ANALYSIS OF HONDA COMPANY MARKETING ENVIRONMENT

ANALYSIS OF HONDA COMPANY MARKETING ENVIRONMENT

ANALYSIS OF HONDA COMPANYS MARKETING ENVIRONMENT

Date of submission: 16th September, 2013

ANALYSIS OF HONDA COMPANY MARKETING ENVIRONMENT

ANALYSIS OF HONDA COMPANY MARKETING ENVIRONMENT

SUBMITTED TO:

SUBMITTED BY:

Submission Date16th December, 2013

LETTER OF TRANSMITTAL

December 16, 2013

Mr. Professor, Marketing

Dear Sir, We are submitting herewith our report entitled marketing analysis of Honda Company, marketing environment as an assignment of Marketing.The main purpose of this report is to give detail information about the external, internal, micro, macro, innovation and overall reflection of the company. This report shows a brief history, its present condition, and real picture of marketing environment.We hope this report will give the required information about marketing environment.

Yours Sincerely,

TABLE OF CONTENTS

CONTENTSPAGE NO.

Executive Summary

Background and introduction

Introduction and description of organization

External analysis

Micro environmental analysis

Internal analysis

Innovation audit

SWOT ANALYSIS

Conclusion

Bibliography

Appendix

Recommendation

EXECUTIVE SUMMARY

This report analyzes about the market environment of HONDA Company in context of Nepal, its history, origin, vision, mission, products, services, the report also focuses on the current situation of the company, and the various difficulties and problems it is facing and is likely to face in the future. Furthermore, this report provide the information about external; macro, micro, internal, innovation, strategies, function and many more. After going through this report one will be able to know about the current situation of HONDA Company. Also this report gives the information about the market, competitor, customer, stakeholders and the importance of promoting it for the development of the company and focus on the satisfaction of the customer and to establish and tackle with the dynamic environment.

BACKGROUND AND INTRODUCTION Honda Company is one of the renowned and well recognized companies in the world which was originated from Japan. It is one of the world trusted brand. Its branches are established around 190 countries. Honda was 1st established in September 24th 1948. Honda Company was established in Nepal in 1968 as pioneer business. Honda Motor Co., Ltd. operates under the basic principles of "Respect for the Individual" and "The Three Joys" commonly expressed as The Joy of Buying, The Joy of Selling and The Joy of Creating. "Respect for the Individual" reflects our desire to respect the unique character and ability of each individual person, trusting each other as equal partners in order to do our best in every situation. Based on this, "The Three Joys" expresses our belief and desire that each person working in, or coming into contact with our company, directly or through or products, should share a sense of joy through that experience. In line with these basic principles, since its establishment in 1948, Honda has remained on the leading edge by creating new value and providing products of the highest quality at a reasonable price, for worldwide customer satisfaction. In addition, the Company has conducted its activities with a commitment to protecting the environment and enhancing safety in a mobile society. The Company has grown to become the world's largest motorcycle manufacturer and one of the leading automakers. With a global network of 507* subsidiaries and affiliates accounted for under the equity method, Honda develops, manufactures and markets a wide variety of products, ranging from small general-purpose engines and scooters to specialty sports cars, to earn the Company an outstanding reputation from customers worldwide.

INTRODUCTION AND DESCRIPTION OF ORGANIZATIONOrigin and historyHonda company was established first time in Nepal at 1968 as pioneer business as Hero Honda by Syakar company which is also known as Jyoti group. From its origin it was competitive with other motor company. From 1968-1985 all products of the company was exported readily from Japan.Later from 1986 products of the company was exported from India by collaboration of Honda Company in India. From the year 2001 Indian established its own factory for producing more products. From 2001-2010 company was known as Hero Honda but it split in the year 2010 after maturity of its 10 year of contract and for the mutual benefit as both Hero and Honda has more than enough product of its own to split. From the year of its origin Honda has rank 1st position in Nepal. And also after split Honda has ranked 1st position since last 2 years in Nepal. Recently there are more than 50 showrooms, dealers and sub dealers of Honda Company in Nepal.

