Honda Marketing Strategy

HondaTheMotor Co., Ltd. Power of Dreams Introduction Honda Motor illustrates the key role that marketing managers play in determining the sustainability of its business. Through working closely with the research and development enables us to maintain and creating innovations in the industry. Competitors are likely to grab our market share but they probably can not be as competitive as us even though those competitors have identical products to offer. The customers are the one who will be more likely to seek the best quality of products, services, warranty and the best price that fits to the level of income. There is one ultimate thing aside those elements is satisfaction. The marketing managers responsibilities in here are to assure that the products will be distributed at the right place, promoted effectively and the last is to elaborate the prices of its products as customers or consumers are searching for the competitive prices. Do customers are merely content after purchasing our products?.. Some perhaps said yes but others may be not satisfy. The objectives of marketing managers are to set plans that generate high profits time after time, indeed it’s the purpose of any organisation. Inevitably, to attain that the marketing managers must understand about the strategic tools on how to make customers feel satisfied. Furthermore, we will conduct business in Asia markets and roughly market penetration in other continents. History of Honda Motor Honda Motor Co., Ltd was founded by Mr. Soichiro Honda in 1948. Before he decided to establish his company, he worked as a mechanic for cars races at a Japanese tuning shop called Art Shukai. A self-taught engineer had encouraged him to apply for the post of Piston designer. Though his intention was put off by Toyota, The firm has hired him eventually and he received the post that he desired. It was because of World War II and gas shortage, Honda could not do anything but he set up a research institute in Hamamasta, Japan. In that period, he was not able to release his dreams of making a motor bicycle due to no financial resources that can support his dream. Although he had not had capital for producing 2 motorcycles, he called up about 18,000 bicycle shops across Japan and finally he received the capital to produce his motorcycle. It was the

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first time for him to produce a motorbike named Honda Cub. This first time production has led his company to be the world’s largest motorcycles manufacturer in 1964. Not long after he succeeded in producing motorbike, he commenced the first automobile production type T360, a pick-up truck and then he produced S500 sports car for the first time. Honda is headquartered in Minato, Tokyo, Japan. This firm has been the leading edge in the industry ever since. Inventing new products with affordable prices with a very high quality standard to satisfy its customers is the key success of his business. The corporate profile is rather unconventional because Honda Motor Co., Ltd. Operates under the basic principles which are “ Respect for the Individual and the Three Joys “ it’s associated to an expression of the Joy of Buying, The Joy of Selling and The Joy of Creating. Meanwhile, Respect of the Individual reflects to a desire that respect the unique character and ability of individual person. The three joys further express company belief and desire that each person working in, coming into contact with us, either directly or through our products, should share a sense of joy through such an experiences. Nowadays, Honda Motor stretches its business around the globe including China, USA, UAE, Europe, Oceania, Asia-Indonesia.

Overall Industrial The scope of the business in overall is Motorcycles, Scooters, ATVs, Automobiles, Electrical Generators, Robotics, Marine Equipment, Jets, Jet Engines, Lawn and Garden Equipment. To expand his prevailing business. Honda Motor Co., Ltd is developing a diversification product-Honda Financial Services. Market Form Since there are number of large companies that produce the identical products such as Suzuki,Yamaha, Kawasaki and Bajaj, Nissan, Chrysler, Mercedes-Benz and Peugeot. Honda Motor Co., Ltd is further categorised as Perfect Competition market form. Structure Condition Honda is fully aware of the existing competitors such as Yamaha, Suzuki, Kawasaki, Bajaj, Peugeot, Toyota, Nissan Chrysler, Minerva, these firms have produced the same products. Also they are penetrating the business in the same targeted market. The kind of perfect competition market form stimulates us to be more attractive and impressive in customers’ insight besides his will be more likely to shrink the total market share.

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Structure Condition according to products type sell in the same market: Company

Year of Est.

Products Type

Area Served

Honda

1948

Automobiles, Financial Services, Motorcycles, Scooters, ATVs, Electrical Generators, Robotics, Jets/Engines, Lawn and Garden Equipment

Worldwide

Suzuki

1909

Automobiles, Engines, Motorcycles, ATVs, Outboard Motors.

