Principles of Marketing

Project
Honda Atlas
Naufil Nadeem Dar

Osama Fayyaz

Salman Masood

Shoaib Ayub

May 9, 2017

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Contents
Executive Summary.................................................................................................... 4
Karachi Plant........................................................................................................... 5
Sheikhupura Plant................................................................................................... 5
Regional Offices....................................................................................................... 6
Current Marketing Situation........................................................................................ 6
Market Description:................................................................................................. 6
Product Review:....................................................................................................... 6
Competition............................................................................................................. 7
SWOT ANALYSIS.......................................................................................................... 9
Strengths................................................................................................................. 9
Weaknesses............................................................................................................. 9
Opportunities.......................................................................................................... 9
Threats.................................................................................................................. 10
Objectives................................................................................................................. 10
Market................................................................................................................... 10
Socio-Political Situation......................................................................................... 10
Technology............................................................................................................ 10
Operations............................................................................................................. 11
Human Resource................................................................................................... 11
Health and Safety.................................................................................................. 11
Environment.......................................................................................................... 11
Finance.................................................................................................................. 11
Goal....................................................................................................................... 11
Issues....................................................................................................................... 12
Demographic......................................................................................................... 12
Economic............................................................................................................... 12
Technological......................................................................................................... 12
Political and Social................................................................................................. 13
Cultural.................................................................................................................. 13
Marketing Strategy................................................................................................... 13
Place...................................................................................................................... 13
Price & Product...................................................................................................... 14

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 Promotion.............................................................................................................. 14
Capturing Value from Customers...........................................................................15
Action Programs....................................................................................................... 15

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Executive Summary

Atlas Honda Limited (AHL) is a joint venture between the Atlas Group and Honda Motor Co.

Ltd., Japan. The company was created by the merger of Panjdarya Limited and Atlas Autos Ltd.

in 1988. Both these motorcycle manufacturing concerns were established by the Atlas Group. In

addition, a third concern, Atlas Epak Ltd. was taken over by the Government of Bangladesh in

1971 after the fall of Dhaka. AHL manufactures and markets Honda motorcycles in collaboration

with Honda Motor Company. The Company also manufactures various hi-tech components in-

house in collaboration with leading parts manufacturers like Showa Atsumitech, Nippon Denso

and Toyo Denso. Honda motorcycles are by far the largest selling motorcycles in the country

with an unmatched reputation for high quality, reliability and after-sales-service.

AHL has undertaken to develop local manufacturing capabilities to the highest, economically

feasible level. While a major role in localization has been assigned to vendor industries, Atlas has

the countrys largest in-house manufacturing capability at its Karachi and Sheikhupura plants. To

support the production facilities, the company has established an R&D wing and tool making

facilities through CAD/CAM which are growing rapidly in size and function as the company

expands. Atlas has managed to execute 12 Joint Venture/Technical Assistance Agreements

between local vendors and foreign manufacturers for transfer of technology. Besides, Atlas has

directly executed 9 Joint Venture/Technical Assistance Agreements other than Honda.

AHL management is striving to modernize company operations by adapting applicable aspects of

research and theory and more specifically, Hondas unique philosophy of hard/soft technologies

to the realities of Pakistani conditions. Company management structure, systems and processes

are changed according to the demands of the customer, growth and new technology. Efforts are

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being made to develop participation at all levels of personnel in decision-making and a

substantial and effective delegation has been established at levels where applicable. Various

participation programs such as Ala Mayar Quality Circles movement, launched in 1985, are

strongly encouraged to allow constructive self-expression and teamwork. The Company training

and development programs encourage all members to develop themselves and contribute to their

full potential.

AHL is playing a pioneering role in creating conditions for easy and confident use of

motorcycles all over the country. A vast and growing network of over 1600 sales service and

spare parts dealers has been established. In order to back up this system, Atlas has set up

Warranty & Training Centers (WTC) in Karachi and Lahore which provide several courses of

varying duration and complexity for motorcycle mechanics and users each year. Mobile training

facilities take the latest know-how, technology and maintenance of motorcycles to major rural

and urban centers around the country.

