Bài báo cáo: Marketing Plan Analysis – Honda Vietnam

Honda is the most dominant company in the Vietnamese motorcycle market. Since it entered to this market, its products have been loved by Vietnamese people, and most Vietnamese have an experience to use a Honda’s motorcycle in their life. However, Honda currently faces the huge problem: market saturation. As a result, there is a necessity to find a new way to overcome this problem. Through this report, we firstly analyze current market situation from macro and micro views. Then, we provide SWOT analysis for Honda in Vietnam.

Marketing Plan Analysis – Honda Vietnam

Group3:

Lưu Vũ Quỳnh Như, Lê Thị Phương Ngân, Phan Huỳnh Diễm Thảo, Vũ Kiều Trâm,

Phạm Xuân Phú, Yuuki Yazawa, Kanta Imanari

Principle of MarketingDecember 9, 2015Instructor: Dr Nguyen Thi Mai Trang

TABLE OF CONTENTS

Executive Summary 3

Introduction 4

The product – SHi 125/150 6

Microenvironment 9

Company 9

Suppliers 15

Competitors 16

Publics 19

Customers 22

Macroenvironment 24

Demographic factor 24

Economic factor 27

Natural factor 32

Technological factor 33

Political factor 34

Cultural factor 35

SWOT Analysis 36

Recommendations 41

Market development for high-income segment 42

Market development for foreigners 44

The extension of customer services 50

The problem of recall for SHi 125/150 52

References 55

Executive Summary

Honda is the most dominant company in the Vietnamese motorcycle market Since it entered to this market, its products have been loved by Vietnamese people, and most Vietnamese have an experience to use a Honda’s motorcycle in their life However, Honda currently faces the huge problem: market saturation As a result, there is a necessity to find a new way to overcome this problem Through this report, we firstly analyze current market situation from macro and micro views Then, we provide SWOTanalysis for Honda in Vietnam We found several problems Honda currently possesses, and also found several opportunities that would contribute to its further growth Based

on our analysis, we suggest three recommendations for the marketing activities of SHi 125/150; market development for high-income segment; market development for foreigners; and the extension of customer services Finally, we briefly mention in the problem Honda faces: the recall of SHi 125/150 and provide considerable solutions for

it We hope our research and recommendation would be helpful to promote the sales of SHi 125/150 in next year

Introduction Company description

Honda is one of the greatest global company and famous for motorcycles and cars It has expanded its business operations through the world, and provides consumersadvanced-technological products at reasonable prices Honda currently expands its businesses to aircraft and robot industry, and seeks to improve itself continually for a long time

Honda history Honda was established by Soichiro Honda in 1946, and started

manufacturing of motorcycles in Japan Honda firstly expanded its business in the United States in 1959, and has gradually expanded its business through the world In

1963, Honda started the sales of cars, and from that time, has significantly expanded its business from motorcycles, cars, to power equipment, aircrafts, and robots Honda is currently recognized globally, and becomes one of the greatest global company

Honda in Vietnam Honda entered to Vietnamese market in 1996 The first

plant in Vietnam was established in 1997 (B Thi, & X Thi, 2009), and Honda started manufacturing at this time However, before Honda entered to the Vietnamese

motorcycle market, Honda exported some motorcycles from other countries to Vietnam,and therefore, Honda’s products were hugely recognized by Vietnamese consumers

Honda succeeded in taking a first mover advantage in Vietnam (B Thi, & X Thi, 2009), so it has s strong power in this market Initially, Honda focused on middle-income segment to promote its motorcycles because people under this segment did not afford Honda‘s products Honda faced to the strong competition of ultra-low price models manufactured by Chinese makers and lost huge market share at the beginning of2000s (Fujita, 2008), but Honda regained its market share by introducing the low-price brand “Wave Alpha” (Nguyen, 2006) This was significant change taken by Honda, and

it initiated to focus on low-income segment as well Currently, Honda is a giant, sharingaround 70% of the Vietnamese motorcycle market, and Honda’s products are loved by Vietnamese people

Mission The mission of Honda (2015) is “Maintaining a global viewpoint, we

are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction.”

