Honda Vietnam

Executive summary Recently, motorcycles motorcycles are the most popular means of transportation in Vietnam.Currently, there are more than 21 million circulated motorbikes, counting for 4 Vietnamese persons per motorbike on average with some popular trade names suchas Honda, Yamaha, Sym, and Suzuki …, which meets about 90% traveling demandof Vietnamese. The demand d emand for motorbikes is more and more increasing with the development of Vietnam economy. Seeing this, the competition among motorcycles makers in Vietnam is more and more powerful. In order to attract customers as well as to satisfy satisf y customers’ needs about product quality, reasonable price, fashion styles… motorcycles makers have carried out a lot of marketing strategies because marketing management has the task of attracting and building relationships with customers by creating customer value and satisfaction so that organization can sell its products as many as possible, more importantly, higher than its competitors.However, it is not easy for any organization to set up a successful marketing plan because the development of the marketing plan is influenced by the situation analysis which provides a gather of relevant market information at both micro and macro environment of an organization. Among motorcycles makers, Honda Vietnam makes a huge effort to remain their brand name and ensure the quality of product with a reasonable price. And it is said that Honda motorcycles always take up the leading market shares in Vietnam making Honda to be the leading company in motorbike industry. So, this report is aimed at providing situation analysis of Honda Vietnamincluding company, environmental, competitor, customer, brand and SWOTanalysis.

1. Introduction On the global market, when the competition in international economic integration becomes more and more blazing hot, especially in the context of financial crisis and economic downturn, enterprises need to create and maintain competitive advantage which makes them outstanding compared with their competitors so that organizations can be solidly based in both short- run and long-run and during their lifetime. The success success of of organization organization is based based on the the effort effort of each each individu individual al inorganization, each business unit and the whole organization as well. There are many many differe different nt departm departments ents in in an organiz organization ation like like market marketing, ing,

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research and development,finance, accounting, purchasing and manufacturing etc… and each department performs its own function. However, each department does not carry its task alone, it co-operates with other departments within the organization so that it not only accomplishes its objective but also contributes to achieve the objective of the whole organization. Profit is a numerical data showing the success of the organization andit is stated that the profit of the organization is the difference between sales revenue and all incurred expenses. Thus, among these departments, marketing department seems to be the most important one contributing to the success of the organization. Inthis paper, a gathering of relevant market information that influence the developmentof the marketing plan will be provided in the circumstances of Honda VietnamCompany, particularly in the context of Honda Lead.

2. Company analysis 2.1. Company profile Honda Vietnam Company which was established in March 1996 with charter capital of 62,900,000 million US dollars is a joint-venture of Honda Motor Co., Ltd (Japan),Asian Honda Motor Co., Ltd (Thailand) and Vietnam Engine & Agricultural Machinery Corporation. At early days, the company specialized in manufacturingand assembling as sembling motorcycles. By 2005, Honda Vietnam received the adjustment investment license in which automobile assembling was added to its business, it also provides warranty services, repairs motorcycle and automobile. Honda motorcycles and automobiles always take up the leading market shares for the high-class motorcycle range in Vietnam making Honda to be the leading company in motorbike industry.

2.2 Mission statement With the mission statement "to become a company that the society wants to exist",Honda Vietnam's activities have been oriented toward the community since establishment. HVN has strived for both the happiness and safety of the Vietnamese people, as well as the development of the country. The company has always made great efforts to apply modern and advanced equipment and technology in







Honda Vietnam has provided a variety of range of motorcycles like SH 125cc, Air Blade F1, Lead, Click play, Click, Future NEO F1, Future NEO,Wave 110RSX , Wave 110 RS, Wave 110S, Super Dream, Wave alpha, it wasunable to scale up production as its factory in Vinh Phuc was running at full capacity. So, in order to meet the increasing demand, Honda Vietnam Company formally held an Opening ceremony for its second motorcycle plant in Vinh Phuc province in August 29, 2008 with the key features of "Environmental and human friendliness" to fulfill the customers’ orders, especially for the Lead scooter. This isthe proof for Honda Vietnam's effort to satisfy more increasing and diversified demand of Vietnamese customers.Besides, Honda Vietnam has been always taking part in social activities with thewish of becoming a Company that the society wants to exist. The Company has paid special attention to traffic propaganda & safety driving instructions, education development support, culture, arts & charity… Especially, the campaign “I love Vietnam” with the message: safety, environment and Social Activities prove HondaVietnam’s effort to contribute actively to the development of Vietnam.

