CBR 250 from Honda

Honda CR-V Commercial in Australia

Biggest Marketing crime by the Japanese

In automobile industry, its always the product P which has a dominant status. Once the product is acceptable then irrespective of the other Ps, the product becomes a winner. The company which demonstrated this to the world more than any other company is now suffering with the same problem.

Its Toyota.

Recalling close to 8 million vehicles, more than its total 2009 sales (Source), Toyota had committed a major marketing crime. It was through the quality and reliability that Toyota redefined, it became the worlds No.1. The company that taught the world JIT, is now suffering because of a quality issue from its supplier. This probably could be an outcome of its cost cutting efforts.

This might possibly be the end of the Japanese dominance in the US market after a similar announcement from Honda. And the impact can be even worse if the other European and Asian countries also react. Even when GM filed for bankruptcy, neither anyone blamed the company nor its brand equity went down. And with the revival strategies, GM will be soon on track. But its not going to be easy for the Japanese. And this might well reflect on other products from Japan.

Now its upto Toyota and Honda, on what strategy they are going to frame to re-establish their lost pride.

Where did Jazz go wrong?

Honda introduced Jazz as a premium hatchback. Around 8 Lakhs, Jazz was competing with i20 and Fabia, which are also positioned for the same target segment. Jazz, from Hondas' stable, had typical Honda quality and refinement, much above its competitors. The space the car offered was the best in its class. Along with the Honda ownership card, Honda would have expected the Jazz to sweep the market. But it did not happen.

Honda from a layman's view is a mini MUV. It looks like a downsized Innova type. But during the launch, the company positioned it against the hatchbacks. The size and dimensions did not support this claim along with the price. The price was way high for this segment. When the i20 is available with a fully loaded automatic transmission option for 8 lakhs, consumers were reluctant to pay almost the same price just for the brand Honda. This is evident from the sales figures available for the month of November 2009. When i20 did very well by selling 3582 units, Jazz managed just 546 units.

Zeroing down on the problem, it's a Positioning Vs Pricing war, where Jazz lost its plot. If Jazz was positioned as a hatchback, it should have been priced a bit low around 7 lakhs range. If the company wants to enjoy this premium, then it should have been positioned as a Mini MUV.

Honda has realised this and had offered a flat Rs 40,000 off on Jazz for Jan 2010. This is the first model from Honda to get this kind of an offer. Rather than getting into this discount game, Honda can manage its premium tag by revising the price for ever.

Honda trying what TVS failed to do...

Honda Motorcycle and Scoorters India (HMSI) has officially announced the launch of its new 110cc motorcycle in the Delhi Auto Expo in Jan 2010. The company who is a technical partner in Hero Honda is a niche player catering to the premium motorcycle segment through Unicorn. Though the company has a commuter segment brand Shine 125cc, now it is entering the entry level motorcycle segment with its 110cc. But the company had made a clear strategy by creating a new segment, which will avoid the head on with its sister brands Passion and Splendor. The new motorcycle is targeted at youth who wants style at the entry level. Also the pricing is expected to be a premium of 10% compared to HeroHonda's Passion and Splendor. This creates a clear differentiation in the already cluttered entry level segment. A product for this segment was already in line with TVS as STAR Sport, which TVS failed to capitalise on. Though the product hit the showrooms, it never took off from there as the company failed to identify the target for the product. HMSI now has an open opportunity to create a winning brand.