2. Professional information provided in brochures, articles, books, magazines and personal contacts. Reading a brochure or catalog on the products or services may provide consumers with information that they wouldn’t known previously.
3. Direct experience with product through inspection or trial.
4. Market generated information presented in advertisements, displays and by sales personnel. For example, at Honda or Toyota dealership, the sales consultant may provide consumers with sufficient information for purchase consideration.
According to Neal C (6), the third method of information search is exploratory search. An exploratory search is not common amongst most purchases as it is done to not only acquire additional information about a product or service but because the process itself is pleasurable. Most exploratory searches can be triggered even where there is no problem recognition (6).
My search of information concerning new car included reading automotive magazines, consumer guide to purchase automotive and various internet sites. I even asked a few friends on their opinion as to what type of car they would recommend to me. As a result of my searches, I identified alternative brands for consideration and possible purchase. These brands are Honda or Toyota. This set of alternatives is known in marketing as an evoked set (3).
With my evoked set to choose from, I had to evaluate them known as the evaluation of alternatives in the consumer decision process. I evaluated the criteria of what type of car I needed and what best suited my lifestyle. With my evoked set of alternatives I decided I wanted a mid-size car, one with best fuel mileage, good for the environment by Environmental Protection Agency (EPA) standards, best rated car in crash tests, high resale value and most importantly best car for its money. I reviewed each criteria on the two cars makers and narrowed it down to the two models; Honda Accord or Toyota Camry.
After reviewing the websites of Honda and Toyota, I found their respective dealers are within 10 kilometer radius of my home. With my wife, I visited their respective showrooms and found that their respective showrooms are both strategically located within the heart of Kota Kinabalu. Their showrooms are clean, tidy, with proper lighting and display full range of their own products. When we first step in to their showrooms, we were greeted by their friendly, polite, well dressed and knowledgeable sales consultant. They explained the features of the respective car model to us after analyzed our needs, expectation, budget and desires. We were invited for a test driver on Honda Accord and Toyota Camry respectively. Both cars are absolutely wonderful. The interior of both cars was amazingly roomy and spacious when I sat in it. The seats were luxuriously furnished in butter soft leather or fabric and are firm, wide and comfortable. I was really impressed with the dashboard which resembled a cockpit control panel. It comes with all kinds of buttons for every function you could think of. The steering wheel comes with the standard buttons which allow volume and radio changes with a touch of your fingers. Every compartment and section of the car is well-finished and covered with sleek coverings that blend well with the colour tones of the car. When it was on the road, inside the car cabin is so quiet and hardly hear any engine noise. The cars run smoothly over the bumps and are perfect for any terrain. Further more, the operation of these cars are more environmental friendly due to the absence of hydraulic fluid. It made our test drive experience so unforgettable. On the other hand, we amazed by the sales consultant’s products knowledge and their ability to answer all our queries professionally. After the test drive, we collected some catalogs concerning Honda Accord and Toyata Camry from the sales consultant for our further evaluation and comparison.
5.0 The Roles in The Stage of Alternative Evaluation
After the information of the automobile has been gathered, it allowing me to determine and compare the relevant and feasible alternatives before the final decision can be made. To complete this stage of evaluation, the roles of influencer, gatekeepers and decider will be carried out respectively.
(1) Influencer. Chris Rice defines the influencer as a person provides information, expertise and or preferences which are fed to the other members of the group (7). As my wife is expecting our first child soon, she is more concern with the safety, price and cabin space of the cars. She has searched some information such as design, accessories, features, car loan interest rate and etc to pass to me in order to purchase a car which she likes most as well as best value for money. Sometimes, it is difficult to refuse my wife’s idea. Therefore, my wife's suggestion will influence my purchase decision. Undoubtedly, my wife should be the influencer in this stage of alternative evaluation.
(2) Gate keepers. Harrell point out that gatekeepers control the flow of commercial sources of information into the buying organization (8). In this case, because I carry the responsibility of taking care of the whole family, so I tend to control and balance some information about the performance, characteristics, price and warranty of the car. By contrast, my wife is more focuses on and controls some information about safety, car loan interest rate and cabin space of the car. Hence, both of us are gatekeepers in the decision process.
(3) Decider. Chris Rice defines the decider as the person with the authority or power to determine how the resources should be allocated (7). As my wife is only a housewife with no income, so she needs my support to live. This situation makes my wife loosing the power to decide. In contrast, I earn money for my family. Therefore, I have enough economic power to determine the purchase decision. In addition to the economic element, I am also more familiar and have better knowledge on automobile as compare to my wife. I can effectively compare Toyota and Honda with other brands' automobile. This is to say, I have technical authority and the economic power to decide on the purchase of the car. Consequently, I am the decider for which brand and model to buy.
