INTRODUCTION

Marketing strategy is the comprehensive plan formulated particularly for

achieving the marketing objectives of the organization. It provides a blueprint for attaining
these marketing objectives. It is the building block of a marketing plan. It is designed after
detailed marketing research. A marketing strategy helps an organization to concentrate it’s
scarce resources on the best possible opportunities so as to increase the sales.

A marketing strategy is designed by:

1.Choosing the target market:

By target market we mean to whom the organization wants to

sell its products. Not all the market segments are fruitful to an organization. There are certain
market segments which guarantee quick profits, there are certain segments which may be
having great potential but there may be high barriers to entry. A careful choice has to be
made by the organization. An in depth marketing research has to be done of the traits of the
buyers and the particular needs of the buyers in the target market.

2.Gathering the marketing mix:

By marketing mix we mean how the organization proposes

to sell its products. The organization has to gather the four P’s of marketing in appropriate
combination. Gathering the marketing mix is a crucial part of marketing task. Various
decisions have to be made such as –

 What is the most appropriate mix of the four P’s in a given situation
 What distribution channels are available and which one should be used
 What developmental strategy should be used in the target market
 How should the price structure be designed

DEFINITIONS OF MARKETING STRATEGY:

•By Philip Kotler,

“Marketing Strategy is the marketing logic by which the business unit

expects to achieve its marketing objectives.”

• By Dibb and Simkin,

“Marketing Strategy indicates the specific markets towards which

activities are to be targeted and the types of competitive advantage to be exploited.”

• By Piercy,

“Choosing market targets and a strong market position base on

differentiating capabilities to create a robust and sustainable value proposition to customers
and networks of critical relationships.”
 NEED FOR MARKETING STRATEGY
1)The fight for market share –

Each market is divided into shares, which are captured by the

players of the market. This fight for market share is intensifying. Because of competition,
margins are poor, and hence the increase of market share provides leverage to the company.
To increase market share, companies need marketing strategy.

2) External business environment –

Most sectors like Petrol, banking, airlines, logistics as well as

telecommunications are regulated by government. Similarly, the PEST environment affects
decision-making continuously. As this external business environment keeps changing, the
need for marketing strategy arises because you need to be ready for the changes in external
environment.

3) Business expansion –

While managing all aspects of businesses, the firm also needs

to expand at a rapid pace. This involves various kinds of mergers, acquisitions takeovers or
introduction of new product lines, each of which needs to be micro managed. Any business
that wants to expands, needs a marketing strategy in place to ensure that the expansion is
happening in the right manner, and is maintaining the right pace. The business also needs to
be ready for the “Ifs and buts” of business, in case the expansion is slower or faster than
forecast.

4) Management of channel structure –

The distribution channel is changing very fast. Many companies

now have their own softwares and they can monitor what is happening at the distributor level.
The rise of modern retailers and E-retailers is giving more power in the hand of consumers as
well as distribution channel. At the same time, changes are happening on the purchase end
with buying groups being formed & supply being managed to match demand. All these
require the right strategies in place to prepare for good or bad times.

5) Penetration of national and international brands –

Not only do manufacturers have to worry about local brands, but

they have to worry about national as well as international brands entering the market. If you
look at printers or technology driven products, you will find bulk of the products originating
from China or Japan. On the other hand, Automobiles mainly originate from Germany or
USA. Thus, a national level manufacturer, needs to have a strong marketing strategy in place
to ward off competition from international players. On the other hand, the international player
has to enter with the right marketing strategy otherwise he will lose.
6) Increasing segments / product portfolio –

Take any company you want, you will find that the company
has multiple products and an in-depth product portfolio. Because economies of scale offers
many advantages, companies keep expanding their product portfolios and keep targeting
more inter connected market segments. So a FMCG company which is selling chocolates, can
also venture into biscuits because the channel is the same. Thus, with so many segments in
place, strategic management becomes very important.

7) Technology –

This point requires no explanation because we ourselves know

how much humanity has progressed in terms of technology in the last 1 century. There was a
time when Barter system was used and there were no quality or price standards in place. But
if today, you don’t supply a quality product, your reviews will be plastered on a 100 review
sites, on E-commerce portals as well as in consumer forums. Technology has made decision-
making very simple. And hence you require strategy in place to handle ever improving
technology.

8) Innovation –

The need for marketing strategy does not end at handling the
business alone. It is fine to be a “me too” brand. But if you really want to be at the top of the
business pyramid, you need innovation at all levels – product, supply or manufacturing to
give you a competitive advantage.

9) Demanding customers –

At the end, you have to remember that whatever you do, the
success and failure lies in the hands of the customers. The power has shifted from the
manufacturers to the customers. And due to the habit of receiving excellent service over a
period of time, most customers have become demanding like a spoilt brat. They want only the
best. You need marketing strategy to give the best to your customers.
 SCOPE OF MARKETING STRATEGIES
1. Goods

2. Services

3. Events

4. Experiences

5. Persons

6. Places

7. Properties

8. Organizations

9. Information

10. Idea.

The scope of marketing deals with the question, ‘what is marketed?’

According to Kotler, marketing people are involved with ten types of entities.

1. Goods:

Physical goods constitute the major part of a country’s production and

marketing effort. Companies market billions of food products, and millions of cars,
refrigerators, television and machines.

2. Services:

As economies advance, a large proportion of their activities is focused on the

production of services. Services include the work of airlines, hotels, car rental firms,
beauticians, software programmers, management consultants, and so on. Many market
offerings consist of a mix of goods and services. For example, a restaurant offers both goods
and services.

3. Events:

Marketers promote events. Events can be trade shows, company anniversaries,

entertainment award shows, local festivals, health camps, and so on. For example, global
sporting events such as the Olympics or Common Wealth Games are promoted aggressively
to both companies and fans.

4. Experiences:

Marketers create experiences by offering a mix of both goods and services. A

product is promoted not only by communicating features but also by giving unique and
interesting experiences to customers. For example, Maruti Sx4 comes with Bluetooth
technology to ensure connectivity while driving, similarly residential townships offer
landscaped gardens and gaming zones.

