Honda Term Paper

Honda Motor Co. Ltd. was incorporated in 1948 and originally manufactured and sold motorcycles (Whiston, 2012). Today, Honda is known for its manufacturing of many items – motorcycles, power products, engines (boat, generators and lawnmowers); and even private jets and robots (Whiston, 2012). For purposes of this research, however, we’ll focus on Honda’s auto-manufacturing abilities. During fiscal year 2012, Honda sold 15. 7 million cars and motorcycles; automobiles constitute a little more than 70% of the company’s revenue (Whiston, 2012).

Honda has developed over the years. There are a wide varity of products avalialabe that serve many different purposes from the small general purpose engines to specialty custom made sport cars and now scooters. Honda has a earned the company a very good reputation from customers all over the world. From when the company was established until now, Honda has be on the leading edge by creating new value and offering many different products of high quality at a family friendly price, for its worldwide customer satisfaction.

Honda is certainly on the list of many consumers, especially as we’ll see in this paper, consumers are interested in reliability, quality and fuel efficiency. The problem Honda faces, however, is that it’s seen as a “practical” car, one that someone will buy to save gas or to ensure safety in a crash This is something that has been pounded into consumers’ heads, as many Honda ads in the past have touted its high quality ratings in crash tests. What Honda is missing, however, is the “coolness” factor.

It can’t even embrace the “tree-hugging” picture which would be a natural with its fuel efficiency, as Toyota’s Prius and the electric cars (think Chevy Volt and Nissan Leaf) have already taken on that visual. The trick here is to brand Honda as an up-and-coming, gotta-have car, while not taking away from its well-known attributes, namely fuel efficiency and reliability. One can make the argument that younger, hipper people are into saving money on gas and a quality car. But most younger drivers are into style, as much as they’re into safety and fuel efficiency.

Based on Demographics segmentation, Honda’s target customers are * Gender: Male and Female. * Age/Generation: 30-50 years old and “Generation X”. * Place: Available in dealers nationwide. * Social class: Social class AB. * Status: Single and Married. Focusing on Psychographics segmentation, VAL’S survey shows Honda’s key consumer group is Achievers. They have goal-oriented lifestyles and a deep commitment to career and family. So, their social lives reflect outer- directed factors. And it is organized around family, their place of worship, and work.

Now, Honda has a good corporate image that is high quality, reasonable, family-friendly or centered your life style. We consider this positive image is really effective for their target consumers. Behavioral segmentation shows Honda’s target customer tend to replace their car every 5 to 7 years, monthly amortization of 15 to 20K, good ride, efficient fuel consumption. Competition The auto industry is highly competitive and extremely cyclical (Whiston, 2012). Furthermore, in places like the United States, fuel-efficiency laws will raise vehicle prices for consumers (Whiston, 2012).

Furthermore, auto manufacturing is very capital-intensive, with large fixed costs ,meaning an definite impact on profits, even when there are small changes in demand (Whiston, 2012). Adding to Honda’s problem is that, as a Japanese automaker, it’s at the mercy of a strong yen – a strong yen means it costs more for the company to make its product. Added to this issue is that Honda isn’t the only game in town. It operates head-to-head with another Japanese competitor; Toyota Motor Corp.

It also must compete against Germany’s best and brightest, such as Daimler AG and Mercedes-Benz, and Detroit, where Ford Motor Co. is becoming a viable competitor (Whiston, 2012). The other two Detroit companies – General Motors and Chrysler – are also becoming stronger competitors (Whiston, 2012). Because of this, car advertisements are becoming more and more persuasive – they focus on everything from the attributes of a car to how it will improve the life of an owner. But the interesting aspect of car brand positioning is that consumers are loyal to their brands.

Someone driving a Honda, for example, isn’t going to give it up to drive a sporty Lexus. Nor is someone who drives a Toyota going to relinquish willingly the keys of said car to drive a Ford. Ford, recognizing this, had an ad campaign a few years ago in which the spokesman enticed loyal Toyota drivers to give the Ford Focus a spin. Though this wouldn’t work for Honda, there are things this automaker can do to get away from the bland label of fuel efficiency and reliability. On the other hand, there are indirect competitors against Honda.

For example, it is Motorcycles, improved or promises of improved mass transit like train or subway, and investment opportunities like business or real estate. Brand Positioning Branding among automakers is huge, given the competition and slim profit margins involved. There is a reason for this – a car, is a car, is a car. In other words, all cars have the same basic components and operate in pretty much the same manner. Certainly the designs might differ, but they’re not THAT different. Because of that, automakers need to rely on branding to paint “pictures” of their cars.

