CAMPBELL, S.M., 2016. A resource-advantage theory typology of strategic segmentation. European Journal of Marketing, 50(12), pp. 2192-2215.
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6. GÂDĂU, L., 2017. Marketing Audit and Its Importance in Achievement of Marketing Objectives of a Company. Journal of Advanced Research in Management, 8(1), pp. 38-43.
7. Honda Motor Company: 2010 company profile edition 2: Chapter 6 SWOT analysis. 2010. Bromsgrove: Aroq Limited.
8. Honda Motors: 2006 company profile edition 2: SWOT Analysis. 2006. Bromsgrove: Aroq Limited.
9. Honda Official Portal (2012). Honda The Power of Dreams.
10. Honda Motors: 2006 company profile edition 3: Competitor Analysis. 2006. Bromsgrove: Aroq Limited.
11. RUMELT, R.P., 1996. The many faces of Honda. California management review, 38(4), pp. 103-111.
12. Honda Motor Co Ltd (7267) – Financial and Strategic SWOT Analysis Review. 2019. London: GlobalData plc.
13. Slideshare.net. (2020). Honda project report. [online]
14. Bhasin, H. (2017). Marketing Strategy of Honda Motors – Honda Motors Marketing Analysis. [online] Marketing91. Available.
15. www.marketing91.com/marketing-strategy-of-honda-motors.
16. Darmadi(2014).HondaMarketing.[online]Slideshare.net. www.slideshare.net/limeka/honda-group-assignment.
17. Hamza, Rana. (2019). HONDA STRATEGIC ANALYSIS.
18. Plengdut (2017). ‘What is Criteria for Effective Targeting of Segments’.
19. Cahn, L. (2015). Riding Motorcycles Is More Dangerous Than You Think | Reader’s Digest.
20. Schiffman, L, G, & WIsenblit, J, L. (2014) “Consumer Behavior (11th edition)”. Pearson Global Edition.

Analytical Essay on Issues of Purchasing in the Corporate Structure at Honda

References Case Article

Honda Motor Company Ltd. is a Japanese multinational corporation that was established in 1948 by Soichiro Honda, who oversaw the expansion of manufacturing motorized bicycles, motorcycles and multinational automobiles. Honda was the first Japanese automaker to create and build engines and transmissions in the U.S. as well as the first to export U.S.-built cars to overseas markets in 1987. Even though Honda operates in 150 countries, the Honda headquarters is in Minato, Tokyo, Japan. Honda currently employs 215,638 people globally, 27,000 of those are in employed in the U.S. Honda currently operates 12 State-of-the-art U.S. Manufacturing plants and 14 Research and Development facilities across the US under the President of Honda R&D Americas, Inc: Frank Paluch. Honda also operates 27 global R&D centers throughout the world including the countries of, Japan, China, Asia, Europe & South America. When it comes to customer satisfaction, Honda has ruled the Fobes List many years over, currently ranking #28: World’s most valuable brands, #36: Top regarded company 2019, #31 in Sales, #100 in Profit. Honda is a family household name when it comes to reliable vehicles worldwide, they had about 5.3 million automobile sales in the 2019 fiscal year. Our case article highlights the beginning of Honda and Japans investments in the U.S. automobile industries from interviews of Mr. Obisan, who worked for Honda (starting in1962) and published the book “Two Decades” focusing on the process of Keiretsu, suppliers and Hondas comprehensive approach to the Honda slogan “The Power of Dreams”.

What is Honda’s problem, and how do they want to mediate it? Honda’s problem began with wanting to expand its brand around the world. However, in doing so it would require domestic suppliers in the regions they set up shop. Honda’s policy and commitment to long term relationships criticized as being ‘too loyal,’ and Honda will go to ‘ridiculous lengths’ to maintain a supplier relationship before severing ties. Honda considered the following: quality, cost, and delivery criteria are the most important criteria to maintain supplier. They are always looking for better suppliers who can produce parts locally — looking to supply change management for a single sourcing supplier or dual sourcing supplier to avoid delay of supplies. Also, ask questions like, ‘Do suppliers meet at least 1-2 times per year, where they present quality and cost reduction awards to suppliers?’. All the while, making a global supplier very efficient in research & development, equally competitive across multiple global locations, equally proficient in cost and quality.