This search and comparing alternative evaluation led me to the next steps of the consumer purchasing decision process; purchase decision and purchase act. After reviewing all the facts about each model, I finally made the purchase decision of buying the Honda Accord. The Honda Accord is mid-size, has great fuel mileage, good to the environment by EPA standards, rated highly on crash tests, better resale value over Toyota and most importantly it offers lower loan interest rate. It was just overall the best car for its money and less expensive than Toyota Camry. I informed the Honda’s sales consultant on our decision and made the down payment for Honda Accord. All other finance arrangement and car registration had been taking care by the sales consultant. The brand new Honda Accord delivered to us two weeks later; after it was registered with relevant authority.
The final step in the purchase decision process was the post evaluation of purchase. This is when the buyer is either satisfied with the removal or replacement of the discrepancy between the existing and desired states or dissatisfied with their purchase. Pleasure or disappointment with the purchase will affect the buyer's impression of value, word-of-mouth communications with other and recurring purchase activities. Companies should try to establish a positive after purchase communication with the buyer in order to build a strong relationship with the buyer for continued business. At this point, companies should understand the buyer may have tension or anxiety following a purchase, this is known as cognitive dissonance. (9) Cognitive dissonance (post purchase doubt) is the perception of incompatibility of two cognitions. Cognitions are processing information applying knowledge and changing preferences, it is reasoning, perception, and learning. Cognitive dissonance is any element of knowledge, attitude, emotion, belief, or behavior. (9)
For my case, after I bought the Honda Accord, my only cognitive dissonance was did I make the right choice in my earlier decision such as did I buy at the right time, or should I have purchased the newer 2009 model instead of the older 2008 model. Honda Service Centre on several occasions sent me letters, e-mails and even telephone calls giving me personal attention to any concerns that I may have regarding my purchase. During one telephone conversation, I expressed my concerns with year of the car. They reassured me that there was no difference in the 2009 model than the 2008 model and that I got the best value for my money. With the resale value of Honda Accord's being so good, they reassured me that I would benefit with either one. I was also concerned with the fact that I would have an extra bill to pay each month for the running cost and maintenance fee of the new car. To make it better for their customers, they even offer free annual inspections for the entire ownership of my car as long as it was brought to their service centre in Kota Kinabalu. This made me feel somewhat less anxious about my decision, knowing that they offer this complementary service shows they care about their customers, not just for the initial purchase but for the duration of customers ownership of the car. My post purchase dissonance further diminished when I read an article commenting the similarity between Honda Accord 2009 and 2008 model. Therefore, I would say I was completely satisfied with my purchase.
6.0 Recommended Marketing Strategies for Honda
The automobile industry is tremendously competitive and highly cyclical one, i.e. an economic boom is generally accompanied by high sales in the automobile industry, while sales usually suffer during economic downturns. The correlation between sales of the automobile industry and Gross Domestic Product (GDP) is extremely high. The strength of the economy is the major determinant of automobile companies’ performance. Sales are similarly tied to the level of consumer confidence and to people's spending power. This is due to the usually high investment involved with the purchase of a new vehicle. During a prosperous time with high incomes, many families and individuals have the means to buy a car, whereas they try to save their money when times are not so rosy and avoid such a large expense. Therefore, after my first purchase experience with Honda authorized dealer in Kota Kinabalu, in order to maintain its competitiveness, enhance customer satisfaction and market share, some marketing strategies are recommended. Ferrel explained that marketing strategies involve selecting and analyzing target markets, creating and maintaining an appropriate marketing mix (product, distribution, promotion, and price) to satisfy the needs of those target markets (10). Thus, marketing strategy refers to how the company will manage its relationships with customers in a manner that gives it an advantage over the competition.
6.1 Product
Before Honda launches a product in to the market, a market research should be carried out on the market. Industries will try to study what customer need from them. It mainly deals with products and their services. After analysing the report of that research, then Honda can launch the product at a perfect price. Price can be related with the place where this has to be launched. The industries will have a look about the promotion part as it is very important for a product to sustain its position in the market. All these four sectors like product, price, place and promotion constitute the product life cycle.
Honda has a strong brand value and this can be considered as the added advantage in this field. Brand value alone may attract some customers to buy their product.
Honda is one of the reputed industries in the world as they consider their services to be at the best. They are listed among the top 50 automobile industries in the world. As such, Honda should always maintain and enhance their service quality in order to satisfy customers’ needs. Services can be of two types. They are services for the sold product and presales services. Services after the product sold can add some revenue to them. Presales service before the product launched can attract customers visits them as well.
Honda should not only concentrate in the styling part but should try to invent some additional features to their product. They should be very strict on finding out safety measures and implementing it in the new models. Honda may add in some features like Antilock Braking System (ABS). This feature helps in anti locking the tyres which helps in preventing many accidents.
