Documente Academic
Documente Profesional
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BY HONDA MOTORS TO BE
MARKETED IN INDIA
Honda - Challenging the Limits.
EXECUTIVE SUMMARY
Globalization is the buzz word and has manifested itself by touching the lives
one of prime importance is the increase in the purchasing power of the people.
The increased income has given purchasing power in the hands of the people
especially the citizens of the developing nations and hence the increase in
anyone who wants to move up the ladder and satisfy his emotive need.
products which suit the customers need and as a part of Corporate Social
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Honda - Challenging the Limits.
Responsibility it is the need of the hour to design and sell cars which are fuel
efficient.
original ideas into unique vehicles. Carrying the tradition further, this marketing
plan is designed to discuss the marketing of new fuel efficient car in of the
The following sections would take through the marketing plan for this car in
India, giving options to the customers under the Honda umbrella. The car
Honda’s fuel efficient car will be hatchback and will be sold in various color
variants to suit the tastes of customers across India. The car will be a compact
car and hence help in line filling since the company doesn’t have any car in
the mid sized segment of the product mix. The car would be exclusively made
As elaborated in the report Indian consumers are value oriented and prefer
behavioral segmentation and the target market would be the value conscious
customers, primarily the middle class consumers and the car rental
companies.
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Honda - Challenging the Limits.
The car would be 1200 cc, light in weight & compliant with the emission norms
distribution network and would be using the same for the selling this car. The
would participate in auto exhibitions & give sponsorship. The company also
plans to use the automobile television shows to opine expert views. The
company plans to encourage test drives arranged by dealers and sub dealers
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Honda - Challenging the Limits.
MOTORS LIMITED
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Honda - Challenging the Limits.
The Company
The history of the Honda Motor Company began with the vision of one man -
SoichiroHonda
In the same year, he designed and engineered the first product of this
Soichiro's vision was international in character. His desire was to lead the
better society. As a result, most of the products that Honda developed started
out by making a difference. Whether it was the CVCC engine in the sixties or
the solar powered car of the nineties, they all sought to challenge and
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Honda - Challenging the Limits.
Financial Highlights
Financial Data
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Honda - Challenging the Limits.
Operating Data
Source:http://www.hondacarindia.com
Honda in India:
Honda had entered in India as Honda Seil Cars India Ltd., (HSCI) which was
set up in December 1995 as a joint venture between Honda Motor Co. Ltd.,
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Honda - Challenging the Limits.
technologies to the Indian customers. The company has brought about three
models in India - Honda City, Honda Accord, and Honda CR-V. Its first model
was launched in 1997. Honda Seil Cars India Ltd. is ISO 9002 & ISO 14001
certified.
The Honda City, its first offering introduced in 1997, revolutionized the Indian
passenger car market and has ever since been recognized as an engineering
marvel in the Indian automobile industry. The success of City as well as all its
other models has led HSCI to become the leading premium car manufacturer
in India.
The total investment made by the company in India till date is Rs. 1620 crores,
further investment of Rs. 1000 crore is planned and being currently invested
for the coming second plant in Rajasthan. The company has a capacity of
Noida, U.P with an investment of Rs. 450 crore. The green-field project is
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Honda - Challenging the Limits.
The initial installed capacity of the plant was 30,000 cars per annum, which
was thereafter increased to 50,000 cars on a two-shift basis. The capacity has
modifications were done by the company with the objective of offering higher
quality products to its customers, faster and quicker. The expansion process
also included expansion of the covered area in the plant, from 1,07,000 sq. m.
to 1,31,794 sq. m.
The company operates under the stringent standards of ISO 9001 for quality
liberalized Indian car market viz. Maruti followed by the South Korean
manufacturer Hyundai Motors. Needless to say, that both the companies enjoy
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Honda - Challenging the Limits.
first mover advantage and the associated benefits like economies of scale,
The following figures show a division of the market share as on 2007-08 (April
March) of the major car manufacturers in the Indian passenger car market:
Hyundai 25.5
Tata Motors 12.7
Honda Seil 4.2
GM 3.2
Ford 2.4
Mahindra Renault 1.8
Others 2.9
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Honda - Challenging the Limits.
Maruti
26%
Hyundai
TataMotors
13%
HondaSeil
GM
4% Ford
47% 3%
2%
3% 2% MahindraRenault
Others
Marketing Objectives:
The marketing plan has been designed with the following market objectives:
First year Objectives: We are aiming for 6% market share of the Indian
market.
