BM2209

Names of students Section Date

ACTIVITY
Honda Wave
Does a vast, global company such as Honda have the capability to outmaneuver ultra-low-priced
competitors? Honda is the world market leader in motorcycles. It is also the leading global manufacturer of
small gas- powered engines, producing over 20 million units annually.
Honda used to dominate the motorbike market in Vietnam, with a share of 90%. Its best-selling model, the
Honda Dream, sold for around $2,100 or Php 105,000. Chinese competitors then entered the market with
ultra-low-price products. Their bikes sold for between $550 (Php 27,500) and $700 (Php 35,000) each. These
extremely aggressive prices turned market shares upside down. The Chinese manufacturers moved over one
(1) million bikes per year, while Honda's volume dwindled from about one (1) million to just 170,000. Most
companies would have thrown in the towel at this point or withdrawn into the market's premium segment.
But not Honda. Its initial short-term response was to cut the price of the Dream to $1,300 (Php 65,000) from
$2,100 (Php 105,000). However, Honda knew it could not sustain this low price long-term.
Moreover, this price was still roughly twice that of a Chinese motorbike. Honda developed a much more
straightforward and inexpensive new model called the Honda Wave. The new bike combined acceptable
quality with the lowest possible manufacturing costs. "The Honda Wave has achieved low price, yet high
quality and dependability, through using cost-reduced locally made parts as well as parts obtained through
Honda's global purchasing network," the company said. The new product entered the market with an ultra-
low price of $732 (Php 36,600), which is 65% less than the price of a Honda Dream. Honda reconquered the
Vietnamese motorcycle market so successfully that most Chinese manufacturers withdrew. This case proves
that premium manufacturers such as Honda can compete against ultra-low-price suppliers in emerging
markets, but not by selling their existing products. Success in the ultra-low price position requires a radical
reorientation and redesign, massive simplification, local production, and extreme cost consciousness.
Answer the following questions: (3 items x 10 points)
1. Based on the case facts, what price positioning strategy does Honda employ?
They are procurement champions
2. What factors contribute to the company's success using its price positioning strategy?
they can provide a product with a low price but a high quality motor. and they can
compete with low-priced motorcycles.
3. How can the company achieve success by using a different price positioning strategy?

through a lot of sold products because of this it will be known if the strategy made was indeed
successful. when they use it, many people enjoy buying it because the price is low but the
quality is good.

Rubric for grading:

CRITERIA PERFORMANCE INDICATORS POINTS
Content Provided pieces of evidence, supporting
8
details, and factual scenarios
Organization
Expressed the points in a clear and logical
of ideas 2
arrangement of thoughts in the paragraph
TOTAL 10

Reference
Simon, H. (2015). Confessions of the pricing man. Switzerland: Springer International Publishing.
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