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Running Head: Honda Motor Corporation Target Market and Segmentation

Honda Motor Corporation Target Market and Segmentation

Albeejohn Hummel

Davenport Univeristy

Busn 520

10/10/2016

Contents

Overview…………………………………………………........……………………………….….3

Primary Target Market.............………………………………………...…………………..….…..4

Secondary Target Market………….…………………………………………………………..…..6

Target Group....................................................................................................................................7

Market Position…………………………...............................................................................….…8

Conclusion…………………………………………………………...………………...…...…..…9

References……………………………………………………………...………………………...10

Overview

The largest automobile company in the world is the Honda motor company. This company started as an engine manufacturer, and later grew to become the first motorcycle manufacturer. The company also ventured into automobiles in order to expand its market scale especially in the united states, the automobile sales account for almost ninety percent of the sales for this company. The bestselling brands for Honda include; prelude, Acura, and Accord. When a business gains success it can affect it both positively and negatively. This means that the company can dwell on the positivity and work on the negative aspects. An example of the negative aspects is that its brands are selling a lot and at the same time they are being termed as the most vulnerable brands for theft (Meyer, 2000).

When starting a business, it is always aimed at attracting a certain crowd. The target market is defined as the group of people towards which a company focuses on their advertisement, marketing and promotion. This group of people determine where a company directs its products, come up with affordable prices, distribution points and also what approaches to use when advertising their products. The target market is a very important group for any business, without a target group it will be very difficult to sell products because the group predict the sale of the products. The factors that influence the selection of a target group are age, social issues, demographics, spending power, gender, religion etc.

Honda motor company is traditionally known for its employment of geo-demographic subdivision which is a combination of demographic, topographical and method of existing to classify customers (Millington, 2013).

Honda is very celebrated for utilizing of marketing methods that petition to a specific market and a vast number of connected promotion mixes. Honda always pursues to have a full grasp and understanding of its target market anxieties, therefore it’s in a position to accomplish abundant profits through recognizing the characteristics of its target market, plus a section approach which takes into account its consumers hassles. Honda has a very good sales record therefore its always very confident, when it comes to breaking the market competition through the use of marketing media, not only for promotion purposes but to control the perception of its target market. This begs the question “which is Hondas target group”.

Primary Target Group

Honda motor company is a very diverse corporation involved in numerous lines of merchandises, this means that for Honda it’s a bit complex when conveying target groups, since they have several products under their wings. Selecting a primary target group is a hard task for Honda because of its multiple product types. The other way to come up with a target market for a company with diverse products is product segmentation which narrows down the target market on the basis of product type. However this is not such a good method because this approach does not cater for each customer’s exceptional disparity and exposure. Honda always has a strategy for producing over the top sales, the company makes use of target markets that have already been accurately clustered, and it groups customers that are comparable on their segmenting proportions into homogeneous segments.

A customers age and his/her economic standing always influences their behavior, these are two major aspects that Honda uses in selecting their target markets for their various products. The other minor aspect is their geographic location which also plays a part but it’s not a major influence as the two above (Meyer, 2000).

Honda is very famous for making use of marketing approaches that appeal to a precise market and a huge number of associated marketing mixes. Honda always seeks to have a full clutch and understanding of its target market demands, therefore it’s in a position to achieve great profits through identifying the characteristics of its target market, plus a segment strategy which takes into account its consumers demands. Honda has a very good sales record therefore its always very confident, when it comes to breaking the market competition through the use of marketing media, not only for promotion purposes but to control the perception of its target market. This bags the question “what is Hondas target group”.

Primary Target Group

Because Honda motor company is a very diverse company involved in several lines of products, this means that for Honda it’s a bit complicated when assigning target groups, since they have several products under their wings. Selecting a primary target group is a hard task for Honda because of its multiple product types. The other way to come up with a target market for a company with diverse products is product segmentation which narrows down the target market on the basis of product type. However this is not such a good approach because this approach does not cater for each customer’s exceptional disparity and exposure. Honda always has a strategy for generating over the top sales, the company makes use of target markets that have already been accurately clustered, and it groups customers that are comparable on their segmenting proportions into homogeneous segments.

Hondas products differ according to their geographic area; this means that their products will definitely differ in terms of accessories, safety requirements and aesthetic appearance depending on the area its being sold. Some countries have strict safety measures and cultural preferences for their products. A good example is the United States a vehicle is supposed to adhere to specific requirements like crash testing for it to sell in the 50 states. This means that a car in the US my not compare to one being sold in Asia. In the US the car will be heavier, bigger and less powerful so as to meet the set requirements.

Geographic criteria is very crucial especially for advertising and understanding, however it’s not the only factor to determine the target market since the automobile market is too wide and it includes all the population. Even though it does not necessarily determine the target market it’s very important for determining the potential growth of a company plus its potential for making profits (Millington, 2013).

