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In the 1960s, Honda made a bold move by entering the US motorcycle market with a strategic plan that focused on high volumes per model, high productivity, and low costs. This move marked the beginning of Honda's success story in the US, as they introduced a new product - small 50cc motorcycles that revolutionized the market through a price generic competitive strategy. Let's delve deeper into the history, strategy, and planning behind Honda's triumph in the US motorcycle market.
1946: Honda Technological Research Institute was established, focusing on internal combustion engines.
1947: Honda introduced its first A-type 2-stroke engine.
1948: The Japanese motorcycle market was crowded with 247 players, mainly producing clip-on engines for bicycles.
1949: Honda launched its first lightweight 50cc 2-stroke D-type motorcycle with 3hp, while competitors were introducing their first 4-stroke engines.
Honda also acquired a plant to manufacture these engines and became the first to offer a multiproduct line, lead in product innovation, and exploit economies of mass production opportunities.
1958: Honda introduced its first small, user-friendly motorcycle for local deliveries, featuring a 50cc engine, step-through frame, automatic transmission, and one-hand controls.
They built a plant with 10 times the capacity of the current market demand.
1959: Honda entered the US market as the world's largest motorcycle producer with sales of $55 million.
Product: Honda focused on producing small lightweight motorcycles with a 50cc engine, 5hp power (compared to competitors' 2.5hp), 3-speed transmission, automatic clutch, electric starter, and step-through frame.
The products were continuously updated or redesigned based on market feedback.
Price: Honda offered its motorcycles at a significantly lower price point of $250 compared to competitors' 00-1500 range.
This pricing strategy aimed at capturing market share and was supported by a cost curve advantage that allowed for pricing flexibility.
Place: Honda established its own distributor, the American Honda Motor Company, and expanded its dealer network region by region from west to east.
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By 1961, Honda had 125 dealers, eventually building the largest dealer network in the US. Honda prioritized building a strong selling and distribution network, even if it meant short-term losses.
Promotion: Honda invested heavily in regional advertising, spending $150,000 in 1961 to target middle-class consumers with campaigns like "You meet the nicest people on a Honda." They consistently outspent competitors in advertising, with support from Yamaha and Suzuki. Promotional efforts were crucial in shaping Honda's brand image in the US market.
Honda's success in the US market was fueled by substantial investments in research and development, as well as mass production infrastructure. Their productivity outperformed western competitors by up to four times, showcasing their commitment to efficiency and innovation. Despite higher labor costs in Japan compared to the west, Honda maintained a competitive edge through a pipeline of new models and a focus on market share growth and defense.
Honda's entry into the US motorcycle market was more opportunity-driven than long-term strategy-based. Leveraging the success of their 50cc motorcycles in Japan and the belief in the power of mass production to reduce costs, Honda saw a window to expand globally. Soichiro Honda's aggressive approach in building a large plant in 1958 reflected a mix of risk-taking and foresight, aiming to position Honda as the world's leading motorcycle company through mass production and cost efficiency.
In conclusion, Honda's strategic approach, coupled with relentless innovation, efficient production, and aggressive marketing, paved the way for their dominance in the US motorcycle market. Their success story serves as a testament to the power of strategic planning, adaptability, and a relentless pursuit of excellence in the face of competition. Honda's legacy in the motorcycle industry continues to inspire businesses worldwide to push boundaries and redefine success.
Honda's Marketing in US in 1960s. (2017, May 29). Retrieved from https://studymoose.com/hondas-marketing-in-us-in-1960s-essay
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