Harvard Case - Collision Course: Selling European High Performance Motorcycles in Japan
"Collision Course: Selling European High Performance Motorcycles in Japan" Harvard business case study is written by Jeff Hicks, Derek Lehmberg. It deals with the challenges in the field of General Management. The case study is 15 page(s) long and it was first published on : Apr 3, 2012
At Fern Fort University, we recommend that Moto Guzzi adopt a multi-pronged approach to penetrate the Japanese market. This involves a combination of strategic partnerships, targeted marketing, product adaptation, and cultural sensitivity. By focusing on building a strong brand presence, fostering customer relationships, and adapting to the unique Japanese market dynamics, Moto Guzzi can achieve sustainable growth and success in this challenging yet lucrative market.
2. Background
This case study focuses on Moto Guzzi, a renowned Italian motorcycle manufacturer, facing the challenge of entering the highly competitive Japanese market. The company's high-performance, luxury motorcycles, while popular in Europe, face significant obstacles in Japan. These obstacles include:
- Strong domestic brands: Japanese consumers are deeply loyal to established domestic motorcycle brands like Honda, Yamaha, and Suzuki.
- Cultural differences: Japanese motorcycle culture emphasizes practicality, reliability, and fuel efficiency, contrasting with Moto Guzzi's focus on performance and aesthetics.
- Distribution challenges: Moto Guzzi lacks an established dealer network and faces difficulties navigating the complex Japanese distribution system.
The case study highlights the efforts of Moto Guzzi's Japanese subsidiary, led by Mr. Suzuki, who is tasked with overcoming these challenges and establishing a foothold in the Japanese market.
3. Analysis of the Case Study
Strategic Framework: To analyze the situation, we can utilize Porter's Five Forces framework:
- Threat of New Entrants: Moderate - The Japanese motorcycle market is mature, but niche players with unique offerings can still enter.
- Bargaining Power of Buyers: High - Japanese consumers are price-sensitive and have access to a wide range of motorcycle options.
- Bargaining Power of Suppliers: Low - The global motorcycle parts supply chain is competitive, giving Moto Guzzi leverage.
- Threat of Substitutes: High - Cars and other forms of transportation pose a significant threat to motorcycle sales in Japan.
- Competitive Rivalry: Intense - The Japanese market is dominated by established players with strong brand loyalty and economies of scale.
SWOT Analysis:
Strengths:
- Strong brand heritage: Moto Guzzi has a long history of producing high-performance motorcycles with a unique Italian design.
- Quality craftsmanship: Moto Guzzi motorcycles are known for their durability and attention to detail.
- Unique product offering: Moto Guzzi's motorcycles cater to a niche market of enthusiasts seeking performance and style.
Weaknesses:
- Lack of brand awareness in Japan: Moto Guzzi is relatively unknown in the Japanese market.
- High price point: Moto Guzzi motorcycles are expensive compared to Japanese brands.
- Limited distribution network: Moto Guzzi lacks a strong dealer network in Japan.
Opportunities:
- Growing demand for luxury goods: Japan's affluent population is increasingly interested in premium products.
- Increasing interest in European brands: Japanese consumers are becoming more receptive to foreign brands.
- Potential for strategic partnerships: Collaboration with Japanese companies can help Moto Guzzi gain access to the market and build brand awareness.
Threats:
- Strong competition from established Japanese brands: Moto Guzzi faces significant competition from established brands with strong brand loyalty.
- Economic uncertainty: Japan's economy is facing challenges, which could impact consumer spending on luxury goods.
- Changing consumer preferences: Japanese consumers are increasingly demanding fuel-efficient and environmentally friendly vehicles.
4. Recommendations
To succeed in the Japanese market, Moto Guzzi should implement the following recommendations:
1. Strategic Partnerships:
- Collaborate with Japanese motorcycle retailers: Establish partnerships with reputable motorcycle dealerships to gain access to the distribution network and leverage their existing customer base.
- Joint ventures with Japanese manufacturers: Explore joint ventures with Japanese companies to develop motorcycles tailored to the Japanese market, combining Moto Guzzi's performance technology with Japanese manufacturing expertise.
- Strategic alliances with local motorcycle clubs: Partner with motorcycle clubs to build brand awareness and create a community around Moto Guzzi motorcycles.
2. Targeted Marketing:
- Focus on niche segments: Target affluent consumers interested in luxury goods and high-performance motorcycles.
- Emphasize Italian heritage and craftsmanship: Highlight Moto Guzzi's unique Italian design and heritage to differentiate from Japanese brands.
- Develop targeted marketing campaigns: Utilize digital marketing channels, social media, and traditional media to reach the target audience.
3. Product Adaptation:
- Offer fuel-efficient models: Introduce models with improved fuel efficiency to appeal to Japanese consumers' concerns about fuel consumption.
- Develop smaller displacement models: Offer smaller displacement motorcycles to cater to the Japanese preference for smaller, more manageable bikes.