Worldwide

Yamaha

1955

Motorcycles. Scooters, Boats, Sail Boats, Outboard Motors, Diesel Engines, Sport

Worldwide

Kawasaki

1896

Motorcycles, Rolling Stock, Aerospace, Shipbuilding, Construction

Worldwide

Minerva

1956

Motorcycles, Bicycles, Automobiles

Asia, Europe, UK, The States.

Bajaj

1926

Two-Three Wheelers, Home Appliance, Lighting, Iron & Steel, Insurance, Travel and Finance.

Latin America, Africa, South East Asia

Toyota

1937

Automobiles,Robotics, Biotechnology, Financial Services.

Worldwide

Nissan

1933

Automobiles, Outboard Motors, Forklift Trucks.

Worldwide

Peugeot

1882

Bicycle, Car, Motorcycle.

Europe, Asia, The States.

Chrysler

1925

Automobiles.

Worldwide

Every company wish to make sales of their products at reasonable prices to their target market. It is not a big problem but a kind of threat. However, it also encourages us as marketing managers to work harder on developing its marketing strategies plan that can attract and impress our valued customers. We are not working ourselves but strengthening our great relationship with the relevant stakeholder. Inventing new innovations that exhibit safety and environmental concerns, through the research and development programmes, the company can develop very economical vehicles that absolutely attracts its target market in the future.

Marketing Strategic Overview As marketing managers, we have to set up marketing strategies plan that attract specific target market and a related marketing mix. We are conscious of combining these marketing strategies can optimise our organisation’s objectives.

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Honda is a rather great company that is fully understand about what market demands. As Marketing Managers, we pursue target marketing where we have defined which customers that seem to be our target and then conduct mass marketing simultaneously. We also have to search for opportunities by understanding the markets. An example of Target Marketing is when Honda Motor launches a new car that intend for medium - upper level and another example for Mass Marketing is when Honda Motor produces motorcycles that purpose solely for everyone regardless of whether they are worst or better off. Target marketing has a very wide segment where Honda Motor can attain big amount of profits in a large market. In this case, we focus on some specific target markets so that we can develop a marketing mix to satisfy customers. Bearing in mind, we will reluctantly face direct competitors as such when we only focus on specific target markets. Hence, as Marketing Managers we are probably not going to decrease our price but reorganise it into a package “ Marketing Mix” is used in a such situation. For example, the price of motorbike “ Honda Tiger “ Rp 18M and let’s say that our competitor Yamaha sets lower price at 17M, ironically, Yamaha has slightly same specs. In this illustration, we are not going to decrease our published price but change the marketing strategy by giving additional package, it can be merchandise products or offering bonus coupon for free sales service within certain time or giving extra time after sales service. Developing marketing mix can be performed in many ways because every products might have different features. As the previous illustrations showed that customer service levels before or after sales can be adjusted. Honda is rather confident to break the market competition by using advertising media to influence our target markets’ perception. The benefit from using advertising media is mass selling-communicate with large numbers of potential customers at the same time. It frequently happens that Honda is using a sort of mass selling to which some of organisations use company’s property for their every day of operation, it is aimed for a publicity where we do not have to pay any penny for such an advertising.

Target Market The objective of Honda Motor to boosting their total sales revenue is to identify the target market. As marketing managers we cluster our customers as follows: Products type

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Target Markets

Area Served

Motorcycles

All Level except underage

Worldwide but focus on Asia Markets.

Cars

Upscale Level, Family

Worldwide

Financial Services

Personal, Institutions

The United States

Products type

Target Markets

Area Served

Scooters

All Level except underage

Worldwide

ATV’s

Personal, Upper Level

Worldwide

Electrical Generators

Manufacturers

Worldwide

Lawn Garden Equip.

Institutions, middle - up households.

Worldwide

Jets / Engines

Personal and Institutions

Worldwide

We are conscious of having competitors that are probably doing the same marketing strategy. However, whatever happens we are not going to standstill. We will develop our marketing mixes for our target markets. It is one of the job for marketing managers to understanding the market. Furthermore, we will focus on our marketing strategies by segmenting and positioning to find the opportunities.

