Honda Case Analysis (A)

Abhigyan Choudhury (P39178)

Honda had started building motorcycle when the industry was in its initial phase and there was
a need gap for reliable, low cost and multi-use motorcycles. After world war 2, in Japan buying
a car for transport was out of reach and motor cycle was seen as perfect replacement for mass
transport and commercial use replacement of car. Honda was quick to realize the existing gap
and created more reliable, light weight motor cycles suitable for commercial usages.
Though, initially Honda had to compete with 247 competitors but due to Honda’s superior
engine quality, low price and innovative approach of mass production created a new era for
itself.
Contrary to the practice of other competitors, who were milking on a single successful product
rather than investing on different product lines. Honda started introducing mass production to
achieve productivity and lowered cost of production to take competitive advantage over its
competitors.
To bring down cost of production, Honda scaled up beyond Japan and entered into U.S.A and
European market. Goal was long term success.
When they entered into U.S market, Honda had already targeted highly potential but neglected
segment of light weight motorcycle category by U.S motorcycle companies. Assisted by high
sales in Japan and mass production, Honda’s cost was cheaper than its American counterparts.
Honda also had many new features in their bikes which were not there in light weight category.
They already had developed bottom up approach and efficiently bridged the gap, but in US
market, most of the players in motorcycle category had adopted top down approach and limited
motorcycles use. Though there was a need, but their narrow vision had created a gap. Honda
was first to grab this opportunity as America was going through rapid industrialization and they
just has perfect products in a category that was ignored by many of these American players.
Due to high productivity they also had advantage and easily outclassed their American
opponents.
Though, American motorcycle companies are well funded, but their vision was narrow and top
down approach had kept them away from this hidden need of their consumers. Honda’s focus
to develop market by region had given it added advantage. Creation of robust dealer network
and good dealer experience also helped Honda. Initially, Honda had spent more money on
creating dealer network with better experience. Good dealers will come to you, if you have
good product and better fetchers in cheaper price. This means high probability of sales and
more retail margin for your dealers.
When good dealers come to you, you have more sales force and better experience for your
consumers with that good dealer can compete with competition’s dealer on price front to give
competitive retail price to the customers.
Honda’s focus on creating robust sales and distribution network (S&D) separates it from rest
of its competitor. Not only good quality product in cheaper price, but also good after sales
experience was created by Honda and this leads to more satisfaction of customers in USA.
Now driven by high growth rate and efficient productivity, Honda’s aim is to increase share
volume. They are also maintaining experience high to beat their competitors in their back yard.
It will be a situation to see, if their competitions will come up with better price range and good
designs that will land Honda in a very awkward situation or if Honda unable to match with the
category growth rate.
Though, Advertising also Honda’s another weapon to create awareness about the category, but
their price reduction with time and still maintaining profitability is the key to their success