A little background
A recent talk with my friend regarding the Vietnamese traffic has made me realize how the current traffic infrastructure degradation (and other “un-named” reasons) is impacting this country motorbikes sales.
If you have read my post about the Digi-Gps device, then you have already known that motorbike is one of the main modes of transportation in Vietnam. According to the plan for growing of the Ministry Transport of Vietnam, Vietnam should be having about 36 millions motorbikes in 2020. However, their estimated report in the first quarter of 2013 stated that Vietnam has already had more than 37 millions (and growing) motorbikes in used.
With this growing number of motorbikes (and other modes of transportation), especially concentrated in big cities such as Hanoi, Ho Chi Minh City, or Hai Phong; the transport infrastructure is not meeting this demand. Even with constant repairs and upgrades, incidences such as flood, traffic, and accidents are making the news quite frequently.
This happens so often that the Vietnamese are used to it, and even try to make something out of it! (Asian and their business plan!)
Due to the lack of supporting infrastructure, and an increase in number of road accidents; the Ministry of Transport of Vietnam has come up with a few solutions.
- On December 15 2007, the Vietnamese government has made it mandatory for everyone (drivers and passengers) on motorbikes to wear helmets.
- On April 14, 2013, any vehicle that is not operated by the person who owns it will be fined. However, this has been dropped in July 2013 due to its implausibility and public outcry.
- In March 2013, a fee was proposed for people who own motorbikes and cars. This fee was said to use as a fund to repair and maintain the infrastructure. However, it was later changed into “Fee to decrease traffic.” On July 2013, the government has also passed a required fee on motorbike owners to maintain the roads.
The later two examples of law were passed under Mr. Dinh La Thang, the new Vietnamese Minister of Transport from 2011. A majority of public has been disagreed with the many laws he has passed. Ridicules, and criticisms are often seen right after he has proposed something new. Popular Internet memes were created and dedicated to him. There are Facebook groups created to voice people’s disagreement upon his new proposed laws.
However, mostly what we have seen are reactions from the public toward new laws regarding Vietnamese traffic. There isn’t much information out there to see how this has affected the automobile industry in Vietnam, especially the motorbike sector. At the end of 2012, the sales for motorbikes dropped like flies due to new proposed laws and economic hardships.
What have they done?
With different barriers set for them, motorbike manufacturers in Vietnam has been trying to increase sales through technology innovations, advertisements, and digital marketing.
- Technology Innovation and Advertisements
Honda has been one of the leaders on the Vietnamese motorbike market. They constantly introduce new models and innovations into the market. Constant innovations and models are good because it has shown the company is trying to improve for better customer satisfaction.
Honda motorbikes are well-known for their durability but not their look. The recent launch of their new SH model (called SH Mode) has proved a disappointment to the fans of this flagship model. Apparently, Honda was hoping to gain a new market for this model by making it shorter and cheaper. And this is their mistake. SH has been one of the symbol for wealth because it is one of the most expensive motorbikes on the market. People purchase this motorbike for its status symbol. By not understanding the market, and in need for an increase in sales, Honda has further hurt itself in the process.
Another big name on the market is Yamaha. Suffering from the same fate as Honda, their sales have been decreasing drastically. Yamaha is known for its strong, young, and sportive looking models. Even though their motorbikes are said not to be as durable as Honda; yet, with a cheaper price and a better look, they have captured for themselves a younger market.
Doesn’t have as many retail stores as Honda, Yamaha has chosen a different market in 2013 to save it sales. Back in 2002, Yamaha has introduced the notion of automated motorbikes with its flagship motorbike, the Nouvo, to the market with a booming success. However, in 2013, they have chosen to focus on manual sport motorbikes, and motorbikes that are under 50cc to compete on the market. Finding a niche is a great way in the times of hardship.
Piaggio with their Vespa has become more familiar with the Vietnamese motorbike owners. After having their factory built in Vietnam, Piaggio Vietnam has been able to supply the market with this iconic Italian model at a more affordable price.
Aiming for a younger, more sophisticated market, Piaggio has made their motorbikes not only trendy, but a status quo. When Honda introduced SH Mode and ruined their reputation, Piaggio Vietnam has introduced the new Vespa 946 in order to claim the market SH has had before. By using the psychology method of scarcity, this new model has become a hot and most wanted motorbike on the market.
What most of these new models have in common is the pledge to be fuel economy. With the rise of gas price and the slowing down of the economy, the new promise of having your motorbike to consume less gas is hard to resist.
- Digital Marketing and Social Engagement
In the new age of being connected at all time, it would be a mistake for these companies not to have any online channels. However, I could only find the official Facebook pages for Yamaha and Vespa. Both of these pages are well maintained with the most updated information on their products, and promotions. The constant conversations that have been going are a great way to gain customer loyalty.
To make up for not having a Facebook page, Honda has actually started a campaign named “I love Vietnam.” They have made short episodes to teach traffic laws, etiquettes, and how-to scenarios. These episodes are aired on national TV channel. It is a great way to reach people in parts of Vietnam where Internet is a luxury.
One of the effort Honda has to engage its community is to hold competition. Honda motorbike owners could participate not only online but also at Honda retail stores.
Could they survive?
2013 sales have not yet been concluded. Despite the different strategies to engage with their customers, I think these big companies have done a great job at brand promotion. It’s always a good idea to know who the target audience is (although Honda might be a little lost in this one). Yet, by being able to communicate with their customers, these companies will have a better idea what the market needs. Vespa’s scarcity method works for them. Yamaha’s niche market has started to paid off. Honda is sticking to being the leader of the market by adhering to its image of being a “safe” brand.
Consumers in the new world is shopping smarter. Under different pressures, and with new information, consumers now make their purchase based on different reasons. It could be for personality (Yamaha, Vespa). It could be for the need of their daily life (Honda). Robert Cialdini talks about the psychology of persuasion. Commitment and consistency is one of the chapter in this book. If these companies want to survive, they need to make a commitment to their customers. They also need to be consistent in their brand image and brand message. I personally think Honda has been successful to keep all their promotions and PR efforts in line with their safety image.
To conclude, I think “YES.” Yes, they will survive. The motorbike has been an icon, a daily necessity to the Vietnamese people. The companies will just have to think of how to always engage with their customers to build a strong loyalty and brand image. The sales will come later on.
The motorbikes will always be here. It’s just the matter of which company is strong enough to stay alive on the market.