5. Persons:

Due to a rise in testimonial advertising, celebrity marketing has become a

business. All popular personalities such as film stars, TV artists, and sportspersons have
agents and personal managers. They also tie up with PR agencies for better marketing of
oneself

6. Places:

Cities, states, regions, and countries compete to attract tourists. Today, states
and countries are also marketing places to factories, companies, new residents, real estate
agents, banks and business associations. Place marketers are largely real estate agents and
builders. They are using mega events and exhibitions to market places. The tourism ministry
is also aggressively promoting tourist spots locally and globally.

7. Properties:

Properties can be categorized as real properties or financial properties. Real

property is the ownership of real estates, whereas financial property relates to stocks and
bonds. Properties are bought and sold through marketing.

Marketing enhances the need of ownership and creates possession utility.

With improving income levels in the economy, people are seeking better ways of saving
money. Financial and real property marketing need to build trust and confidence at higher
levels.

8. Organizations:

Organizations actively work to build image in the minds of their target public.
The PR department plays an active role in marketing an organization’s image. Marketers of
the services need to build the corporate image, as exchange of services does not result in the
ownership of anything. The organization’s goodwill promotes trust and reliability. The
organization’s image also helps the companies in the smooth introduction of new products.

9. Information:

Information can be produced and marketed as a product. Educational

institutions, encyclopedias, non-fiction books, specialized magazines and newspapers market
information. The production, packaging, and distribution of information is a major industry.
Media revolution and increased literacy levels have widened the scope of information
marketing.
10. Idea:

Every market offering includes a basic idea. Products and services are used as
platforms for delivering some idea or benefit. Social marketers widely promote ideas. Maruti
Udyog Limited promoted safe driving habits, need to wear seat belts, need to prohibit
children from sitting near the driver’s seat, and so on.

SCOPE OF MARKETING

IDEA
INFORMATION GOODS

ORGANIZATIONS SERVICES

PROPERTIES EVENTS

PLACES EXPERIENCES

PERSONS
 OBJECTIVES
Marketing objectives help your business move forward. Typically, they are
specific, easy to measure, possible to achieve, not too ambitious, and designed with a time
frame. Successful marketing objectives are formulated and written in a prescribed way to
secure the desired results. For example, "Increase market share by 15% within the next six
months."

Demographic Shifts and Marketing Objectives

With the rise of social media and growing dominance of the

millennials, it's important that objectives address specific audiences in the way that is most
relevant to them.

In 2014, the number of millennials in the United States eclipsed the number of baby boomers,
according to the Census Bureau. The Census counted about 83.1 million millennials,
compared with 75.4 million baby boomers.

“When you’re targeting baby boomers, it’s for an audience that’s on Facebook or watching
television,” said Andy Latimer, CEO and founder of Bluewater Media in Clearwater, Fla.
“Engaging millennials is different because they are less brand specific, their messaging
requires a social hook, and they need a reason to believe.”

TYPES OF MARKETING OBJECTIVES:

Considering your marketing plan or strategy from all angles is necessary

when creating these four main marketing objectives:

•Market share:

This determines how much of the market you wish to gain, and can be
measured with consumer data and advertising spending. “We pull data from various
associations that have the intent of understanding market share for their entire organization,”
said Latimer. “Another way to measure is to compare the ad spend against other products.”

•Profit:

This represents the amount of expected income based on promotional

strategy across the overall life of the campaign and its overall effect.

•Promotion:

Whether it's commercial advertising, couponing, a digital campaign, or an in-

store promotion, this is the desired level of product or service awareness. It can be measured
by sales from beginning, middle, and end of a campaign. “Measure what the net effect is of
the lift against what the baseline was and how the promotion is causing a temporary lift,”
Latimer said.
•Growth:

This determines your current business size and how much you want it to
grow. It may be measured through social media engagement and shares, for example, or
overall reach.

Identifying the Four P's

Develop objectives within each of the four P's: product, price, promotion,
and place. Under product, goals should focus on the sales of products and services. For price,
examine the cost plan and whether it requires modification and if so, objectives that
accommodate adjustments. The promotional element of a marketing strategy generally yields
objectives on raising awareness and brand recognition while place requires setting goals and
explaining how to get products or services to clients.

Paid, Owned, and Earned Media

Paid media includes advertising dollars spent on a variety of media channels, such as Google
AdWords, social media ads, and print. Owned media refers to properties the marketer owns
and manages, such as websites and social media. Earned media is any publicity that is non-
paid, which is considered public relations.

As an example, consider Antioch University, whose marketing team upholds a three-prong

digital media strategy that fuels their marketing objectives and assists the team in determining
what efforts work.

Paid media allows Antioch to target audiences vs. just having a push strategy of placing
digital ads in as many places as possible and hoping someone sees one. It facilitates
measurement to confirm the targeted audience is reached.

Antioch's measurable marketing objectives around owned media include SEO optimization,
user experience, and helping consumers make decisions once they land on websites.

Earned media for any university can be faculty expert stories, student profiles, or faculty
placement as experts in news articles others write.

TYPES OF MARKETING OBJECTIVES

MARKET SHARE PROFIT PROMOTION GROWTH

 IMPORTANCE OF MARKETING STRATEGY
Marketing strategy provides an organization an edge over it’s competitors.

Strategy helps in developing goods and services with best profit making potential.

Marketing strategy helps in discovering the areas affected by organizational growth

and thereby helps in creating an organizational plan to cater to the customer needs.

It helps in fixing the right price for organization’s goods and services based on
information collected by market research.

Strategy ensures effective departmental co-ordination.

It helps an organization to make optimum utilization of its resources so as to provide a

sales message to it’s target market.

A marketing strategy helps to fix the advertising budget in advance, and it also
develops a method which determines the scope of the plan, i.e., it determines the revenue
generated by the advertising plan.
 METHODOLOGY
Regardless of its industry, size or other variables, firm’s marketing
strategy needs to be aligned with the overall corporate strategy in order for the firm to be able
to grow in long-term perspective. To put it simply, rather than being independent of corporate
strategy, strategic marketing needs to be able to contribute to the achievement of strategic
objective an efficient manner.