Honda does build long-term relationship with its suppliers, but not use the form of institutional mechanism, for example family relationships and supplier association. In the purchasing activities, Honda intervenes directly in the activities carried out by its component makers. For a number of components Honda arranges the purchase of the raw materials two or three tiers back along the supply chain, which enable the suppliers gain advantage of price and quality, on the other hand, Honda often dispatched experts to support the suppliers and solve the problems relating with components delivery and quality. This kind of partnership assures continues supply of materials at a reasonable cost and involves the supplier to materials innovation and improvement which will facilitate the organization to produce products with variety. A striking point is the reconciliation with multiple and single resourcing strategy. For example, Honda purchases two different types of seats for one automobile model from supplier A and supplier B separately. This method enables Honda to gain the advantages of single supplier, (for example, deliveries can be scheduled easily, long-time partnership can be established), and multiple supplier, a flexibility of volume, the risk of a disrupted supply, better service and price. By using a Single-Sourcing method Honda is able to ensure that the contract lasts the life of the vehicle but there may not be enough capacity. Honda can also use a Dual-Sourcing method when a delivery problem arises and although it is not the preferred method it is necessary to have to ensure that any delays are avoided. To ensure that problems are kept to a minimum with suppliers, it is recommended to have a meeting with them 1 to 2 times a year at minimum. By holding these meetings, the party’s involved will be able to communicate with each other and strengthen their business relationship.

How does Mr. Honda’s history with suppliers relate to Honda’s current supply management strategy?

The current supply management strategy reflects Honda’s long-term goal of manufacturing products where they sold, and its corollary goal of buying parts where it manufactured vehicles (MacDuffie).

1. Increased local content is mainly due to purchases Honda makes from many of the over Japanese automobile supplier firms that established during the second part of the 1980s.
2. Focusing on four regional markets – has allowed Honda to develop strong sales, research and development, and manufacturing operations in each region – to ensure that the product mix in each region is appropriate to the needs of the region. Using the United States market as an example, “Honda’s commitment to global trade and the positive benefits that result for U.S. jobs, suppliers, consumers and exports.”
3. Developed a comprehensive approach to teaching the principles of lean production suppliers.
4. Uses the Japanese Concept Of Keiretsu The Article states, “Mr. Obi provided the viewers with a book that was recently published by the Japanese Automobile Manufacturers Association (JAMA) called “ Two Decades…”” Which involves a close-knit network of commitment to localize production, vendors that continuously learn, improve, and prosper along with their parent companies. If cost negotiations stagnate, Honda, send in its engineers to help the supplier find a way to meet the cost target while maintaining acceptable profit margins.
5. Suppliers are involved in the development process to the extent that asked and invited to submit suggestions about how specific designs could be made better, faster, with less weight, or less expensively. Today, purchasing by the Honda research and development department. Negotiation and purchasing are key elements in ensuring the lowest price and quality. However, communication with supplier can make cost lower along with shorter production time.

1. Why is purchasing so important at Honda?

The International Purchasing Division of Honda Corporation has full responsibility for coordination between Honda and its overseas plants. Honda’s purchasing department carries out the localization strategy.

This Strategy Involves

• Finding and qualifying local suppliers
• Developing a second source when volume doubles, or when quality or on-time delivery problems occur
• In situations in which the goals or the philosophies of the Honda and the supplier are mismatched, Honda will respect its contract to do business with the supplier.

1. Providing feedback to suppliers regularly to help them to understand, control, and to improve their performance in terms of component deliveries to Honda.
2. Financial condition and cost structure involve relationships that link banks, manufacturers, suppliers, and distributors with the Japanese government.
3. Purchasing Operations procure the parts used, conduct quality and cost management, and are also involved in promoting the development of new technologies.
4. Along with Q (quality), C (cost), D (delivery), and D (development), Purchasing has added M (management) and E (the environment) to supplier evaluations and are advancing the procurement of parts that consider the environment.6) Purchasing results in lower cost, higher quality, and more reliable sources of supply.

