EXECUTIVE SUMMARY :
This marketing plan examines the launch of a human-electric hybrid bicycle called e-bike by the world’s largest motorcycle manufacturing company HONDA, in China. We all know that the Global Warming is a serious issue to be addressed. This is the right time to realize the importance of eco-friendly products to save the earth from global warming and its ill effects. Unfortunately the automobile emissions are the second largest contributors for the green house gases.
Honda with a vision to become the world leader in environment and energy technologies launches this innovative and futuristic eco-friendly product called e-bike. This zero CO2 emission mobility is certainly a head turner which is stolen from the future, which efficiently converts the human force to proposed force. This e-bike is half bicycle and half motorbike and there is no accelerator like the usual electric bikes. One need to pedal to move forwards, the quicker you pedal the faster it goes.
It has a regenerative charging capability called “loop charging”, that is when you go down the hill the motor becomes a generator and charges the battery again. This increase the total distance the bike can go. Its light weight, foldable to a very small size like a Swiss knife and can be put in a rucksack. It is useful in the cities when you have to take in an elevator or carry it to the flat, metro trains, busses, cars etc. This is a transport revolution and its nothing like the world has seen before. It’s going to epitomize the smart urban movement. This is how the future gets around!
Table of Contents –
LEGAL AND REGULATORY FORCES
PROMOTIONS AND ADVERTISING
COMPANY BACKGROUND : Honda Motor Company, Ltd. is a Japanese multinational corporation primarily known as a manufacturer of automobiles and motorcycles. Soichiro Honda is the founder of the company. It has been the world’s largest motorcycle manufacturer since 1959.
Even in the rapidly changing business environment of FY2010, Honda supplied more than 24 million products to customers worldwide. From its early days, Honda has been implementing proactive measures to help solve environmental challenges. In 1972, under the theme “Blue Skies for Our Children,” it introduced the CVCC engine, becoming the world’s first automaker to comply with the U. S. Clean Air Act without the use of a catalytic converter (the world’s most stringent emissions regulations at the time). In late 1999, Honda launched the first commercial hybrid electric car, the Honda Insight.
With a view to fighting global warming and reducing exhaust emissions overall, Honda is engaged in the research and development of alternative motorcycle power sources. To maintain a leading position in the future of mobility, Honda will continue to develop motorcycles and other mobility technologies that demonstrate a strong commitment to environmental responsibility Honda’s vision for personal mobility for the next 100 years of mobility calls for an accelerated shift away from fossil fuels, and for the early development of technologies that will reduce greenhouse gas emissions to zero.
This is because continuing growth in the world’s population is likely to result in continuing growth in the demand for mobility. This is because continuing growth in the world’s population is likely to result in continuing growth in the demand for mobility.
SITUATION ANALYSIS :
ENVIRONMENTAL SCANNING – China has experienced an explosive growth of sales of electric bicycles and scooters, with annual sales jumping from 56 thousand units in 1998 to over 21 million in 2008 and reaching an estimated fleet of 120 million e-bikes as of early 2010.
This boom was triggered by Chinese local governments’ efforts to restrict motorcycles in city centers to avoid traffic disruption and accidents. By late 2009 motorcycles are banned or restricted in over ninety major Chinese cities. Users began replacing traditional bicycles and motorcycles and, in e-bike became an alternative to commuting by car.
LEGAL AND REGULATORY FORCES – In China electric bikes currently come under the same classification as bicycles and hence don’t require a driver’s license to operate.
Previously it was required that users registered their bike in order to be recovered if stolen, although this has recently been abolished. Due to a recent rise in electric-bicycle-related accidents, caused mostly by inexperienced riders who ride on the wrong side of the road, run red lights, don’t use headlights at night etc. , the Chinese government plans to change the legal status of illegal bicycles so that vehicles with an unladen weight of 20 kg or more and a top speed of 30kmh or more will require a motorcycle license to operate, while vehicles lighter than 20 kg and slower than 30kmh can be ridden unlicensed.
In the southern Chinese cities of Guangzhou, Dongguan and Shenzhen, electric bicycles, like all motorcycles, are banned from certain downtown districts. There are also bans in place in small areas of Shanghai, Hangzhou and Beijing.
SWOT ANALYSIS – Strengths
- Honda Motor Company, Ltd has the ability to compete the market challenge from its existing facility of production.
Honda Motor Company, Ltd has the ability to produce a high quality product i. e. electric bike in any quantity.
- It has many existing distributors which will help the Grasshopper electric bike to cover the market place along with some new distributors. It has a competent team, experienced in the Japan industry.
- Grasshopper Electric bike is environmentally friendly.
- Multi-tasking features of the new product highlight it among the existing range of products.
- It has access to monetary resources if required.
- Honda Motor Company, Ltd has been the world’s largest motorcycle manufacturer since 1959 and has dominance in motorbike industry for nearly 51 years and can now apply that experience and skill to a new market with an appropriately researched product.
- Chinese can have a resistance to Western products.
