Consumer Behavior

Final Project: Honda Civic

Introduction of Honda

Honda Motor Company, Ltd. is a Japanese multinational corporation primarily known as a manufacturer of automobiles and motorcycles.

Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than 14 million internal combustion engines each year. Honda surpassed Nissan in 2001 to become the second-largest Japanese automobile manufacturer. As of August 2008, Honda surpassed Chrysler as the fourth largest automobile manufacturer in the United States. Honda is the sixth largest automobile manufacturer in the world.

Honda was the first Japanese automobile manufacturer to release a dedicated luxury brand, Acura, in 1986. Aside from their core automobile and motorcycle businesses, Honda also manufactures garden equipment, marine engines, personal watercraft and power generators, amongst others. Since 1986, Honda has been involved with artificial intelligence/robotics research and released their ASIMO robot in 2000. They have also ventured into aerospace with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-420 HondaJet, scheduled to be released in 2011. Honda spends about 5% of its revenues into R&D.

The company has assembly plants around the globe. These plants are located in China, the United States, Pakistan, Canada, England, Japan, Belgium, Brazil, New Zealand, Indonesia, India, Thailand, Turkey and Peru.

Overall the products that are being offered by the Honda worldwide apart from its cars are

motorcycles, Scooters, ATVs ,Generators, Water, Lawn, Tillers Outboard motors, Robotics, Jets,

Jet Engines, Thin-film solar cells.

The Civic is a line of compact cars developed and manufactured by Honda. In North America,

the Civic is the second-longest continuously running nameplate from a Japanese manufacturer;

only its perennial rival, the Toyota Corolla, introduced in 1968, has been in production longer.

Honda's official slogan is "The Power of Dreams". They have never used this slogan to sell

their products. Mr. Honda's belief is that well built products will sell themselves

1 | P a g eConsumer Behavior

http://en.wikipedia.org/wiki/Toyota_Corolla

http://en.wikipedia.org/wiki/Compact_car


Introduction of Atlas Honda Pakistan

Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited Japan, and the Atlas Group of Companies, Pakistan.

The company was incorporated on November --, 1992 and joint venture agreement was signed on August ---, 1993. The ground breaking ceremony was held on April 17, 1993 and within a record time of 11 months, construction and erection of machinery was completed. The first car rolled off the assembly line on May 26, 1994. Official inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan Leghari. Mr.Kawamoto, President of Honda Motor Company Limited Japan was also present to grace the occasion. The company is listed on Karachi, Lahore and Islamabad Stock Exchanges.

On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and Islamabad. Since then the Dealerships Network has expanded and now the company has sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pitstops network in all major cities of Pakistan.Since the commencement of production in 1994, the company has produced and sold more than 150,000 cars till Oct, 2008.

All dealerships are constructed in accordance with the standards defined by Honda World over.

Percentage of local parts conforms to the government's policy. Local vendors are continuously patronized to develop parts locally. The quality of local parts is thoroughly checked to meet stringent international standards.

We always strive to give outstanding service to our valued customers. In addition to providing regular service to customers, the company also regularly conducts Service Campaigns, to facilitate customer's need for service. This has given our customers absolute confidence in our cars, clearly evident from the ever increasing sale volumes.

It is the constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1 Customer satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to meet customer expectations, and to provide good value for money. Currently we are offering 8 different models of Honda CIVIC and CITY cars in wide range of colors with unique technological and other features.



Honda Civic

The processes that take place in the consumer decision making process are described in the

model below. Using this model the whole project of the consumer behavior has been designed.

External Influences

Consumer Decision Making

Post decision Behavior


Firm’s Marketing Efforts

1. Product2. Promotion3. Price4. Channels of Distribution

Sociocultural Environment

1. Family2. Reference Groups3. Noncommercial Sources4. Social Class5. Culture and Subculture

Need Recognition

Prepurchase Search

Evaluation of Alternative

Psychological Field

1. Motivation2. Perception3. Learning4. Personality5. Attitudes

Experience

Purchase

1. Trial2. Repeat Purchase

Post Purchase

Input

Process

Output


External Influences : Input

Firm’s Marketing Efforts

The project is done on Honda Civic and to analyze the marketing efforts by Honda to enhance its

Civic car we have analyzed the concept of marketing mix. Honda uses all the 4 P’s in its

marketing strategy which are discussed below.