2.3. Company objective In accordance with the mission statement, company sets up its corporate objectivesguiding the present and future development of the company over the next 12 monthsas follows:Expansion of market share in existing and new markets;Development of new product lines to satisfy different consumer preferences;especially, providing high quality scooter like SH for high class in the societyBuilding closer relationship with young consumers in Vietnam based on appreciatinglife styles and thinking of the young generation who always pursue the continuousdevelopment for a better life and for the development of Vietnam.Maintaining the best quality with a suitable priceKeeping up with modern technology and applying the latest technology inmanufacturing product

2.4 Overview about LEAD scooter Currently, Honda Vietnam has twelve kinds of motorbikes which are being offered in the market. SH 125cc is the newest one entering







reasons. Firstly, Lead is similar in design to the Honda SCR scooter that has been imported from China for sales on the local market over a year now. Secondly from the first day appearing in Vietnam market at the beginning of year 2009, the model of the vehicle 110 Lead Honda Vietnam has caused "shock" to all customers due to the much higher price that it was listed. It is derived from the highdemand and scarcity supply for Honda Lead. Actually, when we searchedinformation about Honda, we saw a lot of negative and bad news about Lead as wellas Honda reputation. It is the reason why we want to concentrate more about thisscooter to understand thoroughly marketing strategy of Honda Lead.Lead was firstly introduced to market on December 24, 2008 and sold on January 2,2009 at all HEAD ( Honda Exclusive Authorized Dealers). Honda LEAD is the thirdtype of scooters manufactured by Honda Vietnam; the others are Air Blade andClick scooters. Lead is high – class and luxury scooter for those who have highliving standard and modern lifestyle. The slogan for this scooter is “Lead to the nextstage”, which shows pioneer stuff of the users. Like other products of Honda, Lead isalso a saving energy and user – friendly scooter and it follows the long – termobjective of Honda toward Vietnam market that “Honda is always trying to bringVietnam customers more joy with high quality, safe products and reasonable price” Honda LEAD is featured with a four-stroke, 108cc engine, built-in liquid cooledradiator and computerized fuel injection system to be more fuel efficient andenvironmental friendly meeting the Euro 3 emission standard. Additionally, manysafety features are installed into the LEAD, such as Combi Brake; and the brightHalogen Light. Beside that LEAD is perfectly designed to deliver the most additionalvaluable benefits to customers such as: The super large U-Box; Conveniently FuelCenter Lid; comfortable seat; Tubeless tire . Also, customers have many choiceswhen coming to LEAD Honda Vietnam because of various colors of black, white,red or silver.Especially, the very first time appearance of 2 newly EZ Flip colors:Gold and Pink that offers color transformation in changing brightness conditions isexpected to bring about a fresh and active style for riders. Furthermore, the suggestedretail price of the LEAD will be at a t VND 30,990,000 VND for standard colors and31,490,000







Environmental pollution is a serious problem in Vietnam nowadays. There are many many types types of environm environmental ental polluti pollution on like water water pollution, pollution, land pollution, noise pollution…among them, air pollution is a hot issue for not only Vietnam but alsoother countries all over the world because air environment has many changes affecting badly to people and creature. Air pollution is caused by many factors suchas exploring and using natural resources: coal, oil..., emission from factory,vehicles…it is said that air pollution, especially in big cities, is mainly caused by vehicles. Environmental experts say that vehicles, especially motorcycles, cause 70 per cent of all air pollution. Therefore, producing friendly- environment motorcyclesis encouraged and is concerned a lot, especially; a standard on motorbike exhaust fumes was set up in 2007. In the absence of a control standard for motorbike fumes,the best solution at present is to find a way to minimize fumes from all engines to save the environment. Seeing this, Honda Vietnam has tried to apply new technology in producing motorcycles which is friendly to environment. With all features above,Honda Lead saves energy and environmental friendly meeting the Euro 3 emission standard.

