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Honda in Europe - Case Study Report

Essay by   •  September 21, 2011  •  Case Study  •  1,084 Words (5 Pages)  •  2,646 Views

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Honda Motor Co. (HMC) ranks sixth in sales within the automotive industry. Honda is quite successful as the producer of motorcycles in Japan and US, but, it seems that the sales in Europe are not that optimistic since unable to achieve the availability of appropriate communication channels to customers further affecting the performance in terms of local adaptation.( Mort 2009)

The Hofstede scores for his five dimensions <see Appendix A> represent that similar medium position in the power distance and masculinity dimensions, and similar Low level in the Long-term orientation. UK takes higher position in this Individualism dimension. In addition, France takes the high position on the Uncertainty avoidance dimension, but UK takes the lower position.

In a high-context culture, the interpretation of messages depends on contextual cues. There are things not said but are understood. High-context cultures are characterized by extensive information networks which are close and personal. (Italy, France, UK and Spain) Conversely, a low-context culture emphasizes spoken words, where ideas are communicated openly and people require detailed information in a communication, for example, Germany. < see Appendix B>

Germany

(low-context culture)

 Practicality and durability is one of the main concerns of a product.

 They are more willing to take risk and purchase new products.

France and Italy

(high-context culture)

 Style and image are important.

 Japanese car is the second consideration.

 Risk averse

 Highly patriotic, supporting and purchasing their national products.

The United Kingdom

(high-context culture)

 Tradition and class.

 Individualistic

 Less risk averse.

The fact that the manufacturing plant is located in the UK helps in the promotion of the cars.

Michael Porter's five forces <See Appendix D>

The rivalry in the global automotive industry is intense. The degree of rivalry is further heightened by high fixed costs and the low switching costs for consumers when buying different makes and models. And the threat of substitutes is fairly mild, since numerous other forms of transportation are available without convenience, independence, but low switching costs and not necessarily monetarily. In addition, the barriers are substantial, for example, the startup capital required for the manufacturing capacity and facility. Moreover, the power of suppliers directly affects on the industry's favor with standardized fix costs and backward information integration. Furthermore, the high power of purchasers leads to the high consumers' favor due to the standardized nature of the automotive commodity and the low switching costs. (Nowak, J 1996)

Obstacles in Promotion: Adopting the same promotion strategy had incurred. Firstly, the brand image is weak in Europe and the negative perception has harmed marketing effectiveness, as word-of-mouth is resorted to reach customers. The favoritism in France and Italy prevents Honda from increasing sales and enlarging market shares. Promotion could be more expensive to convert these consumers to Honda vehicles. Thirdly, high-and low-context co-exists in Europe. Honda has a few marketing websites, but the content are not varied among nations.

Product: To enlarge and increase the market share, Honda should enhance the image and communicates it to customers. It can also be achieved by product adaption, addressing various needs in local markets.

Price: The price for motor vehicles is similar to the competitors'. However, European consumers still prefer their home owned brands.

Distribution: Since 1960s, the distribution place for motor vehicles was limited to the UK only. For one, customers tend to relate Honda's first motorcycle image to cars; for another, motorbikes and motor vehicles buyers have different psychologies reflected on social status. Thus, one channel distribution restricts the size of target customers.

Product mix: It refers to the range of product lines and items a buyer can

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