The Development Of New Product For Honda

INTRODUCTION

Honda Motor Company, Ltd is a Japan base international company and recognized as one of the world’s leading automobiles and motorcycles manufacturing company (Yang, 1996). Honda is the largest manufacturer in the world for motorcycles and internal ignition engines also measured by volume, and manufacture above 14 million internal ignition engines (Miller, 2008). According to literature, Japanese firms usually dominate the Asian market with the largest share; moreover follow the global strategies to be a global firm. Firms like Honda Motor Company dominate the research across the manufacturing of automobile business and management disciplines. Honda is Japanese company with its many manufacturing plants around the world. The plants are located at Japan, United States, China, Pakistan, Canada, England, Belgium, Brazil, New Zealand, Indonesia, Thailand and Turkey. In 2007, Honda’s net sales and operating revenue are:

This paper intends to present the research objectives of producing a new product for Honda Motor Company, while identifying, analyzing and assessing the important factors in three tasks of report, task 1 identify the important features of new product such as fuel, economy factor, suspension, engine capacity as well as size, shape etc. which meets the expectations of the consumers in South Eastern-Asian Market, also conducting the market analysis, finding the milestones of the dates, presentation and preparation of an action plan for completing the project of New Product Development, Methods for Monitoring and Updating.

Second task of the report discusses the research into marketing field for the product, calculating, agree and plan for the important resources required for this development project, while adopting different research method, type of data, data analysis techniques, nature and types of resources used for this project and other possible sources.

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In third task, there is evaluation of findings of appropriate tool and techniques, plan and development for a suitable marketing tactics for introducing New Product in South East Asian Market, further development of adequate measures to monitor and evaluate the developmental progress. The report is concluded with a proposal and recommendation based on the findings identifying and justifying areas for future research.

ANALYSIS/TASKS

Task 1: (a) Identify a research proposal/Identify the development of a new product, service or process in terms of overall profitability

Objective of the Production of New Car

First and the foremost objective of the development of product are to maintain the quality. When manufacturing and producing the new product, quality will be significant point of process that can meet the customers’ expectation at the time of buying car therefore quality is the objective with the highest significance.

The high productivity is the second main objective of the development of new product. The product will be manufactured for high and low wages countries with the higher level of comfort.

Flexibility is another essential objective of the development of new product, which refers to the potential to move fast and adequately towards unexpected changes in unstable markets.

Last but not least through the development of new product environmental sustainability would be ensured. For this purpose, there is need of hard and strong efforts in the management of air and water pollutant materials.

Research Methodologies:

The product aims to be provided into South East Asian market; and to introduce a Honda product into market it needs to be researched thoroughly. The marketing research of this product involves using different models such as Porter’s 5 Forces and PEST for Environmental Analysis for the product. Marketing is an important element of the management and success of a product largely depends on the appropriate marketing strategy. The research study of this project involves finding the market environment for the new product and strategies that are required to be adopted for receiving maximum market share in South East Asian automobile market.

The automobile market in South East Asia continued to grow since currency crisis. In 2005, aggregated demand in Indonesia, Malaysia, the Philippines, and Thailand is 2.0 X I million units. Moreover, Japanese market has long history of manufacturing in the South East Asian countries. The financial objective of the development of the new product is to capture the South East Asian market by offering a luxurious and comfortable car in lower market price that satisfies the demand of automobiles in the region. The company will incorporate the high quality material in the development of the new product with cost cutting.

The company is launching a new product; there is need of enhanced and comprehensive sales and marketing support and campaign. The product will be manufactured for middle lower class customers with especial functional specification in size and module. The company offers a number of benefits in its new product to enhance the lifestyle level of target customers. There are number of options and feature combinations available in the product. The sales and marketing support and campaign efforts will be used to enumerate the costs and benefits of the new product based on a market and customer view and to extract an orderable marketing design strategy that enhances sales and marketing profit for the vehicles in the South East Asia. From the initiation till sale, manufacturers, retailers, suppliers and wholesalers will be involved.

The new product is the Civic Hybrid, it will be a joint project with Tsinghua University and Honda, the car sample is already tested on the streets of Kaulalampoor as part of a study on fuel consumption. The development of new product is resulted as the superior fuel economy of Honda’s IMA system. The engine functions in low speed valve with the help of the electric motor, giving it ability of strong acceleration. The new product has rapid acceleration and the engine can operate in high speed valve timing mode while the electric motor can be helpful for this process, producing high result for strong acceleration. With fuel type Regular Gasoline Fuel to Drive 25 Miles 0.50 gal costing only $1.61 featuring improved suspension and the 1.6 L (97.6 cu in) DOHC ZC engine with the engine size 1 liter to 1.4 liter.

