Honda case

Submitted by Diksha Aneja p39194

Honda new product development process

When Honda entered into the motorcycle industry, most of its competitors either operated in
ill-equipped job shops or copied European motorcycle using inferior technology. They came
up with unreliable motorcycles. Honda focussed on introducing reliable products by
leveraging on its technology-based strategy. Whenever a competitor introduced a product, it
responded with a product with additional features at a better price. For example, some large
competitor introduced a 4 stroke engine motorcycle, it responded by introducing 4 stroke
design with doubled horsepower with no additional weight. It developed its manufacturing
expertise of engines, frames, chains, and other parts to aid its new product development
process. Honda unlike its competitors, who invested in one winning design, rather focussed
on product innovation and on offering the multiproduct line to exploit opportunities.
In 1958, it identified a large, untapped market for small motorcycles for delivery. It designed
a product especially for this which later become a huge success. This shows that Honda
enjoys an advantage over its competitors for being a leader in new product development and
for the customer value proposition.

Honda entry in the US market and US market’s attractiveness

Entry in the US was indeed a good decision for the company as its strategy was to increase
market share. It established a US subsidiary in contrast to other foreign players who relied on
distributors. It followed a policy of developing market region by region. It offered a small
lightweight motorcycle superior to sears and sold it at very competitive prices as compared to
US players. Honda not just created the largest dealership network, it also focused on
advertising to overcome the unsavoury image of the motorcyclist to nicest people on Honda.
The unique activities like advertising, which no other player did, to deliver customer value
proposition were fundamental to its strategy to increase market size. It was willing to take
short term losses to build its large distribution network.

Honda Competence
With its extensive advertising and promotional effort, it created a market for the recreational
uses of motorcycles. The company’s new product development was backed up with a strong
commitment to R&D and advanced manufacturing techniques. It was able to increase its
market share because of productivity based cost advantage and R&D capability. It outspent
its competitors in advertising and it also established the largest dealership in the US.