The Honda Insight in India – Research project on the hybrid car to be launched in India

1. Introduction

The international marketing department at Honda, one of the world’s leading automotive companies, is in the process of re-evaluating its marketing strategy and business plan for the company’s recently launched series of hybrid cars and for one (1) model in particular, the Insight. Its strategy is multi-tiered and consists of exploring many new initiatives. The following are a few proposed initiatives: product line expansion, product feature enhancement, distribution expansion, and/or product repositioning.

We, as a team of Marketing Researchers, have been put to the task of aiding the marketing department in selecting one (1) specific decision-making problem, identifying the research problem and objectives, conducting a relevant research study, and recommending a viable strategy.

In this report, we will disclose research findings about the current state and future projections of the Indian economy, the automobile industry and market in India, and various environmental regulations and issues which are currently of importance in India. We will also report on automobile ownership trends, purchase behavior and usage habits, petrol consumption and cost sensitivity, environmental concerns and conservation, and future purchase interests.

2.Product and Industry Background – The Hybrid Car, The Market and Honda

The Hybrid Car – What Is It?

Recent technological advances in the automotive industry have led to the creation and launch of a new breed of automobile – the hybrid car, also known as “the green car.” This new automobile is a cross between a gasoline-powered car and an electric car (such as the Smart car which entered the market in the late 1990s). This vehicle runs on a gasoline-supplied engine and a battery-powered electric motor, at the same time. What are the benefits of such a complex sounding car? The answer is two-fold: to reduce environmentally-harmful tailpipe emissions and to improve gas/petrol mileage, both of which are gaining global recognition and importance.

Recent laws have been imposed in various areas of the world (i.e. – the US) dictating the allowance of particular pollutants that a car is allowed to emit, such as carbon dioxide (CO2), which scientists suspect contributes to global warming, which is in direct proportion to a car’s fuel consumption. Thus, the demand and interest in this kind of car is rapidly increasing.

The Hybrid Car Market – What’s Available?

The hybrid car market is very new, largely unsaturated and with relatively low competition. However, the competition is rapidly increasing, hence Honda’s need to evaluate its current strategy and move forward. At present, there are only two key players: Honda and Toyota, although most automobile manufacturers have announced plans to manufacture their own versions. Both car manufacturers have launched their products in two (2) developed markets: Japan and the United States. Honda was first-to-market in the US with the launch of its two-door Insight in December 1999 and shortly after launched a four-door hybrid version of the very successful Civic. Toyota’s four-door Prius launched in the US in Spring 2001.

Honda is the current industry leader in hybrid sales for 2003. It is also the only automobile manufacturer to offer two (2) hybrid models which achieve the highest fuel efficiency for a gasoline-powered vehicle in the market.

The Honda Insight – What’s The Draw?

Since its launch, the Insight has received numerous industry awards [reference Appendix A, Table 1]. Its key features include:

* Subcompact, two-door vehicle class

* Powered on a combination of fuel and a self-charging electric power source

* Fuel efficiency: 61 mpg city / 70 mpg highway

* Acceleration from 0 – 60 mph in 10.6 seconds

* Owners receive $2,000 Clean-Fuel Vehicle Federal tax deduction in the US

* MSRP starting at $18,980

The 2004 Insight’s design and specifications are sleek, unique, and top of the line [reference Appendix A, Table 1, Images 1 & 2].

3.Research Problem Identification and Objectives

Upon review of the above gathered information concerning the brand, the product at hand, the market of interest and the local industry trends, the below stated Marketing Decision-Making Problem was identified by the Honda marketing division:

* In order to increase sales of the Insight, should Honda launch the Insight in the emerging market of India with its current “green car” US positioning?

Accordingly, our marketing research team has identified the below Marketing Research Problem to create the basis of this study and guide the process of data collection and analysis:

* To determine the Indian consumer’s level of interest in the hybrid car, namely the Honda Insight, and his/her potential motivation for purchase of this type of automobile compared to a standard gasoline-powered vehicle.

Additionally, we have formulated the below stated hypothesis based on current economic, market and industry information as it pertains to India which this research aims to prove:

* A considerable demand for the Honda Insight hybrid car exists within the Indian automobile market as long as the product is priced competitively and positioned as “the cost-savings car.”

Based on the above stated Marketing Research problem identification, the objectives, more specifically, for the study are as follows:

* To ensure that a market for the hybrid car exists in India;

* To confirm that Honda is a desired and trusted brand in the existing Indian automobile market; and

* To identify which of three (3) potential positioning statements resonates most strongly with consumers based on attitudes towards cost of living expenses (petrol prices) versus perceptions towards environmental protection.