Mission, vision, goal and objectivesThe main mission, vision, goal and objective of Honda company is to to believe in customer satisfaction by providing customer quality products even though the price may be little higher than other company products. Honda mainly focuses on its good and unique quality it doesnt compromise its quality for more quantity or less price of the product. Honda provides best motor bikes than any other company as it makes it product understanding the actual customer wants and needs and their satisfaction. Its other goal is to cover 80% of market by Honda products. It also have objective to provide riders with most comfort and balance which makes their daily ride, work etc easier.

Coverage of market share Overall market share of Honda Company is 35% .In Kathmandu, the market share is 40% and outside Kathmandu valley is 60% in the total shares of the company. Due to the increasing demand outside Kathmandu valley, market share in rising level.

MAIN PRODUCTS AND SERVICESThe main products includes cars, motorcycle and power productsCARS Accord City Civic CR- V JAZZMOTORCYCLES CB 600 F Homet CB 1000 R CB 1000 Shine CB Twister CB Unicorn CB Unicorn Dazzler CBF Stunner CBR 250R CBR 600RR NXR 150 Wave XR 250 TorvadoSCOOTER Activa Aviator DioPOWER PRODUCTS Generator Lawn Mower Brush cutter Water pump Engine

EXTERNAL ANALYSISMacro environmental analysis Political and legal factorsMarketing decisions are strongly affected by political and legal factors. Political environment consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society. As government develops public policy to guide business, sets of laws and regulations limit business for the good of society as a whole. Thus every marketing activity of a company is subject to a wide range of laws and regulations. When certain rules are formulated, the market changes accordingly. For example, if there is hike in price of petroleum, the market of the automobile will certainly go down because petroleum are the source or generators of those products and the vice versa. People get discouraged to buy the products when there is price hike and search for the other alternatives.In context of Nepal, there is presence of instability, on government collapse, one rule collapsed and other comes and again the rules changes which make the people irritated as discouraged may be in terms of tax, VAT, custom, tariff and many more, this also affects the market condition.Similarly Honda Co. Ltd has also been affected by political and legal factors; such as: In context of Nepal, due to a frequent change in the government, the company has been adversely affected because the government agencies that enforce the laws have impact on a companys marketing performance. Therefore, marketers need to know about the major laws protecting competition, consumers and society; also such laws needs to be understood at the local, state, national and international levels.

Technological factorsTechnology environment is the force that creates new technologies, creating new product and market opportunities. New technologies create new markets and opportunities and replace an older technology. Marketers have to watch the technological environment more closely. Thus, companies that do not keep up will soon find their products outdated; and they will miss new product and market opportunities. Hondas research and development operations are the creative heart and soul of the efforts to meet the needs of the customers. These are responsible for the development of a variety of innovative models. Thus, the main theme of Honda Company is developing innovative technologies to meet future global needs. The stylists and engineers of Honda Company listen to the customers and dealers in unique ways to create products for an increasingly diverse range of needs and interests. Honda believes in better people through technology, and better technology through people. Economic factorsThe economic environment consists of factors that affect consumer purchasing power and spending patterns. Marketers have to pay close attention to major trends and consumer spending patterns both across and within their world markets. Nations vary greatly in their levels and distribution of income. In developing countries like Nepal, companies offer outstanding marketing opportunities for the right kinds of product. One of its examples can also be Honda Motors Co., Ltd. Changing economic conditions can have a huge impact on even the most successful companies. Instead of advertising and promotion cost, Honda co. provides better quality services. The pricing policy is customer friendly.

Social factors Social factors influence the marketing of a product. As social factors includes: culture, religion, community attitudes, social standards and interest of the individuals; it affects the marketing of goods and services. According to the culture, individuals usually selects the color of the product; and so on. In festive seasons, the new schemes are established for the attraction because people prefer to purchase new assets in those seasons, the choice of the colors also depends upon the culture and the individual desire may be of children or the elderly people. People love to be appreciated about the belongings and the product they acquire so, standard is always maintained by the customer and finally they seek for satisfaction. Society plays the vital role.

Technological factorsTechnology environment is the force that creates new technologies, creating new product and market opportunities. New technologies create new markets and opportunities and replace an older technology. Marketers have to watch the technological environment more closely. Thus, companies that do not keep up will soon find their products outdated; and they will miss new product and market opportunities. Hondas research and development operations are the creative heart and soul of the efforts to meet the needs of the customers. These are responsible for the development of a variety of innovative models. Thus, the main theme of Honda Company is developing innovative technologies to meet future global needs. The stylists and engineers of Honda Company listen to the customers and dealers in unique ways to create products for an increasingly diverse range of needs and interests. Honda believes in better people through technology, and better technology through people.

