HONDA NEW CIVIC
CUSTOMER BEHAVIOUR
OF SINGAPORE
Name: Pham Hoang Gia Bao
CT no: CT0333897
FTDipMM50-CB
1. Situation Analysis of the Company
1.1a Company Background
Known to manufacture automobiles and motorcycles, Honda Motor Co., Ltd, a Japanese multinational
corporation. Found on 24th September 1948 a few years after World War 2, Honda’s very first product was
the T360 mini pickup truck as an automobile (OVS, 29th November 2017) and went on sale in 1949 by its
founders Mr. Soichiro Honda and Mr. Takeo Fujisawa. Presently, Honda owns over 60 manufacturing
plants globally (Honda, 2020), in which each manufacturing plant can produce about 2,000 vehicles daily
(DaytonDailyNews, March 21, 2014) and its headquarter is in Minato City, Tokyo, Japan.
1.1b Vision Statement
“Serve people worldwide with the “joy of expanding their life’s potential”
Lead the advancement of mobility and enable people everywhere in the world to improve
their daily lives”
-Honda
1.1c Mission Statement
“A dynamic growth-oriented company through market leadership, excellence in quality and service and
maximizing export, ensuring attractive returns to equity holders, rewarding associates according to their
ability and performance, fostering a network of engineers and researchers ensuring unique contribution to
the development of the industry, customer satisfaction and protection of the environment by producing
emission friendly green products as a good corporate citizen fulfilling its social responsibilities in all
respects.” (Takahiro Hachigo, 2020).
1.1d Market Situation & Market Share
Honda’s market situation will be demonstrated through SWOT and PESTLE analysis in tables below.
Honda’s SWOT analysis.
-
Weakness
Strength
-
-
-
Brand equity, by focusing on technology,
customer experience, the long line of
products and services has helped Honda to
achieve a strong brand image around the
world.
Strong presence in big markets, Honda’s
presence is well known all around the
world, especially in the US market.
Strong motorcycle sales in Asia, in this
region, motorcycles is one of the most
common vehicles.
Opportunities
-
Relying on 2 major markets (Japan and
US), in 2018, North America’s market was
recorded as 50% of Honda’s revenue.
-
Investment in R&D is low, which leads to
Honda’s products not so innovative.
-
Low product line targeting the lower
middle class, complaints regarding
Honda’s automobile portfolio cars are only
for the upper-middle-class whereas other
car manufacturers such as Hyundai
accomplished.
Threats
-
Electrical vehicles, like most Honda
competitors that already invest in electric
vehicles.
-
In recent years, consumers are having
higher needs and demands of purchasing
automobiles, the rise of fuel price is one
the reason to hesitate to buy a car.
Table 1: Honda’s SWOT analysis (350)
Having a large share in the US and Japan market, Honda is considered as a leading automobile brand.
Although, Honda should invest and pay more attention to developing, hence investing in new innovative,
and suitable product prices for the masses. Demand for normal automobiles has been recorded as falling
and entering a challenging phase in 2019, on the other hand, the electric car is on the rise, Honda must focus
on producing lines of electrical vehicles and hybrid lines in order to keep up with its competitors and the
market.
-
Singapore PESTLE analysis.
Political
Economic
Social
Technology
Legal
Environment
-
One of the world’s lowest corruption
country
-
Maintained good relationship with the US
and China
-
Most stabilized country in the world.
-
Due to high aging population, labor
market price is high
-
Top largest export economy worldwide
-
Estimated lifespan is 80 year old
-
Multicultural, and highly cultural
sensitivity.
-
Youngsters adore the Western cultures.
-
Online and social media has an important
role in communication
-
Top-notched
infrastructure
-
Rights for employees, such as paid leaves.
-
Health insurance must be issued by the
company to the worker.
-
Depends on Malaysia for water supply.
IT
and
broadband
-
High air pollution caused by factories and
vehicles.
-
Strict laws on littering and polluting the
environment and public places.
Table 2: PESTLE analysis of Singapore
Judging by the air pollution environmental factor of Singapore, this should push Honda to be more
innovative and invest in building electrical fueled cars, making Honda more environmentally friendly.
Hence, Singapore is famous for its well-known public transportation system (Bus, MRT train), and a high
competition in the car manufacturer market, yet, Honda is still leading the market with over 15,205 cars
sold in 2019 (Derryn Won, Feb 10, 2020).
-
Honda market share in the automotive market
Table 3: Automotive Manufacturer Market Share
As shown above, Honda is the world’s 5th leading automotive manufacturer in the market, on top is Toyota
with 16.24% market share and bottom with 2.62% is BMW.
2. Target Market Description
2.1a Demographic
Age
25 and above
Income
$50,000 per annum
Gender
Both genders
Social Class
Upper-middle class
Occupation
Full-time worker
Table 4: Honda demographic segmentation of Singapore
Like most of Honda’s cars, the Honda New Civic 1.6 Sedan targets the upper-middle class and working
full time, which prolongs the estimated income of about $50,000 per annum of an upper-middle class
Singaporean (Victoria University of Wellington, 2016). The legal driving age set by the Singapore
government is 21, at this point, college students are not able to afford to buy a car as they just finished their
degree or university, after a few years of saving and working, by the age of 25 Singaporean usually make
their first car purchase. Male is the most common targeted gender when it comes to car purchases (Lindsey
Reynolds, March 3, 2020), although the male and female population in Singapore is to be considered as
balanced, making Honda must target both genders.