* Specify, more precisely, the potential target consumer for the Honda Insight.

4.Research Design And Methodology

In order to accomplish the previously listed research objectives, the following secondary and primary data was collected to gain knowledge and understanding of the various factors that will form the research recommendation and aid the decision-making process. Furthermore, the following design and methodology was followed:

Secondary Data:

To gain a significant understanding of our proposed launch market, we gathered secondary data covering the following areas concerning India, as reported in Section 5 of this report:

* The current state of the economy and various relevant economic factors

* The automobile market, the leaders and the competition, both past and present

* The state of the environment and relative environmental regulations

This data was collected from economic electronic databases, industry-related websites and on-line environmental journals.

Primary Data:

Research Approach

Our sole means of primary research collection was a detailed questionnaire in order to gather information on the Indian consumer, as reported in Section 6. The results were used to quantifiably substantiate our rationale, specify a target market and build a strategy for launching the Honda Insight in India.

Sampling

We surveyed a sample of forty-five (45) Indian car owners who are currently residents of the greater metropolitan New Delhi area. Our sample consisted of both men and women, single or married. The target was set as young professionals, between the ages of 20 – 40 with an education level of undergraduate or higher. Income level was middle class and above, with a monthly income greater than Rs 100,000. This demographic was/is seen as a potential consumer base that has significant purchasing power and modern consumption habits. In addition to sampling people within this age and income demographic, we also sampled people outside so as not to limit the targeting to the assumptions made.

The Questionnaire

The questionnaire consisted of 25 questions of various formats: dichotomous, multiple choice, multi-option, attitude scales and open-ended questions [reference Appendix D]. Question wording and format (measurements in kilometers and liters, financials punctuated appropriately) was tailored to the Indian market. The questionnaire was divided into the following five (5) sections, designed to gain significant insight and knowledge about various attitudes and perceptions of today’s automobile consumers in India:

* Automobile Ownership and Usage

* Petrol Consumption and Household Expenditures

* The Environment

* Your Future Car Purchase

* Personal Information

Automobile Ownership and Usage: This section contained nine (9) questions in regards to current automobile ownership and consumer purchase behavior. The first two (2) questions were written to determine the percentage of the sample that currently owns a car and the range of preferred brands and competition in India. Questions 3 and 4 were asked to learn about purchase behavior, future intentions and spending. This enabled the research team to more clearly identify who is purchasing vehicles and potential plans to purchase a new vehicle in the next year along with how much people have spent in the past on his/her vehicle. The following five (5) questions intended to establish current usage trends, automobile attributes considered in the purchase process, and vehicle ownership lifetime (in years and kilometers) of the sample, all of which helped to evaluate whether or not the Honda Insight will meet the needs of the targeted Indian automobile consumer.

Petrol Consumption and Household Expenditures: Section B contained seven (7) questions aimed to learn about the sample’s various consumption trends, spending habits and cost sensitivity. Questions 10 and 11 inquire about the type of petrol the sample’s current vehicle uses and the amount of petrol consumption (in liters and percent to disposable income). Attitude scales were used in questions 12 and 13 to determine the relative level of consumption satisfaction and concern about the price of petrol. These questions were aimed to gain initial insight into attitudes in order to define whether or not the positioning of the Honda Insight as the “cost savings” car might be relevant. The remaining questions were created to gauge relative spending of petrol against income and household expenditures of groceries and electricity.

The Environment: The following five (5) questions in Section C of the questionnaire were used to understand the level of environmental awareness and concern that the sample currently possesses. The attitude scale in Question 17 was created to determine relative levels of concern across various environmental issues, and furthermore to gauge whether or not air pollution is a primary concern. Questions 18 through 22 were asked in order determine the level of active involvement and thought taken by the sample in regards to preventing or reducing harm to the environment. These questions intended to gain further insight into the sample’s perception in order to define whether or not the positioning of the Honda Insight as the “environmentally friendly” car might be relevant.

Your Future Car Purchase: This section contained four (4) questions regarding future brand and attribute interest, purchase potential and premium pricing of automobiles or instruments that would a) reduce emissions, b) reduce petrol consumption and/or c) protect the environment. Again, these questions aimed to provide information that would be helpful in determining the positioning and pricing of the Honda Insight. Questions 23 and 25 pertain specifically to the Honda Insight: current awareness, purchase consideration and interest level. As an industry leader with the goal of launching a new product that would be first-to-market, responses to these questions provided insight into the current level of awareness and knowledge of the product and potential necessary future education investment.

Personal Information: The final section consisted of a series of questions in order to acquire demographic details of the sample. These details were used in order to cross-tabulate the gathered data by age, gender, etc.