Environmental factorsHondas approaches to environmental initiatives are as follows:(1) Based on basic goal of reducing environmental impacts at every stage in the life cycle of the products.(2) Strive to realize the joy and freedom of mobility and a sustainable society where people can enjoy life.(3) Recognize climate change and energy issues as the greatest challenge to the business, resource problems as a major challenge, and biodiversity as a serious concern.(4) Establish a future vision to achieve zero CO2emissions, zero energy risk (through our energy management technologies), and zero waste to tackle these challenges. (5) Implementing concrete measures for the products and in the business activities.

Honda's theme is safety for their consumers. According to the data provided by the Department of Roads, there are almost 1,000 fatalities on a yearly basis happening across the nation which is a big concern. These figures are alarming, and something has to be done quickly. So Honda wants to focus on safety issues and wants to reduce accidents. The state of vehicular traffic in Nepal is mismanaged, and Honda wants to educate their customers about how to avoid accidents.

Micro environmental analysis Industry analysis Honda Company lies under the automobile industry. The auto mobile industry includes the trading of motorcycles, scooters, mopeds, cars, vans and other transportation means which has been the inseparable part of this global environment. These days, the scope of this industry has been emerging due to necessity and the easy finance policies that banks or other financing institution provides to the general public. People are attracted towards the products of this industry because it can be the very convenient and friendly gadgets for the daily activities. In daily life, we move to one place to another for our career, the transportation means is taken as the compulsory tool, so people are taking those products as the basic needs, the value of products are drastically change. Hence, the industry is emerging due to new technologies and the dynamic environment. To cope up with the existing situation, the new products are launched in time being.

Market analysis

Competitor analysis

Customer analysis

Stakeholder analysis

INTERNAL ANALYSISResource analysis

Marketing auditThe marketing audit has certain similarities to a financial audit in that it is a review or appraisal of your existing marketing activities. Carrying out the marketing audit provides the opportunity to review and appraise your whole marketing activity, enabling you to assess past and present performance as well as to provide the basis for evaluating possible future courses of action.Because the business environment is constantly changing, the marketing audit should be used as a reference tool, with constant updates reflecting changes in the external environment and your own internal business experiences.

1. External AuditExternal factors can be split broadly into three groups, the economic environment, the competitive environment and your own market environment. Consider these areas from your own business's point of view - will any changes have an impact on your business, will they affect your competitors, will they allow you to compete where you could not, or inhibit your ability to compete.1.1 The Economic Environment

PoliticalThe political condition of Nepal is instable, because of that petroleum prices changes and thus, demand of Honda product fluctuates. Increase in petroleum prices decreases the demand for the product of Honda and vice-versa.

EconomicHonda Company instead of spending more on advertisement and promotions of products, they focus on improvement of the quality of the products.

Social and CulturalThough Honda Company doesnt spend on advertisement and promotion, during festive season they provide various schemes.

TechnologicalHonda believes in better people through technology, and better technology through people.

EnvironmentalHonda wants to focus on safety issues and wants to reduce accidents. Honda wants to educate their customers about how to avoid accidents.

Competitive EnvironmentCompetitors of Honda are: Ford Motor Company, Nissan Motor, Toyota Motor Corporation, Suzuki Motor Corporation, Volkswagen AG., Yamaha company, Bajaj company and so on. In order to compete with its competitors, in a few months, the company is going to launch new Honda models in the market.

Internal AuditOverall market share of Honda Company is 35% .In Kathmandu, the market share is 40% and outside Kathmandu valley is 60% in the total shares of the company. Due to the increasing demand outside Kathmandu valley, market share in rising level. The company is selling 50,000 units of Honda motorcycles only. As of now, Honda has been able to sell 30,000 units annually.