A car might be considered “luxury” or a “muscle car,” based on advertising. A good example of this can be found with Honda’s competitor, Toyota. The Toyota Avalon and the Lexus series are technically the same cars – in fact, Toyota owns the Lexus brand. The main difference, however, is that Lexus is a more luxurious-looking car because of styling and interior design, not to mention promotion. While Toyota stresses its reliability, Lexus stresses luxury. Honda shares something else with Toyota – it is also considered “reliable. ” Some have considered the car “bland” as well, as reliability tends to be synonymous with “boring.

” A quick glance at Honda’s branding bring up some interesting words, namely fuel-efficient and quality. In terms of the last attribute, that of quality, Honda ranked sixth in J. D. Power’s initial quality study in 2012 (Whiston, 2012). But an interesting aspect of Honda is also how the company names its models. An interesting article by Taylor (2010) points out that the Honda model names – the Civic, the Accord, the Odyssey , the Pilot – tend to offer a “reassuring promise of peace and harmony that comes not just from one of those names, but all four of him,” the author notes (p.

9). In addition to working separately, Honda ensures the names work together as a family. Honda has also applied similar naming strategies to its Acura brand (Taylor, 2010). But Honda’s positioning and marketing strategies are moving away from showing the car and listing its benefits and features. In recent months, Honda’s marketing and promotion has focused on story telling – in other words, presenting the products in a more creative and engaging way to the consumer (Rechtin, 2012).

The creative brief used to be “show the car, make a clever comment, then show the logo (Rechtin, 2012). But Mike Accavitti, the company’s Chief Marketing Officer has been trying to move away from that type of positioning, to focus on lifestyle and emotional engagement (Rechtin, 2012). Noted Accavitti in an interview: “To sell 350,000 Accords, you’re going to have to hit all walks of life” (Rechtin, 2012; p. 22). An example of how Honda did this can be seen in its early ads from 2012, during which it incorporated the Leap Year of February in its branding (Vara, 2012).

The “story” the promotions told dealt with embracing life stages, such as college graduations, planning a large vacation, purchasing a new home and getting married (Vara, 2012). Though none of those life events would necessarily include buying a new car, it does help the consumer think about the various stages of their lives, and what can be accomplished in those stages, and what’s attainable (Vara, 2012). Discussion One foundation on which Honda has built its brand is that of fuel efficiency (Whiston, 2012). The brand, in and of itself, isn’t really considered “cool” or “hip,” as much as it’s considered efficient and gas-saving.

The company itself is doing what it can to promote this view – around 56% of its product mix is made up of cars, with many of those cars boasting some kind of fuel efficiency (Whiston, 2012). The company is also trying to expand this image by expanding its alternative power train vehicles through more hybrids – the hope is to take market share from the Toyota Prius (Whiston, 2012). The problem, however, is that when one plugs the question “what do consumers think of Honda? ” into a Google search engine, what comes back are comments like “my mother had one” or “they’re big and lumbering” or “they aren’t stylish.

” The best way to boost Honda’s coolness in branding is to place it in a position in which its appeal can’t be lost. The lifestyle storytelling is a very good start, especially because it gets away from the bland promotions that extol the features of fuel efficiency and dependability. Putting Hondas in settings that are appealing, such as on nature trails or in hip urban areas, would also go a long way toward boosting this automaker’s image in a very positive way, especially when it comes to targeting a younger, hipper audience.

This is an especially a good time for Honda to push that new image, as it’s reinventing its various brands. If it’s able to combine the reputation for reliability and gas savings with the idea that it’s a great car to have because it’s a cool one, then Honda will be that much closer to targeting a younger, more hip audience. REFERENCES Rechtin, M. (2012, September 17). At American Honda, Storytelilng Takes a Front Seat. Automotive News , p. 22. Taylor, D. (2010, April 30). Banama-bama, Fo Honda . . .

In Brand-Name Game, Honda has Style. Central Penn Business Journal , p. 19. Vara, S. (2012, January 27). Honda Targets Life Stages with New Leap List Campaign. Retrieved February 5, 2013, from Kherize Five Advertising & Marketing: http://kherize5. com/honda-targets-life-stages-with-new-leap-list-campaign/. Whiston, D. (2012, October 31). Honda Motor Co. Ltd. Retrieved February 5, 2013, from Morningstar Investment Research Center: http://library. morningstar. com/Stock/stock-analyst-report? t=HMC®ion=USA&culture=en-US.