1. Product

In Pakistan the Civic is being officially

introduced in 1994 by Atlas Honda. In

the beginning the products array was

not that large but currently they have

introduced almost more than four

versions in the Civic lineup.

Honda Civic

VTi Oriel - Manual

Transmission

VTi Oriel -

Prosmatec

Transmission

i-VTEC Manual Transmission

i-VTEC Prosmatec Transmission

As the excitement builds with sporty performance, the confidence in dependable Civic protection also grows. Honda supplies advanced active safeguards that work in synergy to help you avoid driving hazards.

G-force Control protection exceeds governmental regulations and sets its own safety standard.


http://www.honda.com.pk/civic/safety/img/img_popup01.jpg


Consumers who purchase Civic are protected by a combination of

sophisticated passive safety systems

Dual map lights illuminate each front seat separately for ideal reading convenience.

A handy console pocket with a cover is located within easy reach near the gearshift lever.

Large-capacity lighted glove box provides plenty of space for a variety of items.

Storage space between the front seats is covered by a sliding shutter. Simply slide the shutter open for easy access to two front cupholders, and slide it closed again when not in use.

The front armrest slides 80mm forward and backward for the comfort of the driver and front passenger. Just raise the armrest to reveal a large console box with space for up to 27 CDs.


http://www.honda.com.pk/civic/safety/img/img_popup03.jpg


Rear passenger comforts include a fold-down rear armrest with cupholders for two.

Use the transmitter-integrated key for power window and key-off operation, as well as convenient keyless entry.

Newly designed opposed wipers move in opposite directions to cover more windshield space, giving you a clear view ahead.

Hydrophilic power door mirror with demister keeps water droplets from forming, so you can see vehicles clearly as they approach.

Fog lamp is visible to other drivers and pedestrians in foggy or rainy weather.

Large-capacity lighted glove box provides plenty of space for a variety of items.

2. Price

The prices according to model are presented in the below mentioned table:



Honda Civic

VTi Oriel - Manual

Transmission

VTi Oriel -

Prosmatec

Transmission

i-VTEC Manual Transmission

i-VTEC Prosmatec Transmission

Rs: 1,910,000 Rs: 1,990,000 Rs: 1,725,000 Rs: 1,850,000

The pricing clearly shows that the cars are premium priced and are targeted towards the elite-class of the country. The prices are excluding the tax after which the prices will rise considerably.

The Figure below for the prices of both the models of Civic will enable to understand the pricing more accurately and will clearly reflect the pricing differences. The M stands for Manual and the P stands for Prosmetic. The vertical axis shows prices in million.

Vti Oriel M Vti Orile P i-VTEC M i-VTEC P15.5

16

16.5

17

17.5

18

18.5

19

19.5

20

20.5

Series 1

The graph indicates that the Prosmetic in both the models is priced considerably higher than the Manual models. Also the difference between the VTi Oriel and i-VTEC is considerably significant.



3. Promotion:

The promotional activities in Pakistan for Honda Civic are limited as compared to what they do all around the world. However Honda Civic is promoted through a combination of mediums. These all include media advertisements. Online advertisement, broachers, inserts in magazines and hoardings. The promotion of the product matches its positioning and target market.

4. Channels of Distribution:

The Honda has placed its products very intelligently. They have opened the company owned showrooms, as well as given the car dealership to major dealers in the country ensuring that the car and the after sales reach every nook and corner. The placement strategy by Honda is aggressive and effective. They have made use of wide spread distribution network which reflects the aggressive marketing strategy.

The channels of distribution are best known as 3s providers in Pakistan. The 3s dealers are situated in different areas of Pakistan and are mentioned in the annexure.

Sociocultural Environment:

When talking about the sociocultural environment then there are many aspects that are included in it. Most common are the family, reference groups, noncommercial sources, social class, culture and subcultures. To understand the impact of all these sociocultural factors prevailing in the environment we have tried to implement all these practically on the Honda Civic.

