Consumer Behavior - Marketing Honda Cars - Research Paper Example

? Consumer Behavior: Marketing Honda Cars Introduction The concept of consumer behavior involves the study of various theories and concepts of psychology and sociology and other related sciences. Firms like Honda use knowledge of consumer behaviour in determining the latest trend and making it as basis to manufacture new products or improve existing products and services and sales strategies. Consumer behaviour is not just about consumers’ way of buying products but it also includes intangible products like services or experiences of firms. Knowledge of consumer behaviour can be used to educate people on matters pertaining to product regulations or other important aspects of the product. (Hoyer & MacInnis 221) Research on consumer behavior provides firms with information about their target market and the business environment. Researchers provide a careful analysis of the firm’s plans, activities and methods. Relationships that are of interest to consumer researchers are classified as “correlations and causal”, which is similar to the cause and effect situation. A correlation occurs when statistics among the factors have significant relationship. Examples of variables are advertising and research which can be the subject of correlation research. There is positive correlation when two variables act at the same time. There is negative correlation in a situation where two variables are in opposite direction. Advertising and sales are correlated positively since both increase at the same time. On the other hand, product defects and customer regard for the product have a negative correlation; meaning, as product defects are seen or felt, customer is dissatisfied. (Kardes et al. 368) Consumer behaviour involves the study of psychology and sociology, and it is important to apply this on the Honda market segment. Sociology includes study of different cultures. Culture influences the American decision-making process and their decision to buy. Advertising and promotion can be considered one of these factors, or, it could be that advertising and promotion are the outcome of these factors since these elements take into consideration consumer behaviour first before they are being programmed. “Gen Yers” are those born between 1977 and 1995 and who will constitute over one-third of the US population by 2015 and now believed the largest U.S. market segment. At present, they account to about 7% of the present US population (qtd. in Rajamma et al. 388). Gen Yers are demanding when it comes to quality. In an October 2008 survey of the U.S. adult population, quality was listed as the number one factor by 86 percent of respondents “in their next car purchase,” while 82 percent listed safety and 74 percent said fuel economy was their number one priority (Cole and Flynn 67). This essay aims to investigate consumer behavior of Honda of America (HAM) customers who prefer to buy Honda cars and other products despite the popularity and quality make of other brands. The Automotive Industry Statistics from the American Customer Satisfaction Index tell us that the automotive industry has higher customer satisfaction than in other sectors, including the durable and non-durable goods. Automobiles are considered durable because they last for many years despite the harsh weather condition they are subjected to. Car users are dependent on this mode of transportation. Malfunctions show as the car is used for a longer period. The automobile is considered “a remarkably durable, reliable, and satisfying product” (qtd. in Cole and Flynn 69). In 2010, Honda car sales reached $92.21 billion. The figures were affected by the foreign currency fluctuation and the negative perception of the public against the car industry. However, for the same fiscal year, Honda had an operating profit of $3.91 billion, an increase from 2009 sales, due primarily to reduction in research and development costs and management measures to save costs (Berger 2). In 2011, the automotive industry in the United States started to recover with sales reaching 12 million cars, which was still considered below the peak sales in the previous years but considered recovering. Ford and General Motors were now selling passenger vehicles. Toyota had also recovered from the millions of recalls due to the breaks and pedal defects in the Lexus cars. (Corwin et al. 1) Honda sales in the United States now account for half of the company’s worldwide sales. This means Honda is now dependent on the US market since many Americans prefer Honda cars. The company is considered instrumental to the growth of the US economy even as it depends on the US market to increase worldwide sales. (“Honda: Honda has been an Engine of Growth for the U.S. Economy for more than 50 Years” par. 1) In the 1980s, the US car industry had many problems. Sales were down while American labourers were considered the cause of the problem since they were not delivering the needed quality products for American consumers. Studies revealed that the American workers were not to blame but management; it was the kind of management that was instrumental to the near collapse of the US automobile industry. Researchers argued that the American workers at Honda were making quality cars, which led them to conclude that it was management of American car firms and not labor that was to blame for the problem. How can we relate this to consumer behavior? Consumers kept buying Honda while a few loyal customers of other brands patronized their own brands. Why Americans Choose Honda There are a number of reasons or issues that can be brought to light on why Americans chose Honda as their favourite car. These will be discussed one by one below. 