Honda is a Japanese conglomerate and produces automobiles (the automobile service represents more than 80% of its revenue), motorcycles, power products and power tools and offers financial services. Honda became famous abroad and expanded from Japan to the US in the 50s and to Europe in the 60s, thanks to its effort and investments in Formula-1.
In the 1990s the automobile market was saturated and highly competitive. Honda has chosen to enter the European market by building its first factory in the UK. But in 2001, Honda represented only 2.4% of this market and suffered from a weak brand image.
This situation can be explained by the marketing strategy chosen by Honda for the European market. Honda decided to sell many different models in the UK where the cars were first produced (the larger range of models including few diesel-powered cars), Germany, France and Italy. The company priced its products at a similar level to that of the competition but did not spend a lot of money on promotion, but relied on the word of mouth. Concerning the distribution, Honda has chosen to sell both its cars and motorcycles in the same places throughout Europe.
Since the late 90s, Honda's sales has been constantly decreasing, due to a lack of popularity, especially in Italy and France. A study of the difference between cultures in Europe and the cultural context could explain this problem. In Europe we can highlight two different kinds of nations: those with a high-context (France, Italy and moderately the UK) and those with a low-context culture (Germany).
[...] o The image of the brand is really poor in the European market: probably due to the communication strategy which would not be adapted to the culture and the country. Moreover, the demands of consumers differ from a country to another one. o Some products are not adapted to the country where they are sold: for instance, diesel cars are sold in UK whereas French and Italian consumers are more likely to buy this product Alternative solutions First solution Offer new cars with a new technology. [...]
[...] ž We think that we could use a nest strategy at the begining to segment and after this, that means after improving our image, we can attack the rest of the European market. The German market is the first target because culturally speaking they are more open minded. First, they care a lot of the environmental topic and they like to try new technologies. Secondly, French and Italian are followers in this type of sector. Indeed if the German market accepts Honda's cars, the other countries will react positively because German opinion in this sector has a good image of quality Propose action plan o Goals and objectives Short-term objectives: Improve the image of Honda based on its fundamental value Use the impact of environment and the fact that the new Honda is the car that pollute the less Reach this goal by the German market Long-term objectives: Use the good impact and the new [...]
[...] Other companies arrived more recently and they are forced to sell in niche markets and their market shares are much smaller SWOT analysis of a company STRENGTHS WEAKNESSES Regional strategy vs Mergers & Late entrance into the European market Acquisitions strategy: Honda has adopted the Low and decreasing sales in Europe RS, it means to set up plants in regional Image : markets in order to remain a global competitor. A weak brand image in Europe (relatively unpopular Honda has already set up into the 4 major in Italy and France) European markets France, Italy, Germany) Non-adapted to the cultures Best sales in UK and Germany for the European Misunderstanding of the different cultures in market Europe, Honda has considered Europe as a single Successful advertising in low context cultures and same market like Germany Promotion: little time and money, not efficient Honda Insight = 1st of the top 5 cars with the and sufficient in the European market lowest CO2 emission OPPORTUNITIES THREATS Face to the economic situation (declining euro the mature stage of the automobile industry life in relation to US dollar), increase of the cycle companies are forced to adopt the M&A cars' exportation strategy otherwise they would have to sell in France/Italy: preference to drive diesel niche markets automobiles High-saturated European market with strong locally Huge popularity of Diesel cars (cheaper and owned car competitors long run cars) French and Italian markets : low quality image of Germany / UK: Taking risk in a purchase Japanese products ; patriotism ; risk aversion A voluntary agreement in the European automotive industry : to reduce the CO2 emissions 4. [...]
[...] We don't know how many cars are sold each year in Europe but we know that Honda sold 201,284 units in 2001, which seems rather low compared to the potential total of care sold in the whole Europe. Competitors There are a lot of competitors who have set up for a while. Some of them appeal to the patriotic feelings of the customers because they are local (i.e. Fiat in Italy, Renault and Peugeot in France, Mercedes and Volkswagen in Germany). [...]
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