1. Family:



The Honda Civic as a brand is very strong in Pakistan. It is among the prestigious sedans in the local market. The people who can afford such a car are very much happy and satisfied with the Honda Civic. As far as the social affect of Family is concerned it is noted that if someone in the family is using Civic then he is utterly satisfied and can definitely recommend buying civic. However it was also noted that now Corolla Altis with the better specification is introduced with all the features with parity with Civic but a differentiation yet created on the basis of engine type which is 1600 CC. This is definitely going to affect the sales of Civic as the petrol prices are continuously hiking up. However the drawback associated with Corolla’s image is still a hurdle for it and will boast a positive impact on Civic sales. This is why it is clearly evident that Civic is much more preferred in the urban areas over Corolla.

2. Reference Groups:

When talking about the reference groups of sociocultural environment then there are many aspects that can be brought to notice. It could be neighbor, friend, and colleague, anyone who can influence on one’s cognition. Reference group plays a vital role in developing of consumer behavior. This informal source of information help one to develop a belief regarding something based on the information being acquired. In Pakistan this reference group plays a vital role. Everyone in the reference group may have different set of beliefs and this will be transferred to the customer accordingly. Honda Civic might be very satisfactory for one in the reference group but other might regard Corolla more than Civic. So the reference group in Pakistan will certainly make a consumer confused in many occasions. After the evaluation of the information gathered from the reference group one might be able to develop a behavior.

3. Non commercial Sources:

Once again this source of information from the external source somehow influence on consumer behavior. This is getting popular in the educated people as it is considered as the unbiased source of information. It includes the online reviews and articles regarding products and services. To understand the non commercial sources with regard to our project on Honda Civic we have visited various websites that have reviews of consumers already using Civic. One of the reviews is also mentioned below.“I have been driving Honda Civic Reborn 2010 for like eight months and during this period of time I never thought or wished that I would have bought Altis! This car is a beast. It’s like a rugby player wearing an executive suit! If you press the pedal gentle, it will purr like a cat but if you press it hard, it will roar



like a lion! I have minor quality related issues, but for me it was a best buy! Fuel mileage during winter is about 12-13 km/l but in summer with AC, it drops between 8-9 km/l. If you want to enjoy your drive and want something awesome under you, go for this car.”

Fahad Khalil’s review posted on http://www.pakwheels.com/new-cars/honda/civic/reviews

4. Social Class:

The social class is also among the major sources to affect on the consumer buying decision. Social classes are economic or cultural arrangements of groups in society. When we talk about Pakistan then the social classes that exist can be classified into:

There are three main Social classes. i.e.

Upper Class. Upper-Upper Class Lower-Upper Class

Middle Class. Upper Middle Class Lower Middle Class

Lower Class. Upper Lower Class Lower Lower Class

As we tried to impel above that which class is potential buyer for Honda Civic. It can be the upper upper class, lower upper class and the upper middle class. The prices of Civic are very high and on the other hand the fuel price also does impact the decision to be reverted by the lower middle class to buy Civic.

5. Subculture and Cultures:


Potential Buyers of Honda Civic

http://www.pakwheels.com/new-cars/honda/civic/reviews


The culture and subculture is the also the part of external environment that implies that how culture does affect the buying behavior of people. When we talk about the culture in Pakistan then there is array of diverse and rich cultures in Pakistan. Unlike many other countries of west the culture and subculture in Pakistan is not that much changed. However in recent times it’s becoming volatile. Based on the cultural aspect we believe that Honda Civic is getting popular as a brand in only urban areas. Still Corolla is dominant in the rural areas as to the concept that it’s more reliable as compared to the civic. Corolla is like a persistent brand in the suburban and it is still strong there. However Honda Civic is not repositioning itself to target this class.

Consumer Decision Making: Process

The process component of the model is concerned with how consumers make decision. The decision is influenced by the psychological fields which are learning, motivation, perception, personality and attitude. These internal influences affect the consumer decision making process. The consumer decision making is process that consists of three stages:

1. Need Recognition2. Prepurchase Search3. Evaluation of Alternatives

Before further going into the stages of decision making we will cover the details regarding the internal influences of the consumer, each in detail based on the theories covered in the textbook of Consumer Behavior.

