AcknowledgementIt is indeed of great moment to pleasure to express our senses of profound gratitude & indebtedness to all the people who have been instrumental in making it a rich experience. We found it to be a challenging project that gave us a real practical exposure to the corporate world and it is almost impossible to do the same without the guidance of peoples around us. It gives us immense pleasure to acknowledge HONDA MOTORS INDIA PVT. LTD. dealers, who have been nice enough to give us a chance to do our project and providing us wonderful support throughout our project.

First and foremost, I would like to thank Ms. Bina Patel , NIS Academy for his constant guidance and support throughout this project. During the project, we realized that the degree of relevance of the marketing strategies being imparted in the industry is very high.

Table of Contents

Company’s History Company’s Profile Head office Showcase Manufacturing Facility Sales and Distribution Network Sales performance Honda's vision and role Corporate Structure Corporate Governance The Indian Automobile Market Business Environment Competitive Analysis Consumer Analysis Core Competencies SWOT Analysis Strategies Bibliography

History of Company

The history of the Honda Motor Company began with the vision of one man – Soichiro Honda. His dream was personal mobility for everyone. Soichiro Honda founded the Honda Motor Company in 1948. In the same year, he designed and engineered the first product of this company - a 50 cc motorized bike on a bicycle frame - in his small shed at Hamamatsu. Today, Honda is a global company with a global viewpoint that is reflected in a solid commitment to local markets and economies.

Company Profile

Honda Siel Cars India Ltd., (HSCI) was incorporated in December 1995 as a joint venture between Honda Motor Co. Ltd., Japan and Siel Limited, a Siddharth Shriram Group company, with a commitment to providing Honda's latest passenger car models and technologies, to the Indian customers. While the company sold its first 50,000 units in nearly five years, it is today geared to sell more than 50,000 units in a single year. The Honda City, its first offering introduced in 1997, revolutionized the Indian passenger car market and has ever since been recognized as an engineering marvel in the Indian automobile industry. Thereafter, HSCI launched its high-end models the Accord and the SUV, CRV. The City ZX, introduced in its new avatar in 2003, replicated the success of the earlier car. The Honda Civic, launched in India in July 2006, too has matched the success of other Honda models and has proved to be a great hit with Indian customers.

Head Office

The Head Office pf Honda Siel is located at Plot#A1, Sector-40/41, Surajpur KasnaRoad, Greater GautamBuddha Nagar, Uttar Pradesh- 203207.

India Four Wheeler Industry

The Four-Wheeler Industry in India has not quite matched up to the performance of its counterparts in other parts of the world. The primary reason for this has been the all-pervasive regulatory atmosphere prevailing till the opening up of the industry in the mid-1990s. The various layers of legislative Acts sheltered the industry from external competition for a long time. Moreover, the industry was considered low-priority as cars were thought of as unaffordable luxury". Post Liberalization, the car market in India have been in a burgeoning stage with all types of cars flooding the market in order to meet the demands of Indian customers who are increasingly exposed to state of the world automobiles and want the best when it comes to purchasing a car.

It is expected that by 2030, the Indian car market will be the 3rd largest car market across the globe. The main encouraging factors for the success story of the car market in India are the increase in the opportunity for new investments, the rise in the GDP rate, the growing per capita income, massive population, and high ownership capacity. The liberalization policies followed by the Indian government had been inviting foreign players to participate in the car market in India. The recent trend within the new generation to get work in the software based sector has led to the rise in the income level and change in the lifestyle significantly, which has further led to the increase in the demand for luxurious cars among them.

