“16th December 2011 , Honda City at Rs 6.99 lakh” A headline which gained attention of not all but atleast for the passionate automobile followers or people like me who nurtured the dream owning the first personal car to be the Honda City. However the idea behind penning down thoughts on the City is not my love for the car but the tipping point which made Honda to kneel down and adopt a price cut strategy for the first time in course of 15 long successful years in Indian market.
Honda has remained the pillar of Indian automobile Car market for long establishing itself as the best in breed Sedan & an iconic symbol adding to the pride of the person owning it. Throughout the 90’s and mid 2000’s the CITY aptly followed the India’s punch line of “Owners Pride, Neighbors Envy”. But as they say, Change is inevitable ,Success and struggle are complimentary and the same is being experienced by the Hondas in the ever so growing Indian Market.
Who would have thought, City would have to come up with a price cut launching a lower end variant. The short history of the Indian car market shows Honda has always seeked a premium and throughout the campaigns never ever given focus to the price of the car. From the old 90s classic City to the sporty new City of 2000’s, To the iconic Civic to the ever hyped Hybrid cars, the focus has always been on the design and the Class. Then what made city to come up with such a strategy, probably the tipping point is crossed sooner than later.
“Tipping point: Gladwell defines a tipping point as "the moment of critical mass, the threshold, the boiling point."
It all started with the success run of the Honda city and Honda Civic post 2000s. An iconic model whom people bought for pride rather than value. No matter which new model is launched City remained the most sought car and made Honda if not the market leader but the market monopolist in the sedan segment. Never been there were any discounts on Honda cars nor were there any major price customer schemes. Probably a game of pure supply and demand Honda being the at the gainers end of the spectrum.
“Being perceived as the best bring definite rewards but only till the rewards are shared across both the Perceived as well as the Perceiver.
In my point of view, the idea of being perceived best & being the single monopolist rented a lot of space in the mind of Honda’s India Management. In a nutshell it meant working on their own terms rather than giving value to the market dynamics. Somehow knowingly or unknowingly the customers were ignored but that was only acceptable until the customers ignored the same.
As always Honda has been close to the hearts of Indian consumers and so was the wait for the launch of another great product “ Honda Jazz” in 2009. The hype was so much that everyone wanted to seek a look or pre book the Hatchback. However the launch was a surprise not because of the great design but because of the great price being seeked for the first hatchback from Honda’s kitty. Probably there was nothing wrong but nothing right as well about the launch strategy of this car. Reason – the mind space of Honda’s Management I talked above. But this time the customers didn’t ignored of being ignored by their favorite brand.
The initial launch was successful with hiked up bookings and great interests by customers. The design was explicit but the price tag did raised the eyebrows. The car was launched at an ex showroom price of around 7.5 lakhs. It was definitely high for majorly middle class Indian consumers who would get any alternative sedan in that price. Paying Premiums for Honda was a habit but paying something way ahead than a premium raised doubts. Probably Honda was trying to establish an all together new segment of Premium Hatchbacks in the Indian Market. As I understand Indian market is always driven by the masses and seldom has a product for a niche segment succeeded here. The customers not only rejected the entrance of a new segment but in the process also moved closer to the tipping point of considering Honda as a just another brand.
If not the failure, Jazz was never a success. But still Honda was in a monopolist market with great design of Honda city and civic segments. Jazz failure didn’t had an impact on the sales of other Honda Products , However there was a definite paradigm shift on the perception. Honda still had that unbeatable design in the monopolist territory of their own.
There were many a options available in the market but none posing a threat to the crowning space of City. This was to change soon , with the launch of Hyundai Verna Fluid , Honda faced the biggest shock of their lifecycle. The biggest strength of being the best design was challenged and hence left Honda with none but just the general features a car have. They were shown backs by the customers on the price front and now even on the design which was once the biggest strength.
The volumes declined, the growth projections were revised and sublimed. The customers over crossed the tipping point and Honda no more remained the favorite brand for the sedan segment.
As a habitual to summarize ( being a Management Graduate) I would extract following points as jist to the extract above :
• Customer still remains the king.
• Monopoly is time bound until you are challenged strongly.
• Ignoring a customer is acceptable until customer ignores being ignored.
PS : These were just few personal views (No offense to anybody) on the brand so close to my thoughts & a strategy which was a little overdone to me. To say the least it still remains the best of the sedans in Indian market. However the future lies on the market factors (Rising petrol prices- Being predominantly Petrol car) & more so on the strategy adopted by the management in the coming days, the actions being evident in the headline above.
I would love to hear from you about agreement or disagreement to few of the points stated above
