Segmentation of Honda

The development of Honda Marketing Strategy requires identifying segmentation basis to

understand the specific buying behaviour of customers. The needs, expectations and buying
behaviour of customers are heterogeneous and depend on multifaceted factors- like:

 Age
 Gender
 Income
 Lifestyle
 Values etc.

By using the segmentation technique, Honda can narrow down the large, diversified target audience
into specific and narrowly defined groups. Market segmentation surveys are common methods of
obtaining the customer-specific information that could be used to create groups sharing common
characteristics.
After understanding the unique buying behaviour of customers and getting the required information
through surveys, Honda can divide the market into small homogeneous groups. It can be done by
exploring the geographic, demographic, behavioural and psychographic characteristics of
customers.
The company can use one or more of these segmentation strategies to choose the right market
segments and develop an effective Marketing Strategy.

 The geographic segmentation divides the market according to geographic areas, like- city, country and
region.
 The demographic segmentation will require Honda to divide market according to demographic
characteristics, like- gender, age, income and ethnicity.
 If Honda chooses behavioural segmentation, then customers will be divided according to their buying
pattern like usage frequency, benefits sought, usage occasions and brand loyalty.
 Use of psychographic segmentation will result in customers' grouping according to their lifestyles,
interests, attitudes, values and traits.

Honda can combine the different segmentation strategies for more specific targeting as explained in
the next section.

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4 Targeting and Positioning of Honda

After dividing the large diversified customer market into smaller groups with homogeneous
characteristics, Honda should wisely choose the target segment/segments whose needs and
expectations match the company’s resources and capabilities.
The targeting can be done by evaluating the commercial attractiveness and growth potential of
identified segments. Honda can choose one or more segments depending on the segments’
characteristics and the company's resources, capabilities and growth objectives.
The commercial attractiveness and growth potential of each segment can be evaluated by using the
following indicators:

 Identified segments have the appropriate size

 Have concrete differences.
 The estimated profits should exceed the additional marketing costs.
 Segments are easily accessible.

After segmenting the customer market and choosing the right target market, Honda now requires to
set a clear positioning statement that could create a positive image of the offered product in the
customers' mind. Honda can follow the following steps to develop an effective positioning strategy:

 Develop the positioning statement for Honda Marketing Strategy by answering the following
questions:
 What your brand stands for?
 What are the needs and wants of your target market?
 How your brand serves those needs?
 How different is your offering from competitors?
 Answers to these questions will yield enough information to develop a positioning statement.
 The comparison of their communication and messaging strategy with competitors will reveal the
potential areas that could be addressed with targeted positioning message.
 Identify the strengths/weaknesses of business by comparing with competitors to find that gaps that
offered product can fill.
 Analyse positioning of competitors and evaluate own position in the market.
 By using the analytical data collected from a different market, customer and competitor surveys,
develop a positioning statement and periodically test its effectiveness by collecting qualitative and
quantitative data (like focus groups, polls, interviews etc.).
 Use the test results to make necessary adjustments in the brand positioning.

5 Company Competitive Advantage in the Marketing

Strategy of Honda
The survival in the increasingly competitive market requires Honda to set the clear differentiation
basis that could provide an edge against rivals. Honda Marketing Strategy should focus on
identifying unique selling propositions (USPs). Some examples of USPs are the highest quality,
lowest cost or uniqueness of idea. Identifying USPs is not sufficient as the effectiveness of the
Marketing Strategy of Honda will directly depend on management's ability to communicate the
identified unique selling propositions.
The Honda can apply Porter's generic strategies model to explore how competitive advantage can
be created. The pictorial presentation of the Porter Model is given below:
The company can set a competitive advantage based on cost or differentiation.

5.1 Cost based competitive advantage

 The cost leadership strategy will suit if Honda has developed capabilities to reduce the cost below the
industry average and achieve the economies of scale. Moreover, it will require Honda to develop close
collaboration between different functional areas.
 Developing most effective distribution channels, access to latest technological tools to assist
production processes, using lean production methods and strong bargaining position when negotiating with
suppliers are some indicators of setting competitive advantage based on cost leadership.