The car Market in India is crowded with all varieties of car models like the small cars, mid-size cars, luxury cars, super luxury cars, and sports utility vehicles. Initially the most popular car model dominating the Car Market in India was the Ambassador, which however today gave way to numerous new models like Hyundai, Honda, Mercedes-Benz, BMW, Bentley and many others. Moreover, there are many other models of cars in the pipeline, to be launched in the car market in India. Some of the leading brands dominating the car market in India at present are Hindustan Motors, Reva Electric Car Co., Fiat India Private Ltd., Daimler Chrysler India Private Ltd, Ford India Ltd., Honda Siel Cars India Ltd., General Motors India, Hyundai Motors India Ltd., Skoda Auto India Private Ltd., and Toyota Kirloskar Motor Ltd. Since the demand for foreign cars are increasing with time, big brands like Mercedes Benz, Volkswagen, Aston Martin, Ferrari, and Rolls-Royce have long since made a foray into the Indian car market.

Facts about Indian Car Market:

Although the Indian automobile industry has come a long way since the deregulation in 1993, India does not rank well among its global peers in many respects, viz., the contribution of the sector to industrial output, number of cars per person, employment by the sector as a percentage of industrial employment, number of months' income required to purchase a car, and penetration of cars.

Figure:-Passenger vehicle stock per 100 people

India is far behind from other countries with just 6.9 cars per 100 persons, while Unites States has 76.9 cars on per 100 persons. Among developing countries, Russia also stands ahead than India and China with 16.3 cars per 100 persons.

Showcase Manufacturing FacilityHSCI's manufacturing unit was set up in 1997 at Greater Noida, U.P with an investment of Rs. 450 crore. The project is spread across 150 acres of land (over 6, 00,000 sq. m.). The initial installed capacity of the plant was 30,000 cars per annum, which was recently increased to 50,000 cars. The capacity expansion was possible because of the excellent performance of all the Honda models in India. The expansion process involved an investment of Rs.150 crores, with the covered area increasing from 55,000 sq. m. to 1, 07,000 sq. m. The covered area now constitutes 17 per cent of the total land area of the plant.

The company plans to further raise its capacity to 100,000 units per annum by the end of 2007 and 150,000 units per annum by 2010.

Sales and Distribution Network

Honda Siel Cars India has a strong sales and distribution network spread across the country. The network includes 51 Honda Exclusive Authorized Dealerships in 21 cities. All HSCI dealerships are based on the "3S Facility" (Sales, Service, Spares) format, offering complete range of services to its customers. The company is targeting 100 dealer outlets across India by 2007, as per their expansion strategy which is based on the '1 dealer per 1000 cars’ formula.

Sales Performance

HSCI closed the 2005-06 financial years with total sales of 42,727 units in the domestic market - a growth of 14% over the previous financial year. The company's, Honda City, accounted for 37,545 units in the year. Of this, the City ZX, which was made available to the customers in the end of November 2005, accounted for 17,165 units. Total Accord and CR-V sales for 2005-06 stood at 3,324 and 1,858 units respectively.

Honda's globally successful Civic, which was launched in July 2006, proved to be an immediate hit in India. In the first month of its launch it has emerged the segment leader, posting figures of 2441 units in a month. The company is targeting an overall growth of 44% in the current Financial Year.

Honda's vision and roleFulfilling the global needs of personal mobility in the new automotive society - go hand in hand with the corporate philosophy: maintaining a global viewpoint, they are dedicated to supplying products of the highest efficiency and quality at a reasonable price for worldwide customer satisfaction. In India, it is through HSCI that customers can enjoy the benefits of Honda's expertise. Soichiro's vision was international in character. His desire was to lead the world in technology, and make a significant contribution to the creation of a better society. As a result, most of the products that Honda developed started out by making a difference. Honda is a global company with a global viewpoint and a four-region global strategy that is reflected in a solid commitment to local markets and economies.

However, the most enduring challenge has been to satisfy the ever-changing needs of their customers. This is the essential spirit of Honda.

The Company's vision is "To be a Company that the Society would want to Exist". It strongly believes in Co-existence and Co-evolution, wherever it operates.

