Lessons in Marketing Excellence

Honda Siel Cars India – IIM Bangalore

Navneet Chahal |Rajant Meshram| Siddhartha Sen

Honda Siel Cars India

30 Minus Beyond 30 Plus

Initial hypotheses were developed by attempting to answer
research questions pertaining to the market & competitors.

1. To determine the market potential for premium/SUV cars in India

2. To analyze the current competitive scenario in the Indian passenger
car market and the position of Honda vis-à-vis the competition.
3. To analyze the consumer preferences with respect to the various
features expected from a premium/SUV car
4. To analyze youth buying behavior and come up with measures to
achieve the expected target within this segment
5. To determine the consumer segments that Honda can target - new and
old customers both
6. To determine the positioning and promotion strategy in compliance
with the targeted customer segments
Hence, we understood that this translates into a very specific target segment – people
below the age of 30 would typically be first time car buyers, a segment where Honda’s
presence is not very strong. The aim is to induce young people (20-30 yrs) to buy
Honda as their first car and to cultivate brand loyalty at an early stage.
Methodology followed:

Exploratory Research

Secondary Data Analysis Survey Questionnaire 1 Survey Questionnaire 2

Defining Constructs Dealer Showrooms Current Car Users

Dealer and Player reports Pre-owned car market Potential car Buyers

Developing Hypothesis for Factor Analysis, Content Analysis, Semantic Differential

Surveys Scaling, Cluster Analysis, Discriminant Analysis

Recommendations and Conclusions

The consumer decision making process – Some insights

1. The people surveyed used a variety of methods including online

research, peer suggestions, dealer visits to find out their ideal car
2. The research usually began on an average 1.5-2 months before the
purchase of the car
3. The people surveyed made on an average 4-5 trips to their dealer and
about 63% consumers contacted more than one dealer during the
decision-making process.
4. After the vehicles themselves, the topics most researched online by
auto purchasers were: Trade-in values, auto insurance, and mileage.
5. Internet was the most influential traditional media for 25 to 34-year-
old auto buyers
6. In about 41% of the cases the first car was an already existing car in
the house
7. The average age of the car was about 1.6 years if it was gifted to this
age group.
Our inferences: Clusters and Segment Invasion Plan

Clusters
Inflexion Point Car Type Attributes Sought from a Car
College Joining New Car as a gift/ Rebel/ Hangout Vehicle, Sporty, Trendy,
Old Car in the house Achiever Fuel Efficiency, Passenger carrying
capacity
Success in Job/ Mostly New Car Achiever Class, Comfort, Status,
Business purchase; occasionally
Pre-Owned Car
Marriage New Car as a Gift Achiever Family, Passenger carrying capacity,
Comfort,

Segment Invasion Plan

Middle Income Upper Middle Higher
Style/Luxury Accord
Civic
CR-V
Value for Money City
Entry Level Cars Jazz
What customers want in a Honda car - key insights

Through Hypothesis testing and using tools such as factor analysis, content
analysis, discriminant analysis we came across the following insights:
1. Comfort and space are more important that mileage
2. Honda is associated with class/luxury/comfort
3. Fuel economy is not the most desirable feature of Honda
4. Higher income bracket people will purchase Honda as a second car in
addition to the existing one
5. Emotional appeal will be more effective than celebrity endorsements/
technical specifications in marketing
6. Consumer wants an engaging experience in marketing without being
pushed into purchasing
What customers want from Honda ads – key insights

 We found two insights about luxury car buyers.

– First, they were confused or struggled to recall the different offerings in all the SP
ads, since the real negotiation points of offers in this segment are seen in
dealerships rather than in advertisements.
– Second, they tended to be more hesitant about buying brands that made big SP
offers in ads because this made them view the brands as cheap and value-
declining. This is the ultimate taboo in luxury brands!
 We made two important insights from our insights. First, we do not need to
convey the content of the SP program; we simply needed to let them know
that this was the best time to buy a Honda.
 Second, we have to ignite their passion to own a new Honda and provide
them a good excuse in this current time.
Our recommendations:

New Products
New hatchback, concept car

Distribution/ Dealerships
NCR region ; Bangalore/Chennai/Gurgaon
Contracts with corporates; Fleet selling

Target Positioning
IIT / IIM ; Marriage
Hangout vehicle – A great drivers as well as passengers car

Advertising and Promotion

Use unexplored media – Airline conveyor belts
Affinity group segmentation
Suggested Campaigns - The Chase

 The beauty of an Alternate Reality Game is two-fold:

– It involves regular participation from the audience as an interactive narrative that uses
the real world as a platform,
– Involves multiple media and game elements, to tell a story that may be affected by
participants' ideas or actions.