It has been stated that “because the link between marketing strategy and shareholder value
has not been made, boards have tended to look at two other more transparent strategies. One
has been cost reduction – sometimes disguised by more appealing names such as
reengineering, downsizing or right sizing. …The other common remedy has been
acquisition” (Doyle, 2008).

ADVANTAGES AND DISADVANTAGES:

Advantages and disadvantages of a marketing strategy:

Every marketing strategy has its own advantages and disadvantages.

In the business world, there is no perfect marketing strategy. An entrepreneur must examine
each marketing strategy and weigh their benefits and costs. Successful marketing strategy
may depend on the use of different strategies to obtain the best result.

1. Development of a Marketing Strategy:

To develop a marketing strategy, one should analyze the advantages and

disadvantages of each aspect. During this process, the cost is usually the main factor that
determines the pros and cons of a strategy. Although the development of a great marketing
strategy attracts new customers, the downside is that it’s too expensive.

2. Distribution Marketing strategy:

If a marketing strategy has to do with distribution, examining the costs of

different distribution methods will help determine if the strategy should be implemented. For
example, one of the way to distribute information is through email marketing. Although the
distribution marketing is relatively cheap, the disadvantage is that due to the large amount of
spam, many Internet service providers have created filters to avoid unsolicited emails.
 3. Viral Marketing as a marketing strategy:

A marketing strategy that has gained popularity in the new media world is
the “viral marketing.” With this strategy an intelligent or emotional campaign begins to
rapidly spread through the Internet. This is usually accomplished through recommendations
and by social media networks such as Facebook and Twitter.

The advantage of Viral Marketing strategy is that it manages to present the product or service
extensively, but the downside is that there is no control on how the information is spread.

4. Decisions in Marketing strategy:

When deciding on which marketing strategy is most appropriate (or a

combination of marketing strategies), it is necessary to examine the advantages and
disadvantages of each strategy. In many cases, if the marketing strategy has more advantages
than disadvantages, this strategy could be implemented. However, deciding the appropriate
marketing strategy is a matter of personal choice in some cases.

For example, a marketing strategy for a particular product may include

advertising in television programs that have high ratings, but a disadvantage could be
sponsoring the program that some may find offensive or in bad taste, which would result in
disinterest of product or service. The strategy that is more attractive for one group may not be
interesting for another group. Hence deciding right strategy for the target group is considered
one of the most important aspect in a marketing strategy.
 COMPANY PROFILE
HONDA
The Honda Motor Company was founded by Soichiro Honda in
October 1946. He was very interested in automobiles from a small age so he used to tune cars
and enter them into races using his friend’s garage. As he grew up he decided to be in the
automobile industry. Soon his efforts paid off and he got a contract for supplying piston rings
for major car maker Toyota. But unfortunately he lost the contract as his products did not
match the required quality. So he went to various factories in Japan looking for ways to
improve the quality of the engines by making efficient piston rings.

 Audi AG Story

 BMW Story

Soon he was able to find a highly automated process that could use unskilled workers to
produce high quality piston rings. Toyota was impressed by his product and bought it in
1941. Next he started a company called Tokai Seiki in order to produce his products at a
larger scale. Soon Toyota bought 40% of the company and thus Soichiro and the officials at
Toyota could built a lasting business relation. But a series of calamities damaged large
portions of his company and this forced Soichiro to sell the remaining parts of his company to
Toyota. In 1946 he founded Honda Technical Research Institute to sell customised bicycles
with attached motors. He had only 12 employees who worked in a 170 sq ft. area.

In 1949, after years of persistence Honda and his team were able to release the Model D
which was the first complete motorcycle they had made with their own parts. Soon the
demand for this low priced vehicle increased and by 1964 the Honda Company was the
World’s largest manufacturer of motorcycles. They did not stop there but tried out different
possibilities in that time period. In 1963, they were able to release their first ever four wheel
vehicle in the form of the T360 mini pick-up truck.

Soon they went on to expand their range of vehicles and they produced their first car called
the S500 Sports Car. In 1986 they ventured into luxury car segment and released the very
successful Acura. In 1991 they released the Honda NSX Supercar which was the first vehicle
to incorporate the V6 engine with the latest variable-valve timing. Their success had no limits
here after as they kept innovating and started producing scooters, engines, generators, motors
and pumps successfully.

Honda has the reputation of being the largest producer of internal combustion engines
reaching an impressive figure of 15 million in 2012. It also is the eighth biggest automobile
manufacturer in the world, an industry into which it had a very late entry. In 2012, Honda had
more than $99 billion in revenues out of which $3 was the yearly profit. It has more than
175,000 employees located in various parts of the World. As of 2013 it has released more
than thirty models of cars bettering its performance year after year.

From producing noisy scooters to making the finest cars on the planet, Honda has come a
long way in evolving as a company. It has been on the verge of sell out but has come back
strongly to cement itself as one of the biggest players in the international automobile market.
It has held its reputation of being the World’s largest motorcycle manufacture since it
claimed that position in1964. Today you cannot see many roads without seeing a Honda
made vehicle pass by. Honda has gone on to become a global superpower in the automobile
industry.

Honda is headquartered in Minato, Tokyo, Japan. Their shares trade on the Tokyo Stock
Exchange and the New York Stock Exchange, as well as exchanges in Osaka, Nagoya,
Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland.

The company has assembly plants around the globe. These plants are located in China, the
United States, Pakistan, Canada, England, Japan, Belgium, Brazil, México, New Zealand,
Malaysia, Indonesia, India, Philippines, Thailand, Vietnam, Turkey, Taiwan, Perú and
Argentina. As of July 2010, 89 percent of Honda and Acura vehicles sold in the United States
were built in North American plants, up from 82.2 percent a year earlier. This shields profits
from the yen's advance to a 15-year high against the dollar.

