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and skills required for the development of the new product especially development
and marketizing for the new product. By choosing the Honda company and
developing the new car I was well able to demonstrate the knowledge of product
development staging from the market analysis to the research and implementation
process to the marketing the product using the various tools and techniques and
efficient use of resources.
1. Introduction
1.1 Honda Company Introduction
Honda Corporation is the Japanese based multinational company dealing with the
motor Auto motive and aerospace industry as well as they is working on the
robotic science since 1986. In 2001 the Honda was the largest motor industry
in Japan and in united states during 2008 ranked a the 4th largest motor
company and consider a the no 1 in bikes manufacturing Company have various
products in their portfolio from cheapest to pure luxury brands like ACURA. The
company concentrates too much on the development of the new products and
spends about 5% of their total cost to their research and development. The
making of most fuel efficient vehicles in the world are the main differential of
the Honda Company.
Size & shape: The already common used cars are the large and more than four
seats vehicles and especially cars are sold in the market. So I suggested the small
car with only two seating’s with the luxury style and expensive car for the upper
class living in these four countries.
Fuel Economy: Is the main competitive advantage of the Honda cars and most
recommended in these contexts. So even in this model I would prefer the car design
which feature the boost the competitive advantage over the other similar cars
Suspension System: the climate of the region is humid, tropical and heavy raining
all the years which demands the suspension system which have most effective
control on wet roads and bad weathers and able to manage the effective drive of
the car.
Engine capacity:
Extra’s: can be identifies as the voice recognized navigation system and advance
security system in the car.
1.3 Outcomes of the Research and Analysis Project
I will be using the above proposed car model to ensure and testify y knowledge and
skills about the new product development process. Where my aims and objectives
will be to:
Analyzing the target market: Where the market is analyzed using the activity
model like pest analysis and captivity level using the porter’s Five Forces Model.
Development plan and its implications: Development is done through the
systematic model to ensure the most effective and suitable life cycle model
and demonstrated through the using of Gantt chart.
Marketing of Product: Where the marketing analysis is done by segmentation.
Targeting and positioning. To place the products in strategic point of view the
4 Ps of the marketing mix are used.
Monitoring and control: where different tools and techniques are used to ensure the
process of the development is running smoothly and either certain outcomes
are achieved or not.
2. Identifying Development
Proposal
2.1 Importance and necessity for new products
New product development in any company is essential in order to maintain their
market position and making them update as the current era is changing constantly
users demand and behavior are changing which demands new products in the
market, so we can say that the new products and services are essential to achieve
success. The following major reasons are identified through studies which
encourage organizations to develop the new product:
• Technology change
• Consumer demand
• Growth strategy through new products
• Products portfolio management
• Competition in market requires new product
• Research and development results in new product ideas
• Market entry and penetration
If company fails to maintain and update their products they may face the share lose
in market and even less demand for their existing products.
The new product and services are achieved through the coordination ad synergy of
different resources widely categorized as the 4Ms Man machine, material and
money. A successful new product and services can be achieved if these four
resources are managed well and used them in an e efficient manner. People from
various stream brings the new ideas and innovation in existing products and mostly
the customers, staff and the suppliers are primary persons to identify the need of
the new product and new product ideas.
PEST Analysis: Every organization and especially the newly developed products
should be screened and tested against the environmental factors which are
affecting the product. Pest analysis is the tool which determines the effect of macro
environment on the product like the political, economical, and social and
technology. These impacts are accounted for whenever measuring the romance and
making the strategic plan for the product launch.
Political factors: Are the interference of the government on certain issues and
industries. These are examples as the competition policies and restrictions on the
trade levels as well as the specifications of marketizing the products. Honda has the
influence of the law in the developing countries like the Indonesia where the rules
say that 2200C cars are not allowed and if allowed only to certain people so Honda
cannot exceed the limit.