5.2 Differentiation based competitive advantage

The differentiation strategy focuses on developing brand loyalty by offering premium products. The
company can find different ways to develop differentiation leadership, such as- by focusing on the
reliability, durability, benefits and distinctive features of products, by developing strong brand
recognition and by increasing expenditure on marketing efforts like celebrity endorsements and
sponsorships etc. Honda can set achieve competitive advantage by adopting product, service,
quality, image, people or innovation differentiation.

5.3 Competitive advantage model

Following the model shows how Honda can develop an effective Marketing Strategy by evaluating its
resources and capabilities, identifying distinctive competencies and leveraging those competencies
by adopting either cost or differentiation orientation:

6. BCG Matrix in the Marketing Strategy of Honda

Honda should continuously evaluate its product line by assessing their growth potential and share in
the market. The products can be classified into the following categories:

 The products with high growth and high market share are classified as stars. Honda should increase
the investment after identifying the stars in its product lines.
 Products with high market growth but low share are classified as question marks. Honda should
analyse why market share is low despite the high growth rate.
 Products with low growth but high market share are cash cows that need to be milked for continuous
good performance in the market with low growth and limited opportunities.
 Lastly, products with low growth and low market share are dogs’ Honda should divest as it is difficult
to make profits and get an adequate return by investing in dogs.

The high number of stars and cash cows will indicate good performance, whereas, a high number of
question marks and dogs will be a cause of concern for Honda. The product classification is
necessary for evaluating the success of the Marketing Strategy of Honda.

Brand Equity of Honda

Brand equity reflects the overall value of the brand. The customers' experiences and perceptions
determine the brand value. Positive perceptions reflect the high brand value and positive brand
equity, while negative perceptions reflect the low brand value and negative brand equity. Honda
should continuously evaluate its brand equity to ensure the long-term survival in an increasingly
complex and competitive customer market. It can be done by evaluating the following brand equity
components:

7.1 Brand equity components

7.1.1 Brand awareness
Brand awareness provides the basis for brand equity development process. High brand awareness
shows that the customers know that the Honda brand exists and can recall the important brand-
related information. The company can measure brand awareness by conducting brand recall
surveys. The high brand awareness acts as an anchor to other associations. It increases brand
visibility that can help Honda gain consideration in the competitive market.

7.1.2 Brand association

Brand association reflects the customers’ associations with Honda based on their memories,
previous experiences, interaction with Honda’s employees, price points, advertisements, WOM,
celebrity associations and publicity in different media channels. It is important for Honda to carefully
plan each interaction with internal and external environmental actors (such as government,
employees, shareholders and media), as customers develop brand association not only due to direct
interaction with the brand, but also the indirect interaction with different environmental factors.

7.1.3 Perceived quality

Honda should carefully evaluate the customers’ perceptions of product quality as these perceptions
influence their pricing decisions.

7.1.4 Brand loyalty

Brand loyalty is among the most important element of Honda’s brand equity. It can be attitudinal
(customers’ feelings towards the brand) and/or behavioural brand loyalty (repeat purchase). Higher
brand loyalty can decrease the marketing expenditure, increase Honda's ability to introduce new
products successfully, erect the barriers to new players and strengthen the company's bargaining
power against other channel members.
Honda can increase brand loyalty by rewarding the customers' repeat purchase behaviour. Although
the loyalty programs are expensive, it will benefit Honda be reducing the costs of acquiring new
customers.

7.1.5 Proprietary brand assets

Lastly, Honda should evaluate its proprietary assets (like channel relationships, trademarks and
patents). These intangible assets prevent the competitive advantage erosion and develop brand
loyalty.

7.2 Brand equity development

In light of Keller brand equity model (shared above), the Honda can take the following steps to
develop the brand equity:

 Develop the brand identity by building brand salience/awareness.

 Identify and communicate the meaning of Honda brand. How it serves the customers’ tangible needs
(performance) and emotional/psychological needs (imagery).
 Evaluate the customers’ feelings and judgments of Honda brand to assess their response.
 Lastly, focus on building- behavioural loyalty, sense of community, attitudinal attachment and active
engagement to develop brand resonance that sits on pyramid top.