2.1b Psychographic
In Singapore, people tend to be more appealing in lofty price points. When it comes to making big purchases
like buying a car, regardless of generations or genders, Singaporean is more attracted to affordable prices
yet high quality. In Asia as a whole, people are captive by quality and exclusivity because they value money
and spend on what is worth it (Raymond Business Consultants Company Pte. Ltd., 2015)
2.1c Behavioural
Buying behaviour can be defined by looking at how very many generations make their purchases, where
youngsters use social media, search engines, etc. to look for the product they are searching, whereas middleaged adults make their purchases or look for products mainly at retails, television and radio.
Young adults look into the outside look, how popular the brand is and less on the safeness as well as
benefits, on the contrary, middle-aged adults look into safeness and how it benefits them.
2.1d Geographic
Climate and areas in Singapore are arguably the same, Honda should not find it difficult separating and
targeting different parts of Singapore but segment Singapore as a whole. Thus, the Honda New Civic 1.6
Sedan is suitable for urban roads mainly, making it easier to adapt and drive on urban roads.
3. Target Market Decision Making Process
3.1 Problem and Need Of Recognition
3.1a New Stage Of Life
In many cases, a car is needed especially when a person is stepping up his or her living condition, this can
be viewed as this person just got a new job and it requires a personal automotive vehicle, and to look
representative in the eyes of business partners.
3.1b Market Induced
Occurs when being pressured to make a purchase by the society. In many cases, cars are required such as
long-term transportation breaks down, families with childrens.
3.1c Dissatisfaction
Common takes place in the scenario where customers are not happy with the previous purchase, usually,
when the wealthy is unhappy about a car that they previously bought they usually return it or store it then
get a brand new car more suitable to their taste and needs.
3.2 Information search
3.2a Friends and Relatives (Internal)
Typically, before making a purchase, consumers usually ask around for information about the product from
friends and family, this process is to gain information from people who already experienced or purchased
the product because consumers believe in people that they trust.
3.2b Social Media (External)
Nowadays, the young generation conduct their research online, social media whether it is for a purchase or
just window shopping. Although the information on social media and the internet is diverse, misinformation
and false news is still at large.
3.2c Sales Professions (External)
A part of a company, assisting in giving advice for the customer regarding the products, the sales profession
is highly trained especially if the products is a specialty. Gaining information about products from sales
staff is considerably trustworthy.
3.3 Evaluation
3.3a Evoked Set
- Toyota Camry
- Hyundai Santro
- Kia Morning
These are 3 different car brands with different products from each brand, to compare with Honda New
Civic. What these cars have in common is that they’re affordable and tempting for young adults due to the
outside look for the car. Brandwise, in Singapore Honda is still the most popular car brand up until Q1 of
2020.
3.3b Compensatory and Non Compensatory Rules
Compensatory rule is the process where a consumer uses different attributes of brands from the evoked
listen and computes the sum of negative and positive attributes which then decide the best brand that suits
their taste.
There are 4 different non compensatory:
- Disjunctive
- Conjunctive
- Elimination-by-aspects
- Lexicographic
These rules are used to set out the attribute for the calculation process of evaluating the brands before
purchasing.
3.3c Evaluation Criteria
When it comes to buying a car, consumers need to set out the requirements and expectations of the car,
common requirements are comorbidity, functionality, looks, price, economic status.
3.4 Purchase
3.4a Committed Product
Cars or any other high involvement products usually do not have a trial process, in this case, Honda does
not offer any trial when making the purchase, making consumers must make up their mind and gain clear
information regarding the product and procedure.
3.4b Repeat Product
Occasionally, family of 5 or more members usually return and make a second purchase of car in order to
suffice the need of transportation for a big family, or/ and, consumer following market trend or new car
brand and make more than one transaction.
3.5 Post-Purchase Evaluation
3.5a Delight experiences
As of 2019, Honda only has about 9 complaints regarding the Honda New Civic, these complaints were
caused by the technical issues within the car (CarsComplaints, 2019). To compare, the ratio of negative
feedback about the product was rather low and acceptable. This is considered as a smooth and happy
transaction and usage of the purchase.
3.5b Post-Purchase Cognitive Dissonance
To deal with an after purchase problem from the customer side, Honda made sure that they have a 30-days
return policy at hand, making sure whether the customer is happy with the decision that they made
previously. On other occasions, Honda also offers repairs within the first few months.
4. Social Influences On Buying Behaviour
4.1 Family
The most significant factor in influencing a customer’s buying behaviour. In many cases, decision makers
are husband, wife, mother, father, etc. Customer’s go through discussion and collaboration with family
members to make the buying decision (Luman, 2018). Typically, family influence is more based on the size
of the purchase, for instance, small purchases like coffee or clothes have less family involvement. Whereas
buying decisions like house or car have higher involvement.