Honda should try their best to prevent wheel spinning. They may want to introduce air bags all over the sides of the vehicle to protect the passengers at any means.
Quality, dependability and reliability are the primary motivators as this is rated universally. All automakers are giving special care in this field as this can make them separate from their competitors. Brand image, styling and performance are also important for many customers but consumers will also think about service after the purchase of a product. Honda should provide superior support to their customers after their purchase for many years. They should takes all the positive steps towards improving their technological department for their after purchase support.
Honda has been in this field for many years. So they should take care of their old clients as well as new clients in the same manner. Honda has to face some challenges in taking care of their after sales support team as they have to know about the new inventions and the technologies used in the new built cars, then only they can help their customers. Honda may introduce a lifeline service for its customers at every time in major cities to make their customers feel good. Honda has to look forward on the future cars and the upcoming inventions which can be treated as a challenge in the after purchase support.
Perfectness in the packaging is a highlighted feature in the quality. Honda is renowned for the best packaging. The product should be in a safe state after its manufacturing is been done. Packing of a product is dealing with its safety and reducing unacceptable damage or loss in the shipping process. The goods produced should be packed properly to make it reach their destination safely. Honda may tie ups with reputable corporate in the packing market to make their products reaching the places safely. The important component in the automobile industry is the car engine; which weighs more and need special attention and packed separately.
6.2 Price
Price is the most crucial element of marketing mix as it is the only revenue earner for the business where as all the other elements of marketing mix are costs (11). Honda uses the value based method of pricing its cars rather than the conventional cost plus pricing methodology. In this methodology price is charged according to customer’s perception of the value of the product based the benefits the product offers to the customer. The benefits of the product are clearly defined for the product over the competitor’s products and based on the value the product offers to the customer the price is determined. Honda has been very successful in their pricing methodology.
6.2.1 Pricing Adjustments
Honda may use various pricing adjustments to boost sales.
Discount Pricing
In discount pricing various discounts are offered to customers in the form of cash discounts, quantity discounts, trade discounts, seasonal discounts, allowances. Honda may use discount pricing to boost sales. Honda may offer discounts worth RM3000 on Honda Accord 2008 model, in order to meet their sales targets. They may even offer low-cost lease and no interest financing.
Penetration Pricing
In this pricing strategy the price of the high quality product is initially kept low to gain entry into the market. Honda may use penetration pricing to enter Malaysia market.
The cars were cheaper in the beginning with better quality than the competitors. Once they have penetrated the market, they grab majority of market share. In this pricing methodology, the company may not get profits in the beginning. Once they have established their brand name, they increase the prices.
Economy Pricing
In economy pricing low quality products are sold at low price. The pricing strategy of Honda City is based on economy pricing.
Premium Pricing
Under this pricing strategy, high quality products are sold at high price. Honda previously used this pricing strategy for Odyssey. Every luxury brand may follows this pricing strategy, which is keeping the price of a product or service high, so that buyers will favourably perceive it as superior or exclusive.
6.3 Promotional Mix
Honda is accelerating its sales through huge promotion. They may segment their brand according to age, sex, race, and lifestyle. They may generate their sales through attracting all types of customers by different promotional mix. Honda has followed a tailor-made approach to advertising its various subsidies. Whether it is the luxurious Odyssey model or the youth oriented Honda City. A major portion of Honda’s advertising budget has been geared towards television commercials. The current economic situation has led the car manufacturer to adopt more frugal ways to advertise their brand. While the web may provide a convenient and cheap advertising outlet for Honda, it does have limitations. Below are the various elements of promotional mix that may adopt by Honda.
6.3.1 Advertising
It is the most effective element in the promotional mix. Advertising helps to introduce the products to a wide audience quickly by means of television, the press, outdoor, cinema and radio. (Jobber, D.2006: p.498). The aim of advertising is not only to make high volume sales but also to create a brand loyalty among customers. Honda may even want to set up their own advertising department and may collaborate with external agencies for advertising its brands.
Honda may use television, press and billboards commercials for advertising its products. The promotion done by television, billboards commercials for Honda products should be in sync with the consumer’s cultural and social background. The commercials are generally meant to create a connection between the car and the target audience.
6.3.2 Internet
Internet is the cheapest method of promotion. Honda should use electronic media to advertise its products. Honda should design a website from which consumers can obtain instant information on products or services to aid them in their crucial purchase decision. As part of the cost cutting measures, Honda may want to increase advertisement by using electronic media. Based on geographic location; Honda may use heavy flash-based websites to reach countries where broadband access is available.
6.3.3 Personal Selling
Personal Selling is a promotional measure which involves oral communication with the prospective customers in order to sell products (Jobber, D.2006, p.545). This type of promotion is done in exhibitions and shopping mall where large number of people gathers. Honda may occasionally use this method of promotion. Honda may want to launches their product in public places and takes feedback and recommendations from public. This may be an expensive way of promoting a product.