About the report This report mainly consists of four parts First three parts:

Analysis of macro environment, microenvironment, and SWOT analysis, are analysis ofcurrent market situation Then, the recommendations for the marketing of SHi 125/150 model will be described based on the analysis of current market Secondary resources from Honda’s Website and some other sources such as academic journals and Websites

of public institutions are main sources of our research We also conducted the

questionnaire on the Internet, and it also helps our research and supports our

recommendations

Product Analyzing: SHi 125/150 Design

Very high-class design: based on the strong side of the SH brand in EU, SHi

125cc/150cc brings out the western design to Vietnamese consumer

The Head: the head of the motorbike is crafted to its finest The highlight part

is the headline, being covered chrome to show even more the high-quality of the

product

16-inch stylist wheels: with light-weight but stable design The wheel ensures

smooth and curve driving for the user

The Body: Is design to bring out the sexy curve at every corner.

The Back: Fully equip with strong glass with highlighted pattern Maximum

lighting to ensure the best quality

The parameter: functional smart count clock, smart and scientific design The Engine SHi runs on an innovative piece of technology, the eSP (enhance

Smart Power), which is a latest design for scooter The engine has very small, but not less powerful, smooth and quite travelling, very eco-friendly, by consume less gas

The gas-spraying mechanism is fully automated and control by the main

board, enhance the ability of the entire motorbike, minimize fuel consumption Thus, this contributes to less gas emissions from the motorcycle

Idling Stop: System temporarily disconnect the motor, is a breakthrough new

technology in the motorcycle with the ability to save fuel efficient and environmentally friendly The system has the ability to automatically disconnect the motor, switch to standby mode to save energy when the car stopped more than 3 seconds and restarts smoothly when the driver throttle back and do not need to press the start button

Technology Integration of Title ACG Vehicles capable of smooth start

thanks to integrated systems and generator startup, the maximum friction reduction, fuelsavings based on intelligent electronic mechanism After turning off the engine, the re-launch is also very easy

Less Friction Technology Designed to minimize the maximum friction, helps

the engine operate more smoothly

Gas Evaporative Control System Fuel tank is equipped with system EVAPO

help minimize the evaporation of gasoline, which saves fuel efficient and

environmentally friendly

Maximize Comfortability & Safety

SHi 125/150 promises to deliver the best driving experience there is.

Main Container U-box compartment is wider, can accommodate both the

first helmet 1 or 2 caps, thanks to the streamlined between the parts on the car that is guaranteed to be the body slim

Fuel Container The gas tank designed with maximum volume and arranged

in the most reasonable way Combined with the ability to excel in fuel economy, the new SH lets users move farther in the distance

On/Off switch Outriggers Switches Side Stand shutdown instantly when

lowering the outriggers down Only works when the engine side has gotten onto

outriggers This helps users to not forget the legs brushing against parties before startingthe car

Hydraulic-brake system SHi 125/150 is equipped with a braking system

combines advanced hydraulics In particular, the following disc brakes not only increase

a sense of stability and safety, but also provide strong braking force, continuous and very balanced when braking

Microenvironment Company

Marketing mix (4Ps) In order to identify the strengths and weaknesses of

Honda itself, firstly, marketing mix which includes 4Ps: product, price, promotion, place, should be analyzed.

Product: Honda has a variety of brands to cover the variety of its market segment Each product will be introduced in order

 SH mode 125cc (7 colors)

Price Standard: 49,990,000 VND

Fashion: 50,490,000 VNDPersonalized: 50,490,000 NVD

 SH 125i / 150i (5 colors)

Price Electronic fuel injection: 30,990,000 VND

Electronic fuel injection: 29,990,000 VND

 Super Dream 110cc (3 colors)

Black & Gold: 18,990,000 VND

 Wave Alpha (5 colors)

According to this product range, it is revealed that Honda thinks the usage of its

products as a mean of transportation rather than as an enjoyment Also, there are more color variation in lower price models than in higher price models In addition, lower price models design for younger people in terms of product style

Price: According to the above information about products, the price of its

products range from 16,990,000 to 80,990,000 VND Accordingly, Honda focuses on

various market segment from lower income to relatively higher income Honda has mainly focused on the middle-income segment, but because of the emergence of ultra-low price models produced by Chinese makers in the market, it expands its market segment to lower-income segment as well by introducing Wave Alpha Nevertheless thepurchase of motorbikes is big deals for Vietnamese consumers because their average income is around 40 million VND, Honda successes to capture various market segment due to its strong brand power.

