FREE ESSAY ON AMERICAN HONDA MOTOR CORPORATION

AMERICAN HONDA MOTOR CORPORATION

Honda Corporation and U.S. Markets 
After investigating the U.S. market and getting positive feedback, Honda exported over
50,000 CR-Vs to the U.S. in 1997. The target markets for this sporty looking new CR-V
were consumers between the ages of 23 - 34, referred to sometimes as generation X. At
$20, 000 however, in comparison to its competitors who offer vehicles at a cheaper cost,
one might ask the question - why such a high price tag? An article on generation X from
demographics.com sums the answer to this question up nicely:
? 54 percent of Gen Xer's have established a financial plan 
? 88 percent want investment advice
? 46 percent already own mutual funds
? Population size of 44 million and growing
The increased use of information technology in today's economy also creates an
environment that facilitates better-informed decision-making. The internet, a powerful
source for information is more than readily accessible. For instance, instead of watching
30-second commercials on television, generation X can tap into the net and spend as much
time as they need researching products before making a purchase. As a result, generation
X is better educated than previous generations and has more disposable income. They value
quality more so than ever before and basically look for products that work for them. 
Economic forces that will impact Honda
To continue selling record breaking units Honda will have to keep in touch with the needs
of its changing customer base. For instance, the fastest-growing states, metropolitan
areas, cities, and countries were concentrated in the South and West, according to the
Census Bureau.
? The states whose population rose the fastest between 1996 and 1997 were Nevada (4.7%),
Arizona (2.7%), and Georgia and Utah (both 2,1%). Meanwhile, Las Vegas, was the most
rapidly growing metropolitan area from 1990 to 1996, with a 41% population increase,
followed by Laredo, TX (33%), and McAllen-Edinburg-Mission, TX (29%). 
? The story for cities was much the same. Among those with more than 100,000 people in
1996, the fastest growing from 1990 to 1996 were Henderson, NV (88%), Phoenix, San
Antonio, and Houston. Each gained more than 100,000 people during this period. 
? According to projections, the U.S. population in 2050 will have risen to about 394
million mostly in part due to increasing ethnic groups.
Significance of these trends
In 1997, an estimated 26 million persons, or nearly 1 in every 10 residents of the United
States, were foreign born, the highest level since 1930. Five states had a larger
percentage of foreign born than the United States as a whole: 
? California (25%), New York (20%), New Jersey (15%), Flordia (16%), and Texas (11%). 
? More than one-fourth of these immigrants ---7 milllion--- were born in Mexico. To
engage them advertisers will have to focus more on multi-cultural themes. Honda's home
page, which displays a picture of young children of different nationalities engaging in a
game of soccer, is a nice example of trying to reach these groups.
Stiff competition means tapping into new markets 
According to theautochannel.com, Honda's CR-V most fierce competition are the Mitsubishi
Montero Sport whose MSRP starts at $18,030 - $32,250 and the Subaru Forestor $18,695 -
$22,195. The MSRP for the Honda CR-V ranges from $18,350 - $21,050 which is less than the
cost of either of their major competitors. The other competitors such as the Chevrolet
Tracker, the Kia Sportage, the Suzuki Sidekick and Toyota RAV4 base MSRP begins around
$13,099 to $15,388 however. Although these prices are far more comforting for price
concious customers, they do not offer the durability and the satisfaction of that of the
Honda CR-V SUV vehicle. Various discussion groups on DejaNews.com reveals that customers
get the following benefit from CR-Vs:
? A customer can buy a fully loaded sports-utility vehicle for under $20,000.
? The CR-V provides a more fuel-efficient attainment and a smoother and quieter ride from
their front wheel drive.
? Under many abnormal diving conditions such as snowy and slippery surfaces, the CR-V
performance is outstanding.
? The CR-V provides great amenities such as extra power outlets and cup-holders, a picnic
table that is stored over the spare tire.
The sales figures for The CR-V year ending 1997 was 32,850 which soared to greater
heights in 1998. Honda should track these news groups because they will give Honda added
insight, in terms of what pricing strategy to pursue as well as what CR-V attributes
customers value most. Honda continues to increase exports to the US and is building a
reputation for being a reliable and sporty vehicle, in effect setting off higher
increases in sales.