Corporate Structure

President and CEO

Regional operations of India

Automobile Operations

Customer Service Operations

Product Operations

Purchasing Operations

Business Management Operations

CORPORATE GOVERNANCEHSCI practices high standards of Corporate Governance and there is a strong emphasis on transparency in its transactions and Code of Conduct for all Associates. It believes very strongly in the practice a unique work culture, which has a sound foundation right from the time of inception of the company .The management style, is founded on the principle of “Respect for the individuals.”

The Associates are trained by way of working, which is very participative and based on Initiative, Equality and Trust. Regular Training programmes, including behavioural trainings, are being arranged/conducted for all levels. It encourages its Associates to be innovative at Work and practice Quality Circle activities in their respective work areas. Need based overseas training are also a part of the training system whenever required. Periodic Employee Satisfaction Surveys (ESS) are being carried out and due credence is given to the feedback from the Associates.

BASIC MODELS /PRODUCTS SOLD BY HSCI

HSCI currently produces the Honda City, Civic and Accord models in India and the CRV is sold as a full import from Japan. The company operates under the stringent standards of ISO 9001 for quality management and ISO 14001 for environment management. Company's products include the 7th Generation Honda "ACCORD", launched in August, 2003 and New Honda "CITY", launched in October, 2003. The company is also engaged in selling its CR-V model through the CBU importation programmed from Japan.

THE INDIAN AUTOMOBILE MARKETThere is a cutthroat competition existing in India particularly in the Indian Automobile market today and this has particularly happened because of the liberal policies of the government. The consumers of today have become aware of what actually they want particularly in an automobile. For example, consumers now demand the fuel efficient vehicles and they have started showing concerns towards the environmental pollution. Therefore the car manufacturers have to consider the consumer preferences. Extensive research and development, option of alternate fuels, clean technologies and quality control to oversee adherence to product conformance will shape the future ofautomobile sector in India. The Government of India is slowly catching on to this trend and would soon demand of the automobile sector such advanced technologies.Business environment

THE ECONOMIC ENVIRONMENT- Rising GDP and per capita Income indicates growth of economy and

hence rises in demand.

- Segmentation: Younger generation has more disposable income with increasing salaries & they are also perceived to be more technology savvy & ecologically conscious. 58% of Indian population is youth population!! (+) This will be the target market for the next few coming years.

SOCIO CULTURAL ENVIRONMENT

- Today’s society judges people on the type of car you drive. Society does not like to admit to this but it is very true. Manufactures know this happens and targets their markets by these thoughts. For example, anyone who drives a mini van is perceived as a soccer mom. This is because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of junk because of what other people will think of him or her. Consumers also just feel better when they are driving a nice or new car; it makes them feel better about themselves. Therefore the car you buy reflects your social status also.

- Another aspect of the sociocultural is the environmental concerns for the need of fuel-efficient vehicles.

TECHNOLOGICAL ENVIRONMENT- Opening up of Indian market to foreign investors has created a rush of

new technologies. There is a thirst to grasp more and more of latest technologies by the car manufactures. However, the R&D expenditure of HONDA has reaped good benefits, making the cars best among its league. (+) and also coming up with newer and newer models.

POITICAL ENVIRONMENT- Open Economy: India has recently opened up the economy and hence

there is tremendous scope in terms of growth here. As one of the emerging markets in Asia, it has a lot of potential as the earning power of people increases.

- Liberalization policy of Congress: The liberalization policy of the government started in 1990s has reaped tremendous benefits at this stage. The Indian economy has opened up and if such policy continues to be the agenda of the government then it would pave the way for one of the most exciting markets for cars.

Political environment – Largest democracy, era of coalition governments, fair amount of political stability, political consensus on economic reforms and higher target of growth of the economy, sound legal system – a factor contributing to a large foreign direct investment.

Economic environment – continued economic liberalization, encouragement to foreign investment, big growth in services sector, controlled inflation in recent time, reasonably stable exchange rate, scarce and costly energy, abundance of skilled low cost labor, easy availability of raw material being a major producer of steel.