Segmentation and Positioning Unlike products segmentation that narrow the target market based on product type. Segmenting is rather tough because we can’t satisfy each customer due to they have unique exposure. In addition, each customer has their own traits so that we also can’t enforce them into a group that we wish. The only best practice of segmenting that can generate higher sales record when Honda Motor can satisfy the target markets that have been clustered precisely. Honda’s Segmentation for motor bikes are described as follows: Products

Type of Customers Segment

Area Served

Level of Economy

Honda Tiger

Teenagers (above 18 yo)

Indonesia

Middle - Upper Class

Honda Supra

Household

Indonesia

Low level

Honda Vario

Considered as female vehicle

Indonesia

Middle class

Honda’s Segmentation for cars are described as follows: Products

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Type of Customers Segment

Area Served

Level of Economy

Honda Civic

Top Executive

Indonesia

Upper

Honda CRV

Executive

Indonesia

Upper

Honda Jazz

Young Executive

Indonesia

Middle-Upper Level

Our company is not just offering one of product types because we have variety of products to offer to market that we have clustered. For that reason, we use more sophisticated instruments that help in segmenting. Clustering Techniques are aimed at clustering group customers that are similar on their segmenting dimension into homogenous segments. Honda Motor uses this technique to measure the demographic characteristics, the important of different needs, attitude toward the products and past buying behaviour. Every city in Indonesia has different insights about the product and price. The diversity can ease us as marketing to collect their feedback and it will turn up a better marketing strategies. A hypothetical example that can be analysed is when consumers/customers in Town A and Town B shared their experiences about using a Honda product ” Car” into our customers’ forum. The data obtained further used to measure the customers’ behaviour. Customer Database can focus the efforts of marketing managers. The variation of the clustering approach is based on customer relations management. Honda Motor authorised dealers could use the database from previous customers to segmenting the information. For instance, the dealers can send latest information to previous customers or invited the clustered high class group for a selective product when there is a new product that is likely to be launched. As technology plays as an important role for gaining database, it can make more easily for us to establish great communications with the customers by sending email, brochures either through their inbox email or regular mail.

Positioning After using marketing segmentation approaches like cluster analysis, we can fine-tune the whole marketing mix so that we can provide some group of potential customers with superior value. By differentiating the marketing mix, we can also perform a better job that meet the customers’ needs. Another thing that’s crucial for us is to know how customers view and react to our brands. Positioning refers to how customers think of our proposed brand in a market. This issues are important when there are competitors like (Yamaha, Suzuki, Kawasaki and alike) enter the market with identical products. For instance, it was so easy to determine whether the motorbike was manufactured by Honda Motor or Yamaha, however, nowadays it is rather tough to distinguish which one is Honda or Yamaha in term of sound wave. It because that Yamaha has copied-cat Honda’s filter of exhaust pipe. However, first come will generate first impression. Who do not know about the economic motorbike sometime ago ?.. Of course, people will say it honestly that’s HONDA. Another example when there are no motorcycles manufacturers produce four strokes

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engines at the time but then lately every motorcycles manufacturers manufacture of the kind. In such cases, customers will view the position of our company as the first motorcycles manufacturer that launched respective products. Positioning analysis is very prominent because it describes our brands, focuses on specific product features and brands that are close to competitors in the product market. The purpose of positioning itself is to assure that the whole marketing mix is positioned for competitive advantage so that Yamaha as competitors will find difficulty in drawing attention from the target markets. Albeit we are the world’s leading motorcycles and automobile manufacturer, we have to be aware of other competitors that are likely to grab our market share. We realise that Yamaha Motor is becoming our closest market competition. Hence, we have to retain our business through analysing our SWOT and our competitor’s SWOT. The benefits from knowing the SWOT can create some opportunities so that we can invent new marketing strategies based on targeting and positioning. Here are the positioning of brands that we have analysed in each characteristics:

Motorcycles (+) & Motor Sports (-)

Motorcycles (+) & Motor Sports (+)

Motorcycles (-) & Motor Sports (-)

Motorcycles (-) & Motor Sports (+)

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World’s leader auto(-)&motorbikes producer+)

World’s leader auto(+)&motorbikes producer(+)

World’s leader auto(-)&motorbikes producer (-)

