Being a market leader is a result of hard work

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.