The development of the new product is tested and after test is ready to be manufactured for South Eastern Asian market customers with low and medium income scale. For any manufacturing fault in the development of the new product, the Company will be responsible also with the warranty of six months. The development of new product will be direct sold to number of dealers present in Thailand, Malaysia, Indonesia and the Philippine. The customers are able to buy the product either directly from dealers or other market wholesalers.

In the manufacturing of the new product, there is requirement of high-tech methods and processes. There are involved suppliers of steel and iron parts and other electronic instrumentation, who supply the components for assembling motor vehicles (Robertson, 1988). In order to make the new product a quality product there is focus on the efficiency of the production for which there is requirement of investing big amount into the development and improvement of the manufacturing process, research and technological creation of the production (Economist Intelligence Unit, 2000). In order to manufacture the new product, there will be need of machines and tools, speed data creation and data management system software, high power computer, virtual manufacturing and supreme visualization techniques, and advanced building techniques (Maxton, 1994).

Engineering: To meet needs of the industry and of the customer of hybrid civic individual constant Research and Development program and practical development approach for product is performed that meets the industry changes and customers’ requirements. Product is designed according to exact stipulation for customer applications employing up to date and high tech technology. Therefore the essentials of engineered quality are performed throughout the phase of designing, manufacturing, and customer care service.

Quality Assurance: In order to assure the quality program, a quality assurance program is developed particularly to meet the requirements of the product and customers. Moreover, the quality assurance is responsible for meeting the requirements and competent of supplying the required credentials and records for first sample, production process, and post-production support. Quality Assurance is alone responsible to preserving the product quality throughout the life of the product, while using the experienced skills in problem avoidance, analysis and solution techniques.

Laboratory Facilities: The assessment and analysis of steel before starting production will be done in laboratories to assure the controlled chemistry stipulation, as well as metallurgical analysis of prepared products.

Manufacturing: The manufacturing of vehicle equipments and parts, a mechanical multi-station cold extrusion press, a full range of CNC lathes, and multi-spindle rotate machines will be used throughout the process. The used of fully mechanized or semi mechanized machines will depend on the requirements of the production of product. The finishing equipment is specifically designed for products polishing, circuiting and vibratory finishing machines will be used for the final preparation of all products prior plating.

Customer Satisfaction: there will be customer satisfaction programs that are customized according to the needs of automotive customers and manufacturer needs, the distribution networks. This support will be used to guarantee a target oriented manufacturing program making high levels of customer satisfaction possible.

(b) Using appropriate Market Analysis Tools, incorporate into this business case information on Market competitively and Activity.

BNET dictionary [1] explains the Marketing or Strategic Analysis as the process conducted to formulate strategy for the business environment within which an organization operates. There are some attributes of such marketing analysis such as through applying the marketing strategic tools, relevant data and information is identified and evaluated that helps to formulate the strategy, secondly defining and analyzing the external and internal environment and at last number of analytical methods are employed in the analysis such as SWOT, PEST and Porter’s five forces analysis.

Market Structure Analysis using Porter’s 5 Forces Model

In order to analyze the market structure for the new product of Honda, Porter’s 5 Forces Model will be used that will assist through identifying the competitive structure of the market for the product.

Bargaining Power of Customers

Southeast Asian market has been dominated by two Japanese automobile leaders Toyota and Honda, but after the entry of other competitors such as South Korea, North America, and Europe, provides more competitive market as it provides the customers with more choices on products. Moreover, Southeast Asian countries Malaysia and Thailand are those countries where there is monopoly of local automobile manufacturers and local manufacturers are much self sufficient in satisfying the needs of customers. In such market situation and tough competitive market, the local customers will prefer to choose the local market product due to higher price of foreign product manufacturers. Despite the fact that Southeast Asian market is highly competitive, Honda Motor Company with its different brand has maintained the competitiveness of the market having unique pricing positioning.

Bargaining Power of Suppliers

Honda Motor depends on number of suppliers for the supply of materials and equipments. For the development of new product Honda will purchase materials, other equipments and important parts required for the manufacturing, from many of its suppliers, and depend upon some particular suppliers for specific material and equipments that will be important to use in the manufacturing of the new product. However, the potential of Honda to carry on with acquired supplies in efficient and cost effective way will be difficult and will be affected by a number of factors, while many of them are out of the control of Honda. These elements are the suppliers’ capability to providing a regular source of supply and Honda’s capability to fight with other users in acquiring the supplies. As a result, Honda can lose its key supplier and it can in particular impact the product manufacturing and increase the costs of the product.