3. How does purchasing rank in the corporate structure at Honda?

Purchasing ranks highly in the corporate structure at Honda. It is in charge of local purchasing which decides the local suppliers as well as the global sources. It also has the option of adding a second source of supply. The adding of a second source is done in case of delivery problems occur. For example, orders are based on forecasting. A dual source may involve a local Japanese supplier and an overseas supplier manufacturing the same part. This is done to avoid supply shortage problems as well as the delivery problems. Having strong relationships with local and global suppliers is key to bringing a product together. Honda is very critical when choosing the right suppliers and also having great communication between them. Honda and its suppliers meet twice and year. These discussion’s majorly focusses on opportunities for commodity and standardization, co-ordination with marketing’s export strategy, new product planning, cost management, and technology transfer issues within the supply base. Having this in place ensures that every entity in the supply chain is in the know which creates strong partnerships amongst the organizations involved.

4. How is Honda organized globally? How does this help/hinder the purchasing function at Honda?

Honda Organized Globally

1. Leading automotive exporter
2. Localization of production
3. Sensitive to international requirements
4. Taking advantages / creating opportunities with Government intervention
5. Partnership with competitors (sharing of product & process engineering)
6. Maintaining relationships with suppliers
7. Virtually live in suppliers’ facilities

Help/hinder the purchasing function at Honda

1. Create buying & selling power
2. Neutralizing the effect of currency rate
3. Legalized contract & strategy through Market Oriented Strategies agreement (MOSS)
4. Get to share same suppliers from the competitors
5. Assurance of quality & services

5. What are the key elements of Honda’s supplier evaluation policy? How does it differ from others (e.g. the Big Three)?

1. Honda handles responsiveness & involvement of suppliers at early stage of product development. Whereas other companies maintain partnerships to control the entire supply chain.
2. The supplier evaluation is handled by Honda R&D while other companies evaluate if they should continue to assemble their own products or if they can outsource production entirely.
3. Honda recognizes supplier’s existing customers and the product supplied. Many other companies reduced their number of suppliers and/or chose specific suppliers to stay in long-term contracts with.
4. In order to commit to top excellence, Honda visits their top & low tier suppliers/vendors while other companies encourage their top-tier vendors to manage their lower tiers.
5. Efficient in R&D
6. Equally competitive at any-and-all global locations
7. Honda is always equally proficient in cost & quality the produce at all the plants, whereas other companies drive for the immediate benefits of low wage costs, therefore outweighing the long-term benefits of investing in quality and relationships.

6. What is Honda’s policy on new product development and supplier involvement? How does it differ from other automotive companies?

In 1986, MOSS- Market Oriented Strategies agreement was initiated and created for the Japanese and American governments, which required companies to report and of their import and localization volumes within that year 1986.

In 1995 PAC (the re-assigned Pacific Automotive Cooperative) This new policy and joint venture which included Japanese Automakers and 32 shareholders to meet political objections and production for North America, thus attempting to collaborate in industrial cooperation to help Canadian Suppliers become involved and competitive.

How does it differ from other automotive companies?

1. Hondas quality designs follow what consumers want, all while Honda keeps and maintains their own new quality designs.
2. Honda saves consumption energy but improves in high quality performance, unlike other competitors. Low consumption energy is a very valuable advantage over other competitors.
3. Honda created a unique feature that required “new tooling, etc.” for the Honda Civic in Europe, with European components they were able to create and constitute a “European-made car”. Seeing that the components were made from European components, European countries accepted this car more readily. Unlike one of Hondas competitors, Nissan who was in the UK and had lower domestic content.
4. Honda created a body assembly plant which composed of welding robot technology at a Rover plant in Europe. This was the first ever plat in Europe that was essentially a replication of the Japanese line.

7. Does Honda support local sourcing from domestic suppliers? What are the advantages / disadvantages of this approach?

Yes, Honda does support local sourcing from domestic suppliers.