Marketing strategies auditFirst of all, marketing strategies means an organization's strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan.We asked different questions to know about Hondas market strategies.Question 1) How do you see Honda's performance in the two-wheeler market in Nepal? Syakar Company holds almost 60 percent of the market share in partnership with another leading company Hero Honda. In many Asian countries, Honda holds a good market share. Maintaining 60 percent of the market share is not easy, and a lot of hard work is needed to have such consistency. They have another responsibility, which is the safety of the customers riding two-wheelers. As the number of two-wheelers increases, so do the chances of casualties. The demand of two wheeler in Nepalese market is increasing.

Question 2)How have you planned your strategies for Nepal this year? As the market is growing in Nepal and we being the market leader, we are looking forward to increasing the volume of two-wheeler sales. In a few months, the company will launch new Honda models in the market.Question 3) What are the different models that Honda is coming up with? Once Honda India starts fulfilling production, we would start importing Honda bikes in Nepal. Right now, there is short supply in the Indian market; but soon the company will be able to solve the problem of high demand. It has a long waiting list. We will be launching the new CB Twister in the Nepali market which is the most stylish and one of the best looking bikes from Honda. This is a 110 cc motorcycle and is focused on the mass community. This is a very important model for Honda in terms of sales. Other models in line would be the new Stunner and the Unicorn with new colors.

Question 4)How do you see the competition in the Nepali market in the two-wheeler segment? I think everyone has their own policy and ways of handling competition. Honda's policy as the market leader is to not only be concerned about sales but also after sales service. The three S factors we focus on are sales, service and spares. We are also concerned about the safety and wellbeing of our customers. We have taken various initiatives to cater to the customers, and the Syakar Safety Riding Training Centre at Gwarko is one of them.

Question 5)Is the demand pattern for Honda products similar in India and Nepal? While demand for two-wheelers is similar, the trends are slightly different. For example, the Honda Dio, which is a youth oriented model, is very famous here while the Honda Activa holds a major share in the Indian market. In Nepal, 125-150 cc motorcycles are ruling the market, whereas in India 110 cc bike are the leaders. Syakar Company chooses models according to the needs of the customers which is why it has such a huge market share.Question 6)What are your strategies to promote Honda in Nepal this year? Honda's theme for this year is safety for our consumers. According to the data provided by the Department of Roads, there are almost 1,000 fatalities on a yearly basis happening across the nation which is a big concern. These figures are alarming, and something has to be done quickly. So Honda wants to focus on safety issues and wants to reduce accidents. The state of vehicular traffic in Nepal is mismanaged, and Honda wants to educate our customers about how to avoid accidents.

Question 7)Are there any strategies to attract customers to the training centre? More than attracting customers, we are focused on whether we can cater to the demand. And our company has no profit motives from the centre as it is part of our corporate social responsibility (CSR). The rates that we are charging customers for the courses are the same that other local driving institutes are charging. And on top of that, the customer would be trained by highly professional trainers with world class facilities which others would not provide. We have a target to serve 2,500 customers a year which I don't think is a difficult task since today motorcycles have become a necessity rather than a need; and you would want to learn to ride your motorcycle at the best institute from the best trainers.Question 8)Is Honda thinking of launching high-end bikes? High-end bikes are basically made for a niche market, and everyone cannot afford to buy them. We have been selling the Honda Hornet which is worth Rs. 1.6 million and the Honda CBR which is priced at Rs. 1.8 million. We are not in a hurry to bring other bikes in the market because we have to do your homework first which is service and spares for these bikes; and I don't think this is the right time for other powerful Honda bikes to be launched in Nepal.Question 9)Does Honda have facilities like training centres in India as well? Honda follows a strategy of informing the customers correctly and accurately about the product. These small steps of informing the customers can really make a big difference.Question 10)What are the sales targets for Nepal? We are selling 50,000 units of Honda motorcycles only. As of now, Honda has been able to sell 30,000 units annually.

Marketing structure audit

Marketing systems audit

Marketing function auditThe marketing mix is used in order to analyze the function and it comprises of framework comprising of Product, Price, Place (Distribution) and Promotion.

ProductsThe objective of the products of Honda Company is to satisfy the customers needs and demands with its new technologies without degrading the environment.

PricesFor the proper marketing of the product, pricing is important. But in present days customers prefer good quality Place (Distribution)

PromotionHonda Company advertises mostly in festivals, new years and on any special event only; it doesnt advertise more like other companies such as: Bajaj, Yamaha, etc. as they dont want to increase price or make price of product high. Rather they involve and engage in direct customer-related activities. For example: establishing scooty racing program first time in Nepal.