Honda's Net Sales and Other Operating Revenue by Geographical Regions in 2007

Geographic Region Total revenue (in millions of ¥)

Japan 1,681,190

North America 5,980,876

Geographic Region Total revenue (in millions of ¥)

Europe 1,236,757

Asia 1,283,154

Others 905,163

American Honda Motor Company is based in Torrance, California. Honda Racing

Corporation (HRC) is Honda's motorcycle racing division. Honda Canada Inc. is
headquartered in Markham, Ontario, it was originally planned to be located in Richmond
Hill, Ontario, but delays led them to look elsewhere. Their manufacturing division, Honda of
Canada Manufacturing, is based in Alliston, Ontario. Honda has also created joint ventures
around the world, such as Honda Siel Cars and Hero Honda Motorcycles in India, Guangzhou
Honda and Dongfeng Honda in China, Boon Siew Honda in Malaysia and Honda Atlas in
Pakistan.

Following the Japanese earthquake and tsunami in March 2011 Honda announced plans to
halve production at its UK plants. The decision was made to put staff at the Swindon plant on
a 2-day week until the end of May as the manufacturer struggled to source supplies from
Japan. It's thought around 22,500 cars were produced during this period.

For the fiscal year 2018, Honda reported earnings of US$9.534 billion, with an annual
revenue of US$138.250 billion, an increase of 6.2% over the previous fiscal cycle. Honda's
shares traded at over $32 per share, and its market capitalization was valued at US$50.4
billion in October 2018.
 Board of Directors
Name/Title Current Board Membership

Takahiro Hachigo, 59 President, CEO &

Honda Motor Co., Ltd.
Representative Director

Seiji Kuraishi, 60 COO, Representative

Honda Motor Co., Ltd.
Director, VP & Head-Strategy

Kohei Takeuchi, 58 Senior MD, Head-

Honda Motor Co., Ltd.
Finance & Administration

Yoshiyuki Matsumoto, 60 Senior

Honda Motor Co., Ltd.
Managing Director, Head-R&D

Yoshi Yamane, 60 Senior Managing

Honda Motor Co., Ltd.
Director & GM-Production

Masafumi Suzuki, 54 Director Honda Motor Co., Ltd.

Masahiro Yoshida, 61 Director Honda Motor Co., Ltd.

Toshiaki Mikoshiba, 61 Senior MD, GM-

Honda Motor Co., Ltd.
North America & Head-Sales

Takanobu Ito, 63 Director Honda Motor Co., Ltd.

Mayumi Tamura, 58 Independent Outside

Honda Motor Co., Ltd.
Director

Hideo Takaura, 69 Independent Outside

Honda Motor Co., Ltd.
Director

Toshiaki Hiwatari, 73 Independent

Honda Motor Co., Ltd.
Outside Director

Motoki Ozaki, 69 Independent Outside Honda Motor Co., Ltd.

Director

Hideko Kunii, 71 Independent Outside

Honda Motor Co., Ltd.
Director
Turning to the economic environment during the fiscal year, in the United States, personal
consumption and private capital investment increased gradually, and the economy was on a
moderate recovery trend; however, credit contraction and high rates of unem- ployment
persisted. In Europe, economic conditions, in general, improved along with increases in
consumer spending and other developments, but unemployment remained high, and there was
concern regarding the financial system. In Asia, the economies of China and India expanded,
and the remaining countries in the region generally reported recoveries. In Japan, the
economy moved into a lull, and, although private capital invest- ment showed some
improvement, tough operating conditions continued as trends in consumer spending were
weak in some areas and unemployment remained high. It

is forecast that the Great East Japan Earthquake will have a depressing impact on the
economy for the near term.

Under these business conditions, Honda’s consolidated net sales and other operating revenue
for the fiscal year ended March 31, 2011 expanded over the previous fiscal year, despite
unfavorable currency translation effects, as a result of increases in the sales of motorcycles,
automobiles and other Honda products. Such adverse factors as higher selling, general and
administrative expenses, increased R&D expenditures, foreign cur- rency movements and the
effects of the earthquake had some negative impact. However, operating income and net
income attributable to Honda Motor Co., Ltd. grew, reflecting such positive factors as the
increase in net sales, changes in the mix of sales, the benefit of higher production volume on
costs and overall cost-cutting activities.

Motorcycle Business

Total unit sales of motorcycles increased from the previous fiscal year because of higher sales
in Asia and other regions, including South America.

In Asia, expansion in demand was robust, supported by strong economic performance. In

particular, sales in Thailand of Honda’s new Wave 110i and the Scoopy i as well as sales in
India of the new CB Twister and the Activa acted as driving forces in bringing a major gain
in sales. On the other hand, in North America, where demand did not fully recover, despite a
moderate recovery mainly in the sales of utility all-terrain vehicles (ATVs), recovery in the
sales of sports ATVs used mainly for recreation and motorcycles for recreation was lagging.
Sales in other areas, including South America, picked up after mid-year because of the
increased availability of credit and improvement in income. Sales of the CG150FAN,

NXR150, CG125 and other models were strong, mainly in the Brazilian market.

Automobile Business

Unit sales increased from the previous fiscal year, despite declines in Japan and Europe, as a
result of growth in unit sales in North America and Asia.

In Japan, operating conditions continued to be tough because of the reactionary decline in

demand in the latter half of the fiscal year following the termination of government sub-
sidies. New models were introduced to boost sales, including the Fit Hybrid, but because of
the impact of shrinking demand, the adverse effects of the Great East Japan Earthquake and
other factors, unit sales decreased.

In Europe, in spite of the launch of the CR-Z as a new market entrant and other mea- sures,
sales in the region were generally stagnant because of the termination of sales support
policies in certain countries in the region, weakness in consumer spending trends and more-
intense competition.

On the other hand, in North America, along with the moderate recovery in the United States,
sales of the new model Odyssey and light trucks expanded.

In Asia, demand in China was on a growth trend, and sales of the CR-V, in particular,
showed major expansion. Sales also grew in Thailand, Indonesia and elsewhere, amid favo-
rable economic trends.

Power Products and Other Businesses

Total unit sales on a consolidated basis increased from the previous fiscal year on the strength
of higher sales in all geographical areas.

In North America, Europe, Japan and other regions, including South America, along with the
increase in demand for construction equipment accompanying the economic recovery, unit
sales of general-purpose engines, mainly on an OEM basis, increased. In Asia, unit sales
grew along with market expansion, agricultural subsidies provided by certain governments in
the region, the effects of weather conditions and other factors.