Promotion: Honda has been famous because of its excellent customer services both before and after purchase This creates great customer value and strong brand image though the Vietnamese market In terms of advertisings, even though Honda has variety of channels to advertise its products such as YouTube channel, and own

Website, its advertisings are general and not differentiated with its competitors

Therefore, there are necessities to create the ads focusing on specific feature of products

or having huge impact on consumers’ mind Honda engages in various CSR activities such as supporting education, environmental conservation, and doing charity activities

In addition, Honda strongly encourages safety driving in Vietnam Because of heavy traffic situation, Honda thinks that Vietnamese people should know how to drive more safely and efficiently Honda launched “safety driving project”, and it provides safety

education in its own training center and local community Due to these its activities, Honda succeed in building strongly positive reputation among Vietnamese people.

Place: Honda has its own dealers or dealers under its name in all provinces in Vietnam This enables customers to easily access to a dealer near their location

Accordingly, consumers can easily go to a dealer when they have a problem with their motorcycles, and excellent services in each dealer strength customer’s loyalty to Honda.This strong combination, easy access and excellent customer services, contributes to creating great customer equity and is the source of its strong brand image

Marketing strategy In order to identify the marketing strategies, two

questions must be referred: “Which customers will be served?” and “How will a

company serve?” Honda’s marketing strategies will be analyzed as following the

textbook

Segmentation: At first, basically Vietnamese people, except some rich people,

think about a motorcycle as a mean of transportation rather than the thing showing their status In addition, Vietnamese people most care about price when they buy a

motorcycle (Q & Me, 2014) Accordingly, Honda chooses income segmentation as a basic strategy of market segmentation

Targeting: The prices of its products range from 80,990,000 VND to

16,990,000 VND, and therefore, its market segment varies from high to low income segment Accordingly, Honda uses differentiated marketing, and each brand focuses on each market segment in order to cover various market segment.

Differentiation and positioning: Honda differentiate its products based on two ways of differentiations At first, Honda differentiates itself by using its brand image Vietnamese people have recognized Honda’s products are high quality and durable for along time, and therefore, this is the most influential differentiation in Vietnamese market In addition, Honda has a lot of dealers in Vietnam, and this contributes to its service differentiation Customers easily access to a dealer near their location, and get a services both before and after they purchase its products

In terms of positioning, Honda’s position in the market varies the brand to brand Wave provides consumers only basic functions that required to drive at relativelylower price, so this is the same for less strategy On the other hand, SH provides high quality at higher price, so it is more for more strategy In addition, some other brands provide relatively good functions and quality at normal price, so these would be more for the same strategy

Suppliers

When Honda entered to the Vietnamese market, it relied its components on Japanese and Thailand manufactures in order to sustain its high quality products

However, at the beginning of 2000s, many Chinese makers entered to the Vietnamese market with ultra-low price motorcycles, and therefore, Honda was required to launch low-price model brand to compete with these Chinese competitors Accordingly, Hondainitiated to depend on local manufactures to produce non-core components to reduce theproduction cost of its motorbike (Nguyen, 2006) This hugely contributed to reducing the costs, and Honda succeeded in introducing Wave Alpha to the market Although Wave Alpha has become popular product in Vietnam, Honda faced a new problem related to suppliers The Vietnamese government set the requirement of local content ratio, and as a result, Honda must have expanded its local suppliers (B Thi, & X Thi, 2009) In order to deal with this requirement, Honda has invested in and worked closely with local manufactures to improve their quality management and productivity for a long term, and currently its local content ratio is more than 90% The components of some brands, such as SH mode and Air Blade, are produced more than 95% in Vietnam (“Motorbike manufactures”, 2013) Accordingly, it is revealed that Honda now has good relationships with its local suppliers, and this is one of the strengths for it to sustain its higher market share in the Vietnamese market

In Vietnam, 95% of market share is accounted by 5 companies; Honda,

YAMAHA, Suzuki, SYM, Piaggio Honda has about 60% of market share Although it

is decreasing slowly nowadays Characteristics of Honda’s products are unbreakable, high quality and performance, and easy to use Thus, its main competitors would be YAMAHA and Suzuki because both company have similar product quality with Honda.Piaggio and SYM are just small competitors because their market share is small, and their product concept is different from Honda’s one

