Honda in Europe (Case #5, Notes)
Overview
The Honda motor vehicle company operates in the mature automobile industry, where the number of players has become becoming increasingly less and less. European and American car manufacturers reacted to the saturation in the market place by merging or acquiring competing car companies. Honda, like the largest Japanese car manufacturer, Toyota, decided against this strategy. To remain as a global competitor, Honda instead expanded its operations by setting up plants in regional markets. As a result, Honda has five global operations, North America, South America, Japan, Asia-Oceania, and Europe. The European operation covers Europe, the Middle East, and Africa.
Honda is currently ranked sixth in the world in terms of vehicle sales, second in Japan, and a distant 10th in Europe. Sales of Honda vehicles have been stagnant in Western Europe despite an increase in Eastern Europe and Russia. Honda implemented a marketing strategy that was the same throughout the whole of Europe. The price, product, promotion and distribution did not differ from the UK, Germany, France and Italy. The company failed to distinguish between the four countries, especially in terms of the context culture of the nation. High context cultures such as France and Italy and to a lesser extent the UK react differently to promotion and advertising than low context cultures such as Germany. On a positive, Honda offers vehicles that produce low CO2 levels, which are becoming increasingly popular in Europe for various tax and environmental reasons. Honda is currently at the crossroads of its European expedition in the automobile market.
Discussion Questions
1. Does adapting the promotion of its motor vehicles to suit each country's culture make sense for Honda?
2. Is it wise for Honda to market its products the same in every country?
3. Is pricing its vehicles similar to the competition, a good strategy for Honda?
4. Should Honda change its product mix from country to country?
5. Is distributing their motor vehicles together with their motorcycles a good strategy for Honda?
6. Is the European market too competitive for Honda?