Social environment – large middle class, major changes in life style, a majorincrease in urbanization, consumption, both parent working, nuclear families,leisure activities, and trend of using credit cards.Technological environment – technology import liberalized and a significant effort in internal technology development.

- Increasing affluence of urban consumers would ensure reasonable demand for cars. The changing lifestyles indicated an increase in demand for cars in the mid price segment.

- The changing buying behavior of the consumers shows that they are becoming choosy and looking for styling, comfort, etc, and fuel efficiency conforming to environmental standards.

Technologically the industry is experiencing major changes. The technologyrests with very few players in the world.Intense competition is indicated in the coming years.

PORTERS 5 FORCES MODEL:We’ve used the Porters 5 Forces Model to gauge the industry attractiveness

- Threat of new entrants The threat of new entrants is very low in the automobile industry. The

industry is very mature and it has successfully reached economies of scale. In order to compete in this industry a manufacture must be able to achieve economies of scale. For this to occur, manufacturers must mass-produce the automobiles so that they are affordable to the consumer.

Another barrier to entry is that it takes an incredible amount of capital to manufacture the automobiles. It takes an extreme amount of capital not only to be able to manufacture the products but also to keep up with the research and development that is necessary for the innovation requirements.

Access to distribution channels is another high barrier to entry. A company must find a dealership to sell their automobiles or have their own dealership. Space in the dealerships lots is very limited making it difficult to have a wider variety of inventory.

Brand Identity: Honda brand name is almost known all over the world and its reputation in India is very strong.

Government Policy: The government has a very open policy in theautomobile sector with almost negligible control over the companies(major companies) coming to India Hence, there would be no control overwho can come up with a new technology and a new model in the Indian market.

Learning curve: HONDA has a huge learning curve in the Indian market and since it has been here long enough to know its customers, it can envisage their needs in a better way than any other new entrant.

SWOT Analysis

Strength

Familiar brand name New age design. Reputation for producing high quality products. Honda has won many awards for initial quality and customer satisfaction Automobiles are reliable and generally fuel efficient Strong research and development which has afforded them

competitiveness in quality products. They were a pioneer in engineering low emissions internal combustion

and hybrid technology. Honda is the only other manufacturer outside of Mitsubishi to branch

out into many other areas outside of automobiles Huge learning curve.

Weakness

Prices are higher for non-luxury vehicles than comparable modals by other manufactures.

Opportunities

To continue progressing low emission vehicles and alternative power sources. While they have made progress in this area, the technology is still overpriced for the consumer, and the infrastructure does not exist.

Another area of opportunity would be developing nations like china and India. These are large markets, and cheap dependable transportation would be a hot seller.

Easy Financing

Threats If continuous innovations are not done, then competitors will beat you

with last year’s technology. Strict environmental Laws like EURO III Norms. Liberal Government Policies.

FUNTIONAL & COOPERATIVE STRATEGIES

Till date, HSCI’S strategy has been to create value through expanded sales via innovation in research and manufacturing. Instead of having one large manufacturing plant, it uses an idea of “manufacturing products where they are sold”. In this way manufacture is increased in areas where sales increase. This practice has led to over one hundred manufacturing plants in over thirty countries, a process they call “globalization”. They also are guided by a commitment to the future. This ideal is reflected in several ways. Low emissions vehicles are one example, anther are manufacturing plants that are focused on environmental friendliness as well as efficiency and quality.

Till now the focus is on the premium segment in India for the time being as it was bringing in the required volumes. They can focus on C and D segment cars where they have a market share of 14%.

However, they should not ignore the other segment in order to avoid threats from their competitors.

Till date the implementation of ideas in a planned manner has helped the company in achieving the progress it has achieved. The work culture at Honda has made the implementation of ideas possible At the concept level, IT projects are discussed with department heads, functional heads and the management; at the user level different kinds of technical training is also carried out. The company also invites some IT companies to share their thoughts about the benefits of IT with certain users.