3.2 Social/ cultural When traffic jams situation happens more and more frequently, in addition to government legislation requires every one on motorcycles to wear helmet, scooters become favorite means of transportation nowadays because scooters express someadvantages s omeadvantages compared to motorbikes as follows: Firstly, scooter is more convenientfor driving in small roads or rush hours, traffic jams than motorbikes because scooter does not need much adjustment for gear as motorbike. Secondly, scooter has a large box for bags and helmets. Most of all, the line Scooter is currently circulating in themarket are designed relatively consistent with the appearance of Vietnamese peopleas relatively low saddle. Moreover, many people perceived that scooter will takemore petrol than motorbike, so average income class will have tendency to buymotorbike but now, which is improved so much. In addition, with the development of economy, people have higher income; they have more demand for







4. Competitor analysis Currently, motorbike market is quite attractive. There are a large number of the companies focusing on this field. So, since Honda launched LEAD into the market, ithas met both internal competitors like Air-Blade, Click… and many external direct opponents such as Smash, Mio classical, Nouvo, Suzuki amity 125, Attila Victoria,Honda SCR China, ….Besides, a lot of the companies producing cars: Toyota, Ford,Huyndai, BMW…are considered as indirect competitors of Lead. Among direct competitors above, Attila Victoria and Honda SCR imported from China will beselected to assess their strengths and weaknesses relative to Honda Lead.As we can see that SYM is the first adversary which competes with Honda. SYM is associated with reliability and genuineness. SYM, with line of diverse motorbike products such as Attila, VS Exel, Magio 110 RS, Bonus 110…created a new wave onthe Vietnam market and has competed strongly with Honda. Specially, SYM introduce doriginal Attila to the Vietnam market in 1998, Attila Victoria, a new version to themarket in August 2008 before introduction of Honda Lead at the end of 2008, which made Attila Victoria coming to customers earlier. It has not only new shape but also cheaper price than Lead (28 million VND- Attila Victoria, and 31 million VND – Honda Lead). In addition, SYM has provided services more attractively for users asthey buy this product than Honda. For example, guarantee period of Attila Victoria is 2-year warranty like Lead and one more option is 30000km comparing with 20000km of Honda. In general, Attila is one of the competitive and powerful motors which Honda needs pay attention to make Lead more perfect. Secondly, SCR which has been produced by Honda China is also a strong competitor of Lead. In general, Lead and SCR are nearly similar about the shape, engine, but the priceof Lead (31000000 VND) is cheaper than SCR (33000000 VND) and the color of Leadis younger and more various. SCR has only two colors for customers to choose: yellowand pink but there are four colors for Lead. L ead. When Honda launched Lead to the market,SCR is very popular to users and receives much more attention from customers becauseof good features such as big box, fuel injection engine PGM-FI…. These features arealso included in Lead. The difference









the guarantee periodof Lead is longer than SCR (six months to one year). To sum up, with appearance of Lead in 2008, it attracted more attention of many people and has reduced a largenumber of SCR bought.With evaluation above, it is clear that Lead stands the second position comparing withAttila Victoria and SCR. Up till now, with the reasonable price Lead is a good choicefor those having average or high income. The positioning of Lead and its two direct competitors can be defined at the following map: QualityLeadAttilaSCR Low price.

5.Customer analysis In the Vietnam motorcycles market, there are a re four customer segments divided for those who use Honda Lead. Customer segments Characteristics Geographical Currently, Honda has about 400 retail stores in all thecountry. Like other kind of motorcycles, Honda Leadhas been distributed to HEAD (Honda ExclusiveAuthorized Dealers) from the North to the South,however it has still been consumed mostly in bigcities in which have dense populations and high livingstandards such as Hanoi, HoChiMinh city, Hai Phong,Da Nang, Hue, Can Tho, etc. Because Lead is a high – class and luxurious luxurious scooter product, it is not much sold in rural areas. Demographic







Actually, Honda Vietnam designed Lead for specificsocioeconomic classes in term of economic ability. Itfocuses on those who have high living standards, inother words, who can afford for this luxurious product.

Lead is a preferable motorcycle to those who are keenon scooter because of its style which makes driversfeel proud of them as well as brings luxury andmodernity to its i ts owner.Behavioral

Lead is firstly launched in Vietnam market at the beginning of year 2009. It is a time near Tet holiday,therefore consumers want to have a new motorbike atthis time in order to make ready for Tet. This leads tothe increase demand for this scooter.

