Branding Strategy Adopted Byhonda

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    BRANDING STRATEGY ADOPTED BYHONDA:It is common view that consumes view a brand name as an important part of the productandno doubt branding ads to the value of the product.Branding is actually:

    A name, term, sign, symbol, or a designora combination of these intended toidentify thegoods and services of oneseller to differentiate them with theproducts and services of theircompetitors.HONDA BRAND NAME:I n s t i t u t eo fB u s i n e s sA d m i n i s t r at i o n 4 7

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    BRAND DECISION MADE BY HONDA:Brand decision of HONDA is based on the fact that it is most popular perceived by

    thecustomer as luxurious vehicle. HONDA brand name has strong consumer loyalty but onlyina specific target segment of the whole society.

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    BRANDING STRATEGY:HONDA has struggled a lot to keep its brand being remain in minds of consumers. Under thisregard the main strategy is to add the valuable features to vehicles to keep the brandloyalty.BRAND PERSONNA:Every brand of HONDA has its own branding strategy. HONDA ATLAS CARS

    PAKISTANLIMITED builds brand persona for each brand. Pricing, Promotion, Distributionand future products development follow brandpersona.I n s t i t u t eo fB u s i n e s sA d m i n i s t r at i o n 4 8B R A N D M ES S A G E P ER S O N A CIVICDISTRACTINGLYGOOD LOOKINGFOR THE STYLISH,GOOD LOOKINGPEOPLE

    CITYEXTREMEPERFECTIONFOR THELUXURIOUSVEHICLE LOVERS

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    PRODUCT FEATURE:To get a superior market share the product must have the salient features in it. HONDAhasadopted the same strategy that it has been continuously adding features to its vehicles.Lethave a look vehicles offered by HONDA ATLAS CARS (PAKISTAN.) LIMITED inregardto their featuresHonda Civic:The shinning features of Honda civic would be elaborated as follows:EXTERIOR:Distractingly goodlooking :New Civic has an exciting new style. Its the car for people who know whatshappening.Who shape the time?Theres a lot to love about the Civic:It's reliable, economical and remarkably fuel-efficient.It's now equipped with newheadlights, bumpers and grille, so you'll have a toughtime concentrating on anything except its stylish good looks.

    Globalization of Tata Motors: Strategic Plan for the Future

    Faculty Contributor: Murali Patibandla, ProfessorStudent Contributors: Arun A, Balasubramanian C, Indranil Guha, Gautham M N

    http://www.honda.com.pk/civic_com.htmhttp://www.honda.com.pk/civic_com.htmhttp://www.honda.com.pk/civic_com.htmhttp://www.honda.com.pk/civic_com.htm
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    Tata Motors produces vehicles both in the Light Commercial Vehicles (LCV) and theMedium and Heavy Commercial Vehicles (M and HCV) segments. It faces highercompetition in the LCV segment, where its Tata ACE has been a huge success.Internationalization forms a key component of Tata Motor's strategy and it has successfullyentered countries having a demand similar to India like South Africa, Thailand and

    Argentina, mainly through acquisitions and joint ventures. It needs to improve its productreliability, service network and channel reach in order to maintain and replicate this successin other markets. Some of the recommendations for Tata Motors are exploring masscustomization options in the Small Commercial Vehicle (SCV) segment, improving brandreputation and technology appropriation to bring out a world class ultra-HCV segment.

    Tata Motors is currently India's largest automobile company with revenues of $7.2 billion in2006-07. It is by far the leader in commercial vehicles and the second largest player in thepassenger vehicles market with winning products in the compact, midsize car and utilityvehicle segments. Employing around 23000 people and headquartered in Mumbai, TataMotors became the first company from India's engineering sector to be listed in the NYSE in

    September 20041. While currently about 18% of its revenues come from internationalbusiness, the company's objective is to expand its international business, both throughorganic and inorganic growth routes.

    A brief examination of the truck industry in India using Porter's analysis helps us understandthe threats that Tata Motors faces.