Consumer Learning


Stimulus Situation

(Need a sedan)

Nissan Sunny

Honda Civic

Toyota Corolla

Chevrolet Optra 1.8

A/T

Reward

Not stylish enough. Brakes

issue

Expensive and not sleek. Low

space.

Poor performance


To understand the consumer learning we have selected to work on the instrumental conditioning. It is based on the stimulus and the response. The theory suggests that the learning occurs through a trial and error process with habits formed as reward received for certain responses and behaviors.

To understand this concept lets us quote an example related to our project for better understanding. If a consumer that is quietly satisfied with the Honda Civic uses the car at every occasion and never get a glance of issues with its Civic, he/she will definitely go for the Civic instead of the other car when in future the replacement for car is possible. (This is only for the targeted class we already mentioned above.) Talking with various price insensitive Civic users they still said that they will prefer Civic over Corolla.

Model of Instrumental Conditioning

This model is developed after talking with a current user of Honda Civic who has all these models in his evoke set and tried these models. Also be noted that the customer was price insensitive.

This model tells us about the instrumental conditioning. The customer who is the price insensitive and really been able to evaluate different options can surely try all these


Repeat Behavior


models. The customer had tried all these cars mentioned above and then changed the cars because he was looking for more power and when Honda first introduced the 1800 CC model he opted for it and since then he has been using this car and changed the model when the new Honda Reborn was introduced. The consumer is highly satisfied and is willing to even buy the new model as soon as it arrives.

Outcome and Measures of Consumer Learning

Now to understand the consumer learning and to measure the outcomes of consumer learning, marketers try to check by the increased market share and brand loyalty. The interesting thing is that brand loyal customers provide the basis for growing market share.

To understand this concept for the Honda Civic we have gained some information about the market share of Honda Civic compared to the Toyota Altis. The head to head competitors in Pakistani Market. The figure for market share for both these brands for the last year:

May June July August September October0

100

200

300

400

500

600

700

Sales of Altis

Sales of Civic

To understand the measures of consumer learning we will use the concept of recognition and recall, attitudinal and behavioral dimensions of Brand Loyalty.

1. Recognition and Recall Measures:



We have used the Recall Measure for our project. The recall is based on unaided medium. The car fanatic uses the magazines to gather the information for buying the new cars when they feel like not roaming in the markets for information. Now since the Honda Civic is a very expensive car the consumers try to gather the most information before purchasing and when those who are willing to buy the Honda Civic are asked to recall the information they gathered prior any purchasing they will be able to recall the salient feature.

2. Brand Loyalty:

As mentioned in the book as well that the Brand Loyalty is the desired outcome of the consumer learning. After understanding the whole concept and asked about the brand loyalty from the Honda Civic user he said “I will never think to get another car for myself.” The statement itself tells that how loyal the customer is to towards the Honda Civic. Since the consumer who uses the Civic for the first time, his behavior will be reinforced with the aspect of what he was seeking in the brand and once customer feels like satisfaction is achieved he will always go for the repeat purchase thus increasing the brand loyalty and also the market share.

3. Brand Equity:

Honda is a well known and reputable brand and ranked 51st in the Fortune 500 as on 2010. There had never been a negative association with the brand so negative brand equity doesn’t exists with Honda. With this high level of Brand Equity the Honda officially launched its Civic in Pakistan for the first time. Later on Civic proved to provide Honda to extend its base in Pakistan and come up with more and powerful products in the market. So the comparison of Honda Civic with Toyota Altis shown above also tells us how successful Honda is getting from the last few years. This high brand equity is the testimonial that the Honda Civic is being ranked ahead of the sedans available in Pakistani market.

Consumer Attitude Formation and Change



The attitudes are evaluated by asking different question to a respondent who is using the product. Like relating to our project if we are going to ask someone about Honda Civic and he/she is content with Honda Civic then there is a strong possibility that he/she will recommend it to someone who is planning to buy a car. From this a person can understand the attitude of consumer as positive towards the brand. However it can be negative as well in certain cases.