Threat of New Entrants

However, automobile industry is already slow in terms of state of economy and region like Southeast Asia where there are already local and foreigner automobile manufacturer it is difficult to survive. On the other hand, Honda Motor Company is already present in the region with its different other products, the development of new product will create more competitive advantage for the company preventing the threat of new entrants. Besides, there is wide range of choices for customers with the production of products of different company; the decline in demand can cause the product go fail in terms of high sale.

Threat of Substitute Product

Since the creation of automobile and automobile industry, there has been number of researches made to find the substitute of product such as use of natural gas, water, Sunlight, Vegetable oil, and Ethanol in the automobile. The continuous research and invention using sunlight and others can cause threat to the new product.

Nature of Revelry/Competition among competitors

With the growing trend of globalization number of companies is involved in the market share of global market working in different markets. The world automobile industry is also influenced by expanded global competition. Southeast Asian market possesses a unique place due to nature of automobile market with local and foreign automobile manufacturers providing competitive advantage to the customers. Japanese automobile firms Toyota and Honda are the most competitive rival in Southeast Asia; moreover, other local manufacturers such as Thailand and Malaysia are side to side create the competitiveness in the market.

General Market Environment Analysis

PESTEL Framework for the New Product of Honda:

Political

The political conditions in any country affect the strategy and pricing policy of a product of company. The political condition in the Southeast Asia has always been of diverse nature, and due to diversified nature, the level of political stability is different in different countries. The taxation and pricing is modified by the local government and political figure affect the strategy of a company. The requirement of energy in Southeast Asia in transport sector is 24 % of total share energy consumption and in 2000 the total consumption for transport sector has accounted for 70 %. Due to high consumption of automobile and low consumption in the manufacturing of the automobile product, the tax charges on the total sales of product are lower in the local market of Southeast Asia.

Economic

Southeast Asian transformation into global economic has provided it opportunity that affect the local economy of the region. These economical global transformations have changed the institutional governance and organizational structures of the local economy today. Today automobile market of Southeast Asia with the two Japanese rivalries is world’s most divergent market. The local automobile market of Southeast Asia fundamentally recognizes national business systems along with globalization tendencies making multiple possibilities and opportunities through the participation of global automobile actors in globalization.

The growing global markets that exist in Southeast Asia market is with the international tendencies provide immense opportunities for the global players moreover there is more increasing awareness of globalization particularly for important actors in automobile industry of Southeast Asian business systems. With the evolutionary perspective, the new changes in the Southeast Asian market with the emergence of Korean and Chinese automobile company lead to dynamic economic changes in the automobile industry. The merging market of automobile in Thailand is the best example of the globalization and economic growth in the automobile industry as it grew large and showed robust growth even during recession and political turmoil in the country.

Social

The Southeast Asian countries are together ASEAN forming integration to assist in the different spheres such as economics, social and environmental issues. There are apparent social differences among the countries of Southeast Asian countries; it is informative to understand that some significant diversities among the Southeast Asian social, specifically considering taking place inevitably in the same fundamental directions in a similar ways.

In Malaysia, there have been ethnic rivalries and an ethnic assenting action policy. In other countries like Thailand where Japanese intervention is larger the local community, to limit the control of ethnic Chinese by encouraging the policy makers to encourage the foreign investors, thus the control of ethnic Chinese was decreased. In Malaysia there is an important role of FDI (Foreign direct investment) that is found for the political motivation. Malaysia and Thailand, with the largest market share in automobile industry are socially different and exceptional; moreover, these exceptions are attributed with their political and economic considerations.

Technological

The research in the field of science and technology has remarkably increased since the revolution in the field of technology was improved in the region. With the diverse nature of automobile market in Southeast Asia, different automobile firms are keen to do research and for product development using Information and communication technology and other new systems. However, as a result of competitive market in the regions firms are determine to invest a large amount of their revenue in the research and product development and this research and development prevent any new entrants in the automobile industry in the Southeast Asian market.

Environment

The environmental pollution produced by the transpiration and automobile vehicles have become the central attention of the governments in Southeast Asia and it has been observing specifically in Thailand where government has passed a regulation according to which no such transportation is allowed to be sold in Bangkok. In addition, Malaysian government has also taken step to improve the environment transparency through imposing law for using less polluted transportation means.