Karachi Plant

Company mother plant is based in the city of lights and provincial capital of Sindh, The Karachi

city. It is located at F-36, Estate Avenue, S.I.T.E. Karachi. Atlas Group signed technical

agreement with Honda in 1963 and plant started commercial production subsequently. Plant

spread over an area of 5 acres. In 1964, production began with 7 motorcycles per day. Now plant

production has reached to 300 units in a day. Plant manufactures CD 70 only.

Sheikhupura Plant

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 Another plant is situated in Sheikhupura city, Punjab. It is located at 26-27 KM Lahore-

Sheikhupura Road Sheikhupura. The plant was built in 1981 and spread over an area of 27 acres

with the establishment of modern and synchronized 500K plant in 2006. The plant manufactures

all four models i.e. CD 70, CD 100, CG 125 and Deluxe.

Regional Offices

Lahore: 1 Mecloed Road Lahore-54000 [ (042) 111-111-245, 37225015-17, 37233515-

17 ]

Rawalpindi: 60-Bank Road, Saddar [ (051) 5120494-6, 5120497 ]

Multan: Azmat Wasti Road Multan-60000 [ (061) 4540054, 4540028, 4571989 ]

Rahim Yar Khan: Atlas Honda Limited, 4-B Zamindara Colony [(068) 5888809 ]

Current Marketing Situation

Market Description:
Majority of the population of Pakistan lives around the poverty line that is looking for cheap and

easy mode of transportation. Motorcycle is one such mode of transportation which is used by

huge number of population and over the time it has become a need of consumer due to lack of

proper public transport system in Pakistan. Consumer these days wants motorbikes with high

mileage as per the rising price of fuel over last decade which has almost tripled. On the other

hand, every consumer is not looking for cheap mode of transport but is looking for bikes to fulfill

the desire of owning one and with the buying power, they demand for bikes with style and

power.

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Product Review:
MODEL PRICE
CD 70 Rs.67,500
Pridor Rs.83,000
CG 125 Rs.96,500

Deluxe Rs.116,500

Total units of bikes sold during 2015-2016 were 807,669, which accounted for profit after tax of
Rs.3 billion.

Competition
Major Competitors

Brands

In Pakistani motorcycle industry Honda is a leader. Although there are 50 brands of bike are
available yet many of them have not got recognition among the people.

All these exist in different segments of markets.

Yamaha

It is a basically two stroke 100 CC motorcycle. It is very popular in villages because people
consider it more durable and a smooth driving bike on rough roads. It is second largest selling
brand of Pakistan.

MODEL PRICE
YB125Z Rs.115,900
YBR125 Rs.129,900
YBR125G Rs.133,900

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 Dhoom 70cc Rs.50,500

Road Prince

It is first Pakistani brand that was introduced. It targets lower socio-economic segment of the
market. First time it introduced heavy bike look in a four stroke and 70 CC motorcycle. Its price
is low as compare to Honda but. It is not direct threat for Honda. But to some extent people like
it, as it offers multiple features in low price e.g charging port, digital meter and mini-speaker.

MODEL PRICE
Passion 70 Rs.40,500
Review of Distribution

Sales Trend

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SWOT ANALYSIS
Strengths
Qualified and well-trained Employees

Customer care and satisfaction

Environment Management System

High quality product

Advanced Technology

Strong distribution network

Brand Image

Highly efficient delivery system

People Trusted Product

Comfortable work environment

Highly loyal, committed and motivated employees

Successful promotional campaigns

Variety of products

Weaknesses

Price is higher than other companies in competition in the market

High costs

Expenses related to the post-retirement benefits for employees

Lack of new model: there has not been a significant change in the variability of the

product design

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Opportunities

Growing automotive market

Technology upgrading

Development of new areas or markets creates more opportunities for the company.