4.2 Social Class
Determining the consuming patterns of one's buying behaviour based on their social status. Different social
classes have different ways and behaviour when purchasing on a daily basis or even a one-time purchase.
He or she may determine how they consume based on their income, workplace, family, or sometimes even
friends. In short, people have different needs and wants to purchase depending on their social status. The
company needs to target the right class based on what’s the product's benefits and the price as well.
5. Psychological Influence On Buying Behaviour
5.1 Motivation
Through Maslow's hierarchy of needs, we can tell that different people have different needs, from basic
needs such as thirst and hunger , safety, love, self-esteem, self-actualization (Lumen, 2016). When targeting
a certain group of customers, companies need to understand what is their motivation and needs.
Needs of transportation and boosting self-esteem is where cars kick in. Particular of the-upper middle class
workers.
5.2 Perception
The perception of a brand image, products, past-purchases, etc. affects an individual’s buying decision.
This process is formed through the way consumers perceive the brand or the product based on how it
benefits them (Business Jargon, 2019). For example, Apple users buy Apple products because they believe
that Apple is the elite class of mobile phone technology.
Thus far, Honda’s brand image in Singapore is quite positive of how they experience using and spectating
Honda products.
6. Personal Factors Influences On Buying Behaviour
6.1 Occupation
Having significant impact on consumer’s buying behaviour, an occupation of a person determines the size
of a purchase dependending on their needs and requirements at their workplace. For instance, a CEO is
required to look formal, he or she will need to buy a tailored suit, drive a fancy car, whereas engineers are
usually dressed in uniform, non special requirements about clothes are needed.
Honda’s portfolio of products consists many to adapt in different fields of work and needs, although service
and lower middle class usually are not targeted by Honda due to pricing.
6.2 Age
Through different stages of a human life cycle, it is obvious that we will vary our taste in what we buy,
what we need and what we want (AIPMM, July 7, 2010). Fluctuated by age, teenagers desire for something
trendy, eye-catching, and popular, whereas elderly people prefer simplicity and quality rather than its look.
Through research and daily life experience, we can tell that teenagers or young adults prefer sport and fast
cars, whereas older people prefer to drive in simple, convenient and safe-ensured cars.
7. Marketing Strategies Recommendation
The marketing mix is highly recommended for Honda, this strategy covers the 4Ps: Product, Place, Price,
Promote. The marketing mix helps companies to achieve their targets during the marketing process through
planning for advertisement, pricing, ect. This process will be explained and analyzed thoroughly in the
following paragraphs.
7.1 Product
Four of Honda’s business divisions are: Motorbikes, Cars, Financial and Power services. Mainly known for
its long line of automotives and motorcycle products, Honda has been in the market since 1948. For this
particular product, Honda New Civic, will be separated into 3 levels of a product in the following table 5.
Core Customer Value
-
Suitable price, convenient and safe
Sporty looking for young people
Actual Product
-
The Honda New Civic
Augmented Product
-
Financial aid vary on customer choices
Table 5: Levels of Product
Core customer value: Consist of what the customer is expecting when purchasing the Honda New Civic, in
this case, pricing, convenience and the outlook of the car is tempting for the young adults. Based on the
research done in paragraph 6.2, youth are more attracted to this model compared to old people.
Actual Product: The Honda New Civic
Augmented product: Side benefit when the customer made up their mind on buying the product, Honda
offered a financial aid which usually is 2% payment for 60 months.
The Honda New Civic, like all of Honda’s products, is considered as a specialty product in the market.
7.2 Place
Arguably, Honda is able to use both direct and indirect distribution channels. Consumers can purchase
Honda products directly from Honda Auto Terrace (Direct distribution), or purchase through authorized
retail facilities by Honda. Due to Honda operating globally, using both distribution channels will not be of
risk in disintermediates.
7.3 Price
Monitoring whether the company is losing or profiting from a certain product and plans out the price point
for it. Honda has retailers and car dealers worldwide, these factors have limited ability upon fixing the price
as it has been set based on the cost of Honda’s production process. Honda proposes cost-based pricing
techniques, reducing the risk of heavy losses during the process or earning more than expected.
7.4 Promote
In the past, Honda took off successfully with the motorcycle campaign “At Honda, You Meet The Nicest
People”, this campaign was streamed on TV, radio and newspaper showcasing that Honda’s product is
meant for the common man.
Applying the same upon Honda New Civic, Honda should take a heavy on promoting the car, having a
showroom or showcases in Singapore shopping malls, billboards as a part of physical advertising. Using
social media platforms, radio, Tv and newspaper to ensure the message is sent out to everyone in the public.
8. Conclusion
As conducted, PESTLE and SWOT analysis is explained thoroughly with Honda’s characteristics as well
as the Singapore market, the 5 steps of a customer’s decision making is to explain how customers come to
mind before and after making the purchase. Influenced by personal, psychological and social factors upon
a buying decision for a consumer is based on his or her current state of life and understanding. Ending with
the marketing mix (4P’s) aside with recommendation for a better understanding when bringing Honda New
Civic to the market.
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