The introduction of Honda into the automotive industry and the American market illustrates the role in which marketing plays in determination of the success of a business. In 1959, Honda Company established the American Motor Company as a subsidiary. During this time, the major competitors faced by the company included Davidson of the U.S.A, Triumph and Norton of the UK and the Motto-Guzzi of Italy. In its philosophy ‘building products in a market where they are sold’ Honda aimed at expanding its business to venture market opportunities.
This study dwells on two Hypotheses;
H1 The advancement of Honda in the USA is as a result of its marketing strategy
H2 The marketing strategy by Honda is dependent on the type of customers
In an attempt to answer these two hypotheses, the study examined Honda’s statistics which include data regarding its progress and how it was established and penetrated the American market.
An internal magazine issued by Honda in the year 1954 stated that in order to be first in Japan, one has to be first in the global market. It is in this pursuit that Honda ventured the international market and in 1959 when the Honda Motor (AH) was established in Los Angeles. This establishment was in quest to find a market for motorcycles which could be able to satisfy the American consumers. To achieve this, an American Honda network was created that was the n600 automobile model being sold in Hawaii in the year 1986, it is from this beginning that the company managed to penetrate the American field of automobile sales. In March 1986, the American Honda established the Acura dealer as a second sales channel for automobiles and aimed at bringing precision and performance to the consumers.
According to the Boston Consulting Group report which was initiated by the British government with the aim of studying the reason for the decline in British motorcycle companies, the report established that the success of Japanese manufacturers began as a result of growth of their own domestic market. It is as a result of high production for domestic demand that Honda started experiencing economies of scale because the cost of producing motorbikes started to decline with the level of output. This factor enabled Honda to achieve a highly competitive cost position that the company used in order to penetrate into the US market. Honda shares a basic philosophy of the Japanese company which is that high volumes per model provide the potential for high productivity as a result of using capital intensive and highly automated techniques.
The marketing strategy of Honda is therefore aimed at development of high model volumes which they put greater attention that has seen them giving to growth and market share.
Through the innovation of Mr. Honda by the company, Honda built up engineering competencies, after setting up its headquarters in the west coast of America, Honda then moved away from other companies it used to rely upon in order to sell its products.
Before entry into the US market, the motorcycles available where limited for specific groups such as the police and army, Honda however found a policy for selling the motorcycles not primarily to motorcyclists who have been confirmed but also to the members of the general public who had previously never given a thought at using a motorcycle. The strategy of Honda was developing region by region as they expound on the US market. The company spend much in the advertisement baring the theme ‘you meet the nicest people on Honda’ it is from this advertisement that the company managed to spread it awareness, gain acceptance and penetrate the market in the US. According to a study conducted by BCG, Honda is a firm that is dedicated to be a low cost producer and utilize its dominant position in the Japan industry in order to gain entry to the US market and redefines the mark through use of the ‘nicest people’ image. It is as a result of exploiting comparative advantage through aggressive advertisement and pricing. To push into the US market, Honda used the strategy of promoting the larger 250cc and 350cc motorbikes as they discovered that Americans liked ‘large’ things, the bikes where however unreliable hence leading to the promotion of superbikes, a brand of bicycles that salvaged the reputation of the company.
Honda gained its strengths from the roles the founders had played since it had been established with an inventive idea having a large ego and volatile temperament. The main concern of Honda was not in the profit making but in order to display its innovative ability, it is a drive that enabled the company to maintain its customers and attract others. Some apart from the strategies used by Honda contributed to its success, this is as a result of luck which accompanied them during the time they were establishing themselves in the US, the us government placed some restrictions on the venture of funds which forced the company to take an alternative route, they entered the US market towards the end of the motorcycle trade season.
The theoretical aspect of Honda’s strategy can therefore not be ignored, it helps to examine if the company actually used a model in its marketing strategy. Honda can therefore be seen as a corporation that analysed the market and formulated a strategy that was able to cope with the existing environment and the pressures brought about by the competition. Implementation of these strategies enabled the company to smoothly incorporate itself into a foreign market and actually succeed. Currently Honda is a dominant company in the US, its start was promising and it was as a result of the company being flexible and a having a clear understanding of the opportunities presented by the market that it was able to establish itself.
A company needs to utilize its market position, whenever the aspects of design and method of production are strengthened; it is possible to increase sales despite lack of proper organization. Weaknesses should be turned into advantages in order for them to work in favour of the business. Whenever a new idea is brought into place, it is risky to over-plan and instead work on short-term achievements as progress continues to be realized and assumptions regarding the state of a given market should not hinder its exploitation. Various challenges face organizations, however, the weaknesses within an organization can become irrelevant if the strategy is strong and there is good leadership.
From the study, it is evident that a clear strategy and proper planning is the basis of success of Honda hence proving the hypothesis that the advancement of Honda in the US is as a result of its marketing strategy.
Novelguide. (2016). Marketing of Honda motorcycles in the USA | Novelguide. [online] Available at: http://www.novelguide.com/reportessay/science/social-science/marketing-honda-motorcycles-usa [Accessed 15 May 2016].