Nowadays, a motorbike is not simple as a means of transportation. It also shows the socioeconomic status of its owner, so consumers want to choose motorbike which represents their high rank because of its luxury.

Consumers also choose Lead because of its advantages compared with the other scooters such as:saving energy; light, simple and user – friendlydesign; advanced, powerful and mild engine; cheapstated price







Most customers in big cities and urban areas areaware of the Lead brand because of its repetitiveadvertisings on television as well as monumentalshow for the first appearance of this scooter.However, scooter.However, many potential users in the rural areas areunaware or not informed about this kind of motorcycle because Honda has not focused on thismarket segment. Decision type for the Honda Lead Actually, scooter like Honda Lead is still an expensive and infrequently purchased product for Vietnam customers; therefore before making decision to buy a new one,they highly involved in a purchase by searching a lot of necessary information aboutits price, quality and characteristics. Moreover, there are significant differencesamong brands such as Honda, Yamaha, Suzuki and SYM as well as other motorcycles products coming from China. For example, Honda products are saving – energy and user – friendly, while Yamaha products normally look so sporty and powerful. It is the reason why consumers always compare among brands to choosethe best one. These features show us that it is complex buying behavior.

6. Brand analysis 6.1 Product life circle (PLC) stage Up to now, Honda Lead has been appearing in Vietnam market for about one year.Like other new products, it also progresses through a range of stages fromintroduction to growth, maturity, and decline. This sequence







Actually, Honda Lead has very quick introduction stage, so it moves to the growthstage immediately. Firstly, as the product is introduced into the market, the demandfor it was so high that sale goes up rapidly instead of slow sales growth as predictedfor this stage. Moreover, according to Mr Shinichi Shimada, Senior Manager of Customer Service Department, Honda Vietnam affirmed that this company issuffering loss of prestige when Head himself push price up and benefit from thedifference between the listed and selling price, meanwhile the company do not benefit from the price increase .

6.1.2 Maturity stages Currently, the “price storm” of Honda Lead L ead has not been solved appropriately byHonda Vietnam Company and it’s HEAD. Consumers have been disagreeing withwhat Honda managers explained for their irresponsible action in term of controlling price. In addition, they no longer believe Honda reputation and they may boycott Honda products including Lead. In recent time, the sales of Honda Lead slow down,which make profits drop. This report forecasts that Honda Lead may have chance to return the growth stage if the company changes the marketing strategy in term of price to make customer trust trust the company reputation again. In contrast, if HondaCompany do not act correspondently with the customers’ opinion, they are likely toloose the motorcycles market to other competitors.

6.2. Current marketing strategy using 4Ps framework







Honda Lead has been distributed through HEAD in all the country. HonDa Companyhas still used HEAD as their main channel of product distribution.

Promotion Honda continues their promotion campaigns through two main communicationelements communicationelem ents namely advertising and public relation. Because of the large market shareof motorcycles lines, Honda is utilizing both PUSH and PULL strategies. In term term of public relations, Honda is always trying to build good relationships with theVietnamese customers by involving in the community as well as investing in social portfolio with the purpose of proving their efforts toward Vietnam society.

Price Recently, Honda often makes customers dissatisfied with the pricing decision because of the much higher difference between the listed and selling price. HondaCompany clearly knows about this issue from the “price storm” of Lead and Air Blade, but they have not solved this affair appropriately yet. This brings HEADchance to push price up whatever they like to make profits.

7. SWOT ANALYSIS

7.1. Strengths Honda has been a well-known brand in the world before entering to Vietnam in1996. People know about Honda Japan, Honda Thailand and now Honda Vietnam.Over 10 years of long existence and development, Honda Vietnam now becomes a part in the Vietnamese people’s life.









