Honda's Move into the US Motorcycle Market in 1960s: A Case Study
The case describes Honda’s move into the US motorcycle market in the 1960's. Honda's strategy was directed towards high volumes per model, providing high productivity, and low costs. Honda succeeded in the US by introducing a new product (small motorcycles, 50cc) that expanded the motorcycle market in the US through price generic competitive strategy. Honda was prepared with capacity, capital and technical capability to enter the US market.
History:
1946: est. Honda Techn. Research Institute (internal combustion engines)
1947: first Honda A-type 2-stroke engine
1948: Japan motorcycle market: 247 Japanese players, mainly clip-on engines for bicycles
1949: first Honda lightweight 50cc 2-stroke D-type motorcycle (3hp); competition launches first 4-stroke engines
1951: first Honda 4-stroke engine (6hp: same weight), acquired a plant to build these engines; at the same time, Honda was first to (1) offer a multiproduct line, (2) take leadership in product innovation and (3) exploit opportunities for economies of mass production
1958: first small, unintimidating Honda motorcycle for local deliveries (50cc, step-through frame, autom. Transmission, one-hand controls; Honda builds a plant with 10x the capacity of the current market demand
1959: Honda enters the US market (being already the world’s largest motorcycle producer with sales of $ 55mn
Questions:
1. What is the strategy that has allowed Honda to be so successful in the motorcycle industry and, in particular, in the United States?
2. How well do you think Honda’s strategy was planned?
Answers:
1. Honda’s strategy to the US market:
a. Product: small lightweight motorcycle, 50cc, 5hp (vs. comp. 2.5hp), 3-speed transmission, autom. Clutch, electric starter, step-through frame; mass produced in Japan. Products are updated or redesigned whenever a market threat or opportunity is perceived.
b. Price: low-priced; $250 (vs. comp. $1000-1500). Prices are set at levels designed to achieve
History:
1946: est. Honda Techn. Research Institute (internal combustion engines)
1947: first Honda A-type 2-stroke engine
1948: Japan motorcycle market: 247 Japanese players, mainly clip-on engines for bicycles
1949: first Honda lightweight 50cc 2-stroke D-type motorcycle (3hp); competition launches first 4-stroke engines
1951: first Honda 4-stroke engine (6hp: same weight), acquired a plant to build these engines; at the same time, Honda was first to (1) offer a multiproduct line, (2) take leadership in product innovation and (3) exploit opportunities for economies of mass production
1958: first small, unintimidating Honda motorcycle for local deliveries (50cc, step-through frame, autom. Transmission, one-hand controls; Honda builds a plant with 10x the capacity of the current market demand
1959: Honda enters the US market (being already the world’s largest motorcycle producer with sales of $ 55mn
Questions:
1. What is the strategy that has allowed Honda to be so successful in the motorcycle industry and, in particular, in the United States?
2. How well do you think Honda’s strategy was planned?
Answers:
1. Honda’s strategy to the US market:
a. Product: small lightweight motorcycle, 50cc, 5hp (vs. comp. 2.5hp), 3-speed transmission, autom. Clutch, electric starter, step-through frame; mass produced in Japan. Products are updated or redesigned whenever a market threat or opportunity is perceived.
b. Price: low-priced; $250 (vs. comp. $1000-1500). Prices are set at levels designed to achieve