Initiatives Going Forward

In recent years, Honda has been experiencing a period of major change in business
conditions. Key factors causing this change have been increased awareness on a global scale
of issues related to the environment and economic growth in emerging countries, which has
brought structural change to the world economy. For Honda to continue to grow and develop,
it will be important to create and commercialize advanced envi- ronmental technologies, take
quick action to strengthen our business position in the markets of emerging countries and, at
the same time, restructure our corporate organi- zation to secure profitability.

With this awareness, we have positioned the next 10 years as a time for Honda to reform in
the direction of “delivering good products to our customers, with speed, affordability and low
CO2 emissions”, and right now we are taking aggressive action to

do just that. Delivering “good products” means that Honda must create attractive prod- ucts
that customers think are necessary based on our original technology, knowledge and
ingenuity. We must do this “with speed” without keeping our customers waiting, and we
must deliver them at affordable prices that will make customers think, “I’m glad I bought a
Honda”. I believe this is what we want to achieve, and, as a “personal mobil- ity
manufacturer”, we must make more-aggressive efforts than ever before to make major
reductions in CO2 emissions.

Motorcycles

Good Products at Affordable Prices

Among motorcycles, there are “commuter” types that play an essential role in providing
people with basic transportation, and there are “fun” types that people ride for the joy and
pleasure of riding. The market for commuter types in the emerging countries is expanding
along with economic growth. With this trend as a driving force, Honda sold approximately
17,952,000 motorcycles last year, the largest number in our history. The principal markets for
motorcycles are China, India, Indonesia and other countries that have large popula- tions, and
further growth in sales is expected in these countries. In addition, the nations in the African
region, especially Nigeria, are new and expanding markets, and we believe they will provide
support for Honda’s growth.

To respond to this strong demand for commuter-type motorcycles, we believe that more and
more affordable prices will be important. In recent years, Honda has taken initia- tives to
procure parts globally. We have standardized the basic architecture for models in the region
to enable us to enjoy economies of scale in parts procurement. We have also promoted
improvement activities among local parts manufacturers to set price standards globally as we
have also worked to realize synergies.

For example, in Brazil, which is an important emerging country, the market share of Honda
products is about 80%, but, by far, the most-important factor in Honda’s position in that
market is our entry-level models. These are Cub-style 100cc bikes that are light, quick and
offer an easy ride, which is exactly the kind of performance that a commuter bike should
provide. As we have evolved these bikes as Honda motorcycles, we have cre- ated supply
systems that enable us to offer them at affordable prices.

Also, by making these bikes available at affordable prices, Honda is able to provide products
to customers in an even-wider range of markets. In mid-2011, Honda introduced a new 125cc
model in Nigeria, the largest bike market in Africa, where about 800,000 motorcycles are
sold a year. By using highly competitive parts manufactured in China, Honda is able to offer
these bikes to customers in Nigeria at affordable prices. In new markets, competition is tough
because motorcycle manufacturers in China and India are already marketing low-priced
models, but, by drawing on Honda’s global resources, we will take aggressive action in
developing the African market, with Nigeria as the base.
Strengthening the Honda Brand with Distinctive Styling

Along with affordable prices based on cost-competitiveness, another important element for
success in the motorcycle business is having distinctive “Honda styling.” Particularly for
large and sport-type bikes targeted at customers who want to ride their bikes for fun, Honda
aims not only for performance and specifications but also pursues strong and indi- vidualistic
styling that makes everyone who sees the bike aware that it is a Honda. Design and styling
that make potential customers think “I want that Honda bike. I love it.” are key success
factors.

Honda’s large bikes come in the VFR series and the CB series. The VFR series aims to of-
fer bikes that use the latest technology to make riding an interesting and fun experience. On
the other hand, the CB series bikes are in the tradition of styling and value that Honda has
created over the years in Japan and the United States. Having two series of bikes, one
targeting traditional needs and the other focusing on a new wave, is an advantage for a

top motorcycle manufacturer. Our next goal will be to make Honda motorcycles even more
unique in terms of design

and performance.

We are expecting major growth in the global motorcycle market in the years ahead. As a
leading motorcycle manufacturer, Honda will work to offer products at affordable prices,
using our technology and quality as a foundation. As we work to offer design and styling that
is even more unique to Honda, we will continue to respond to the expectations of our
customers through out the world.
Automobiles

Internal Combustion Engine Evolution and the Spread of Hybrids

The current trend in the world automobile market toward more-compact cars with better fuel
economy has been accelerated by the growing awareness of environmental issues and the
instability of oil prices.

As a company providing “personal mobility”, Honda has moved forward with R&D on a full
range of environmental technologies and taken initiatives to reduce the burden on the natural
environment. Among the various alternatives, and this is especially true for hybrids, we
believe that environmental technology will be more valuable if it can appeal to a wider range
of customers. That is why we proceeded with the development of our lightweight, compact
IMA hybrid system, and, following this, have succeeded in offering vehicles equipped with
this system at affordable prices. This hybrid system is now available on the Insight and CR-Z
models, and in October 2011, Honda launched a Fit Hybrid model, and will continue to work
to expand the market penetration of these vehicles.

We believe that hybrid technology will become a mainstay product as one means to re- duce
the burden on the environment. But, we think that people do not just want a hybrid vehicle,
but also a vehicle with competitiveness and performance. In other words, these cars must be
more than just hybrids. They also must have good fuel economy, offer a pleasant driving
experience, and be available at affordable prices. That is why Honda is working to improve
fuel economy by improving both the gasoline engine and battery technology. Also, with a
target date in 2012, Honda will introduce a new lineup of gasoline engines and transmissions
and is working toward the development of medium-sized and larger “plug- in” hybrid car
models that can be recharged using household power outlets.