people living in the cities. Beside the features of a modern scooter’sengine, such as, 4 stroke, 108cc radiator built-in liquid cooled engine, LEAD is alsocomputerized Honda PGM-FI(electronic fuel injection )system that providingLEAD as the best fuel efficiency in its class and offers environmental friendlinessmeeting the strictly Euro 3 emission standard . This advanced advanced point is is not applie applied d

for lots of scooters in Vietnam, for example Additionally, many safety features are installed into the LEAD, such as CombiBrake. Beside that LEAD is perfectly designed to deliver the most additionalvaluable benefits to customers ,namely, LEAD has a super larger U-Box than other scooters’, for instance, Nouvo or Air Blade… so it is very convenient for driver tostore a lot of things . Also, customers have many choices when coming to LEADHonda Vietnam because of various colors of black, white, red, silver,gold and







listed retail price of the LEAD is at 30,990,000VND for standard colors and 31,490,000 VND for special colors (VAT included), but in fact that the customers must buy LEAD higher three- four millions and evenwhen its price goes up 39,000,000 VND.But Honda Vietnam did not have any effortto solve this problem. They just told via the media that HEAD could sell motors atany price that they wanted. This means Honda Vietnam denies being responsible for this affair. Another result from the “prices storm” is that the motor prices being pushed up would let consumers down. On the Internet, there are some forums callingthe consumers to boycott LEAD Honda Vietnam. Moreover, the “prices storm”helped HEAD to be tax dodgers because they sell motor to the customers at high prices but pay tax at listed prices, meaning the low prices. Therefore, they can havemore money from the difference diff erence between the two prices.The last weakness is about Honda Vietnam services such as sales service,maintenance service. At HEAD, when customers complain about the highlyincreasing prices of Lead, no one gives them suitable explanation or intends toconvince them to buy. Generally, attitude of sales persons are not helpful and thatmakes a lot of buyers dissatisfied. Another example is concerned with theguarantee’s maintenance of Lead. When the customers go to HEAD to havewarranty, they often wait for long time or receive unfriendliness of staff.

7.3. Opportunities Opportunities







thecompany has expanded the scale of production of LEAD to satisfy customers’needs.The second opportunity which the external environment offers is socio - culturalconditions. It is evident that air pollution is one of the country’s most alarming issuescaused mainly by motor vehicles as Vietnam expects to have 31 million motorbikesand 3 million cars by 2015 This problem problem causes causes seriousharm seriousharm to people people and nature. nature. Therefore Therefore,, the whole society becomes more aware of theimportance of protecting the environment. They intend to use emission-limiting andfuel-saving vehicles. Taking advantage of this opportunity, the Honda VietnamCompany has issued a mass of hi-tech and eco-friendly products, accompanied byenvironmental protection activities. Honda Vietnam has obtained many advancedachievem a dvancedachievements ents in the motor industry and LEAD is one of the best ones.The last but not least is the opportunity due to globalization. Like many other companies, in Vietnam in Post-WTO time, LEAD has great opportunities from thisimportant event. When our economy integrates completely to the world market, thecompany is in front of the chance to have much wider customer market without anytrade barriers. Also, it can adopt modern technology, foreign investment andeffective management methods more easily







depend on foreign suppliers in terms terms of price and quantity. Next, Next, threat is caused by new entrant. Since Viet Nam is a member of WTO,Vietnamese WTO,Vietnamese customers have more choices to own suitable scooter. There are morefam morefamous ous foreign foreign brand name names s than ever ever before before in domestic market such as Piaggio,CPI … with good quality and appealing appearance. They attract a large amount of customers especially ones who have high income and desire to show off their status.Additionally, Vietnam permit motorcycles importing business not only new but alsoold ones with efficient quality standard and expiry date rules. Moreover, according to Mr Do Huu Hao, vice prime minister of Ministry of Industry, the import tax of motor is reduced considerably in the next 3 years at the rate of at least 15 % in comparisonwith the current price. Thus, Honda now is in the edge of losing market share inVietnamese market.Finally, it comes from rivalries. Yamaha, Suzuki, two strong competitors of HondaVietnam, now keep innovating their products, including scooters, and having long-term goal to become the leading producers. Evidently, Yamaha Yamaha has scooter scooters, s, such as,Mio, as,Mio, Exciter, Exciter, Nouvo Nouvo with with various various prices prices from 20,000,000 to 32,700,000 VND; whileSuzuki also has Suzuki Hayate with lower price, good quality, fashion. In addition,Lead now has to struggle against the scooters flood from China which cheap price isa







innovateLEAD and expand market for this scooter Threats Threats Bargaining power of customersBargaining power of suppliers New entrantRivalriesInnovate continuously product with high qualityand suitable price for customersLook for domestic suppliers to make lower priceand assemble actively

Honda Vietnam

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