World’s leader auto(+)&motorbikes producer (-)

Maintenance Service(-)& Resale Value(+)

Maintenance Service(+) and Resale Value (+)

Maintenance Service(-)& Resale Value (-)

Maintenance Service(+) and Resale Value (-)

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Family (+) & Luxury Car Producer (-)

Family (+) & Luxury Car Producer (+)

Family (-) & Luxury Car Producer (-)

Family (-) & Luxury Car Producer (+)

Honda Motor’s S.W.O.T Strengths

: ➡ The world’s leader motorcycles and the sixth world best automobile manufacturer as well as remarkable brand image. ➡ Assembly plants are scattered worldwide to ease customer for obtaining the products that they desire. ➡ Variety of products manufactured to meet the target market demands. ➡ Environmental and safety concern by making hybrid and fuel cell automobile.

Weaknesses

: ➡ Unable to be the market leader for a certain product such as cars in the States. ➡ Less advertisement and promotion strategies. ➡ Postpones the operation plants in some countries due to capitalism caused.

Opportunities

: ➡ Able to assure its firm of gaining trust from potential customers through sponsorships for some either local or International events. ➡ Assembly plants that are located worldwide enable customers more easily and satisfy their desires. ➡ Able to ensure customers that the products are economic and safety & reliable ➡ Easy to win the market competition from competitors where they don’t produce automobile.

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Threats

: ➡ New government set new policies for importing automobile & parts of motorcycles. ➡ Economic situation. ➡ Competitor can win the market first knowing from our lack of impressive advertisement in the developing countries. ➡ Similar products designs might be copied& competitors perform mass production to gain the profit at the first time.

Yamaha Motor SWOTs Strengths

: ➡ Yamaha is applying the combination metal for piano in motorcycle. The aim is to make it lightweight and sturdy. ➡Yamaha stay focus on motorcycle manufacturing and domestically production, but also expand it to the other countries. ➡ Using Moto GP champions to entertain their fans and great moment for promotion and publicity.

Weaknesses

: ➡ A little left behind than our company when promoted its product for the first time the product has established. ➡ Its first image was a heavy weight and high emission product, unlike Honda that has changed from the 2 strokes to 4 strokes. ➡ Some products “ Motorcycles “ are not very economic in comparison to Honda. Experience yourself with Yamaha MIO, though it’s light but it’s not costeffective in customers’ insights.

Opportunity

: ➡ Yamaha offers the lower price of product than another competitors. ➡ If Yamaha keep struggling in R&D, to meet customer satisfaction, it might be a chance for Yamaha to be the on of the leaders in the motorcycles industry.

Threats

: ➡ Yamaha’s resale value is lower than Honda. ➡ If the Moto GP champions did not win the competition will affect their sales performance and it becomes an opportunity for market competition. ➡ If the mindset of the target market changes to the environmental concern that will be more likely directing customers to switch their preference to Honda or other competitors.

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Understanding competitor’s swots and our own swot enable us to set up new marketing strategies plan and further implement them in market. Strategics are not planned to focusing on one object if one plan does not work, we have to adjust and use another plan to gain the market share. It seems that Yamaha and other organisations are also manufacturing the products that we have been producing ever since. Nevertheless, it would not affect our sales as customers will see what we have offered in the market ever since. These positioning show us clearly that each organisation have their own SWOTs that impress their consumer and customers. In such case, Honda Motor simply keeps the high standard performance and the research and development support the company to invent new innovations that are actually for customer satisfaction. As we all can see from the positioning have exhibited clearly that the closest rival for overall industrial is Yamaha for the motorbike and Toyota for Automobile. It is obviously true that nowadays customers consider about our performance which bring and develop new technology that concern with environments. Hybrid, economic vehicles, fuel cell are just sample for a few number of products that are likely to be the new trend and lifestyle in the near future. What makes us different from the other competitors are that we have wide products to offer at all levels. Regardless of Yamaha Motor that claims that his company has made such a high profit through selling motorcycles and other products in Indonesia. But reluctantly, Yamaha admits that Honda Motor has obtained high margins from loyal customers.