The advantages are as follows:

1. Kaizen is easy to implement in domestic suppliers due to the locality and the fact that it will eliminate many unnecessary costs.
2. Domestic suppliers better understand customer culture and market trends
3. “Think global, act local”

The disadvantages are as follows

1. Not all domestic suppliers may be able to provide the specific raw material necessary
2. Not every country has the same taste as others.
3. Domestic suppliers may only supply to domestic markets
4. Differing designs between domestic and global may be an issue

8. Honda’s policy and commit to long-term relationships has been criticized as being “too loyal”, and Honda will go to “ridiculous lengths” to maintain a supplier relationship before severing ties. What do you think about these criticisms?

Although Honda’s policy has faced criticism, I do not see there being an issue in them having a long-term relationship with their supplier. Their profits do not seem to be affected nor do their levels of production. Criticism will always come from anybody who does not see eye-to-eye and does not always prompt change. Honda is always looking for a supplier who can produce parts locally. On top of that, the most important criteria that Honda looks for when picking a supplier is one that can meet their levels of quality, cost, and delivery.

9. The “keiretsu” system in Japan has been described as having advantages and disadvantages. Does Honda have a keiretsu (answer: no, not really)? What are advantages of a keiretsu? Discuss the case of Nissan: their keiretsu is breaking up under ownership by France’s Renault. What do you think this means for Japanese buyer-supplier relationships in the automotive industry?

Advantages of Keiretsu:

1. The mutual stockholding among the group members improves their stability
2. Helps transfer technology
3. Organization of overall business procedures

Disadvantages of Keiretsu:

1. Reacts slowly to outside events
2. Local levels of content remain low

Strategic Supply Chain Management in Honda: Analytical Essay

Honda Company

Introduction and Products Manufactured:

Honda company produces products of high quality, at reasonable cost worldwide for the satisfaction of the customers. It is the third largest automobile company in the world. Now it has also introduced products for agricultural, industrial and domestic purpose. Soichiro Honda and his partner Takeo Fujisawa are the founders of this company. Both of them formed the company in 1948 with combined efforts, Fujisawa provided financial, marketing strategies, assets and capital for the establishment of the company. Honda has spread from Japan to various parts of the world, in USA it was established in 1959. ((N.A.), (N.D.), Honda Motor Company Ltd, Paras. 1,2)1. In 1969, it was founded in Canada. Then in 1986 Alliston plant was established in Ontario. In 1994, Canada exported products to north America, Brazil, in 1997 to China and 1999 to Japan. Then in 2010, its new head office was established in Markham, Ontario. (William, E., 2016, November 3, Paras. 2-5)2.

Products Manufactured

Honda company is a manufacturer and supplier of various products like automobiles, diesel engines, battery-operated vehicles, robotics to make work of people easier. It also produces machines for disabled to move from one place to another, generators, snowblowers, lawn movers. Power products like water pumps, grass cutters sprayers, pressure washers. ((N.A.), (N.D.), Honda Motors Co Ltd., Para. 5)3.

Sourcing, Manufacturing facilities and Distribution:

Honda company presently is sourcing from many suppliers for raw material which are located in Canada, USA, Japan. These suppliers provide raw materials to manufacturing plants located in Ontario, Canada. Second is in Greensburg, USA. The third plant is in Marryville, Ohio and east Liberty, USA. These manufacturing plants are sourcing from different suppliers of different countries. Manufacturing facilities provided to employees are flexible and focus on the future. Honda company manufactures products based on concept of green factory. With the establishment of manufacturing plants, this company has introduced innovations with more efficiency, less time consumption and less cost effectiveness. Recycling of material to obtain aluminium for the production of a 4-cylinder engine in 2008 made manufacturing easy. (Essays UK, 2015, June 22, Para. 4)4.

The manufacturing process includes various steps to produce final finished products for sale. Then vehicle quality shipped to dealer. Distribution of manufactured product means how it is introduced for sale in the market. Automobiles are distributed from wholesalers and then to retail distributors which are finally supplied to customers.

