The American Honda Corporation has a great track record of consumer-manufacturer relationships, making it important to research the relationships it has built with the consumers. New technologies in communications and database management have led to an explosion of managing consumer relationships. This holds true, especially in consumer and business-to-business, as the marketing effort returns from a mass mentality to a shopkeeper’s mentality, from supply to demand marketing. The ideal one-to-one approach is through direct marketing to capture understanding, evolution, value and treatment of customers (Stearns 1).
The American Honda Corporation began as a small motorcycle company in 1959. Today, Honda is a top manufacturer of motorcycles, power equipment, ATVs, generators, marine engines, and automobiles. From the first Honda vehicle, the S500, released in Japan to today’s top-selling Accord and Civic, Honda is one of the world’s leading manufacturers in the automobile industry. In 1967, auto production began in the Suzuka factory. In 1972, the Honda Civic debuts and by 1977, the Civic ranks first in United States fuel-economy tests for the fourth consecutive year. The Honda Prelude debuts in 1978, followed by the most profitable Honda Accord in 1982. In 1986, Honda introduces its luxury line, Acura. By 1990, the Honda Accord becomes the best-selling car model in the United States and wins the fifth consecutive 1st ranking in the J.D. Power and Associates Consumer Satisfaction Index.
Honda Motor Corporation’s basic philosophy of making products acceptable in international markets has led the Company and its subsidiaries’ unique business development since its early days. As customer acceptance of Honda products in key markets increases, this philosophy has expanded to a basic business strategy of making products wherever they are being sold in quantity. Through this approach, Honda has been able to contribute to the economic welfare of a number of countries that produce Hondas. An example of Honda’s commitment to the people and countries in which its products are sold is Honda of America Manufacturing, Incorporated, in Marysville, Ohio.
Because of successful marketing relationships with customers, Honda has gained a great reputation for itself. It has created a unique development and manufacturing capability producing a variety of consumer products built around compact, high-performance engines. By developing, manufacturing, and supplying ‘quality’ products, using local resources, and reinvesting capital, Honda fulfills its goal of being a responsible and contributing corporation.
Honda always finds a way to delight its customers, be it the gas efficient hybrid vehicle or the launching of scooters in India; there is always something new to make Honda customers proud of the company. Honda realizes the need for achieving cost leadership and often devises ways to delight its suppliers, but it is usually difficult to find the right vendor. Honda tries hard to build a long-term relationship. In order to sustain long-term relationships, most suppliers are inter-linked with Honda. While some companies try to make the payment procedure complex, with the underlying intention of delaying the payment, Honda is trying to come up with procedures so that payment can be expedited. Such activities undertaken by the company makes it an ideal customer in the eyes of the suppliers who reciprocate by providing the best of their products and services at the lowest possible price. The symbiotic relationship results in fruitful association for both (Sharma 1).
Relationship marketing, itself, centers on all marketing activities directed toward establishing, developing, and maintaining successful exchanges with customers. It is crucial to maintain positive relationships with the customer and the manufacturer of the product, because loyal customers tend to be more profitable to keep than those who are price-sensitive and see little difference among competing products. Also, a company that is successful usually has strong relationships with customers, making it hard for any other competitor to penetrate the interests of the customer. For example, Honda spends more than $5 billion annually for materials and components from three hundred suppliers. The expenditures by the three hundred member purchasing staff at Honda of America represent eighty percent of the firm’s annual sales. Each sector of the chain is involved in manufacturing the product, the marketing techniques, delivery, and customer service support after the initial sale. If any of these factors were affected, so will the success of the popular products within the corporation (Hoffman et al 174).
Since the typical industrial corporation spends over half its sales revenues on industrial purchasing, supplier management has been recognized as crucial to the firm’s competitiveness, likewise with the Honda Corporation. Honda invests so mush to ensure the very best in quality, that the supply-in-demand must be more than expected to ensure a profit. The automobile industry is a good way to look at the traditional and relationship models of the buyer-supplier relationships (Kim and Michell 119). Several factors must be examined when looking at these types of relationships. These are the percentage of supplier sales to the automaker, the percent of non-redeployable capital equipment, annual man days of face to face contact, information sharing, assisting quality improvement, assisting cost reduction, supplier’s trust in automakers fairness, supplier’s expectation of unfair and fair treatment. All factors work to achieve the trust of the consumer (Kim and Michell 120). People’s identification with Honda is based primarily on the perceptions of its core or defining characteristics. The mission, structure, processes, and climate shape this identity. It also represents hierarchical constellations of characteristics or traits that are central to the Company and eventually, makes Honda relatively distinct against other automobile manufacturers (Bhattachanya and Sen 77).
Supply-chain management is a way of connecting operations of a company with other strategic suppliers and its main mediators and customers, therefore, improving effective and efficient productivity.
According to the elements contributing to effective relationships, consistency and reliability rank among those of importance. J.D. Power Vehicle Consumer Center, rates Honda vehicles among the highest in mechanical quality, performance, style, safety, fuel economy, and overall long-term reliability. Ratings by such a credible source as this, instills trust in potential customers as well as creates continuity for present customers. Customers, then, have confidence in Honda. The fact that Honda has an impeccable track record for their performance of their vehicles makes them an unbelievable commodity.
The American Honda Corporation has experienced marketing success, because of its implementation of the Acura Corporation, a luxury subsidiary, creating business-to-business marketing. Honda’s relationships are a viable strategy for social exchange, business-to-consumer marketing, and non-profit marketing (Arnett and German 89). With the establishment of the American Honda Corporate Foundation, the company is able to use Honda to be beneficial to the community through scholarships and grants, making a sector of Honda a non-profit organization (“Honda Corporate”).
The channel that Honda uses for its marketing relationships is specifically:
Supplier – Manufacturer (Honda)/Assembly – Retailer (Dealership) – Consumer
Earlier, the supplier-manufacturer dynamics were introduced, but it is also important to understand the remaining tiers of the marketing relationship. The assembly in this model is one of the most crucial portions. If the assembly does not come through with a quality product, then a company like Honda could suffer from potential callbacks and costly repairs. If production creates a series of lemons, over time, consumers will lose confidence in the manufacturer. The dealership is responsible for delivering the product to potential buyers. If there are not good salespersons, then there will be less profit and also prices would not be appealing to customers, because there would be less demand for them. After the sale, it is important that the product continues to perform well. Customers need assurance; therefore, there is a warranty upon receipt of the vehicle. Also, there is customer service and maintenance services provided at local dealerships. All of these things contribute to overall customer satisfaction and makes relationships with Honda a good one.
In conclusion I foresee more research in the field of relationship marketing in an international context. Comparisons are made between the US and Japanese buyer –supplier relationships in the automotive industry and then between four of the major automakers in Japan. In the comparative study of the US and Japan the data support the existence of a clear difference in supplier management between the two countries. Further research directions may be suggested, both conceptually and empirically. Future research will probably give focus in the differences between the majors in each county and possible convergence between both types of relationships contractual and relational. There is a managerial implication drawn from exploratory studies showing that there is a potential myth that Japanese automakers have pursued very similar supplier relationships. They have more likely pursued different supplier relationships based on, for instance, their size and profitability. It is recommended that a comparison of the major automakers in Japan be made individually, not collectively.