YAMAHA Yamaha’s motorcycle has high performance and quality as same

as Honda It cooperates with Toyota in terms of engine technology, and the ability of production and technique are excellent YAMAHA has 20% of market share in the Vietnamese motorcycle industry; therefore, it is the 2nd largest market share The variety of YAMAHA’s motorcycles is as same as Honda since it has 11 brands of products However, YAMAHA’s price range is lower than Honda Even though Honda currently provides low-price brand such as Wave, its price range relatively higher than YAMAHA’s products On the other hand, YAMAHA makes effort to reduce average price of products In addition, YAMAHA’s motorcycles are focused on sporty driving Its design is beautiful and sophisticated

According to YAMAHA annual report (2012), YAMAHA’s marketing strategy

in Vietnam is trying to enhance brand power and expand market share Products are based on low-fuel consumption engine It will also increase the variety of products in terms of development and designing for attracting more Vietnamese consumers

Recently, the rise in oil price makes YAMAHA focus on low-fuel consumption engine

in order to respond to customers’ needs Also it is for expanding the market share

Suzuki Suzuki’s motorcycle also has good quality and performance closed to

Honda and YAMAHA However it completely devotes its effort to reduce cost of production, and also sells products at low price In addition, its product design is

unique Suzuki has 6% of market share; the marketing strategy of Suzuki is compete with other companies with its low price to expand its own market share For achieving low price motorcycles, Suzuki decreases the number of brands; it now provides only 8 brands and concentrate to produce only narrow range of products Moreover, Suzuki usually use colored materials in order to reduce the production cost while other

companies usually use non-colored materials and color these materials by themselves

Product Comparison As it was mentioned above, SHi 125/150 provides high

technology, great quality, and eco-friendliness to consumers Comparing with

YAMAHA NM-X, SHi 125/150 still has advantages in terms of these functions This

comparison clearly indicates that Honda SHi 125/150 is better than YAMAHA NM-X except the design because it depends on personal favor.

The reason why we choose YAMAHA NM-X as a comparing product is that price is close to Honda SHi since the price of NM-X is 80,000,000 VND while SHi is 80,990,000 VND Also, these products target the same market segment; both of these focus on upper-income class Actually the design of these motorcycles are different in terms of for female or male However, in this comparison, it would not be considerable problem

Firstly, we focus on fuel capacity Large fuel capacity means consumers can drive longer distance A motorcycle is necessary goods to live in Vietnam Thus, fuel capacity is an important criterion to use conveniently and comfortably NM-X’s fuel capacity is 6.6L while SHi’s fuel capacity is 7.5L It shows SHi is better than NM-X in terms of fuel capacity Secondly, we make a comparison in terms of fuel consumption That connects to two results: reducing cost and protecting environment In other words, good fuel consumption helps to reduce cost for oil, and reducing oil consumption contributes to protecting the environment

Public

Financial publics.

Individual or Organization

Number of shares held

(thousands)

Percentage of total

shares outstanding (%)

Japan Trustee Services Bank, Ltd

Meiji Yasuda Life Insurance Company 51,199 2.8

State Street Bank and Trust Company 43,820 2.4

Tokyo Marine & Nichido Fire

The Bank of Tokyo-Mitsubishi UFJ,

Mitsui Sumitomo Insurance Co., Ltd 25,739 1.4

Media publics Honda has many different media channel in hand, such as:

 www.youtube.com/user/HondaVideo

 hondanews.com/channels/

 corporate.honda.com/press

 world.honda.com › World News › News Releases

There are also many other showroom, news-coverage, newspaper ad which are devoted for Honda

Public Relations (PR) Strategize, plan & execute PR activities for assigned

project (minimum 3) from pre-launch, launch to sustenance phase: Press Materials Preparation, Monitor media coverage for each projects executed., Evaluation (PDCA)

on projects executed, Budget monitoring for each project, Support Internal

Communications, Support ad-hoc events/projects, Pitch & arrange media test drive, Handle all media enquiries, Monitor & analyze media exposure trend for Honda & competitors