Flowchart:

Operation Strategy:

Honda’s operation strategy is related to corporate and business strategy. The main mission is to produce good quality products at a reasonable price. Its strategy includes goals, objectives, vision, mission of the company. It has helped this company to spread globally with the establishment of manufacturing plants. The main aim of Honda relates to creation of new ideas, and innovations with hardwork and determination. For operational success focus is made on the cost, quality, speed. For example, Research and development department ensures good quality by testing, analysis, evaluation of equipment and machinery. All practices are ensured that they are performed efficiently. Raw materials are evaluated, to be available as per requirement in abundance. Use of raw material is analysed, for efficient production. Collaborative teamwork is examined to be effective, to attain success at the international level. Honda is one company that focuses on environment. For example, it is the first company to produce fuel less cars to prevent air pollution, thereby increasing the efficiency of fuel, the performance of car. Innovations like robots, machined for disabled, have helped people to move form one place to another by making their work easier. (Essays UK, 2015, June 22, Paras. 8,10,11)5.

Supply Chain Strategic design:

Supply chain strategy means making plans with objectives for designing, management processes, so as to reach business goals. These strategies are followed with accuracy like operational strategy which includes design, quality distribution and transportation of manufactured products to warehouse. Honda company is following supply chain strategy for distribution, sourcing. All work is divided among different departments and supervised for productivity. Better communication among workforce, and departments provide competitive place in marketplace. Its process includes Plan- plans are made to manufacture products according to demands in society, to accomplish requirements of customers. Suppliers- suppliers are contacted, selected to obtain raw material in bulk, with low cost expenditures. Manufacturer- products are manufactured in factories according to designs proposed in plans. Modifications, additions are brought about as per demands. Warehousing- manufactured products are stored in huge quantity in Toronto. These products are preserved and kept secure for delivery. Distribution- dealers/wholesalers obtain manufactured products from factories by road, rail or air transportation to sell to customers. Just in time delivery assures confidence, trust of customers, increasing efficiency of company. Buying policy- for example, Honda company introduced pre-owned program for products that considers only those products which pass through 182-point inspection. Warranty is offered for every product depending on its function. Customer satisfaction- Honda dealers are concerned not only with distribution, but also satisfy customers with long term relationships, so as to develop marked position in marketplace. (Alnasser, A.M., 2013, December, Paras. 9-14)6.

Product design:

Product- One of the most used product manufactured by Honda is snow blowers. First it was introduced in 1981 to make life of the people easy. It was of three types which were single stage, dual stage and the hybrid stage snow blowers. Single stage snowblower is compact, easy to operate and lightweight. It is basically used for the homes purpose. Dual stage snowblower is preferred for large areas with heavy snow. Hybrid snowblowers have better snow cleaning capacity. Design- It is easy to use. The controls are accessible with ease have 4 stroke engine which makes process quick and easy. Dual snowblowers has low temperature rubber tracks and gripping cleats, it can clear snow in steps, sidewalk, steep inclines. Single lever is used for ground speed without affecting rotation speed. Height and direction of snowblower discharge is with joystick control. It has electric starter of 120-volt ac. Some models have 12-volt dc electric starter. It has long lasting durable design to tackle cold and has 36 months warranty. ((N.A.), (N.D.), Honda Snowblowers, Para. 1-5)7.

Honda Civic sedan is famous most commonly used automobile having following features, Exterior- it has standard led daytime lights and led headlights. There are 17 inches aluminium alloy wheels. Fog lights to have visibility in fog are present. One touch power moon roof with tilting feature is present. Interior- heated front and back seats are available for winters. Leather covered steering with audio, cruise controls is present. 8-way power drivers seat and four-way power passenger seat is available. And for automatic control of climate dual zone is present. Technology- forward collision warning system, helps to detect vehicles in front by audible, visual alerts. Lane departure warning system, monitors lane position by visual alerts. Adaptive cruise control system and low speed follow, is designed to keep speed constant. Honda satellite linked navigation system, gives direction and detect speed limit. Rear view camera helps to look back while reversing. It has two earth dream 4-cylinder engines. ((N.A.), (N.D.), 2018, Honda Civic Sedan, Features)8.