Legal

There are certain rule and regulation about the marketing laws and laws on environmental issues in the countries of Southeast Asia. Specifically in Thailand, government seems to upgrade the automobile industry by amending and forming new industrial laws such as Thai government has formulated such policies that attract the foreign inventers in the country to share market competitiveness. Moreover, through the policies government has successfully persuaded international investors, automobile assemblers, to serve in the local industry and providing them with appropriate market conditions to be successful. On the other hand, Thailand has no local car maker which gives immense opportunity to invest in the car manufacturing in Thailand as government policies are flexible to give opportunity to foreign company.

Investing in Thai market is also efficient because country with high demand of car and less supply of needs seeks further growth and development. In addition, Thai government also offers sufficient support to industry in the form of offering tax incentives and different other dimensions as this industry are contributing greatly to the local economy of Thailand.

c. Develop this Scenario of New Product Development into a Project which includes Milestones with Dates.

For the manufacturing of the new product, the company will at first step manufacture original equipments and motor vehicle parts.

Car Manufacturing Process

Timeline

Date

Manufacturing of Motor Part

1 day

1st October till

2nd October

Chassis

2 hours

2nd October

Body

1 hours

2nd October

Paint

2 hours

2nd October

Interior

8 hours

3rd October

(d) Using an appropriate method of presentation, prepare an action plan for completing the project of New Product Development. Your plan must include Methods for Monitoring and Updating (3.1c)

Action Plan for Completing the Project

In order to complete the project on time, every step of car manufacturing process needs to be performed appropriately on time. The process of car manufacturing such as Manufacturing of Motor Part, Chassis, Body, Paint and Interior will be done according to outputs.

Outputs of the report are the milestone dates according to which project will be completed within 3 days.

Human resourcing plan refers to prepare the workforce who is going to work on the project. The workforce will be prepared before the project is initiated, all recruitment, hiring and assigning of work will be done additionally. In this regard, the point of the number of staff and workforce is important to appropriately calculate.

The working timing and working hours are the detrimental point to completing a project. Work will be done during 5 working days, and there are 40 hours available to work on the project.

Execution of Action Plan

To carry out the above action plan there is need of resourcing people, time, space and equipment related to project.

Team Leader:

A team leader is an important component that leads the project, to complete this project according to schedule a team leader will be appointed. The selection of a team leader will be done very carefully according to the requirement of the project.

Project Duration:

The duration of the manufacturing of the project is 3 days.

Team Coordinator:

A team coordinator will be appointed who will be responsible for organizing and facilitating team meetings and managing the team communications.

Action Plan Focus:

Before starting a process team will communicate to focus on within the next 12 hours

Issue will be selected to create an energy and sense of mission within the team.

Every important point of meeting will be recorded that is provided in “Team Planning Session 1.”

Monitoring and updating is always an important step of performing a project. The aim of monitoring a project is to evaluate the process and time management. There are different methods of monitoring and updating a project such as reports, diaries, finances and meetings.

For monitoring and updating the development project of new product for Honda, reporting is the most appropriate method because reports are neither too long nor are they aimless. Through writing report outcomes of specific objective can easily be evaluated.

Expenditure planning is important to take into account for monitoring the financial accounts. Through financing method internal financing and external financing the spearhead of all project development and financial benefits related to project can be monitored and evaluated.

There are number of staff required for different field of this project such as Engineers, Lab chemist, technical workforce, Assemblers and fabricators, Commercial and industrial designers, Drafters, Electricians, Engineering technicians, Industrial machinery mechanics and millwrights, Industrial production managers, Machine setters, operators, and tenders-metal and plastic, Machinists, Material moving occupations, Painting and coating workers, construction and maintenance, Tool and die makers, Welding, soldering, and brazing workers. Prior starting the work, the workforce will be trained for working on the project efficiently. Staff will be paid for attending the training sessions, and other than that trainers will be from the organizations from their fields of specialization. The company will provide meals, transportation, and lodging to trainee and trainers both. The total cost of meal, lodging and transport is 2,330.73 USD with 233,073.08 USD costs on their salary.

