INDIAN INSTITUE OF MANAGEMENT

TIRUCHIRAPPALLI

PRODUCT & BRAND MANAGEMENT

CASE – 6
“Honda Today”

Submitted To:

Prof. Suresh Paul Antony

Submitted By:

Team 01

Chetan Yadav (1701011)

Mayank Lal (1701034)

Satyam Verma (1701045)

Prabhangshu Adhyapak (1701153)

 1. How would you categorize Honda’s approach to product development?

Honda had always approached product development with more inclination towards innovation.
Each new product launched by Honda is conceptualized as an entirely new product with its own
character and traits. Unlike the industry norm, development of a new car model in Honda includes
the simultaneous development of both a new car design and a new engine. Most of the other
manufacturers usually launched old cars with new engines on vice versa. Honda tried to ensure
coherence, integrity and balance between a car’s body and engine, to give each new car an identity
of its own which resonated in every aspect of the vehicle.

The development teams in Honda were also independent and dedicated to a specific project or car
model, and often ended up working through several generations of new cars in the same project. In
most automobile companies, an engineer, who was usually a part of a specialized team, usually
worked on several cars in a year.

While Honda believed in innovation through improvement, the improvement usually meant
development of new products by improving existing products than just improvement of existing
products.

2. What should Kamimura do? What specific option or approach would you recommend? What
must he do to execute the approach in the time available?

Kamimura has four choices available to him to make the new ‘Today’ comply with the updated
standards of specifications.

Option Cost (Billion Yen) Stroke to Bore Ratio

1. Increasing Bore only 0.5 0.87
2. Increasing the Stroke only 1.5 1.13
3. Increasing both bore and stroke 2.0 0.95
4. Expanding the engine block 5.0 0.95

The company has already invested 5 billion Yen on redesigning the engine with a primary aim of
improving the performance of the car and build good brand equity in the long run. However due to
the new specifications imposed by JAMA and this spending almost becoming redundant, they have
budget constraints for making amendments based on new specifications. But, this should be done
without compromising on the actual aim of improving performance. The best performance is
achieved at a Stroke to Bore Ratio of 0.96 (Ideal Ratio- Exhibit 6). Hence, the best suited option that
gives the best possible performance is option 3 i.e. to increase both the bore and the stroke of the
engine. This is slightly costly but choosing the less costly options 1 and 2 would not give good
performance which may hinder the customer feedback and growth rate.

Kamimura must first try to retain the engineers as because of the change in regulation, there is an
urgent need to diverge the maximum possible resources in the experimentation project. Now, when
he has decided to go with option 3, he shall get the prototypes of the modified engine ready at the
earliest and test them. After successful testing, he must go for market testing and then allow mass
production.
3. What do you think Honda’s competitors will do? Why?

The response of different competitors will be as follows:

Suzuki: Market leader would always try to maintain its position. It is currently more of a
performance based car and has sufficient resources. Hence, it would also go with option 3 and
increase both stroke and bore.

Daihatsu: It is the challenger brand and is more oriented towards fuel economy. It would also try to
maintain or improve its position by providing product as good as the competitor’s. Hence it would
go for option 2 which would result in far more fuel economy than the present version as the
company would not take the competition head on and try to build a separate positioning.

Mitsubishi: It has the ideal ratio of Performance and fuel economy and hence it would try to
maintain that by choosing option 3.

Fuji: Operates on a same scale as Honda and has a positioning of an economical car. Hence, it would
choose option 3 as with other options it may have to change its positioning.

Mazda: Operates on a very small scale and hence it would want to invest less in a highly competitive
market and go for option 1.