In addition to these initiatives, Honda is proceeding with the development of a Battery

Electric Vehicle (EV) that will apply technology it has created for a fuel cell electric vehicle
(FCEV). Work is also under way on developing a compact diesel engine for the European
market. The results that Honda has achieved by focusing our corporate resources on ad-
vanced technology will be applied to creating new products in the years ahead.
Strengthening Our Lineup of Small Cars as the World Shifts to Compacts

In response to the worldwide trend toward smaller cars, Honda is working to strengthen our
mini-vehicle lineup in Japan and is moving ahead with the development of a new model
BRIO compact car for Asia that is scheduled to launch in Thailand and India in 2011.

In the mini-vehicle segment, in Japan total new cars sold in 2010 amounted to about 1.73
million units, while the number of registrated vehicles sold

was about 3.23 million units. Thus, in terms of units, mini-vehicles accounted for more than
30% of new car sales. Because of issues related to the rising cost of gasoline, customer
demand for smaller cars is expected to rise, and an important issue will

be how to increase competitiveness in mini-vehicles in the domestic market.

To respond effectively to this trend, Honda is already upgrading our mini-vehicle en- gines,
transmissions and platforms. Therefore, an all-new mini-vehicle equipped with tech- nology
unique to Honda is expected to be launched in the near future.

The BRIO was launched in 2011 in Thailand as an eco-car with good fuel economy as well as
exported to other ASEAN member nations. Plans also call for launching the BRIO as an
entry-level car in India. To compete successfully in the rapidly expanding market for compact
cars in emerging markets, the key factor is “affordability”. Honda will draw on the know-how
we have accumulated in Asian countries as a motorcycle manufacturer to enhance our
competitiveness in automobiles.
Power Products and Other Businesses

Initiatives to Develop and Market New Energy-Generating Products

In power products business, Honda supplies general-purpose engines that power construction,
agricultural and other types of machinery and, thereby, supplies useful products that help
people get things done every day. In emerging markets, these products are even more
indispensable for people’s lives than motorcycles, and, as economic growth continues in
these countries, their markets are expected to expand. For example, in the African market,
demand for electric power generators is expanding, and Honda is drawing on the capabili-
ties of our production bases in China and India to the fullest to expand sales by offering
attractive products at affordable prices.

Also, in India, along with previously available electric power generators, Honda has be- gun
to manufacture our first inverter power generators in that country, which can be used with
high-precision equipment, such as medical devices, and require advanced technology to
produce. In China, Honda has also become the first Japanese company to manufacture small
tillers in that country. Through these and other activities, Honda is responding to demand in
emerging markets by drawing on our technology and know-how to meet cus- tomers’
expectations and develop new markets.

In addition, as part of our power products business, Honda is working ag- gressively to
develop and market new energy-creation products, such as solar power panels and small
cogeneration units for household use.
For Honda, the next 10 years will be crucial in determining whether we can successfully
survive the major changes taking place in business conditions: namely, the “increased
awareness on a global scale of issues related to the natural environment” and “structural
change in the world economy”. Hon- da must focus especially on further developing our
advanced environmental technologies, strengthening our business position in emerging
markets and bolstering our competitiveness in the small car business as we aim to make new
leaps forward by enhancing the core characteristics that make Honda unique.

Returning Profit to Shareholders

Honda strives to conduct its business from a global perspective and to increase its corporate
value. We consider the allocation of profits to shareholders to be one of our most-impor- tant
management responsibilities. Our basic policy for dividends is to make distributions after
taking into account our long-term consolidated earnings performance. Honda also acquires its
own shares with optimal timing with the goal of improving the efficiency of its capital
structure.

For fiscal 2011, Honda set a year-end cash dividend of ¥15 per share, bringing total cash
dividends for the fiscal year to ¥54 per share. This dividend comprised ¥12 per share for the
first quarter, ¥12 per share for the second quarter, ¥15 per share for the third quar- ter and the
previously mentioned year-end dividend of ¥15 per share.

For the fiscal year ending March 31, 2012, we are scheduled to pay quarterly dividends of

¥15 per share, or ¥60 per share for the full year, which will be ¥6 per share higher than in
fiscal 2011. We will continue to do our utmost to meet the expectations of our shareholders.

Honda is a company where each and every member of management and the organiza- tion
works to realize the dream of providing joy to Honda customers by setting challenging
objectives, aiming for progress and growth as we look toward a better future at all times and
working to open up the frontiers of the future. What we are aiming for today is “to become a
company that society wants to exist.” In the future, as in the past, Honda will take up the
challenges of advanced creativity inherent in the features and qualities that are associated
with the Honda brand by continuing to draw on “The Power of Dreams,” respond to the
expectations of society, bring joy to our customers, inspire them and give them satisfaction.

We look forward to the continued understanding and support of our shareholders and other
investors. We are in this together, for the long term.

Power Product and Other Businesses

Honda’s unit sales of power products totaled 5,509 thousand units, an increase of 16.1%
compared with the previ- ous fiscal year, due to increased unit sales in all the regions.

Revenue from external customers increased ¥14.9 billion, or 5.4%, to ¥292.6 billion from the
previous fiscal year, due mainly to the increased unit sales of power products, which were
partially offset by unfavorable foreign cur- rency translation effects. Honda estimates that by
applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net
sales for the year would have increased by approximately ¥27.5 billion, or 9.9%, compared to
the increase as reported of ¥14.9 billion, which includes negative foreign currency translation
effects. Revenue including intersegment sales increased ¥13.6 billion, or 4.5%, to ¥318.2
billion from the previous fiscal year.

The operating loss including that of other business was ¥5.5 billion, an improvement of ¥11.1
billion from the previous fiscal year, due mainly to an increase in income attributable to
increased net sales of power products, which was partially offset by increased selling, general
and administrative expenses and unfavorable foreign currency effects.

Japan

In the power products business during the fiscal year under review, Honda’s sales increased
20.5%, to 388 thousand units. This was due to an increase in sales of general-purpose engines
for OEM use to manufacturers of construction machinery in the United States and in the
Middle East and Africa as well as an in- crease in Japan in sales of electric power generators,
tillers, snow blowers and other types of machinery. In May 2010, Honda new- ly launched
the ENEPO EU9iGB, a gas-powered electric power generation unit that runs on household
butane gas canisters.
North America

Honda’s consolidated unit sales in North America increased 14.7%, to 2,085 thousand units.
This increase was due to higher sales of general-purpose engines for OEM use to
manufacturers of lawn mowers, construction machinery, pressure washers and other
machinery as well as increased sales of generators accom- panying the recovery in the
economies of the region.