c. Explain the Possible Sources of those Resources

The resources required for the manufacturing of automobile car includes labors, raw materials, equipment, space, and budget cost. The budget cost of this project will be sponsored by Honda Motor Company of Japan, the space for manufacturing the automobile there is need of space and automobile manufacturing plant, and this project can be executed in one of those countries where Honda has its automobile manufacturing plant such as Pakistan, United States of America, Malaysia, Japan, China, Canada, England, Belgium, Brazil, New Zealand, Indonesia, Thailand and Turkey (Yip, 2000). Manufacturing another plant will increase the cost of the project as building an automobile plant will cost $560 million about half of manufacturing facilities of comparable size. Therefore project will be executed in two different countries Thailand and Indonesia because these two countries already have automobile manufacturing plants and are the countries where product needs to be sold. For other countries such as Philippine and Malaysia, the automobile plants can be built in these countries for the ease of manufacturing. Labors will be hired for this project at the place of automobile manufacturing. For hiring the staff, the assistance of third party can be taken for the ease of services to be done. There are good markets in Japan and China for equipments and other raw materials. Besides Taiwan also provide automobile manufacturing tools and equipments and equipments can be purchased from any of mentioned countries (Tsutsui, 2001).

Task 3: Present and evaluate the findings with regard to the initial proposal/Plan and agree the implementation of the product, service or process and the measures for monitoring and evaluating success.

a. Using appropriate tools and techniques plan and develop an appropriate marketing

strategy for this Introduction of New Product in South East Asian Market. (10.3b)

Current Performance of Honda Motor Company

Marketing strategy is defined to implement the principles to capture the target market. In the market Southeast Asia, consumers recognize the consumption of improved fuel economy and reduced exhaust gas. According to the demand of consumers, Honda has planned to introduce such vehicle that is fuel economy and reduced emissions. Honda intends to introduce civic hybrid vehicles to the Southeast Asian market. In 2000, the civic Hybrid car has already been introduced in USA with different features designed according to it environment and consumers’ demand. The civic hybrid was successful and has increased over 570 percent. Today, in USA hybrid vehicles hold a 1% market share with three different models of hybrid vehicles (Alexander, 2009).

The Target for the Product

This new civic hybrid is going to be sold in Southeast Asian market having specific environmental features; moreover, Southeast Asian automobile market has enough potential with the increasing demand of cars.

Marketing Strategy for the New Product:

Addressing Eco-friendliness as a Marketing Strategy

Environmental consideration has become an important part car manufacturing and influencing the car manufacturing and other managerial decisions. The development of new product aims to develop an eco-friendly product according to requirements of environment (Abele et al, 2005). Therefore, the marketing strategy of this new product will be influenced by this factor creating an organizational cultural focusing on the environmental issues.

Nature

People

Vehicle

Adopting Five P’s as Marketing Model:

Five P’s represents marketing model used as marketing mix to describe the techniques and combination for a brand. Five P’s are Product, Price, Place, Promotion and People (Kerin, 2008).

Product: The new product offered by Honda is a civic hybrid is to be introduced in the Southeast Asian market.

Price: The price of the product is determined as18, 030.21 USD.

Place: The place of selling is Southeast Asian countries viz., Thailand, Malaysia, Philippines and Indonesia.

Promotion: There would be wide range of promotion used for the advertisement of this new product. Customers will be approached through different means of media such as TV commercial, Internet advertisement, and advertisement direct to consumers.

People: The appointment of staff for this project will be significant because their skills and talent will be incorporated into the product. Therefore, it will ensure that competent and skilled persons are hired on merit base.

b. Develop appropriate measures to monitor and evaluate the marketing Progress

The marketing strategy can be achieved by evaluating the marketing process properly.

Formally there are two marketing evaluating tools used for controlling the marketing strategy implementation. The first is the formal marketing control and second is the external marketing controls (Kotler et al, 2008). The action taken before the implementation of the marketing strategies is formal and input controls and output controls. The output controls are used to ensure that outcomes are achieved with the expected results of implementing the marketing strategy (Brassington & Pettitt, 2006). There are different measures taken to evaluate and control the marketing implementation; for the implementation of marketing strategy of new product of Honda, the actions will be required to evaluate the implementation are as follow:

Identification of performance measures of each marketing activities

Internal and time base evaluation of marketing activities

Monitoring of performance by management

Monitoring of customers’ perception about the performance of marketing implementation (Ferrell & Hartline, 2008).

(c) As a result of Market Analysis in Task 1, what were your findings regarding the market potential in South East Asian Market?

There are number of competitors in Southeast Asian market and Honda also possesses a significant place in the automobile market of Southeast Asian countries. The number of competitors may cause considerable obstacle to increase sale of the new product but Thailand could be perceived as enriched market due to number of reasons such as existence of Honda and other Japanese firm Toyota which has always been competitor of Honda will create good marketing advantage with one leading competitor who is also competing Honda in other countries. The supplying of raw material and other equipments are significantly in good hand as Honda has been supplied with number of suppliers and some particular suppliers. In respect to supplie