Реферат: Marketing Of Honda Motorcycles In The Usa

Marketing Of Honda Motorcycles In The Usa Essay, Research Paper

Marketing of Honda motorcycles in the USA

The American Honda Motor Company was established as a subsidiary

by Honda in 1959. During the 1960’s the type of motorcycles

brought by Americans underwent a major change. Motorcycle

registrations increased by over 800,000 in five years from 1960.

In the early 60’s the major competitors were Haley – Davidson of

U.S.A, BSA, Triumph and Norton of the UK and Motto – Guzzi of

Italy. Harley-Davidson had the largest market share with sales in

1959 totalling a6.6 million dollars. Many of the motorcycles

produced were large and bulky and this led to the image of the

motorcycle rider as being one who wore a leather jacket and went

out to cause trouble.

The Boston Consulting Group ( BCG ) report was initiated by the

British government to study the decline in British motorcycle

companies around the world, especially in the USA where sales had

dropped from 49% in 1959 to 9% in 1973. The two key factors the

report identified was the market share loss and profitability

declines an the scale economy disadvantages in technology,

distribution, and manufacturing. The BCG report showed that

success of the Japanese manufacturers started with the growth of

their own domestic markets. The high production for domestic

demand led to Honda experiencing economies of scale as the cost

of producing motorbikes declined with the level of output. This

provided Honda to achieve a highly competitive cost position

which they used to penetrate into the US market. ” The basic

philosophy of the Japanese manufacture is that high volumes per

model provide the potential for high productivity as a result of

using capital intensive and highly automated techniques. Their

marketing strategies are therefore directed towards developing

these high model volumes, hence the careful attention that we

have observed them giving to growth and market

share.” (BCG p.59 ).

The report goes on to show how Honda built up engineering

competencies through the innovation of Mr Honda. The company also

moved away from other companies who relied upon distributors to

sell their bikes when the company set up its headquarters in the

west coast of America. The BCG found that the motorcycles

available before Honda entered the market were for limited group

of people such as the police, army etc. But Honda had a “policy

of selling, not primarily to confirmed motorcyclists but rather

to members of the general public who had never before given a

second thought to a motorcycle”( SP p.116 ). The small,

lightweight Honda Supercub sold at under 250 dollars compared to

the bigger American or British machines which were retailing at

around 1000 to 1500 dollars. In 1960 Honda’s research team

comprised of around 700 designer and engineer staff compared to

the 100 or so employed by their competitors showing the v alue

which the company placed on innovation. Production per man-year

was 159 units in 1962, a figure not reached by Harley-Davidson

until 1974. Honda was following a strategy of developing region

by region. Over a period of four to five years they moved from

the west coast of America to the east coast. The report showed

the emphasis which Honda paid to advertising when the company

spent heavily on the advertising theme ” you meet the nicest

people on a Honda” thereby disassociating themselves from the

rowdy, hell’s angels type of people.

Essentially the BCG is portraying Honda as a firm dedicated to

being a low cost producer, utilising its dominant position in

Japan to force entry into the U.S market, redefining that market

by putting up the nicest people image and exploiting its

comparative advantage via aggressive advertising and pricing.

Pascale tends to disagree on many points of the BCG report. The

report suggests that there was a smooth entry into the U.S market

which led to an instant success. Pascale argues that Honda

entered the American market at the end of the motorcycle trade

season showing their impotence to carry out research in the new

market. As they entered the market at the wrong time sales were

not as good as they should have been and any success was not

going to be instantaneous. Pascale also criticises the

assumption that Honda was superior to other competitors in

productivity. He says that Honda was successful in Japan with

productivity but circumstances indicate that the company was not

superior. The lack of funding from the ministry of finance and

the ploughing back of profits into inventory meant they had a

tight budget to follow.