1. Quality cars Quality is the number one priority of customers. In the competitive world of car making, quality is the most important priority. Quality is a management innovation that originated from American managers, passed on to the Japanese which Japanese managers and car makers nurtured up to this day. It came from a single man W. Edwards Deming who taught Japanese managers the art of quality management. Car makers from all over Japan and the United States know this. When Honda Motors Company ventured in the United States in the 1980s, at a time when the United States car industry was struggling, the firm knew what was needed to compete in the American market; they had to sell quality cars. (Shook 62) Why would customers say they want quality when most car makers delivered the same quality products? By analyzing the role of perception in quality among the different cars in the industry we will be able to analyze whether quality means adding brand equity or it is just a mere asset as distinguished among other assets of car manufacturers. Cole and Flynn argued that perceived quality of a car can be seen on how the customers answer such questions as: “Does it deliver the expected performance with desired features at a reasonable cost? Is it reliable? Is it durable? Is it serviceable? Is it attractive? Does it have strong resale value? Does it contribute to my psychological and emotional needs, including the image I wish to project?” (Cole and Flynn 68) When an automaker has strong perceived quality, it means it has the trust of the customer. Business must be able to deliver superior products to satisfied customers and by so doing it can earn the trust of the customers. If business delivers a product that gives them problem or trouble, it will affect the trust of the customers and thus they will not buy the product for a considerable period of time. Trust can be gained by delivering the desired quality of the product. Toyota lost the trust of their customers when a problem occurred, giving problems of brake and acceleration pedals on Lexus cars forcing many customers to lose their trust. Toyota lost millions of dollars and the trust of their valued customers. Trust was gained after Toyota had to recall millions of cars and correct the management problem. Recently, a survey found that carmakers Honda and Toyota “have the trust of twice as many customers intending to purchase a new vehicle as do the Ford and Chevrolet brands, and four times as many as the Chrysler brand.” (Cole and Flynn 68) All manufactured cars have their own problems which can be seen as ingrained in the manufacturing process. This affects quality. When a customer buys a car, be it from American or Japanese automakers, during the first year there are only a few differences in reported problems among the different carmakers, but when the vehicles age, the leading Japanese automakers (Toyota, Honda, and Nissan) report fewer problems. This provides the conclusion that “even if U.S. automakers have closed the gap in initial quality problems, their vehicles still suffer from far more frequent problems as they age” (Cole and Flynn 79). 2. The Price The prices of Honda cars are reasonably placed at lower level to meet customer demands and setting it at par with other cars. Prices range from $23,625 for Accord Coupe to $37,380 for Ridgeline (“Motor Trend”). Price is secondary to quality. Honda customers prefer to buy quality high-priced cars. 3. Management Style and Discipline Honda built manufacturing plants in the United States as early as the 1970s when there were no trade restrictions at that time. Honda of America (HAM) became popular. It was not only in the United States that Honda ventured to build manufacturing plants but in many parts of the world. Honda competed against Toyota, Volkswagen, Mercedes Benz, and the giants in the US car making, Ford and General Motors. (Berger 56) Honda values its people and their families. Leadership comes to the fore by leading people with inspiration and motivation, providing them with a sense of pride and a voice that can be heard up to the top management. Workers are motivated to work for a team and encouraged to be a part of an organization that values people. People here represent employees and customers. Employees and managers who value customers gain new customers and customer loyalty and therefore add equity to the organization. Honda calls it smart management, which means letting employees feel they are part of the team, allowing them to be creative in the process, and motivating them to express their ideas and creative imagination. (Shook 59) 3.1 Honda Cares Acquiring a Honda car means enjoying a package of benefits, for example: If you have any problem associated with your car even if your warranty certificate has expired, you can still rely on the services of Honda; You can avail of their many quality services, like the “concierge emergency service, rental car reimbursement, trip interruption benefit,” and much more (“Honda: Honda Financial Services” par. 1). 