1. Attitude Object:In understanding of the attitude research the object specific approach is used. In our project the object is Honda Civic compared to Toyota Altis.

2. Attitude are a Learned Predisposition:

The general view is that the attitudes are learned. The attitudes relevant to purchase behavior are formed as a result of direct experience with the product, word of mouth, information acquired, exposure to mass media, internet or direct marketing.

Now putting this altogether for Honda Civic, which is overall a strong brand. The attitudes towards Honda Civic are learned through all the above mentioned tools.

Factors ExperienceWord of Mouth

InternetMass

MarketingDirect

MarketingInformation

Acquired

Application on Attitude

3. Attitudes have Consistency:

It is very interesting that the attitudes do have consistency but the tendency of change is still present. Like if a person’s attitude towards Honda Civic is positive and he regards the brand then the possibility is that he will recommend others to use Honda. However in case when the price may be a factor the purchaser might look for alternative and may find buying Honda City as an alternative.

4. Attitudes Occur Within Situation:

The attitudes changes with the events and circumstances. Like if a customer who is willing to purchase a new Honda Civic does have the money but thinks that he has a



small family and economically it’s not a well decision then he might be looking for an option for buying a small and economical car. This is the example of circumstances that might affect the decision making.

5. Linkages Between Attitude Formation:

This may be the outcome of understanding the attitude of consumer behavior for the marketers. Like for a marketer at Honda might have to see all the above discussed variables and then create a linkage of consumer attitude with the Honda Civic.

Tricomponent Attitude Model

According to this model the attitude consists of three components which are:

1. Cognitive Component2. Affective Component3. Conative Component

1. The Cognitive Component:


Affect(Feel)

Cognition(Think)

Conation(Do)


This part of the model is based on the knowledge and perceptions that are acquired by combination of direct experience with the attitude object. To relate this component to our project lets present an example. The attitude object will be Civic and Corolla. The consumer may have to evaluate different attribute of the product. Like Civic is trendy and sports a unique look with superior road grip. On the other hand Altis with less road grip but little better mileage. Now before consumer makes a decision in buying any of these he/she will be evaluating all these attributes.

2. The Affective Component:

This component tells us about the feeling of one about a particular brand. This can be evaluated by the marketers in terms of good or bad, favorable or unfavorable. To implement this concept we have used the table from the book.

Selected Evaluative Scale Used to Gauge Consumers Attitude Towards Honda Civic

1 2 3 4 5 6 7

Luxury ●

Interior ●

Exterior ●

Comfort ●

Road Grip ●

Fuel Consumption

●

Scale 1 Good and 7 as Poor.

3. The Conative Component:



It’s the last component of the Tricomponent attitude model. It is about the actions that a consumer will take with regard to the attitude object. To understand this we will use the intention to buy scale table with respect to Honda Civic.

Intentions to Buy Scale

Which of the following statement best describes the chances that if you have available resources will you buy Honda Civic when making a decision in buying new car?

I definitely will buy it.

I probably will buy it.

I am uncertain whether I will buy it.

I probably will not buy it.

I definitely will not buy it.

With the help of this table the information can be gathered on the intentions of a consumer to buy Honda Civic. As asked by different respondents the outcome is different.



Elaboration Likelihood Model:



The Elaboration likelihood model (ELM) of persuasion is a model of how attitudes are formed and changed. The ELM distinguishes between two routes to persuasion: the "central route," where a subject considers an idea logically, and the "peripheral route," in which the audience uses preexisting ideas and superficial qualities to be persuaded.

To further understand this model we have applied it on Honda Civic as part of our project. The Honda Civic is a high involvement purchase and consumers will definitely pay more attention on the evaluation of the product. The consumers will therefore be using the central route of persuasion as the purchase of Honda Civic is expensive. Now user will pay more attention to the information and think about it in central route of persuasion. Every consumer has different characteristics and along with the central route of persuasion he will deeply process the information gathered. The processed information will lead in developing the attitude of the consumer regarding the Honda Civic. This attitude will further develop the consumer behavior.

Annexure:

Region Name Address Phone No. Fax No.