Campaign/ARG name The Chase

Product Life Cycle Phase Introduction

Pre-Campaign Publicity 5 weeks

Target Audience > 30 years Rural and Urban Indians

Duration 10 weeks (April-June)

Agency to be contracted AKQA

Possible Co-Partner Commonwealth Games, Olympic Gold Quest

Products Endorsed (Multiple products can be integrated by designing the stages of the game suitably)

Media used Blogs, Websites, Social Networking sites, TV, Radio , Newspapers
Other Campaign Ideas

1. Where are THEY??

Honda could launch a YouTube channel with which would be updated at a fixed time (8.30PM-
daily/alternate days/weekly) featuring short documentaries about prominent sportspeople
who lost media attention but are still doing well. The short 4 min documentaries would have
their story, struggle, shot to fame and how they were forgotten. Leaving the audience with a
poignant feeling. Eg. Karnam Malleshwari, Dhanraj Pillai etc

2. Memoirs of the Commonwealth

With the Memoirs of the Commonwealth - Honda Blogger Program, Honda would try to do
something that has never been tried on such a large scale before: To bring a real insider’s
perspective on what is happening during the Games to fans at home around the world

3. Idea Pool
The primary aim of the website would be to pool in advice from common people on how to
tackle various issues affecting the world today – everything from lifestyle to global warming and
sustainability.
Future Trends

 The future predictions which will drive the sales for the Category and Honda are:
1. Squeezing of Honda by cheap entry level cars and foreign players at the luxury end
2. Role of “status” in Indian buying patterns
3. Improving dealer performance may confer a competitive brand advantage
 These trends clubbed with behavioral insights from our TGs is what we believe can
result into capturing, driving and defining the category.
Thank you…
Appendix – I (Recommendations)

 Pre- Owned Car market

– Enter into the Pre-owned Car market
– Enter into financing
– Increasing need for transparency
– Improving service
– Increase in customer aspirations
Particulars In per cent
First 3 years 40
First 5 years 60
Life time Value 10
Useful Life 15
 Sales force organization
– Organize and analyze sales force of Honda
Appendix-II (Factor Analysis)

Factor 1: “Honda Loyalty” factor.

Factor 2: “Premium Car Feature” factor.
Factor 3: “Socioeconomic Status” factor.
Factor 4: “Ergonomic and Comfort” factor.
Nature Factors
Operational issues Performance
Mileage
Reliability
Depreciation
Service issues Maintenance
Warranty Period
Availability of service station
Post purchase service guidance
Safety and Security Safety measures incorporated
Insurance conditions
Price Cost of Automobile
Cost of Ownership
Competition and Technological up gradation Development in service
Competitive pricing
Esteem Issues Comfort
Style
Luxury
Image
Appendix III –(Dealer Network)

Firm No of plants Capacity No of No of cars Sold in Dealer

dealers 2008-09 Turnover(numbe
r of cars sold per
year per dealer)
Fiat 2 1,30,000 - 8,078 -
Ford 2 100,000 - 25,196 -
General Motors 2 2,25,000 200 45,923 230

HM 2 64,000 - 7,097 -
HSCI 2 1,20,000 106 50,174 474
Hyundai 1 600,000 252 244,030 968
M&M 2 1,62,600 800 13,423 17
Maruti Suzuki 2 10,00,000 683 636,707 932
Tata Motors 3 300,000 - 160,422 -
Appendix – IV (Semantic Differential Scaling of Honda
vis-à-vis competitors)

Extensive
Limited Service
Network Service Network

Robust Fragile

High Esteem
Low
Esteem
Value for Money Overpriced

Untrustworthy Trustworthy