Marketing Mix The controllable variables that Honda Motor puts together in order to satisfy the target group. Reluctantly, the marketing mix consist of some products that are offered at certain price with some promotion to tell potential customers about its products and a place where customers can reach the intended products. Product To attract customers, we have considered about variables that interest customers to buy products that we have offered, it may involve either a physical good or service because product is not limited to physical goods only as the objective of Honda Motor is to satisfy customers needs. For instance, Honda released a new general motorbike that can be driven for all levels. In this case, customers are not really looking at only the design of physical products, but also what variables are included when they want to buy the product. Such as quality, features, manual installation/ instruction, and the benefits are the elements to be considered by potential customers because they

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will not buy a product from Honda Motor if it does not have good quality, features that customers expect, manual installation/instruction that ease users and the benefits from buying Honda Motor. Every product that we produce has always a brand that reflects our image. As Honda understood about the characteristics of its target market, we use sort of brand which is easy to be recognised by our target market. It has to be also familiar to customers so that they will remember it because customers view a brand as a guarantee of quality. One thing that’s very funny when a number of consumers were questioned about Honda Motor products through survey said that by having Honda Motor’s products will help them become a very economic person and they won’t change to another product. So in this case, our company has built such a brand insistence to customers. Although we have created such a great brand name that customers hardly forget it, we are as marketing manager must also consider a step a head. The Products life cycles which describes the stages a really new product idea goes through beginning to end. Customer will think of how long does the product they buy will be long-lasting.? What about if our competitor Yamaha introduce their new product to a market with more competitive variables given ? Indeed, we all realised that Yamaha has probably better offer but customers will not just rely on their new product because customers have been very familiar with Honda’s product. Honda sales profit can be grow fast but sometimes profits go down but then rise again since Honda makes some innovations. Nevertheless, we have to be aware as competitors see the chance and probably enter the market as they will copy what products sold most or even worst when they try to improve it so that they can compete better with our company. When these competitors move aggressively to obtain more profits, it will be more likely a nightmare for us as our sales will possibly continue down due to market maturity. It will lead to sales decline where new products from our competitors are entering the market to replace their old products and then the price competition will occur, however, it is not such a big deal since Honda has a very strong brand that will gain better profits than competitors as customers are able to differentiate what products that suit them. Place As Marketing managers, we must define a strategic plan to decide for the location where customers can get either goods or services in the right quantities and the right place. Selecting strategic locations are definitely required because we need to serve different target markets that have unique characteristics. The objective of selecting such a strategic place is to reach our customers needs. As we know that every city in Indonesia for example has Honda Motor service centre and this kind of strategy is a public secret that Yamaha also builds their service centre to reach their customers. In a such case, we have to involve our customer services staff to assist customers professionally so that we will win the competition. Honda Motor has no major problem finding a place in Indonesia or Asia in general because we have been working with our subsidiaries as well as affiliates to be one of our distribution channel where the main objective is

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to provide goods and services to the customers. To set up such a distribution channel, we have subsidiaries and affiliated in some countries. Honda Motor has scattered plants worldwide and it’s best practice to work with the retailers or the authorised dealers and for this reason Indonesia appointed AHM to be a partner. Promotion It’s a sort of way to communicate information between our company and potential customers. Before hand, we understood that segmentation and positioning are obviously factors that can lead us to conduct such promotions. The great promotion part of the marketing mix is telling the target customers that the right products are available at the right place and at the right price. Honda Motor has broad products that we must find the strategic tools to promote, this will of course involve some typical of promotion such as personal selling, mass selling and sales promotion itself. These type of promotion have different strengths and limitation but it will help us develop the best promotion blend. Selling Promotion will be conducted by sales executive for a product like cars, motorbikes, however, this way will consume lots of money, efforts but consider effective because our sales executive can obtain direct feedback and mass selling is meant to target market as a whole. It can be done through advertising and publicity so that potential customers can see and understand about our physical products as well as the characteristics. Sales promotion is activity that is considered more than advertising, publicity and personal selling. It’s because in sales promotion will interest them and we can encourage our potential customers to try and purchase our products eventually. Price Marketing Managers should also consider the unit cost of production, distribution channels, and other elements before determining the prices. Regardless of the calculation as we assumed it has been done and today we can see what customers can benefit from paying the products. Type of Motorcycles