Second year Objectives: We are aiming for 10% market share of the
Indian market.
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Honda - Challenging the Limits.
SWOT ANALYSIS
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Honda - Challenging the Limits.
Strengths:
Honda enjoys a reputed brand image everywhere in the global market. The
company is also rated high in the customer satisfaction index and has also
Technology
Honda has always believed in innovation. A late entrant in the car market, but
the company is known to deliver auto lineup for a world of diverse needs and
satisfied customers.
The company has been manufacturing cars which run on alternate fuels like
diesel, natural gas, ethanol and also hybrid cars. The recent launch is also an
Strong R&D
first to comply with the 1970 U.S. Clean Air Act; the VTEC power plant, which
uses variable valve control for high fuel efficiency and high performance; an
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Honda - Challenging the Limits.
Indigenization
The company believes in using the local raw material and having OEMs for
the cars. The indigenization helps the company to reduce the risk of exchange
rate fluctuations and also in maintaining a lean production facility. The Honda
Weaknesses
Late entrant
The company has entered late in the Indian car market and lost on the first
movers advantage. The position of the company has however built up due to
The Indian car market is largely dominated by the demand of mid segment
cars. The company’s product line does not have a car in this segment. This
The new car in question would be a step in this direction & enable the
The car manufacturers are exposed to commodity price risks to higher costs
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Honda - Challenging the Limits.
risks, the company continues to attempts to enter into long term contracts
Opportunity
The Indian government in the recent budget has given tax sops to the
manufacturers of small and mid sized cars as these are fuel efficient. This will
reduce the cost of production and the same benefit can be passed on to the
Economic growth
The Indian economy has been growing at an average of 8-8.5% per year for
the last few years. The growth percolates into the rising income of the people
Young population
The majority of Indian population is in the young age group which would then
Threats
India is not insulated from the recent slowdown in the world economy. The
deceleration of growth will reduce the momentum of growth. It may also lead
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Honda - Challenging the Limits.
Consumer loans are a preferred mode of financing and an increase in the rate
of interest may dampen the demand for loans and hence the demand for cars.
An increase in the prices of fuel may reduce the demand for cars but since the
product being introduced is a fuel efficient the rising fuel price may not affect
The car industry has established players like Maruti, Hyundai and Tata Motors
who are operating in the mid sized segment and enjoy equally good brand
image with larger market share. The launch of Rs. 1 Lakh small car by Tata
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Honda - Challenging the Limits.
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Honda - Challenging the Limits.
The automotive industry is one of the largest industries worldwide and in India
as well. The automotive sector drives upstream industries like steel, iron,
• Passenger Cars
• Two-Wheelers
• Three-Wheelers
The Indian automotive industry has the potential to emerge as one of the
largest in the world. The country already ranks number two globally in the two-
wheeler segment, and is next only to China. It ranks 11 th in car production and
households, the country is expected to make it to the top five markets in cars
and commercial vehicles by 2020. Of the total sales, roughly 10 per cent is
1
http://www.gailonline.com/gailnewsite/mediacenter/reportsautoindustry.html
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Honda - Challenging the Limits.
Source: SIAM
March 2007 was 20.70 percent. Passenger Cars grew by 22.01 percent, Utility
2006-07.
The following data gives the sales of automobiles in the last six financial
years. As indicated by the given data the sales of passenger vehicle i.e. the
cars has grown manifold. The growth in the passenger vehicle segment is the
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Honda - Challenging the Limits.
2,000,000
no. of units
1,500,000
1,000,000
500,000
0
2002- 2003- 2004- 2005- 2006- 2007-
03 04 05 06 07 08
year
1,800,000
1,600,000
no. of units
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
3
8
-0
-0
-0
-0
-0
-0
2
7
0
0
0
0
0
2
years
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Honda - Challenging the Limits.
The projected annual growth rate for demand of cars is expected to be above
Source: http://www.fadaweb.com
• Large population
• Growth in urbanization
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Honda - Challenging the Limits.
India is a vast country with a population of more than One Billion spread on a
literacy level the striking diversity of Indian population and its behavior as a
About 34% of the population is below the age of 15 years & roughly 40%
Therefore companies in all areas of business find the Indian market highly
Another striking feature on the Indian market is the burgeoning middle class. It
The Indian middle class is educated & have sufficient disposable income to
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Honda - Challenging the Limits.
believe in living life in style. The demand for cars and motor bikes has also
owned motor cars in 2004- ’05 as compared to 1.2% in 1993- ’94 while the
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Honda - Challenging the Limits.