Economy expanding (increasing rural to urban immigration)

Threats

Financial risk

Rising inflation

Rising oil prices

Bad infrastructure

The shortages of energy and power may cause disruption in operations.

Increase in material prices may increase input costs.

Devaluation of Pakistani Rupee

Growing competition in the automotive market

Rising tax rates

Objectives

Market

To remain market leader in two-wheeler industry.

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Socio-Political Situation

To operate in a stable market with least volatility and low occurrence of unforeseen variables.

Technology

To produce the best and highest quality product that meets international standards of fuel

efficiency, comfort and reliability.

Operations

To ensure continuity of operations without any disruptions in supply and minimizing idle time.

Human Resource

To recruit the best available people and ensure their adequate truing in order to maintain quality

in work.

Health and Safety

To ensure health and safety of the employees in workplace.

Environment

To ensure environment friendly product and production processes.

Finance

To maintain a strong financial position of the Company and produce financial performance

which is reflective of Company's scale of operations, availability of resources and efforts of

employees.

Goal
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The goals of Atlas Honda Motorcycles (Pakistan) Limited is committed to fulfilling customers

needs and wants and to provide good value for money.

To create a brand that is supported by people's expectations and appreciation.

Issues
Demographic
A rapid growth in the country's population has major implications for the company as it is
translated into a higher demand of the product. Moreover, there is an increase in the youth
population which again increases the demand for motorbikes. Furthermore, increased
urbanization and rural to urban emigration also causes an increase in the demand. Apart from
that, an increased foreign remittance has allowed people with increased income to back their
need with money and hence contribute to higher demand for the product.

Economic
Economic factors that are posing a threat to the company include rising inflation which not only
affects the consumers' buying power, but also increases the costs to the company of producing
motorbikes which is translated into higher product prices. High rates of unemployment,
continued power shortages and the consistently rising fuel prices adversely affect Atlas Honda.

Natural: There are several trends in the natural environment that are affecting Atlas Honda's
marketing and operations. Firstly, an increase in the air pollution has led the company to opt for
environment friendly production of the motorbikes whereby the company has taken many steps
to reduce its waste and CO2 emissions and adept the 4R policy of reducing, recycling, re-using
and responsible disposal.

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Technological
Technological Environment means forces that create new technologies, creating new product and
market opportunities. Atlas Honda manufactures various hi-tech components in-house in
collaboration with leading parts manufacturers like Showa Atsumitech, Nippon Denso and Toyo
Denso. Atlas has managed to execute 12 Joint Venture/Technical Assistance Agreements between
local vendors and foreign manufacturers for transfer of technology. Besides, Atlas has directly
executed 9 Joint Venture/Technical Assistance Agreements other than Honda to keep up with the
changing technological environment. AHL management is striving to modernize company
operations by adapting applicable aspects of research and theory and more specifically, Hondas
unique philosophy of hard/soft technologies to the realities of Pakistani conditions. Company
management structure, systems and processes are changed according to the demands of the
customer, growth and new technology.

Political and Social

The unstable political environment of Pakistan has certain implications on the company as the
government policies regarding imports, exports, tariffs, duties, and taxes keep on changing. Atlas
Honda manufactures approximately 80% of its parts in Pakistan and any change in the
government policy or the rate of taxes directly affects company costs. A tightened monetary
policy in terms of high interest rates in the FY08-09 depressed the demand for cars and
hampered the sales of the company, also increasing the cost of debt that the company had taken.

Atlas Honda is also governed by social codes and rules of professional ethics which drives the
managers to look into issues like congestion, air quality and the explosive growth of Pakistan's
urban centers as such factors could put a break to the growth of the company.