Marketing productivity audit

Innovation auditProducts unique and innovative features are the foremost factor that helps in grabbing the market. The customers prefer the product which has the new and the latest versions so that they can just enjoy it. If the product is unique and the customer has that particular product, there is creation of superior complex among the peer groups. This is why the company or producer focuses and invests to create something new and better than of the competitors. To stand on the upper height, distinct features much touch the eyes of the customers. As Honda is one of the leading companies in the automobile industry, it has provided the most sensational new models of the bikes, scooters in time being. The products are revised and made some changes then only bought into the market thats why customers are attracted to purchase that specific product. For example, Dio with new features has launched with the sporty look focusing both males and females. The scooter has the sleek and trendy look with the more mileage, wider seats, and more fuel storage. It is available in different beautiful and unique colors like white, yellow, orange, gray and many more. It has revolutionized the general attitude that the scooter are only for females, so they made some changes to make the scooter applicable to males also. Females are attracted to the scooter but the new models and the features have attracted the males to purchase the scooters because the scooters are more easy and comfortable to drive. As a result, the sales are more than the old models because the innovative features just catch the eye of the customers. Hence, the innovation can be the important tool to flourish in the industry.

Other auditing tools

SWOT analysisStrengths1. Diversified product portfolioHonda Motors Company does not focus only on selling vehicles. It is the largest producer of the engines and motorcycles as well. Therefore, the company is not as susceptible as its competitors are to market cycles or technology disruptions.

2. Huge investments in R&DHondas investments in R&D reach as much as 5% of revenue. The business relies on these investments to achieve competitive advantage through various technologies, such as improved vehicle painting process, new hydrogen and hybrid engines or new welding technologies.

3. Strong brand imageHonda has a reputation for producing the best quality engines around the world. The companys brand was the 21st most valuable brand in the world valued at $17 billion and was only behind Toyota, Mercedes-Benz and BMW.

Weaknesses1. Product recallsHonda recalled many vehicles to fix various faulty parts and manufacturing defects. Car recalls severely damages firms brand reputation and future sales. Approximately 100000 vehicles are recalled by Honda, it means there is some defects in some part which make consumers unsatisfied and angry.

2. Decreasing salesIn 2012, Hondas revenue hit the lowest point in 4 years to 7.948 trillion. Honda sales were down by 11.2% in North America, which represents more than 40% of total Honda revenues. Revenue from Asia and Europe also declined by 21.3%, 15.5% respectively, signaling poor firms performance globally.Opportunities1. Increasing fuel pricesHondas strong emphasis on engineering fuel-efficient vehicles (Honda Insight and Honda Civic) with flexible fuel, hybrid and hydrogen engines will pay off due to increasing fuel prices.

2. Positive outlook for global motorcycle industryHonda is the worlds leading producer and seller of the motorcycles having more than 29% of the market share. Growing demand for the motorcycles is a great opportunity for the company to expand its global market share and grow sales.

3. Growing global demand for environmentally friendly vehiclesThe declining levels of fossil fuel sources and the rising CO2 emissions became a major concern for many people and many governments. Therefore, ecologically friendly cars, powered by hybrid, hydrogen or flexible fuel engines became very popular. Hondas focus on hybrid and hydrogen fueled engines is a great opportunity to capture the market share for this new demand.

4. Growth through acquisitionsHonda could greatly benefit from strategic partnerships or acquisitions of smaller competitors. The business would add new brands to its portfolio, achieve greater economies of scale and would benefit from synergies between different firms.

Threats1. Intense competitionHonda faces more intense competition than ever. New small entrants are disrupting the market with their capabilities in producing electric vehicles or alternative fuel engines. Big companies are restructuring themselves to become more efficient. As a result, firms like Honda are suffering from competition from both big and small players.

2. Rising raw material pricesMetals are the main raw materials used in vehicle and motorcycle manufacturing and the rising price of the raw metals raises overall production costs for Honda.3. Natural disastersDue to natural disasters, manufacturing is disrupted and thus, there is decrease in the production volumes.

CONCLUSION

BIBLOGRAPHY

APPENDICESPROJECT WORK OF MARKETINGPAGE 21