6.3.4 Public Relations
Public relations is the effective management of relationships and communication to improve the mutual understanding between the company and its public.(Jobber,D.2006: p.646).Public relations can be used as a powerful tool for creating awareness and to improve the reputation of the company. Honda should focuses on maintaining good relationship with press, media and the general public. The media in turn may give Honda good coverage whenever they launch new products or take any strategic decisions. Honda's website could be used as an effective communication medium between the organisation and the public. It should has extensive information on all the Honda’s vehicles, the promotional offers, the location of its dealers, service centres and showrooms.
6.3.5 Sales Promotion
Sales promotion is a crucial component of promotional mix. It is providing incentives to customers in order to stimulate sales (Jobber,D.2006,p.448). Following the global financial crisis in 2008, Honda sales have been deeply hit. So Honda has been offering numerous promotional offers to the customers. The most commonly used promotional method adopted by Honda is to offer money off on its cars.
Honda may also consider other discounts on the purchase of Honda like 0% finance, fuel voucher, free service, or equivalent cash discount.
6.3.6 Direct Marketing
Direct marketing is the distribution of information about products, products and the promotional benefits to customers through interactive communication campaigns. This method of promotion is beneficial as it would help to establish direct relationships between the organisation and the customer. Honda may use direct marketing by organising a direct marketing campaign before the launch of any new model in order to inform the public about the car. As an effort to reduce the advertising costs, electronic direct marketing may be introduced.
6.4 Place
The main objective of place decision is to choose the distribution channels, location of outlets, methods of transportation to make sure that products are available to the consumer in proper quantity at the right time and place. Generally the elements of distribution channel consist of wholesalers and retailers through which the goods pass on to the ultimate customer. Honda may consider several ways of making products available to the consumers. They should use different ways based on their sales considerations and contractual considerations. The major sales channel of Honda may divide in to
1. Dealership,
2. E-commerce customers,
3. Direct sales to corporate/rental fleets.
Dealership should provide services to the customers by maintaining an inventory of vehicles. Dealers should also provide after sale follow up, maintenance, offers help and serve the clients. The vehicle distribution to the group buyers may be done by the domestic dealers even though they are administered directly by the international Honda sales force. The benefits to the corporate consumers should also given by the dealers.
E-commerce channel performs the sales of the vehicles through the medium of internet. The e-commerce wing may also keeps in touch with the dealers .
There are mainly three strategies of distribution placement for Honda. Initially Honda may makes their brand perception powerful among the consumers by launching core models, then a restructuring of the sales network may be arrange by the company. As a result of the rising markets and increasing competition which is boosted by the liberalization, Honda should split their distributors into subsidiaries and makes their operations in the headquarters much powerful and elaborates the sales network. Then the company will strengthen the domestic production capacity, cut down the cost and increase the production quantity.
The distribution system for Honda should be demand driven. The matching of the total supply/demand decisions with the short span sales and distribution processing should be arranged by the company. A good relationship with the dealers should maintained by Honda and the company should considers the dealers as their partners in business. Honda dealership should have the best understanding on their local market place and have the autonomy and flexibility to invest in the sales and marketing programs that work for their region. If Honda can match up the long term global supply and demand planning with a short term regional sales and distribution operation, it will definitely help the company to give the right car at the right place at the right time. Honda may also want to improve its efficiency by using inventory reduction system. The inventory range should maintained on a small volume by Honda by eliminating spikes in demand and cutting down the overall supply chain cost. The company should maintain a low level of inventory if they are able to produce vehicles in the same order the consumers buy them. The feature of flexibility to the demand will enable the company to maintain a least stock in the automobile industry. The suppliers of Honda should also require to improve their activities by improving the overall customer to customer cycle. Honda should acts as a “guru” (teacher) to its suppliers by teaching them lean manufacturing techniques. The lean manufacturing technique makes sure that a short period of time is required from the needing of an item by Honda and the manufacturing of that item by the suppliers.
7.0 Conclusion
Companies need to consider each step in the consumer decision process with regards to perception in order to develop a competitive edge in today's industry. Understanding of all the steps, the internal and external influences affecting the consumer can help companies develop or modify their marketing strategies accordingly. An understanding of each of the above discussed issues such as the five steps in the consumer decision making process and how perception affects consumers the most at each stage are very important when designing a marketing strategy for a competitive advantage.
When consumer making a purchase decision, they are constantly influenced by other factors than just information, such as family, friends, cultural values, social class or subculture. Marketing managers need to consider these to provide a competitive edge. The target market needs to be selected carefully before exposure to messages about the products and services. This way the target market is more likely to pay attention to it as they have an interest in the products and services. Also there is a greater chance that the consumer will interpret the message the way it was intended.
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