The result of all this is that IT at Honda Siel has helped the company cut costs and save on manpower generation of different IT projects easier.

It was Honda's policy not to offer discounts to push sales as such a strategy lowered the image of the product. However Honda Siel did reduce the prices because of excise cut. Honda should follow the same strategy of not giving any discounts but it can come up with new lower priced models.

Since it has a great threat from Toyota which has a competitive pricing, therefore HSCI needs to produce the cars at low prices also so as to cater other segments as well as it can come up with the new products say with Hybrid technology cars which are few in number in India. Therefore it can go for diversification where it can cater to newer markets with new products or it can serve the same segment with newer products like the hybrid cars.

In tandem, Honda Siel Cars India has decided to increase its sales network from the existing 55 dealerships to 100 outlets by 2008. It has dealerships in metros and Tier I cities (Ahmedabad, Jaipur, Chandigarh, Ludhiana Surat, Kochi, etc) and will now focus on Tier II cities (Jammu, Hubli, Jamshedpur, Jodhpur, etc) to service a production plan to make one lakh medium sized luxury vehicles apart from small cars. The company has set up additional regional sales office in Mumbai and Chennai. Its existing offices in Greater Noida and New Delhi are currently looking after the north and east.

Toyota and Honda have taken nine and 11 years to have a chain of 57 and 55 dealerships respectively. Analysts believe it is a tough call though not as difficult as the initiative of Tata Motors to scale up to 600 outlets from the existing 140 dealerships by 2008.

Honda Siel Cars India Ltd (Honda) is firming up marketing plans to attain a turnover of Rs 850 crore in fiscal 2000-01 up from Rs 700crore in 1999-00. The marketing focus for the fiscal: to expand into secondary towns, focus on enhancing market share in the south, maintain adequate level of media-spending, rope in consumer finance companies with strengths in local markets, associate with the hospitality sector for inviting prospects and build an interactive Website.

Consolidating organized financing with consumer finance accounting for around 65 per cent of sales, Honda is now planning to consolidate organized financing -- at present it has tie-ups with ICICI and Standard Charted. ``Halfway through the year, they may go for regionalize-ups with players having strengths in local markets,'' says Gupta. The tie up with Standard Chartered and ICICI gives Honda an internal rate, which is less than one per cent of the market rate (15 per cent now).

MARKETING STRATEGY

The company can opt for penetration pricing in order to capture a larger market share. This can be done through rapid technological development and new innovations in which they can develop new products which are low priced and through this it can cater to the needs of other segments also.

PRODUCT DEVELOPMENT STRATEGY

Since Honda Siel Cars India is having a strong edge in Research and development, therefore they can focus on this to come up with newer and newer products as per the customer’s requirements.

ADVERTISING AND PROMOTIONS STRATEGY

They can use the pull strategy in order to attract more customers through offers and lower price models. The Brand promotions can be done through using the distribution network.

RESEARCH AND DEVELOPMENTS

They should continue to follow the same strategy in research and development as they are following now i.e. continuously investing in R&D and keep coming up with new innovations and products so as to maintain their leadership position in R&D.

OPERATIONAL STRATEGY

In this they can go for modular manufacturing strategy i.e. preassembled subassemblies. The parts of the car can be made and stored in different units. As per the order of the customer a group of workers can assemble the cars at a high speed mode and can make the car available within the short period of time. This will enable the company to follow and enhance Just in Time approach.

Consumer Buying Behavior

The bargaining power of suppliers is very low in the automobile industry. There are so many parts that are used to produce an automobile, that it takes many suppliers to accomplish this. When there are many suppliers in an industry, they do not have much power. There are so many suppliers to this industry; manufactures can easily switch to another supplier if it is necessary.