Local public Honda supports a broad range of community-based

environmental education, preservation and restoration efforts That means we’re

providing grants, products, and in some cases, the support of hundreds of Honda

volunteers Whether it’s cleaning beaches, restoring wetlands, greening urban areas, or engaging students in field-science research, we believe in caring for the environments inwhich we work and live As the leading company in producing motorcycle in Vietnam,

Honda Vietnam always hold up activities to encourage and show people how to drive safely Since 2004, the “Tôi Yêu Việt Nam” programs, has been certified and

cooperated by the Committee of the National Traffic Safety, Police Department Road and Honda, have been aired for 10 years Over time the, the program has make an impact upon the people all around the country with many successes bring positive effectfor local people

General public Beside having responsibility with manufacturing, producing and

especially ensuring safety environment, Honda also commits to contributing for the general community, such as raising fund for the education, charity work and

environmental program: The top 10 youngest innovator, the award for successful engineer and scientist, the raising fund for poor but hard-worked student, the Fund for victim of the 9th storm, “Ngảy hội trồng rừng”

Internal public Benefits of Employment: Honda Associates are our most

valuable asset and Honda offers a wide range of benefits to meet the needs of our diverse workforce The type and scope of benefits vary by company and location

Honda Philosophy: The Honda Philosophy has guided our direction, and

continues to serve as the basis for our daily activities At the core of the Honda

Philosophy is the concept of "Respect for the Individual." This means that we recognize

and respect individual differences in one another, that we treat each other fairly, and that

we establish relationships built on mutual trust By doing this we encourage each Associate to think creatively and show individual initiative and judgment

Commitment to Inclusion and Diversity: Honda is committed to bringing together a diverse group of Associates, dealers and suppliers to foster the kind of

innovation and vitality that enables us to achieve our dream of creating products and technologies that make people's lives better In this spirit, every Honda Associate and business partner is expected to embrace and actively support diversity and the cultural richness and advantages it provides

Corporate Social Responsibility: Honda has a long-standing commitment to be

"a company that society wants to exist." Honda is working to address the world's

environmental challenges through a comprehensive approach for the near and longer terms Read about these programs Honda is also engaged in a broad range of activities that support and give back to the communities where we work and live

Consumers

Consumer markets Honda main goal is to provide high quality transportation

for Vietnam with reasonable price

Business markets Here are some Honda suppliers, like, Keihin Corp (Fuel

system), Showa Corp (Steering system), Shumito wiring system, Ltd, NOK Corp, Nihon Plast, Nippon Seiki

Reseller market Beside from official distributing channel, there are also

retailers who purchased product at profit point, such as dealer, automobile specialist, approved body shop

International markets Continental Expansion – North, South, and Central

America American Honda Motor (AH) was established in Los Angeles in June 1959, marking the start of Honda's expansion overseas The quest was to find a market for motorcycles and to win the satisfaction of American consumers, and so through the efforts of AH a sales network was created Honda established offices in Singapore and Malaysia in 1963, actively preparing for entry into the growing Southeast Asian market.Honda established Asian Honda, a company for motorcycle and power products sales,

in Bangkok, Thailand, in October 1964 In April 1965, Thai Honda Manufacturing (TH), a production base for motorcycles and general-purpose engines, was established for local production

Macro Environment Demographic factor

Demographic changes have significant impacts on the social and economic performances of countries, regions, and the whole world (Giang & Pfau, 2008)

Therefore, deep understanding of the population trend is an advantage in promoting sales

Nowadays, motorcycle is considered as the most common means of transport in Vietnam, especially in Ho Chi Minh City In average, there are 2 to 3 motorcycles in each house in Vietnam Therefore, Vietnam has a large motorbike-consumption

(United Nations, Department of Economic and Social Affairs, Population Division (2015) World Population Prospects: The 2015 Revision.)