- Adapt design and features: Consider incorporating Japanese design elements and features to appeal to local tastes.
4. Cultural Sensitivity:
- Invest in cross-cultural training: Ensure that Moto Guzzi's employees understand Japanese culture and business practices.
- Develop culturally appropriate marketing materials: Adapt marketing materials to resonate with Japanese consumers.
- Engage with Japanese motorcycle enthusiasts: Participate in local motorcycle events and engage with Japanese motorcycle communities.
5. Long-Term Strategy:
- Build a strong brand presence: Invest in building a strong brand image and reputation in Japan.
- Develop a sustainable distribution network: Establish a network of dedicated Moto Guzzi dealerships throughout Japan.
- Foster customer relationships: Build strong relationships with customers through exceptional service and support.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Moto Guzzi's core competencies lie in design, engineering, and manufacturing high-performance motorcycles. These recommendations align with the company's mission to produce exceptional motorcycles that embody Italian craftsmanship and passion.
- External customers and internal clients: The recommendations address the needs of Japanese consumers by offering products that cater to their preferences and providing exceptional customer service. They also empower Moto Guzzi's Japanese subsidiary to succeed in the market.
- Competitors: The recommendations address the competitive landscape by differentiating Moto Guzzi from Japanese brands through its unique heritage, product offerings, and marketing strategies.
- Attractiveness: The recommendations have the potential to generate significant returns on investment by capturing a share of the lucrative Japanese motorcycle market.
6. Conclusion
By implementing these recommendations, Moto Guzzi can overcome the challenges of entering the Japanese market and achieve sustainable growth. The company's unique heritage, product offerings, and strategic approach can position it for success in this highly competitive market.
7. Discussion
Alternatives:
- Aggressive price discounting: This could attract price-sensitive customers but could damage the brand's image and profitability.
- Focusing solely on existing products: This would limit Moto Guzzi's appeal to Japanese consumers who value fuel efficiency and smaller motorcycles.
- Ignoring cultural differences: This could lead to marketing blunders and alienate Japanese consumers.
Risks:
- Strong competition: Established Japanese brands may retaliate with aggressive marketing campaigns.
- Economic uncertainty: Japan's economic climate could impact consumer spending on luxury goods.
- Cultural misunderstandings: Misinterpretations of Japanese culture could damage Moto Guzzi's brand image.
Key Assumptions:
- Japanese consumers are willing to pay a premium for high-performance motorcycles with a unique Italian heritage.
- Moto Guzzi can successfully adapt its products and marketing strategies to meet the specific needs of the Japanese market.
- Strategic partnerships with Japanese companies will be successful in building brand awareness and opening up distribution channels.
8. Next Steps
Timeline:
- Year 1: Establish strategic partnerships, develop targeted marketing campaigns, and introduce adapted product models.
- Year 2: Expand distribution network, build brand awareness, and monitor customer feedback.
- Year 3: Refine product offerings, strengthen customer relationships, and assess market penetration.
Key Milestones:
- Secure partnerships with key Japanese motorcycle retailers.
- Launch targeted marketing campaigns to reach affluent consumers.
- Introduce fuel-efficient and smaller displacement motorcycle models.
- Establish a network of dedicated Moto Guzzi dealerships throughout Japan.
- Develop a comprehensive customer relationship management program.
By following these recommendations and milestones, Moto Guzzi can navigate the challenges of the Japanese market and establish a strong foothold in this lucrative and demanding market.
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Case Description
In 2006, the Japan subsidiary of Tommasi Motorcycles, an Italian manufacturer of high-end motorcycles, was implementing a new customer data application to help its motorcycle dealerships increase the effectiveness of their sales and marketing activities. Horizon LLP, a consulting firm, was Tommasi's global implementation partner for the application. To identify any dealer concerns regarding the new system, Tommasi Japan had brought in additional consultants from Horizon to conduct a series of interviews with the dealers. As the consultants soon discovered, the dealers' concerns with Tomassi went far beyond the new application. An unannounced visit by an influential dealer set all the players on a collision course, and soon exposed their widely differing views and a number of fundamental problems in the relationship between Tommasi Motorcycles Japan and its dealer network.The case begins with a series of separate dialogues involving the director of sales and marketing, Nobu Katoh; the expat president of Tommasi Motorcycles Japan, Fambio Bonardi; Koji Saito, an influential owner of multiple dealerships; and two consultants from Horizon, both of whom are non-Japanese. When they meet in the board room of Tommasi Motorcycles Japan, the ensuing conversation reveals a number of issues: opportunistic behaviour by the bilingual Katoh, who plays the role of translator - and also gatekeeper - between the dealers and Tommasi's Japanese National Office by limiting, filtering and shaping communications in both directions; a limited understanding of local market conditions by expat Tommasi management who rotate in and out of their positions every three years; frustration on the part of business-savvy dealers; and naiveté on the part of the consultants, who did not see the social hierarchies at work, nor realize that their cultural and language fluency, which had in past projects always been an asset, could also be a threat.
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