Due to this the newly launched product will gain an initial advantage in the market.
- Yamaha, SANYO, are also on the verge to launch the similar product.
- There are many competitors who have already established their market dominance in the same product in china.
- The time taken to do business in China will stretch human resources.
- Chinese can be more loyal to brand than Western brands.
- The demand for electric bike is growing rapidly.
- The product will be considered good for health as it can also act as exercise equipment. Due to the issue of global warming the opportunity increases and gradually helps out in accelerating sales
Estimates suggest that by 2013 China will have the largest number of electric bike users.
COMPETITOR ANALYSIS – CRITIQUE – This e-bike is a folding electric bicycle that not only serves as a means of transportation, but can also become a stationary exercise bike and can even generate and store kinetic energy. Electric and pedal power hybrid bicycles make a lot of sense to commuters.
With a small amount of battery power to augment your pedalling efforts, you can achieve extra speed and distance while leaving a minimal environmental footprint and paying next to nothing per kilometre. One can ride a bicycle almost anywhere, at any time of the year, and at lowest cost!
MARKETING MANEUVER : PRODUCT – There’s nothing that we love more than a well-designed bike! A Human-Electric hybrid bicycle, also known as an e-bike, is a bicycle with an electric motor used to power the vehicle or to assist with pedalling and use rechargeable batteries.
The human-electric hybrid bicycle may best be described as ‘human power augmented’ as in blending human and motor power. Herein lies its uniqueness, utility and exceptional riding enjoyment. While e-bikes are ridden by cyclists of all ages, on many different rides and routes and for different purposes. This is a relatively new kind of bicycle for those of us who enjoy pedalling. Pedal Power Electric Bike Concept can not only get you to work in the morning it can double as an exercise bike when you get home. The bike generates its own energy from pedal power.
You can choose to pedal down the hills and ride up the hills using electric power. It also features a bar-mounted control unit, or HMI (Human-Machine Interface). It displays the battery status and allows users to choose between up to four power settings, offering electrical pedalling assistance from levels of 0 to 150 percent. The power settings are: Eco (maximum range), Tour (standard setting), Sports (“dynamic riding”) and Speed (maximum setting). Its foldable frame also makes it a perfect compact solution for city commuting and apartment living, which is green and hip!
PLACE – Place refers to the means by which your customer acquires the product. This includes the actual place it is purchased from i. e the shop, the telephone, the web page, the warehouse as well as the actual route of distribution. The e-bikes can be sold in all Honda motorcycle showrooms and there are about 44 major Honda dealers in china. The platforms like expos, trade shows, consumer fairs and new distributors can be used for sales. In China there are a lot on-line dealers contribute to major number of sales.
PRICING – One of the four major elements of the marketing mix is price.
Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decision, and promotion. So price plays an important role in the increase of sales. The price of our product will be $1200. At the launch of the product there will be no discount, this will help out to maintain and preserve the prestige and value of product. There will be no hidden cost and net price will be given in order to ensure it is presentable and easily understood by the customer.
The price of the e-bike is to be set by taking certain market aspects into consideration. Certain marketing aspects such as:
- Non-Price competition: As there are many Electric bikes available in Chinese market. The range of Electric bike ranges from $500 – $2500. As the Grasshopper electric bike can not only get you to work in the morning it can double as an exercise bike when you get home. So as compared to other models in the present market, there is no such product serving in $1200 in Chinese market.
- Matching competitor’s price: The main theme is that it is a complete differentiated product among the present products in market.
It also match’s the competitors price in market and provide more benefits in the same price. Matching competitor’s price gives an advantage to create the remarkable position not only in market but also in consumer’s sight. Balancing the price with the competitor’s product creates a platform to compare the available products in market and makes even easier in product selection for consumers.
Unit sales growth: The price has to be set by aiming at the target for the sales of unit to be grown. The reason for setting up the price in moderate range is to increase the number of sale in market. Market share growth: Also it is taken into consideration about the growth in the market share. If the product is impressive at affordable rates it becomes easier to capture the market share and it is also the primary aim of a company to mark an outstanding market share growth.
Targeted profit return: Targeted profit return is one of the most important factors while pricing the product. The scale of the returned profit helps out to draw out the plan for company’s progress. Company can make further progress on the basis of the profit it is gaining.
Establishment of new units, working on to create new and efficient products, launching those new products require a considerable amount of fund. So in order to carry on the further progress price should be set in order to gain targeted profit.
PROMOTIONS AND ADVERTISING (BRANDING STRATEGIES) –
i. LAUNCH : Beijing Auto Show Beijing International Automotive Exhibition or Auto China is an auto show held biennially in Beijing, China since 1990. It has now become one of three top auto shows in the world along with Frankfurt and Detroit.
ii. CO-SPONSORSHIP : Great Wall of China Marathon (GWCM)
The Great Wall Marathon is an annual marathon race held in May along and on the Huangyuan, Tianjin section of the Great Wall of China East of Beijing. The race has grown over the years to several hundred participants.
iii. Brand Ambassador : Mr. BRAD PITT “THE GREEN CELEBRITY” Brad Pitt is famous as a green celebrity. Though the actor was going green all the way back in 2004, purchasing hybrid cars and calling for energy independence, he’s made the biggest green mark on the world of green building and sustainable design through his support for the rebuilding projects in New Orleans.