Two graphs above show the comparison between the population in 1950 and in

2015 As it can be seen from the graphs, the population increases considerably

throughout the period The population of Vietnam is estimated around 90.73 million in

2014 (The World Bank), and is predicted to continuously rise in the next few years In addition, UNFPA Vietnam (2015) describes the structure of population in Vietnam as following:

Vietnam has gone through dramatic changes in population structure The number of people under the age of 15 has fallen substantially, while the

number of people of working age (15 to 64 years old) has increased Because

of this, Vietnam is now in a period known as the ‘golden population structure’ Besides, level of education is grown slightly which has led to the rise in income and living standard of people living in Vietnam Accordingly, it can be predicted that peoplewould be more quality-conscious rather than price-conscious Moreover, Vietnam has unequal distribution of population People are moving from the countryside to cities Therefore, companies should understand these differences between rural and urban area,and implement effective strategies to distribute their offerings through the country

Turning to gender, nowadays, women tends to be independent because they desire the same rights as men Therefore, the number of women who makes their own living is going up sharply This has led to the increase on the consumption of relatively expensive products However, women have different eyes on fashion and they pay muchmore attention on the outlook than men That is why marketers have to make sure to provide various design in their offerings On the other hand, men usually tend to be more quality-conscious such as technology rather than design, so marketers should also find the ways to emphasize qualitative attractiveness

Economic factor

Economic environment affects consumer buying power and spending patterns The research is about Honda motorcycle, on the other hand, it is examined all factors which are involved in economic environment that influence the sales of motorbikes in Vietnam In fact, Vietnam is a developing country in the process of industrialization andmodernization, and therefore, many economic factors have recently changed The aim

of the economic environment research is to help analyzing the entire market thoroughly

to understand how the market recently runs Therefore, rich information should be carefully examined to take the best strategy This research covers four parts belonging

to the economic environment

Inflation rate Firstly, inflation rate in two countries, Japan and Vietnam, are

analyzed Japan, the founder of Honda, will be considered at first In fact, the statistic shows that from April to July in 2015, the inflation rate of Japan went down from 0.6 to 0.2 It will cause that many products’ prices decrease or stay constantly, and the cost of materials usage in making motorcycles will follow similar way This may impact on the price of the final products Beside, when motorbikes are delivered as export products to Vietnam, this price may be reduced However, the motorcycle market usually stays stably, so its price tends to stay constantly Therefore, the motorcycle producers likely

increase the quantity of motorbikes instead of changing the prices of products Next, theinflation rate of Vietnam is examined It has also gradually decreased through every month, the information indicates that from April to August in 2015, the rate had

decreased from 0.99 to 0.61, and the statistic predicts that it will continuously decline This part includes Vietnam’s inflation rate because there are two kinds of motorcycles, one is assembled in Japan and another is assembled in Vietnam However, the reason for mentioning in the inflation rate in Vietnam is that only few percent of domestic production accounts for high-value components of vehicles Components manufactured

in Vietnam are mostly simple spare parts such as seat belts, seats, and wire The rest of the critical equipment with high technological content mostly imported from other countries The increase in the inflation rate likely leads to the increase in the sales of products

Consumer spending Consumer spending in Vietnam is the other crucial part

According to IECONOMICS (2015), from 2013 to 2014, Vietnamese consumer

spending increased from 2,331,160.5 billion VND to 2,591,337 billion VND, and it continuously increases to 2,644,079.0125 billion VND in 2015 The forecast shows that

it will increase to 2,789,285.4888 billion VND within next two years Because of the increase in consumer spending, it indicates that Vietnamese people recently tend to

spend more The market encourages people to spend as well as their ability to do it Based on this information, producers could decide to increase the production of

products and focus strongly on Vietnamese market as the destination of export

The level of income The next part is the level of income This is the important

part because from this database, marketers could briefly understand about the change in consumer behavior and buying power According to the World Bank, the level of income has gradually increased every year The Gross Domestic Product per capita in Vietnam marked $2052.3 in 2015 Beside, an average cost of a motorcycle selling in Vietnam varies from $800 to $900 Basically, Vietnamese people could buy a motorbike

by themselves with one or two year saving Consequently, the level of income is

predicted to increase in the future, so not only Honda but also the other companies likely produce and export more motorcycles in order to increase their revenue as well asprofit Moreover, Vietnamese market is still a potential market to invest and develop motorcycle industry

Global effect The last factors should be considered is the global affects

According to Mr Kurokawa Kengo, the CEO of Asia Plus Inc., stated that middle and affluent class (MAC), that means the middle income class and wealthy people, is one of terminologies when we discuss business opportunities in developing countries like