Europe

In Europe, consolidated unit sales increased 10.1% over the previous fiscal year, to 1,174
thousand units, because of strong demand for general-purpose engines for OEM use in
construc- tion machinery and generators as well as sales of snow blowers, despite intensified
competition in the lawn mower market.

Asia

In Asia outside of Japan, consolidated unit sales increased 23.9%, to 1,325 thousand units.
This increase was due to favorable sales of engines for agricultural equipment and pumps,
generators and brush cutters supported by economic expansion in the region, and
continuation of government subsi- dies for farm households. Weather conditions also
contributed to increased sales.

Other Regions

Unit sales in Other Regions increased 14.5% over the previous fiscal year, to 537 thousand
units. Factors accounting for this increase were favorable sales of general-purpose engines for
OEM use for installation in construction machinery and pumps to the Middle East and South
America, due mainly to eco- nomic recovery.

Solar Cell Business

In October 2007, Honda’s consolidated subsidiary Honda Soltec Co., Ltd. began production
of thin-film solar cell modules for household use, which have been sold through
homebuilders, construction companies and other channels in Japan. In Octo- ber 2008, Honda
Soltec began serving customers in the public sector and industrial markets, including the
Hanshin Koshien Stadium, logistics centers/warehouses and hospitals. In 2011, new thin-film
solar cells will go on sale that are even more com- pact and feature more-efficient conversion
of solar energy to electric power.
Aviation Business

In April 2011, a Honda aero business subsidiary, Honda Aircraft Company, Inc., completed
construction of its plant for the fab- rication of aircraft fuselages at the Piedmont Triad
International Airport in Greensboro, North Carolina, in the United States. In De- cember
2010, the company successfully completed the first test flight of the production model of
HondaJet.

Next, the aircraft will undergo flight, structural and other tests aimed at obtaining type
certifications from the Federal Aviation Administration in the United States and the European
Aviation Safety Agency. Preparations are under way to begin production in the first half of
2012, and the first HondaJets are slated to be delivered to customers in the latter half of 2012.

In the area of aircraft engine business, Honda Aero, Inc., a wholly owned subsidiary of
Honda that is responsible for aero engine business, is making progress with certification tests
with the goal to obtain certification for its HF120 turbofan jet engines before the end of the
current fiscal year ending March 31, 2012.

Financial Services Business

To support the sale of its products, Honda provides retail lending and leasing to customers
and wholesale financing to dealers through our finance subsidiaries in Japan, the United
States, Canada, the United Kingdom, Germany, Brazil, Thailand and other countries.

The total amount of finance subsidiaries–receivables and property on operating leases of

finance subsidiaries increased by ¥67.9 billion, or 1.4%, to ¥4,837.6 billion from the previous
fiscal year, due mainly to an increase of finance subsidiaries– receivables attributable to the
adoption of new accounting standards, which was partially offset by the negative foreign
currency translation effects. Honda estimates that by applying the Japanese yen exchange
rates of the previous fiscal year to the current fiscal year, the total amount of finance
subsidiaries– receivables and property on operating leases of finance sub- sidiaries as of the
end of the year would have increased by ap- proximately ¥595.9 billion, or 12.5%, compared
to the increase as reported of ¥67.9 billion, which includes the negative foreign currency
translation effects.

Revenue from external customers in the financial services business decreased ¥44.4 billion,
or 7.3%, to ¥561.8 billion from the previous fiscal year. Honda estimates that by apply- ing
the Japanese yen exchange rates of the previous fiscal year to the current fiscal year, revenue
for the year would have de- creased by approximately ¥1.2 billion, or 0.2%, compared to the
decrease as reported of ¥44.4 billion, which includes the unfavorable foreign currency
translation effects. Revenue in- cluding intersegment sales decreased ¥45.3 billion, or 7.3%,
to

¥573.4 billion from the previous fiscal year.

Operating costs and expenses decreased ¥36.7 billion, or 8.7%, to ¥387.1 billion from the
previous fiscal year. Cost of sales decreased ¥11.6 billion, or 3.6%, to ¥309.8 billion from the
previous fiscal year, due mainly to a decrease in costs related to lease residual values. Selling,
general and administrative ex- penses decreased ¥25.0 billion, or 24.5%, to ¥77.3 billion from
the previous fiscal year, due mainly to a decrease in provisions for credit losses.

Operating income decreased ¥8.6 billion, or 4.4%, to ¥186.2 billion from the previous fiscal
year, due mainly to unfavorable foreign currency effects, which was partially offset by a
decrease in provisions for credit losses and losses on lease residual values. Our finance
subsidiaries in North America have historically accounted for all leases as direct financing
leases. However, starting in the fiscal year ended March 31, 2007, some of the leases that do
not qualify for direct financing leases account- ing treatment are accounted for as operating
leases. Generally, direct financing lease revenues and interest income consist of the
recognition of finance lease revenue at the inception of the lease arrangement and subsequent
recognition of the interest income component of total lease payments using the effective
interest method. In comparison, operating lease revenues in- clude the recognition of the
gross lease payment amounts on a straight-line basis over the term of the lease arrangement,
and operating lease vehicles are depreciated to their estimated residual value on a straight-
line basis over the term of the lease. It is not anticipated that the differences in accounting for
oper- ating leases and direct financing leases will have a material net impact on Honda’s
results of operations overall, however, oper- ating lease revenues and the associated
depreciation of leased assets do result in differing presentations and timings compared

to those of direct financing leases.

Honda consolidated former qualifying special-purpose enti- ties (QSPEs) that were not
consolidated as of March 31, 2010. As a result, previously derecognized finance subsidiaries–
receiv- ables held by former QSPEs increased in the Company’s consoli- dated balance sheet
as of April 1, 2010. In addition, Honda is not recognizing certain gains or losses related to
securitization transactions, such as gains or losses attributable to the change in the fair value
of retained interests since the year ended March 31, 2011.