He’s teamed up with Global Green USA for a sustainable design competition and a handful of other projects totalling millions of dollars and countless hours spent on making the Big Easy a greener city from the ground up. Pitt has also found time to host a public broadcasting series on green design, help design a green hotel in Dubai and purchase an eco-friendly winery with wife Angelina Jolie. The eco celeb has started a non-profit organization to research green building techniques. Currently, Brad Pitt helps build low cost green homes in New Orleans. He will make an apt ambassador for the e-bike, as he is a global personality and one who believes in green mission.
iv. Billboards and Print advertising
FINANCIALS : This section will offer a financial overview of Honda Motor Company, Ltd as it relates to the marketing activities. Honda Motor Company, Ltd will address target sales, sales forecasts and how they link to the marketing activities.
TARGET SALES – Annual electric bike (e-bike) sales in China grew from 40,000 in 1998 to 20 million in 2010. This rapid transition from human-powered bicycles and asoline-powered scooters to an all-electric bike technology system is special in the evolution of transportation technology and unique to China. We examine how and why e-bikes developed so quickly in China with particular focus on the key technical, economic, and political factors involved. These appeals that it is important to China as it embarks on a large-scale transition to personal vehicles, but also more sustainable forms of transportation. Looking at the increasing sales mark it is estimated that in coming year from 2011- 2013 the sales will hit the target of 2. 5 million in 2011 further climbing through 2. 8 million up to 3. million in 2013.
SALES FORECAST – The first year will be used to secure market space, set it up to product standard. During the first six months relationships will be established with many different distributors in the market. These relationships will be based on Honda Motor Company, Ltd willingness to take all of their closeouts. Typically, the manufacturer will call several distributors and eventually will explain them the strategy to accelerate the market sales. Honda Motor Company, Ltd increased willingness to create an incentive for the distributors based upon their sales can make the sense for increasing the future sales.
As the number of electric bikes per annum is increasing in china, it helps out to diagnose the sale forecast in china. As the society is becoming more concern about global warming more number of people are switching on to electric bicycles. China is one of biggest market of electric bikes. The number of electric bikes ridden had been increased dramatically, so based on this it can be diagnosed that the future sale is favourable in China for the Grasshopper electric bike as it can be used for various purposes other than riding.
Following the above plan, it is forecasted that sales will steadily increase during this year. Sales| 2011| 2012| 2013| Direct Sales| $3000000000| $3360000000| $3500000000|
BUDGETING : Costing predictions are difficult in the market entry. In the perfect competition, possibilities and consequences are ambiguous. Tentative budgeting can be done. The purpose of a marketing budget is to pull all the revenues and costs together involved in marketing into one comprehensive document. It is a managerial tool that balances what is needed to be spent against what can be afforded, and helps make choices about priorities.
It is then used in monitoring performance in practice. The marketing budget is usually the most powerful tool by which you think through the relationship between desired results and available means. Its starting point should be the marketing strategies and plans, which have already been formulated in the marketing plan itself; although, in practice, the two will run in parallel and will interact. At the very least, the rigorous, highly quantified, budgets may cause a rethink of some of the more optimistic elements of the plans.
EXPENSES: The marketing expenses will be budgeted to ramp up before and slightly after the two major trade shows each year. The website expenses however, will be consistent throughout the year. Expense will be accrued in terms of launching a new product in Chinese market. Trade show, advertising and other promotional factors will be added to the cart of expenses. Looking at the Chinese advertising market, it is the leading way to popular your product among the individual. So expense can be forecasted as the position of the company becomes stronger and firm in the Chinese market.
The expense will increase as the company’s sales will proceed in the following year. It will be more focused on the promotion of the product and expanding its brand value among the people. So by taking into concern various above aspects expense budget can be forecasted. Marketing Expense Budget | 2011| 2012| 2013| Trade shows| $80000| $87000| $95000| Advertising| $86000| $92000| $97000| Other| $25000| $31000| $40000| Total Expenses| $191000| $210000| $232000|
ADVERTISING BUDGET – HONDA Motors should allocate funds appropriately for different channels of advertising.
There should be proper diversification of funds. The company should try to create impact in mind of customers by advertising its product in various mediums like television, billboards, internet, newspaper, magazines, tradeshows etc. The main target of advertising should be to create long lasting image of product in mind of the target audience. Following should be allocation of advertising budget. Sr. No| Mode of Media| % Advertising Budget| 1. | Television| 8| 2. | Billboards| 15| 3. | Magazines| 20| 4. | Newspapers| 18| 5. | Internet| 23| 6. | Trade show| 16|