Engine

Released year

Price Off The Road

Tiger CW-Sports

200

2008

IDR 24,890,000

Supra X 125 R (SW)

125

2008

IDR 14,365,000

Vario CW-Scooter

110

2008

IDR 14,965,000

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The external will also affect our sales performance. However, it’s not the final battle because each price that our competitor has its package. We will take look closely to what Yamaha sets the price based on the similar motorcycles type. Type of Motorcycles

Engine

Released Year

Price off the road

Scorpio CW

225

2008

IDR 20,785,000

Jupiter Z-CW

125

2008

IDR 15,150,000

Mio CW

113

2008

IDR 11,885,000

We are not just determining the prices as seen, however, we have set our pricing policies where it can’t be literally told to public as competitors may be able to react the same to attract their customers. Obstacles faced during the marketing strategy implementation. As it might happened to other organisations. The obstacles that hassles us is that when counterfeiter tried to distort our business unit though providing unreliable particular spare parts to our distribution channels. This will raise serious problem in term of gaining trust from customers. Another thing is the cultural responses, we can not penetrate the markets when the behaviour of our customers change due to counterfeiting issues. However, it won’t long last since we investigate periodically so that there will be no negative perception in the future. Problems faced during the marketing strategy implementation Continues advertising that has been addressed by our competitors might cause a challenge for us to invent new strategy to make such an noise advertisement. External element can also create us a problem in distributing our products to some places because of natural condition. Sometimes getting permission from the local authority slow down our marketing implementation plan as those typical people expect to receive something from us “(bribery)”, as our main business is in Asia. It’s obviously needed. The biggest problem is that stereotype product that can switch customers’ mindset as our products designs are being modified by competitors to attract their target markets by releasing the products in advance.

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Result in Market Competition for the last the last 3-5 years that has been conducted by both companies. Honda Product

Sales by Region

2005

2006

2007

2008

2009

Motorcycles

Asia

39%

55.3%

58,96%

73.96%

78.76%

Yamaha Product

Sales by Region

2005

2006

2007

2008

2009

Motorcycles

Asia

39%

42.7%

44.5%

50.6%

58.6%

As we can see from the table, our company focuses on one business unit can still gain the market share. It’s only one of the products that are being offered to market. Global sales can be figured out that Honda simply leads the market. We are very confident for future sales as forecasted that either region or global sales will be unbeatable as we have done a lot of researches to develop our products to satisfy our customers. Success key for our company versus Yamaha The key success for Yamaha might be identified through their promotion and entertainment process, such as inviting the two motor GP champions to Indonesia recently and also aggressive advertising through media. Asian love watching serial TV programmes that commercialised/sponsored by our competitors. Choosing colour on each product type is also one of Yamaha key success to attract their target market. However, as the leading world’s motorcycles manufacturer, we assure that our success keys are more auspicious comparing to our rivals. Herewith, the success keys from our company: - Strengthen R&D in Asia and it’s headquartered in Thailand. As marketing managers, we are fully aware of developing business in Asia because the numerous population in the world and it brings great opportunity for our company. - Great Management Function, it also plays as ultimate role in attaining our goals and objectives, unlike the Yamaha management that changes virtually every year. From this situation, we can understand that great management is extremely important as it can affect the productivity and sales performance. - Innovation-Yes it’s one of the best key success in our company after conducted the research, our researcher department present what should be developed. Marketing Managers always look beyond to satisfy customers. The new technology that is currently launched in the

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market is one of the innovations to show that we are the integrated company. Also Honda spoil the customers by producing cars as one of the privilege goods. Customers are looking for the convenience way in their life. It’s impossible that better off customers will ride their motorbike with their family around and these customers merely can’t get such a product from Yamaha. Perhaps safety is the most prominent factor encourage people switch to Honda‘s product. - Expanding Subsidiaries, Our company has approximately 508 subsidiaries worldwide. While Yamaha only has 108 subsidiaries. It can tell customers that they can obtain goods they are looking for at the right place and at the right time without hassles. - The variety of products certainly will dominate the market demand. Although we can’t achieve sales record in one unit of business, we can maximise in other business unit that generate great profits.

- The End -

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