Honda aims to achieve global growth by further encouraging and strengthening innovation
and creativity and creating quality products that please the customers and exceed their
expectations.

1. Research and Development

In connection with its efforts to develop the most effective safety and environmental
technologies, Honda will continue to be innovative in advanced technology and products.
Honda aims to create and introduce new value-added products to quickly respond to
specific needs in various markets around the world. Honda will also continue its efforts to
conduct research on experimental technologies for the future.

2. Production Efficiency

Honda will establish and enhance efficient and flexible production systems at its global
production bases and supply high quality products, with the aim of meeting the needs of its
customers in each region.
3. Sales Efficiency

Honda will remain proactive in its efforts to expand product lines through the innovative use
of IT and will show its continued commitment to different customers throughout the world by
upgrading its sales and service structure.

4. Product Quality

In response to increasing customer demand, Honda will upgrade its quality control by
enhancing the functions of and coordination among the development, purchasing, production,
sales and service departments.

5. Safety Technologies

Honda is working to develop safety technologies that enhance accident prediction and
prevention, technologies to help reduce the risk of injuries to passengers and pedestrians from
car accidents, and technologies that enhance compatibility between large and small vehicles,
as well as expand its lineup of products incorporating such technologies. Honda will reinforce
and continue to advance its contribution to traffic safety in motorized societies in Japan and
abroad. Honda also intends to remain active in a variety of traffic safety programs, including
advanced driving and motorcycling training programs provided by local dealerships.

6. The Environment

Honda will step up its efforts to create better, cleaner and more fuel-efficient engine
technologies and to further improve recyclables throughout its product lines. Honda will also
work to ad- vance fuel cell technology and steadily promote its new solar cell business. In
addition, Honda will further its efforts to minimize its environmental impact. To this end,
Honda sets global targets to reduce the environmental burden as measured by the Life Cycle
Assessment*, in all areas of business, spanning production, logistics and sales.

* Life Cycle Assessment:

A comprehensive system for quantifying the impact Honda’s products have on the
environment at the different stages in their life cycles, from material procurement and energy
consumption to waste disposal.

Therefore, in order to improve the competitiveness of its products, Honda will endeavor to
enhance its R&D, production and sales capabilities. Furthermore, Honda will continue to
enhance its social reputation in the community through Companywide activities. Honda
recognizes that further enhancing the following specific areas is essential to its success:

7. Continuing to Enhance Honda’s Social Reputation and Communication with the

Community In addition to continuing to provide products incorporating Honda’s advanced
safety and environmental technologies, Honda will continue striving to enhance its social
reputation by, among other things, strengthening its corporate governance, compliance, and
risk manage- ment as well as participating in community activities and making philanthropic
contributions. To achieve these targets, Honda will make all possible efforts in pursuit of its
vision for the Company as it moves towards 2020: “To provide good products in a timely
fashion, at afford-

able prices, and with low CO2 emissions”.

8. Immediate Issues for Attention The Company temporarily suspended production at

its sites located in Japan due to the effects of the Great East Japan Earthquake that occurred
on March 11, 2011, which included a short- age of parts supplies. In addition, some of
Honda’s business sites, such as Honda’s R&D subsidi- aries located in Tochigi Prefecture,
were heavily damaged. By April 11, 2011, the Company had resumed production activities at
all of its production sites; however, production of completed automobiles at plants within
Japan and production of components and parts for Honda’s overseas sites had been operating
at approximately half the normal rate. Production in Japan had been nearly normalized in late
June. Production at Honda’s automobile plants overseas has been reduced as well and is
expected to be nearly normalized around August to September. In such circumstances, Honda
will endeavor to normalize the supply chain continuously and aims to return to normal
production as soon as possible. Honda will work on sales pickup by the recovery of
production and bring about a recovery of its operations as soon as possible. Taking into
account this experience, Honda will strive to minimize risks that have surfaced due to the
earthquake disaster, including risks related to supply chain disruption.

In response to the occurrence of inappropriate activities at Honda Trading Corporation, which

is a subsidiary of the Company, and based on the investigation report and suggestion for
preventive countermeasures that was submitted to the Company’s Board of Directors by the
investigation committee established with external experts, the Company will build a system
to make appropriate business judgments in accordance with the applicable laws and regula-
tions and will further enhance corporate governance, increasing compliance awareness and
strengthening the risk management systems, including through the reexamination of person-
nel management systems.

Through these Companywide activities, Honda will strive to be a company that its
shareholders, investors, customers and society want to exist.
The Company temporarily suspended production at its sites located in Japan due to the effects
of the Great East Japan Earthquake that occurred on March 11, 2011, which included a short-
age of parts supplies. In addition, some of Honda’s business sites, such as Honda’s R&D
subsidi- aries located in Tochigi Prefecture, were heavily damaged. By April 11, 2011, the
Company had resumed production activities at all of its production sites; however, production
of completed automobiles at plants within Japan and production of components and parts for
Honda’s overseas sites had been operating at approximately half the normal rate. Production
in Japan had been nearly normalized in late June. Production at Honda’s automobile plants
overseas has been reduced as well and is expected to be nearly normalized around August to
September. In such circumstances, Honda will endeavor to normalize the supply chain
continuously and aims to return to normal production as soon as possible. Honda will work
on sales pickup by the recovery of production and bring about a recovery of its operations as
soon as possible. Taking into account this experience, Honda will strive to minimize risks
that have surfaced due to the earthquake disaster, including risks related to supply chain
disruption.

In response to the occurrence of inappropriate activities at Honda Trading Corporation, which

is a subsidiary of the Company, and based on the investigation report and suggestion for
preventive countermeasures that was submitted to the Company’s Board of Directors by the
investigation committee established with external experts, the Company will build a system
to make appropriate business judgments in accordance with the applicable laws and regula-
tions and will further enhance corporate governance, increasing compliance awareness and
strengthening the risk management systems, including through the reexamination of person-
nel management systems.

Through these Companywide activities, Honda will strive to be a company that its
shareholders, investors, customers and society want to exist.