Cultural
For a large majority of Pakistanis belonging to the middle income group, motorcycles are the
only mode through which they and their families can become independently mobile, transferring
the ever-increasing distances in the urban areas. With increased awareness and literacy, people
are becoming more work-oriented and many students need a motorcycle for work and study.
Moreover, many youngsters seek stylish yet affordable motorbikes for self-expression purposes

Marketing Strategy
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Place

Atlas Honda has developed the largest network after sale services varying from 1S to 5S services

that are: Sales, Service, Spare Parts, Second Hand and Safety. Honda has developed a Dealer

Development Department which co-ordinates with dealers and provide the workers of the dealers

(mechanics) with up to date knowledge about their products. The 5S dealerships were upgraded

to global standards recently with the latest equipment and tools necessary for repair services or

sales. Widespread dealership network not only cover the urban areas but it also reaches out to

rural areas providing the villagers with aftersales services as-well. Honda has maintained a

delivery network that reaches out to all dealers easily and rapidly from their plants situated in

Sheikhupura and Karachi.

Price & Product

MODEL PRICE
CD 70 Rs.67,500
Pridor Rs.83,000
CG 125 Rs.96,500

Deluxe Rs.116,500

Promotion

Promotion like any other company is the basic necessity of Honda's product. Through promotion,

Honda has created awareness of its products and brand by using various tactics. Honda created a

catchy slogan Mein tay Honda hei lein saa which has been effectively used in every

promotional campaign since its formation. Honda focuses on promotional campaign very

seriously as brand awareness leads to higher sales and ultimately higher profits. Honda has

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various internal and external programs to promote their bikes. Service development department

focuses on training and dealing with dealers. The company also arranges meetings and buffet

dinners for the promotion of its dealers e.g. it arranged one such activity in April 2006 in

Mughal-e-Azam, Lahore. Various other tactics like push strategy are used for dealers to assure

they have maximum interest in sales of Honda bikes.

In external programs print media and television advertisements are used. Honda recently

launched Pridor, their new bike, in 100CC segment and has massively advertised via Television

ads and billboards. Every dealer has been forced to park it at the entrance so the entering

customer gets a first glance at Pridor. Moreover, the company has trained about 7000 mechanics

that not only provide repair service to the public, but also publicize the products of the company

by word of mouth. Moreover, the company joined the popular social networking site "Facebook"

by creating its own page where people can interact with the company marketers and give a

feedback to the company's marketing strategies and product mix. Furthermore, they promoted a

positive brand image by donating 1% of preceding year's profit before tax each year to an

approved charitable institution.

Capturing Value from Customers

Honda makes sure that customers are satisfied from their products via various tactics such as 2

year warranty service as they want to see their customers happy. Customers delight lead to strong

emotional relationships and loyalty. Honda has the highest share of customer i.e. 71.4% which

proves that the customers they server are delighted and are loyal to brand.

Action Programs

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Models for 2017:
Honda Pridor, Honda Deluxe, Honda CD Dream, Honda CG125 Dream, Honda CG 125

For advertisement, two sources are used Television ads and billboards. For examples in Lahore
billboards will be placed in five famous places, Century Tower, Calvalry Ground, GardenTown,
Pace, Thokar.

Controls
Tight control measures are used to closely monitor quality and customer service satisfaction.
Customer feedback through surveys regarding the quality and problems will be conducted, so
they are tackled quickly. This will enable the company to react very quickly in correcting any
problems that may occur. Moreover, to monitor that the company is meeting its objectives,
monthly sales will be monitored, so deviation from the expected sales will indicate that the goals
are not being achieved.

Budget

Rupees in
Particulars '000
Sales 60123501
Cost of Sales 53725506

Gross Profit 6397995

Sales and Marketing
Expenses -1596397
Administrative Expenses -510028
Other income 700158
Other Operating Expenses -350201
Share of net profit of an
Associate 50000

Operating Profit 4691527

Finance costs -18595

Profit before taxation 4672932

Income Tax Expense -1204654

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 Profit for the year 3468278

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