Honda manufacturers both motorcycles and motor vehicles, therefore age is a big factor for its clients plus their economic position determines their target groups. The age of a customer determines his/her socioeconomic level. Clients who are a bit older will definitely a higher spending power as compared to the young people. However people in their mid-thirties are more likely to spend more that those over fifty.

Honda has been there for so many years this has led to its change in its approach especially with the young generation. The company started with only the sale of motorcycle, now it has even expanded and it’s no selling motor vehicles. The company is also trying to change according to the era so as to remain relevant in the market.

In the past Honda used to create cars that were powerful, fast, and light these factors appealed to the young generation. However due to economic changes safety concerns and high fuel prices they have adjusted its products to please the more refined age group bracket of between thirty to fifty years. Honda is also catering for the young age where they create luxurious cars, convenient, comfortable, fuel efficient, safe and affordable. This age group is the primary target group for Hondas motor vehicles. This group is always financially stable and has families; therefore the vehicles they want should be able to provide safety for their families. Hondas vehicles are more expensive than the rest of the competitors however for this group it’s what the car has to offer not the price. The youth are the secondary target group for Hondas cars, this group is choosier and for them a fast, fancy, exotic, safe and comfortable vehicle is all they need for a lower price (Haseeb, 2016)

Secondary Target Group

Honda motor is starting to lose popularity among its secondary target group, this is because they are more concerned with pleasing their primary target group that they forget even the secondary group also brings profit. The primary target is a more conservative group therefore they don’t mind about the cars being exotic, fun, fast and comfortable instead they are creating products that are seemed boring to one group. They are no longer guided by respect for individuality and joy driving instead they are guided by profits.

They are more focused on the group that will bring those most profits with fewer demands. The primary target group has less demand therefore they are leaning more towards that group forgetting that even the secondary target group is very important too(Paul, 2009).

Honda has been suffering losses because of lack of customer satisfaction; hence they decided to clean up house through changing its management team with a younger team that has fresh vibrant ideas. Honda released the Acura which is powerful, exotic, fast, comfortable, safe and edgier. Honda has learned its lesson and is trying to accommodate both secondary and primary target groups’ demands together by considering the age and the economic standing when designing their products. They seek to capitalize on the growing secondary target group, while maintaining the demands of primary target group. A success that Honda has established where “consumers engage little conscious effort” when deciding in the purchase of their product (Millington, 2013).

Target Group

The target groups determine the sales for a company; therefore it’s not easy for a company to abandon a target group that is very profitable to them. North America is a very important continent because ninety percent of its purchases come from North America. This is the reason why Honda has spent millions of dollars in advertisement, promotion and development of vehicles for that specific market.

The target market for Honda motor company is people aged between thirty to fifty years. These people are either married or single but with mid to high class status meaning they have a higher buying power. The target group is a working class population, fairly successful, and they desire value for money and prestige in what they drive. Apart from the financial status, demographics and age, behavior patterns of customers is also a factor in becoming a target group. The higher the buying power the more often a client is likely to replace their vehicles. This means that these people buy a car every five to seven years (Paul, 2009).

Marketing Position

Honda is facing a lot of competition in the united states, based on figure one below Honda motor company is the last one among the big five automobile companies in the US. Honda had risen to number four beating Toyota in 2009 but later came down in 2015 to number five. Although its position keeps changing its share market remains constant every time.

Honda is a company based in Japan; therefore it’s still a foreign company in the US, which explains the ranking however even with low ranking in the US the company has maintained a steady share percentage all along, this means that its sales are more stable than those of other companies.

Honda has always played it safe when it came to business seeking target markets that are financially stable and focusing on them only. The company does not seek a top ranking position instead it seeks to have a more stable consistent share percentage. This is a very safe strategy since the company does not want to take any risks and venture out of its comfort zone. This has impacted negatively on the kind of products they produce since they are boring and generic. Honda was banking on its fuel efficient vehicles that were really becoming famous because of the high fuel prices. However the prices have gone tremendously down which means people will opt for the exciting fuel guzzlers they had before since they won’t spend much on fuel. The other threat is the separation from Hero Moto Corp which was a major partner; this termination resulted in loss of forty percent of its sales (Haseeb, 2016)

Conclusion

The evidence is clear that Honda only seeks a stable share percentage instead of seeking to be number one in the industry. This means that it is always playing safe, looking for financially stable customers as target groups, and only investing in areas where their products are highly sold. However even with all these careful measurers the company is still going through losses and it losing popularity especially because of the recent recalls it has been getting. Honda is now undergoing a management changed which is meant to revamp the company and return it to its former glory and to make it even better.

References

Millington, P. (2013). M: Management. New York: New York University Press.

Meyer, K. (2000). Honda Motor Company Limited. Retrieved from http://automobiles.honda.com/

Haseeb, K. (2016, march 24) Marketing, Marketing Plan for Honda Cars. Retrieved from

http://marketingdawn.com/marketing-plan-of-honda/

Paul, T. (2009). Target Market or “Who is the customer?”

Retrieved from http://npdbook.com/target-market-or-who-is-the-customer/