Economic factors: economy factors are like the annual incomes of the average
households, Taxation and economic growth in context of the inflation. Economic
factors decide the major consequences on the firm like deciding the pricing, ways of
the distribution and other financial risks associated with the Economic factors,
which are necessary for Honda to assess before launching the new product. Like the
there are only few developed economies are other are highly volatile so Honda
should produce the feasibity report before launching the new car.
Social factors: Social factors all include the general traditions, consumer beliefs and
especially there religion and cultural value. The demographics in regards to the age
race and sex are the main factors to take into account before making any decision.
Like the tropical culture of the SE Asian Market people are used to purchase the
large vans consisting of more than four seats and mini vans are common on the
roads two and three seating’s are usually not in trend. Mostly people are escorted
through their drivers few people dive their car. Changes in social trends can impact
on the demand for a firm's products and the availability and willingness of
individuals to work.
Technological factors: These are most crucial to the success to assess the updated
technology and their use in the environment where the product is being used. Like
in SE Asian market the technology of suspension system is important but the voice
controlled navigation will not be much demanding and useful especially in
developing countries. The new products are the mainly affected through how they
are being advertised and impact of technology on the cost efficiency, innovations
and maintain the quality.
Environmental factors: The environmental factors will be affecting the seasonal
sales and the design and shapes common in the region will decide. The regional
environment in overall describes the need for the large average cars rather than
small cars.
Legal factors: legal factors that may affect the new product development process
are the some restrictions on the engine size as in Indonesia does not allow the sale
of more than 2200C engine in he country.
2.3 Product Development Life Cycle
Commercializat
Test
marketing
Car
Business
Development &
Idea
Idea
Step One: Ideas generation: There are various sources to get the idea of the product
some are but main sources are the following
Employees ; As the employees which are directly dealing with the customers and
they are most interacted with the external environment as well as they new more
about company operations, so they are the best sources to find the loopholes
deficiencies and the idea of the new product. As well as they can come up with
some brilliant ideas about the products as well.
Customers: there are two methods by which the customer needs are identified and
checked and their opinion is obtained in order to get the idea of the new product
one method is to take recommendations, feedbacks and doing surveys and other
Method is with out involving the main customer just study and analysis their
behavior and trends .
Supplier: Are the source of main input in company they sometimes have better
idea to be presented in the company
Competitors: Especially for Honda which is in competition with Toyota and other
motor companies are mostly to keep head on head competition follows the instinct
and aspirations of the other companies.
Technology: Change in technology in other fields can also ask for change in the
company’s product portfolio and remain the update in the market.
Step 2: Ideas Screening: This is crucial stage as there will me more outcomes
from the step one and result in the confusion about the new idea. So in this stage
every idea is tested for its feasibility in regards to its financial, technical and market
point of views. The idea selection look simple but in reality it is not. This process
any take several time and effort to come to the conclusion.
Step 3: Development & testing:
Here the prototypes of the product is make and organization heck that either there
are possibilities that the organization will get the certain outcomes from the product
or not or either they have to make changes in the plan and how far product will be
an aid to provide the organization its overall objectivity.
Step 4: Marketing & Development: Here the proper marketing strategy and
plan will be originated in order to ensure that the organization place the product for
the right customers in right place and in right situation so the maximum benefits
are achieved at this stage mostly the decisions are made which are in long run used
along side with the further development of the product.
Step 5: Business Analyses: This involves mostly the financial analysis of the
product and its related costs and the opportunities related to the production and
marketing of the product. Cash budget and related performance measures are set
and presented for approval and further actions are taken to ensure that the
required outcomes are obtained.
At this step the organization will assess the performance of the product by
introducing it to the selected customers dealers so they ca heck the viability of the
product, initial faults are recovered and addressed. At this stage their bare margin
that
Step 7: test marketing: It involves only distribution of the product to the specific
dealers and customers and waiting for their review.