7.3 Brand equity measurement

Honda can measure its brand equity by evaluating the:
 Difference between the price charged by Honda due to its brand name and price charged by similar
unbranded products.
 Amount of extra sales volume generated compared to other branded and non-branded competitors.
 The company’s share price.
 Brand’s potential to make future earnings.
 Return to shareholders.

The company can also combine the above methods and formulate a multiplier to accurately assess
the esteem and strength of the brand that reflects the brand equity.

8. Competitors Analysis in the Marketing Strategy of

Honda
The detailed competitor analysis is highly important for the development of Honda Marketing
Strategy. The competitive analysis is done to understand the relative positioning and market share of
the company's direct and indirect competitors. Honda should first identify the competitors, evaluate
their strategies and compare the strengths and weaknesses of their products with their product
offerings. There are five steps Honda can follow to understand the strategic positioning of its key
competitors:

 Firstly, clearly define the target market.

 Identify the director competitors and create a list of it.
 Analyse the competitors’ product offerings, their market share, key strengths and weaknesses.
 Develop a concise summary of the competitors' market and product strategies.
 Conduct a comparative analysis against its products and/or services.
 Continuously update the competitive analysis to make informed and strategically wise decisions.

The company can use different strategies to get the information about competitors, such as- doing
Google research, going to trade shows, browsing public documents, asking customers, playing
secret shopper technique and tapping the vendors
A detailed competitor analysis can be categorised into the following parts:

 Identify market growth, share and financial objectives. Some examples are maximising short-term
profitability or investing in R&D for long-term growth.
 Evaluate the competitors’ strategies by collecting information from shareholder reports, white papers,
press releases, promotional campaigns, hiring practices, acquisitions and mergers. This information will
reveal the direction in which the competitors are moving.
 Use the above information to analyse competitors’ strengths, weaknesses and core capabilities.

9. Market Analysis of Honda

Honda Marketing Strategy development requires a comprehensive market analysis. It can be done
by quantitatively and qualitatively assessing the customer market. The information obtained from the
market surveys will help Honda management in identifying the emerging opportunities, exposing the
potential threats and understanding how they relate to the company’s major strengths and
weaknesses.
Honda can follow the following steps to conduct the market analysis:

9.1 Market size analysis for developing Marketing Strategy of Honda

Honda should evaluate the market potential and volume to determine the size. The market potential
includes potential customers and considers upper demand limit. The market volume includes certain
indicators like realised sales and total turnover. Honda can take information from different sources to
accurately determine the market size, such as- financial data of industry’s major players,
government data, customer surveys, published industry reports and trade association data.

9.2 Market trends analysis for developing Marketing Strategy of Honda

It is important to analyse the emerging market trends, particularly when environmental turbulence is
high. Honda can use different trend analysis techniques for this purpose, such as- marketing mix
modelling, risk analysis, choice modelling and customer analysis. Honda should also monitor the
political, legal, regulatory, social and economic changes as these environmental forces play an
important role in shaping the market trends.

9.3 Market growth analysis for developing Marketing Strategy of Honda

Honda can extrapolate the historical data to determine the market growth rate. This information can
help a company in determining the current lifecycle stage of the industry.

9.4 Market profitability analysis for developing Marketing Strategy of

Honda
Honda can use Porter's five force framework to determine market profitability. The high buyer power
will negatively affect market profitability, showing Honda’s customers have different options. Low
supplier power positively influences profitability and indicates Honda has a strong position during the
negotiation process with suppliers. High entry barriers show that there will be lesser new entrants in
the market. High substitute product threat and high competitive rivalry will also decrease the market
profitability and attractiveness for Honda.

9.5 Cost structure analysis for developing Marketing Strategy of Honda

Honda can use Porter’s value chain model (as given below) to determine the industry’s cost
structure.
It will help Honda in isolating the costs and identifying critical success factors. Honda can also use
the information obtained from cost structure analysis to develop cost advantage.ORDER NOW