Being a market leader is a result of hard work

By Jonminofri

JAKARTA (JP): The Honda Astrea Legenda motorcycle is really like a legend. Some 6,000 units of this model were immediately sold following the TV commercial aired last June, even though this new product had yet to be officially launched.

Then in July the sales figures stood at 30,000 motorcycles, surpassing the target set at only 20,000.

This sales record shows that the Honda Astrea Legenda is ahead of Chinese-made motorcycles, which have been using the trick of low prices to boost their sales over the past two years.

Unless they devise a more appropriate trick, Chinese-made motorcycles will never be able to catch up with Astrea Legenda in sales.

The following data speak more about the trend referred to earlier. At present, the motorcycle market in Indonesia is expanding widely. In the first half of 2000, the sales volume stood at 391,499 motorcycles. This year it rose by 106 percent to total 807,722 motorcycles. Of this total, 51 percent have been produced by PT Astra Honda Motor. The increase in the sales volume of Honda motorcycles over the same period was higher than the increase in the entire motorcycle industry, namely 110 percent.

"For me, sales and market share are results," said Prijono Sugiarto, Director of PT Astra International Tbk, about what Astra has done in securing its market share for Astra products in Indonesia.

Citibank, dominating some 46 percent of the credit card market in Indonesia or serving 1.2 million Citibank credit card holders, has also enjoyed the hard-earned fruit of its long endeavor to meet its customers' needs. "We continuously give added value so that our customers won't feel neglected," said Th Wiryawan, the Marketing Communications Director of Citibank. In his words, service is a marketing relationship strategy.

The EazyPay service is the most popular added-value item from Citibank. This service is akin to the traditional sales of products on credit. Pans and other household utensils are usually sold in this manner.

Long process

For a company, securing a market share is not as easy as turning the palm of your hand. It is difficult and has to go through a long process. PT Unilever has 60 years of experience in its endeavors to secure market share in Indonesia for its Pepsodent and Close Up toothpaste products.

Despite this success with its toothpaste products, it failed when marketing Nasi Instan, an instant rice product. The main reason for this failure was that this product failed to meet consumers' expectations. To prepare Nasi Instan proved to be more difficult than preparing instant noodles like Indomie. It often happened that the rice turned out too hard or even too soft. Unilever also failed in marketing Mie & Mie, a instant noodle product expected to rival the successful Indomie from Indofood.

The best example in terms of market leader is Microsoft. One of its secrets is that Microsoft always does its best to fulfill all consumers' expectations. Computer users are often amazed to find so many facilities that the Microsoft Windows have got ready for them.

The way Microsoft fulfills its customers' expectations deserves a thumbs up. Every Microsoft product is made on the basis of complaints and wishes of computer users that are passed on to Microsoft, which is owned by Bill Gates. Before the software products are marketed, they must go through a long trial process (known as the Beta version), involving thousands of people across the world. Only when the products is considered OK will the final version be marketed. In this way, the products can accommodate most consumers' wishes.

BMW and Astrea

In the luxury automobile market, BMW has been ahead of Mercedes Benz in terms of sales in the past five years. Priyono said this was the result of a long endeavor that began in 1990.

At that time, BMW sales in Indonesia were considered "quite bad". Research conducted by Frank Small showed that the after- sales service was slow and was only 50 percent of that provided by Honda Accord. Then the quality of the service was much worse than that given by the service centers for Japanese-made automobiles. Besides, consumers found this service very costly.

Based on that research, BMW decided to change the image by, for example, introducing an annual service contract. It also introduced a 24-hour service to give the impression that there would be no BMW breaking down on the roads.

"I've always told my executives that we must think one step ahead of what our competitors may be thinking about," said Priyono.

Priyono can take pride in the result of this endeavor now. In the past only a few would say that BMW was a quality car, a reason why it was more difficult to sell a Honda Accord, he said.

Today, there are no Japanese-made automobiles that can beat series-3 BMWs. Even series-5 BMW are now above the E Class in sales. BMW of series 7 are still behind the S Class. At present BMW is getting ready to launch its series 7, perhaps late this year or early next year, he said again.

Honda has also its own interesting story of how to maintain its market share, a story quite different from that of BMW.

In fact, Honda has long dominated the motorcycle market in Indonesia. Its most popular is the Astrea. However, the influx of Chinese-made motorcycles have made consumers start to think that Chinese-made motorcycles are cheaper but not much different from Astrea in terms of quality.

However, as has been touched upon earlier, Astrea moved ahead on sales, leaving Chinese-made motorcycles far behind. What had Astrea done actually?

Last year, there were three different companies handling the manufacturing of Honda products. PT Federal Motor, 95 percent of whose shares are owned by PT Astra International, is in charge of assembling and PT Honda Federal (some 41 percent of its shares owned by PT Federal Motor, while the other 55 percent belong to Japan's Honda Corp.) produces the components. Product distribution is carried out by PT Astra International itself. So, many parties were involved and the process was long.

As of August 30, 2000, PT Astra International, PT Federal Motor and PT Honda Federal were consolidated under PT Astra Honda Motor. Some 50 percent of its shares belong to PT Astra International while the remaining shares are owned by Japan's Honda Corp. This consolidation was effective as of January 2001.

PT Astra International benefited from this consolidation as it received cash amounting to Rp 1.12 trillion from Japan's Honda, for its higher contribution, so that the company could run more efficiently, therefore substantially minimizing the cost.

This retrenchment, in addition to the use of locally made parts to make up 90 percent of the motorcycle, has cut the cost price of Astrea in such a way that consumers pay only about 10 percent more than they would for a Chinese-made motorcycle. Consumers, in terms of price, will of course prefer Honda to Chinese-made motorcycles as Honda has many after sales-service outlets across the country.

Using this trick, Honda has successfully maintained its position as the market leader.