Step 8: Commercialization: At this stage the product is formed and originated to
be commercialized all advertisement are dome at this stage the dealers and very
concern arrangements are done and product is delivered fro the sale in market.
Secondary data: the data gathered from the sources, which are not precisely
made for the purpose for which the data is being used.
Some common and renowned sources are given below for the secondary data
• Company’ annual financial statements
• Newspaper articles
• Internet and official website
• Published books and magazines
Development of the new product requires the efficient and most appropriate
managed combination of the resourcing the resultant outcomes from it. There are
following resources which needed to be handled carefully in order to obtain the
success from the implementation of the product and get potential outcomes from it.
Financial resources: Development of the new product needs the initial
investment, large or small amount depending on the type of product and the target
market. For the introduction of the new product in the market is a huge funded
event for the Honda, so Honda can obtain these resources by using following
sources of finance:
• Retained earnings: Retained earnings are the best source of income
there is no funding cost associated with it no extra capital cost and there
will be no hazel for the obtaining funds from the retained earnings.
However the retained earnings are mostly available to small extent and
we are unable to finance the whole project with only retained earnings.
Availability of retained earnings depends upon the available cash. So
before using retained earnings for the project Honda have to make sure
that the withdrawal of the cash does not result in the cash defecate in the
organization.
• Share Issue: Other method is by issuing the share capital in the stock
exchange either equity shares or preferences shares. This method is
mostly used where the company leverage is already high and the debt
can result in the high financing cost. The advantages of the shares issue
are that the risk factors are less and cost of equity understands to be less
as compared to the debt. However, the main disadvantage is that it can
reduce the control, lessened the earnings per share and sometime it is
difficult to issue shares in particular market conditions and is not
expected to issue share until unless have to raise quite huge amount as
the issuing costs are quite high.
• Debt: debt obtained either from the debentures issues or bank loan. Loans
are cheap and tax deductibles. As well as it is relatively easy to obtain the
loan if company is low geared and have good credit history. In ordered to
obtain the Debt Company and repay it companies financial position and
the cash flows should be strong.
1. Deciding the buyer and market where product will be sol d or targeted.
2. Deciding that the loopholes in existing market and in other words
identifying the space in market for the product
3. Identifying the characteristics of the product which are filling the gap
in market
4. Identifying the position of the product in the market.
Marketing Mix: Honda can use following marketing mix for their car
marketing.
Product: Product is the core of the business and even the marketing process.
Honda Cars are placed in market as the most fuel efficient, Durable and modern
sleek look. So we can say that the Honda has made the differential in the market
through their high quality of the product.
Place: Place of distribution of course for the cars are the are dealers as well
company can invest in online selling in the developed countries like Philippines and
Thailand where the internet use is more than in Indonesia
Promotion: promotion can be done through offering the initial launch discounts
which are entitled for the entering in the market. As well as, the promotions in
different areas will be different according to the requirement of the area.
Price: Price is the deciding factor to place the product in market for the different
class of the buyers. The SE Asian markets mostly the people are belong to the
average class wealth. So the price of the new product is suggested is the average or
the minimal and not too luxury.
Methods of marketing:
Honda can do the market by using the following methods to introduce the new car
in the SE Asian Market:
1 Offering their car in showrooms highly visible and getting the flexible
contracts with the dealer as the introduction product
2 TV and Radio Commercials
3 Using their official and partner websites as keeping the car image in their
homepages and visible while browsing the website
4 Putting the ads in the newspaper and other motor industry related magazines
Ratios Analysis: The most important and key financial measure which is
aimed to provide the standard comparison between the actual performance and
budgeted performance , even the performance for the different periods is calculated
and compared. The Honda new car development process can use this measure
during the development and marketing process or even after the project finish to
compare the financial statics estimated and actually obtained.
The most commonly use ratios are
Profitability ratios: Which using the Return on the capital employed and profit margin ratios
compare the overall profitability from the project
Liquidity Ratios: These describe how company have managed their current resource and how it
was efficient to maintain the level of the asset and liabilities using quick and current ratios ad
working capital ratios in overall.