Sourcing strategy:

Raw Material Sourcing- Raw material required by company is iron for steel to make body, roof, panel of various manufactured products, aluminium is used for light weight wheels. The glass, rubber for the tires, belts, plastic (obtained from petroleum products) for door handles, dashboards which are highly durable. These are supplied by suppliers to manufacturing Honda company for production of various appliances, products. (Maverick, B.J., 2017, December 11, Paras1-7)9.

Supplier, Customer Strategy- Honda has followed philosophy to be frank, have open communication and collaborative work with cooperation for suppliers. All these approaches have ensured their targets to be achievable. Negotiations have done many contributions, as said by Rick Mayo, purchasing manager at Marysville Honda plant. Cost modelling process constitutes determination of cost of various components by integrated process. They overcome problems, issues faced by suppliers by providing better resolution. Manufacturing plants are located close to suppliers for convenience. Strategy followed by Honda company organises various programs, activities related to development of suppliers and awards for them. To develop good supplier relationship, company devotes most of its time, money, investments for construction work of suppliers. For example, Honda applied BP process for Tower automotive, which is supplier of welded assembled parts, stamped parts. It helped this supplier for renovation, redesigning of its working cell for making assembled parts for automotive. Redesigning included all like front and back door, roof connecting to floor. This doubled production of about 63 to 125 parts per hour. As a result of establishment of fixed position, the wear and tear of welding gun from welding tips reduced and increased welds from 50,000 to 250,000. Communication with suppliers for productivity, quality of products and its delivery to customers, is made by open discussions. Expectations of suppliers have listened patiently and honestly. Company tries to sort out problems faced by suppliers related to quality, delivery, by organising timely meetings to give suggestions. This leads to less time and cost consumption. Long term commitments motivate suppliers to do work willingly, and appraisals from manufacturing companies encourages them and build strong relationships. ((N.A.), 1998, November 9, Automotive News, Paras. 4-23)10.

Logistic Functions:

From manufacturing plant products are produced with the help of raw material taken from the suppliers. Then these products with final finishing, are delivered to warehousing areas, by road transportation where these are stored, the packaging is done to deliver them to dealers or distributers by road or by air.

Midwest Express Inc is strong globally spread consolidation centre. It includes warehousing, consolidation/deconsolidation, export packaging and vendor services. Located in east liberty, Ohio it provides transportation facilities to Honda company in Indiana, Greensburg, Alabama. It supports 13 Honda products to assemble at a time covering 2,833,902 sq. feet area for warehousing. ((N.A.), (N.D.), Midwest Express, Inc., Paras. 2,3,8)11. Komyo logistics in America provides warehousing, distribution facilities, and consolidation packaging to Honda company. Transportation is done by road by fleet of trucks. ((N.A.), (N.D.), Warehousing Distribution, Paras. 1,2)12.

One more, Simcoe parts service Inc. is located in north of Toronto area, Alliston. It is member of group of Honda logistics. Transportation is done by road. They ensure accurate delivery of automotive parts at right time. ((N.A.), (N.D.), Simcoe Parts Service Inc., 2018, Paras. 1-5)13. Classic Honda in Canada is famous dealer for distribution of Honda products. ((N.A.), (N.D.), Classic Honda)14. Norm reeves Honda superstore in California is distributer of Honda products in USA. ((N.A.), (N.D.), Norm Reeves Honda)15. Carson Honda in Los Angeles is another Honda distributer in USA. ((N.A.), (N.D.), Carson Honda)16. Lindsay Honda is distributor of products in Midwest, Ohio in USA. ((N.A.), (N.D.), Lindsay Honda)17. From all these dealers customers easily purchase products manufactured by Honda company.

References

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7. ((N.A.), (N.D.), Honda Snowblowers, Para. 1-5)7. Honda Snowblowers. Retrieved on December 28, 2018 From https://powerequipment.honda.ca/snowblowers
8. ((N.A.), (N.D.), 2018, Honda Civic Sedan, Features)8. Honda Canada | Official Automotive Website. Retrieved on December 28, 2018 From https://www.honda.ca/
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17. (N.A.), (N.D.), Lindsay Honda)17. Lindsay Honda- Serving Colombus. Retrieved on December 28, 2018 From http://mobile.lindsayhonda.com/