The BCG report shows that Honda had a smooth policy of developing

region by region, moving from the west to the east. Pascale

response is that this is partly true but reminds that Hondas

advertising was still in Los Angeles in 1963, four years after

setting up their subsidiary. The report to the British government

showed that Honda had a deliberate strategy of disassociating

themselves from the hells angels type of people by following the

nicest people advertisement policy. Pascale shows that this was

not an intentional move since there were disputes within the

company with the director of sales eventually persuading to

management against their better judgement. The BCG report found

Honda pushed into the U.S market with small lightweight

motorbikes. However Pascale says this is again not true. He

argues the intended strategy was one of promoting the larger

250cc and 350cc as Honda felt that this was what the market

wanted since Americans liked all things large. The bikes were

unreliable which led to the promotion of the supercubs. These

bikes salvaged the reputation of the company. An idea which

hardly came from an inspired idea but one of desperation. Overall

Pascale gives the impression that it was through an incidental

sequence of events which led to Honda gaining a strong hold in

the U.S market, mainly through the unexpected discovery of a

large untapped segment of the market while at the same time

trying to retain the interest of the current market.

The criticism made by Pascale can be further analysed by looking

at the strengths of the Honda company. The strengths of Honda

start with the roles which the founders played.

Honda was an inventive genius with a large ego and a volatile

temperament. His main concerns were not about the profitability

of the company or its products, but rather to show his innovative

ability by producing better engines. Fujisawa on the other hand

thought about the financial section of the company and how to

market the ideas. He often challenged Honda to come up with

better engines. By specialising in their own abilities the two of

them were able to pool together resources and function

effectively as a team. Another strength was the way the company

utilised its market position. Strengths in design advantages and

production methods meant they were able to increases sales in

Japan even though there was no organisation within the company.

Once there was a large enough demand for its products, mainly the

supercub, Honda both in Japan and in America, moved from a sale

on consignment basis to one that required cash on delivery. This

seemed a very risky decision to make at the time but within three

years they had changed the pattern within the motorcycle industry

by shifting the power relationship from the dealer to the

manufacturer. Mr Honda had cultivated a “success against all

odds” culture into the company. This was tested when he sent two

executives to the U.S with no strategy other than to see if they

could sell something. The weaknesses within an organisation can

become irrelevant if the strategy is strong and there is good


An element of luck also helped Honda follow an emerging strategy.

Restrictions placed on funds by the government for the U.S

venture forced Honda to take an alternative route. If they had

all the funds necessary they may well have gone through the

normal distribution channels.

Honda entered the us market right at the end of the motorcycle

trade season. When leaking oil and clutch problems occurred on

their bikes it did not affect Honda as hard as it would have had

they entered in the beginning of the season. Also people noticing

the Supercubs led the company to produce a bike which was not at

first supported by senior management.

The success of Honda was not the result of senior management

coming up with all the answers. In fact senior executives in most

Japanese manufacturing companies do not take their strategic

positions too seriously. Salesman, cleaners and those working on

the manufacturing floor all contribute to the company is run and

thereby influence its strategic position. It is this ability of

an organisation to move ideas from the tom to the bottom and back

again in continuos dialogue that the company values the greatest.

As a conclusion it is necessary to consider the theoretical side

of Hondas strategy and see whether the company was in fact

following a model. The first model is the Andrew’s model. Andrew

came up with the idea that there were two stages to corporate

strategy, formulation and implementation. Formulation involved

looking at the market, competitors and resources and formulating

a corporate strategy which would be implemented throughout each

process of the organisational structure. This model was also

supported by Porter. This is how the BCG saw Honda, as a

corporation, who had looked at the market, formulated a strategy

to cope with the environment and competition pressures and

implemented it, making all Hondas plans and activities

deliberate. The second model known as the emergent strategy

portrays a different image to the Andrews model and shows how

Pascale viewed Honda. The model shows a realised strategy made up

from a an intended strategy together with an emergent strategy

which is not planned but emerges in relation to activities within

the environment. Pascale seemed to think that in Hondas case a

substantial proportion or the companies corporate strategy was

emergent and less was actually intended strategy. The actual

strategy followed by Honda is likely to be a combination of



Minzburg, H. & Quinn, J.B. ( 1991), The strategy Process.

Prentice hall.

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