Karachi Honda Shahrah-e-

Faisal

13 Banglore Town, Main Shahrah-e-Faisal,

Karachi

(021) 4547113-6, 4527070, 4527373, 4527474, 4527575

(021) 4526758

Honda Defence 67/1, Korangi Road Near HINO Circle, Karachi

(021) 5805291-4 (021) 5805294

Honda Site C 1, Main Manghopir Road, SITE, Karachi

(021) 2577411-2, 2564926, 2570301,

2569381

(021) 2577412, 2565056

Honda South 1 B/1, Sec. 23, Korangi Industrial Area, Karachi

(021) 5050251-4 (021) 5064599

Honda Drive In

118 C, Rashid Minhas Road, Karachi

(021) 4992832-7, 4992824

(021) 4992825

Honda Quaideen

233-A-2, PECHS, Karachi

(021) 4556071-3, 4556510-12

(021) 4554644

Hyderabad Honda Palace Shahbaz Town, Jamshoro Road,

Hyderabad

(0223) 642032, 641178, 641179

(0223) 641519

Lahore Honda City Sales

75 B, Block L, Gulberg III, Ferozepur Road,

Lahore

(042) 5841100-06 (042) 5841107

Honda Fort 32 Queens Road, Lahore (042) 6314162-3, 6309062-3, 6313925

(042) 6361076

Honda Point Main Defence Road, Lahore

(042) 5700994-5 (042) 5700993

Honda Canal Bank

13-b,Block — K,Johar Town, Shaukat Khanaum

Bypass, Lahore

(042) 5300822-33/ 7029360-61

(042) 5300841

Islamabad Honda Classic Plot 179, I 10/3, Industrial Area,

Islamabad

(051) 4438801-06 (051) 4436446

Rawalpindi Honda Centre 300 Peshawar Road, Rawalpindi

(051) 5564525-8 (051) 5564524

Multan Honda Breeze 63 Abdali Road, Multan (061) 4588871-3, 4548881, 4542862

(061) 4588874




Faisalabad Honda Faisalabad

East Canal Road, Faisalabad

(041) 8731741-4 (041) 8524029

Honda Chenab 123 jb Raja wala Green view colony, Faisalabad

(041) 2603449, 2603549, 5500897,

5508297

(041) 2603349

Sargodha Honda Citurs Fields

7-Km Lahore road, Sargodha

(048) 3225186-187 (048) 3226589

Gujranwala Honda Gujranwala

G.T. Road, Gujranwala (055) 3893481-3 (055) 3893484

Sialkot Honda Falcon Pakki Kotli, Daska Road, Sialkot

(052) 3252000 (052) 3563203

Mirpur Honda Empire Mirpur

Mian Muhammad Road, Quaid-e-Azam Chowk,

Mirpur A. K.

(058610) 51501, 1032701

(058610) 51500

Peshawar Honda North Main University Road, Peshawar

(091) 5854901, 5700807, 5700808

(091) 5854753

References:

Textbook: Consumer Behavior 10 th Edition by Schiff man, Kanuk , Kumar.



http://www.honda.com.pk/civic/specifications/index.html

http://en.wikipedia.org/wiki/Honda

http://www.pakwheels.com/new-cars/honda/

http://marketing.about.com/od/marketingglossary/g/refgroupdef.htm

http://en.wikipedia.org/wiki/Social_class

http://wiki.answers.com/Q/What_are_the_social_classes_in_pakistan

http://www.cssforum.com.pk/css-optional-subjects/group-b/sociology/20082-social-classes-pakistan.html

http://en.wikipedia.org/wiki/Brand_equity

http://en.wikipedia.org/wiki/Elaboration_likelihood_model


http://en.wikipedia.org/wiki/Elaboration_likelihood_model

http://en.wikipedia.org/wiki/Brand_equity



http://wiki.answers.com/Q/What_are_the_social_classes_in_pakistan

http://en.wikipedia.org/wiki/Social_class

http://marketing.about.com/od/marketingglossary/g/refgroupdef.htm

http://www.pakwheels.com/new-cars/honda/

http://en.wikipedia.org/wiki/Honda

http://www.honda.com.pk/civic/specifications/index.html

Consumer Behavior

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