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Honda - Challenging the Limits.
consumers take the purchase decision of a car and who are the participants in
As elaborated above, Indian car market is in its growth stage and the income
of the Indian consumer, particularly the middle class, is rising. A closer look at
Value Orientation2: Indian customers are highly judicious, educated and well
informed. They are price sensitive and put a lot of emphasis on value for
money. The Indian consumers are noted for the high degree of value
orientation. Such orientation to value has labeled Indians as one of the most
This orientation in fact, extends to the extended family and friends as well.
Brands with identities that support family values tend to be popular and
accepted easily in the Indian market. Indian consumers are also associated
with values of nurturing, care and affection. These values are far more
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Honda - Challenging the Limits.
The purchase decision is hugely influenced by others in the family and the
reference group. An Indian consumer would go in the detailed study of the
product and consult his reference group before making a decision to purchase
any brand of car.
2
Product Market Study: Consumer Behavior In India , Matrade Chennai, October 2005.
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Honda - Challenging the Limits.
Essentially he would look for the following features in the car to take a
purchase decision:
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Honda - Challenging the Limits.
POSITIONING
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Honda - Challenging the Limits.
Market Segmentation
The Indian passenger car industry has undergone a drastic change in terms of
The Indian car market is in its growing stage and has been classified mostly
on price and the product features. There has hardly been any kind of
The Indian car market can be segmented broadly in the following heads:
below Rs. 3 lakhs. Entry level car Maruti 800 and Alto and soon to be
launched Nano.
range: between Rs. 3 lakhs and Rs. 6 lakhs. Like Swift, Santro, Wagon
range: between Rs. 6 lakhs and Rs. 8 lakhs like Maruti Esteem, Honda
Management , Calcutta.
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Honda - Challenging the Limits.
• Premium Car Segment: Real world-class car and people who are ready
to pay for it. Preferred price range: flexible but around Rs. 10 lakhs is
The market segmentation for the car would be a behavioral segmentation with
basis on behavioral variables like benefits of the product, usage rate and
attitude. The stress would be on the value seeking segment of the market with
The Indian consumer is family oriented and puts a lot of stress on the fuel
efficiency of the cars. The product would be catering to the segment of the
market which is value oriented, makes a purchase decision based not only on
the price of the car but the operating cost of the vehicle. The car has a seating
Target Market
The car under consideration would fall in the compact car segment and the
targeted buyers would be households who prefer cars with less operating cost.
The economy class segment consists of almost 80% of the passenger car
market in India.
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Honda - Challenging the Limits.
The competing factors for the car would be the fuel efficiency and the price of
the car along with the manufacturing expertise of Honda. The company would
also promote the ease of availability & economical cost of the spare parts of
the car.
The company intends to target the value conscious middle class segment that
looks for value for money with comfortable ride. The company would also
targets the working women who spend their precious time in commuting by
public transport.
For its corporate sales the company is targeting car rental services who rent
their cars to the middle level employees of organizations for business travel
and the tourists within the city and for short distances. The company would
Positioning
operating cost. The stress would be on the mileage of the car and also on the
size which will allow easy maneuverability on the crowded Indian roads. The
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Honda - Challenging the Limits.
Honda would also cash on its corporate image of superior after sale service to
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Honda - Challenging the Limits.
DEVELOPMENT
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Honda - Challenging the Limits.
segment of the Indian car market. The car should deliver its promise of being
a fuel efficient vehicle. The product hence has been developed with
Car would be light weight, which would also increase the fuel efficiency.
However the company would also consider the safety of passengers & would
Engine downsizing to around 1.2 liters will be done so that lesser CO2
emissions are made from the car. This would also help to take the tax sops
power.
The car would be assembled at the Greater Noida plant of the company which
will help to utilize the installed capacity of the plant. The engine would be CKD
imported from Honda Japan. The company also proposes to have solar
The car will also have a 3 year warranty with free vehicle service provided for
first year. The company also proposes to introduce a CNG model in near
future.
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Honda - Challenging the Limits.
Product features:
Technical Specifications
Make Honda Fuel efficiency 25 kmpl
Model Fuel efficient model Fuel Type Petrol(CNG version
later)
All aluminum Fuel capacity 35 liters
Body Type
Hatchback
Number of Doors 4 Capacity 1200 cc
Seating Capacity 05 Air conditioners Power saving AC.