The bargaining power of the buyers is moderately high. The buyers being consumers purchase almost all of the industries output. The manufacturers depend on them to stay in business. The buyers also are a significant portion of the industries revenue. If they can not keep their buyers happy then there is a risk of losing them to their competitors. The buyers have low switching cost because if they are not happy, they can easily switch. All the buyer has to do is sell the car they own and purchase a new one.

The reasons why the power is not completely high is that the buyers are not large and few in number. The buyers do not have the ability to integrate backwards into the industry. If they want a car then they have to purchase it from a dealership.

Threat of Substitute Products

There are not many substitute products for automobiles. Some of the substitutes are walking, riding bike or taking a train. Substitutes products all depend on the geographic location of the consumer. In some cities such as New York or Chicago, a car is not as necessary. In cities such as those, the subway is the most effective means of transportation. However, in most places a person must have to access to an automobile in order to get around.

Intensity of Rivalry among Competitors

- Rivalry among the competitors is very strong is this industry. The major competitors are so closely balanced that it increases the rivalry. In order to gain market share in the automobile market, one must gain market share by taking it from their competitors.

- One of the other reasons there is such high rivalry is that there is a lack of differentiation opportunities. All the companies make cars, trucks or SUV’s. The competitors are compared to one another constantly. The price, quality, durability, and many other aspects of different manufacturers are greatly taken into consideration when deciding what type of vehicle to purchase. When the different manufacturers advertise they even compare their products to their competitors. For example, the commercials will focus on areas where the company outperforms its competitors.

Customer AnalysisWho buys the product?

Individuals: People who buy it and use it for them. Taxi Services and Rentals: They would be interested in buying a car

which provides maximum luxury and fuel efficiency at the same time.

What is bought? Car, convenience, comfort, luxury, peace of mind

Where do they buy? From the company’s showroom and dealers.

When do they buy? When a genuine need arises or maybe a gift on birthday, festival (e.g. In

Diwali when they get bonus), on New Year etc.

How is it bought? When the need arises: When they need to travel, additional

car for the family as the luxury item or as a status symbol. There is a growing trend among the customers to posses the latest gadgets.

Information Search: Customers will visit dealers, websites, company’s websites, refer auto magazines, peer reviews, TV shows (CHALTI KA NAAM GAADI on CNBC), Documentaries etc. to obtain maximum information about the car and its technology.

Evaluation: Customer will be influenced by Performance, Fuel Economy, Luxury, Brand Name and many other factors before coming to a decision.

CORE COMPETENCIES:

Honda has a core competency in building small petrol engines with efficient profiles.

Apart from it the other core competencies are

The cars performance in terms of fuel efficiency Delivery/guarantee of quality and reliability Research and Development into the Hybrid Technology

However, what differentiates it from the other auto makers in is the performance of its car. Thus it needs to focus on improving the performance of its car by keeping up with the R & D work.

Threat of Substitute Products

There are not many substitute products for automobiles. Some of the substitutes are walking, riding bike or taking a train. Substitutes products all depend on the geographic location of the consumer. In some cities such as New York or Chicago, a car is not as necessary. In cities such as those, the subway is the most effective means of transportation. However, in most places a person must have to access to an automobile in order to get around.

Intensity of Rivalry among Competitors

Rivalry among the competitors is very strong is this industry. The major competitors are so closely balanced that it increases the rivalry. In order to gain market share in the automobile market, one must gain market share by taking it from their competitors.

One of the other reasons there is such high rivalry is that there is a lack of differentiation opportunities. All the companies make cars, trucks or SUV’s. The competitors are compared to one another constantly. The price, quality, durability, and many other aspects of different manufacturers are greatly taken into consideration when deciding what type of vehicle to purchase. When the different manufacturers advertise they even compare their products to their competitors. For example, the commercials will focus on areas where the company outperforms its competitors.

Bibliography

1. www.hondamotors.com

2. http://world.honda.com/HondaSielCarsIndia/ 3. www.google.com

Books Referred

PGDAM (Post Graduate Diploma in Applied Management) Book - 1st Semester Courseware 3