    Overview of the Truck Industry in India

    The truck market in India comprises the light trucks (LCV) and the medium and heavy truckssegments (M and HCV), of which the M and HCV segment constitutes nearly 78% of thetotal Indian truck market.

    a) Light Commercial Vehicles (LCV)2

    The market for light trucks is composed of pickups, vans and coaches weighting up to 3.5tonnes. This segment has exhibited a consistent growth rate of over 20% in the past 5 years.This growth is expected to continue with the launch of Tata Ace by Tata Motors and similarplans by other players like Mahindra & Mahindra, Eicher, etc.

    b) Medium and Heavy Commercial Vehicles (M and HCV)3

    The medium and heavy trucks include commercial vehicles, heavy buses and coachesweighing 3.51-16 tonnes. This segment has stabilized and is expected to grow at 10% overthe next 5 years. The major players in this segment include Tata Motors and Ashok Leylandwhich account for more than 85% of the market.

    Competitive Threats in the Industry

    The Porter's analysis for the LCV and the M and HCV segments show strikingly similarresults except for the threat of new entrants. In the LCV market there exist a small number oflarge companies between whom there is a high degree of competition. To gain market share

    companies are focused on innovation and strong marketing strategies. The companies are

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    usually not diversified beyond automotive manufacture. As a result, if the automotive sectoris in a downturn, it could raise exit barriers. Hence the overall rivalry is strong in this market.

    In the face of such rivalry, let us consider the financial performance of Tata Motors.

    Financial Performance of Tata Motors

    Over the years the conpany has performed exceptionally well financially inspite of thecyclical nature of the industry. A critical analysis of the financial statements provides us withthe following insights.

    1. The issue ofCyclicality is plaguing the automotive sector and the future outlook inIndia is not great considering the robust performance of the past 3 years. Tata Motorshas countered this by increasing the share of exports in the sources of revenue.

    2. Excess debt has led to a high Debt to Equity ratio and this is not good news as thecompany plans to go for further capital expansion. Also the percentage of cash flow

    used for CAPEX is increasing as shown in Exhibit 1.

    Exhibit 1 Percentage of cash inflow used for

    CAPEX

    3. Rising interest rates in the economy is a cause of concern as it dampens both capitalinvestments and softens the domestic demand.

    4. Positives: The cash flow from operations has grown 11 times compared to last yeardespite a huge CAPEX. Tata Ace single handedly raised the market share of TataMotors in LCV segment by 5%. The operating leverage for Tata Motors is higher dueto the high fixed costs of CAPEX. But still the overall financial leverage of TataMotors is well under control when compared to Ashok Leyland.

    Internationalization

    Tata motors has decided to focus on a narrow base of 14-15 countries where marketconditions are similar to that of India

    As a part of the company's new internationalization strategy, the company has decided tofocus on a narrow base of 14-15 countries where market conditions are similar to that ofIndia. In these countries, Tata Motors now has dedicated manufacturing facilities, marketingteams and sales teams. The idea is to have self sustained operations in this narrow band ofcountries. The company evaluates locations on the basis of market opportunities and labourskills.

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    In the framework pertaining to international expansion strategies, Tata Motors can beidentified as an Extender, and is focusing on expanding into markets similar to those of thehome base, using competencies developed at home (see Exhibit 2).

    Exhibit 2 Where is Tata Motors now and How toGlobalize?

    Korean Operations

    Tata Motors entered the advanced Korean Market by acquiring Daewoo, with which it hastremendous synergies in terms of product strategy and R & D. Tata Motors has planned touse this merger and leverage the technology for developing a World Truck for India andinternational markets.

    South African Operations

    In the export market, Tata Motors moved from a fragmented approach to specific markets,chosen in terms of consumer behavior, distribution networks, supply chain, etc. and identifiedSouth Africa as one of the best markets. The sales in this region are about 15,000 units4. Thisis a significant improvement over what Tata Motors was cumulatively exporting (8000 units)before adopting its new internationalization strategy.

    Thailand Operations

    Tata Motors formed a joint venture with Thonburi Automotive Plant to enter Thailand.Thailand is the second most competitive market for pickups, and the new pickup trucksdeveloped here will be sold in both domestic and export markets.

    Latin American Operations

    Tata Motors has taken its alliance with Fiat to produce a new one-tonne pick-up truck, forLatin American markets from Fiat's facility in Argentina. This arrangement will also see TataMotors forming a joint venture with a subsidiary of Iveco, the commercial vehicle division onFiat, to set up a distribution network.