4. The Honda Models: Quality and Unique Cars One of the principles guiding the company Honda Motors Company is to be original. This is known as Hondaism and is taught to all employees and managers of Honda throughout the world. The originality concept has been there ever since its founders Soichiro Honda and Taeo Fujisawa started the company and led it to greater heights in the world of car making in many parts of the world. To be original means not to copy other products or cars. This has been the concept of Honda during the pre-war days when the company was just starting in a small shop in Hamamatsu in Shizuoka prefecture in Japan (Mito 2). This is one of the reasons why American customers prefer Honda than the American built cars. Insight is one of Honda’s hybrid cars and believed getting the top marks since these are fuel efficient and environmentally friendly with the lowest gas emissions. Data supplied by Honda states that the transmission version of the car is 3.9 liter per 100 kilometers in the city and 3.3 liters per 100 kilometers on the highway. Insight is a lightweight two-seater with a relatively “cute” engine which requires no frequent trips to the gas station. It accumulates fuel which is two thirds less than the usual average car and the body is made of aluminum designed with aerodynamic principles. (“Hybrid Fever” par. 4) Hybrid Honda Honda is an innovator in the field of hybrid cars. It was the first to introduce hybrid car to car aficionados than Toyota. Insight weighs very lightly and is powered by a hybrid gas and electric, a 3 cylinder gas engine that has an electric motor down at the end where the engine’s flywheel normally resides. The engine’s flywheel spins in a pack of magnets, acting alternately as an electric motor or as a generator. During a uphill climb when power is most needed, the battery pack powers the motor to “electrically turbocharge” the Honda engine. The flywheel also acts as a generator and replenishes the battery pack when the foot is released from the accelerator and give pressure on the breaks. The Insight has a unique shape, giving the impression that it is a Ferrari. It has a sleek aluminium body and rear fender skirts to help counter the wind resistance and lower fuel consumption. Honda also has reduced the amount of sound insulation because of the aluminum construction. (“Hybrid Fever” par. 5) 5. Honda Flies Real Airplane: The HondaJet The Hondajet is Honda’s pride in the air. It can fly at a maximum cruise altitude of FL430 and can climb at a rate of 3,990 feet per minute. The Hondajet is 14.9 feet high, 42.62 feet long and has a wing span of 39.76 feet. Manufacture of Hondajets is handled by a separate company, the Honda Aircraft Company with its headquarters in Greensboro, North Carolina. (“Hondajet: The Next Honda in Your Life” par. 19) 6. The Honda Acura Honda and the Japanese carmakers had carefully developed a technology and organizational structure attuned to the constraints of the American structure. The US carmakers were vulnerable to the competitive challenge exposed by the Japanese firms. Honda built larger, more up-scale models which attracted American buyers. The Acura had sales of 109,000 in 1987 and became the number one in customer satisfaction. But it was not only Honda which made it to the top in sales but also Toyota with luxury models like Lexus. Conclusion Various reasons can be attributed to the popularity of Honda cars in America. Quality, durability, originality, and the test of time are some of the reasons why Americans buy and prefer Honda. These qualities can be found in other brands but Honda is unique in that it has survived to the test of times. Honda has established itself as a carmaker from its humble beginning in a small shop in Japan until it went global and competed with other giant carmakers in America and the rest of the world. The name Honda has fostered the principle of originality even if at the start the small shop used to copy other manufacturers. But its founders learned that in order to survive in the competitive world of car making, originality and quality are the most important attributes. The reasons listed in this essay on why Americans purchase Honda products were based on literature review and gathering although there were no empirical studies found in the various sources available for this essay. Nevertheless, these reasons are known facts about Honda and its loyal customers. Works Cited Berger, Alexander. Global Corporate Strategy – Honda Case Study. Germany: Books on demand, 2011. Print. Cole, Robert and M. Flynn. “Automotive Quality Reputation: Hard to Achieve, Hard to Lose, Still Harder to Win Back.” California Management Review. 52.1 (2009): 67-93. Sage Publications. Web. 21 Nov. 2013. Corwin, Scott, John Loehr, Evan Hirsh, Marian Mueller, Michael Beck and Kasturi Rangan 2011. 2011 Automotive Industry Perspective. PDF file. 21 Nov. 2013. . Freedman, Craig and A. Blair. “Seeds of Destruction: The Decline and Fall of the US Car Industry.” The Economic and Labour Relations Review 21.1 (n.d.): 105-126. Academic Search Complete. Web. 22 Nov. 2013. Honda: Honda Financial Services 2013. Web. 21 Nov. 2013. . Honda: Honda Has been an Engine of Growth for the U.S. Economy for more than 50 Years 2013. Web. 21 Nov. 2013. . Hondajet: The Next Honda in Your Life 2013. 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Honda: An American Success Story: Revolutionizing the Art of Management. PDF file. 21 Nov. 2013. . Read More