Capital Ratios: These ratios calculate the profitability and return to the investors from their
investment in the brand, company and product.
Budgetary control:
Methodological control, where the extent of income and expenditure are pre determined and through out the
development the organization try to restrict on the standard limitations and any differences are measured using
the variance analysis where variance are calculated on the efficiency of the material and laboure to set the
efficiency in operational area and the master budget is used the access the performance in overall operational
and financial areas.
Budget is the source to predict accurately the outcomes of the product and the resulting, the
better management of the finances and resources. It avoids the maximally the deviation from the
original budget. It can be used as the determent of the price of the product.
There are two approaches are used the budgeting process in one approach it is believed that if the
financial models are used appropriately future can be predicted and give efficiency in inputs,
outputs and processes. However, the second approach consist of the concept that it’s not about
the financial models these are the people who brings the information in the company overall and
make the processes perfect.
Feed backs and recommendations Systems: This is the recommended system which is
practicized regularly and with the defined intervals. During the development it aids to mange the
risk factor and resolves any unpredicted and unseen issue. As well as the process may come up
with better ideas and result in more outcomes, motivation if issued and recommendations
resolved properly.
Also the regular feed backs and surveys alert the team and they are less inefficient in overall
4.3 New product in Strategic context
The Ansoff Product-Market Growth Matrix is the creation of the Igor Ansoff and he presented
this model in Harvard business review as the tool for creating the strategic differentiation.
According to this matrix new and existing markets and products are used in different
combinations to decide the rule of the marketing. There are four possible growth strategies
emerge from this matrix based on product and markets. After the evaluation of company
products in this matrix context the company is better able to decide that which course of action
they will be choosing to increase or maintain their current performance. The matrix consists of
four strategies:
1. Market penetration: This strategy involves the working with the current market and
current product only the increase of performance is done using the same product sale
increase and market share increase as well this is the less risky strategy for marketing.
2. Product development: According to this strategy the firm obtain the competitive
advantage using the new products in the market and introducing the different products
and attract the more customers. By this way company achieve the market share with out
much concentrating on the market.
3. Market development: with this strategy the company can go after the new segments of
the customers or simply identify and target the new space in existing market and focus
with out changing their product portfolio.
4. Diversification: the successful and matured companies in one area and brand can mp in
the totally different market with different type of expertises. This type of strategy is most
risky in general terms.
The above matrix placed our product as the Diversification as we have developed the new
product and implement in new market or can say existing market but with new space in
market to be placed effectively.
4.4 Outcomes
So according to the research and analysis report, I have evaluated the
implementation process and marketing for the new car developed by the Honda
Especially targeting the SE Asian market. The analysis of the market done in task 1
shows that the market is more prone for the new moor products and need to be
addressed and have space, which was justified by the new Car from Honda
corporation which is designed keeping in mind the humid climate, average road
conditions, average wealthy culture and especially the trend and type of cars
already being used in most countries of SE Asia. The new car assessed for the
market positioning and market targets where the car was placed for the average
working class family used segment and company adopted the growth strategy of
Market diversification with different market and different product.
5. Recommendations
Future marketing and production could be done by using the dealer base
distribution network and aiming the maximum units sold in the area too reaches the
saturation of the market. Honda is recommended to review their strategy after
regular intervals and on regular basis. As environment is changing very frequently
and customer base is also changing so this is very vital to Take account economic,
technical, social and political factors to be taken into accounted. SO company is
able to save itself for future threats and capitalize the opportunities. A management
team must be establishing for the continuous monitoring and evaluation. The
company may face few technical problems as this is the new product
Recommendations are to organization that they must use their marketing resources
effectively to introduce the product effectively in the market. All the technical
problems which are going to raise after the introduction the product in to the
market must be taken care seriously.