Safety Seat Belts ,Anti Lights Solar chargeable
all models)
Bags, Collapsible
Steering(in higher
versions)
Colors available in
higher versions)
Euro-IV, Bharat Overall length 3500 mm
Emission Norms
Stage-III compliant
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Honda - Challenging the Limits.
PRODUCT MIX
The product mix can be explained as the total range of products that the
company has on offer to the customers in different markets. The product mix
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Honda - Challenging the Limits.
of a company can be described to have width and depth. The width of the
product mix refers to how many product lines are present in the company
activity. The depth of the product mix refers to the number of products offered
Product Width
Prod
uct
Cars Motorcycles Power products Technology
Dept CRV Super cub Generators ASIMO
h
Outboard engines
Product width is only consisting of cars in the Joint Venture of Honda with Seil.
The Motor cycle and the power business are separate companies with
different partners.
Product depth: Total range of products offered in the product line is:
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Honda - Challenging the Limits.
Accord Premium
• Accord V6
City Zx Premium
• City ZX EXI
• City ZX VTEC
Honda Civic Premium
• Civic 1.8V MT
• Civic 1.8V AT
• Civic 1.8S MT
• Civic 1.8S AT
Honda CRV SUV
Source:http://www.hondacarindia.com
The new fuel efficient car would fall in the Car business of the company. The
introduction of fuel efficient car in the compact segment would help the
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Honda - Challenging the Limits.
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Honda - Challenging the Limits.
DISTRIBUTION CHANNELS
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Honda - Challenging the Limits.
The company intends to use its existing distribution network for sale of the
members:
STOCKIST
DEALERS
SUB DEALERS
BOOKING AGENTS
The company intends to have stockist to reduce the delivery time to the
customers. Since the car would be manufactured at the Greater Noida pant
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Honda - Challenging the Limits.
and the customers would be based all across the country the delivery time
would be faster
development.
Choice of dealers:
• Experience
• Financial Position
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Honda - Challenging the Limits.
• Past performance
• Working hands.
Honda Seil Cars India has a strong sales and distribution network spread
The company gives some commission to the channel partners along the
distribution channel. It also gives incentives to them if they sell more products.
This way, the distribution and marketing of the product takes care of itself to
some extent.
4
www.hondacarindia.com
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Honda - Challenging the Limits.
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Honda - Challenging the Limits.
maintenance cost. The punch line of the product would be “More for less-
& reaching the target market, exploiting the dynamic nature of TV 60%
used for name & image identification and also create broad awareness
information of the car and provide them a chance to test drive the new
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Honda - Challenging the Limits.
advertising.
The sales promotion would be more by way of publicity. The Indian consumer
seeks extensive information before making a purchase decision for a car. The
company would hence exploit this area and create awareness & interest
through popular auto shows telecasted on TV and through write ups in popular
The company would also gift the car as the prize for the winners of many
realty shows on Indian television like Indian Idol (Indian version of American
Idol). This would ensure the company to introduce the car in the Indian market
Brochures & booklets highlighting the product features would be printed and
stocked with the dealers, retail battery outlets and kiosks at malls would also
be erected to explain the customers about the features and handle additional
information sought.
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Honda - Challenging the Limits.
CONCLUSION
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Honda - Challenging the Limits.
The preceding sections of the report highlight the fact that cars have become
a vital part of a city dweller in India. The demand for cars is growing at an
excellent rate and as compared to the developed nations the penetration rate
The studies have also found that the Indian consumer looks for those products
which fulfill his control needs. Apart from good resale value and easy
maintenance; they seek durable engine and extra seating capacity which
being offered by the car. These functional benefits are built in the car. The car
is also environment friendly with low CO2 emissions and solar chargeable
lights.
Honda has an advantage as people are already aware of the brand pedigree
them. Hence the product would satisfy the needs of the target customers. The
product would help the company to increase its market share as a compact
BIBLIOGRAPHY
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Honda - Challenging the Limits.
Bose B, Marketing Management (Text & Cases), (2007), HPH, New Delhi
Kotler. P, Marketing Management, (2006), 12th ed., Prentice Hall Inc. , U.S.A.
Dr. Misra M, Customer Segment Research and Its Role in Designing Sales
Promotion Programme for Small Car Industry in India Volume XXXVII •
Number 10 • October 2007, Indian Journal of Marketing.
Peter.J & Olson J., Consumer Behavior & Marketing Strategy,(2005) 7th Ed.
Mc.Graw Hill.
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Honda - Challenging the Limits.
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