Honda says brand image will remain intact despite price cut
Honda India sounds pretty confident about the price cuts that it has done recently, which include cut down in prices of new Honda Jazz and Honda City. According to the Senior VP of sales and marketing of Honda India, Mr. Jnaneswar Sen, the firm is pretty aware of the current market situation and accordingly the price cutting move has been taken. Furthermore, the company has taken care of the brand image as well. There are slight chances that the price cut down might have a bad influence on their brand equity, but Honda India is confident that it would not affect the premium brand image.
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The same kind of step was taken by Daewoo years ago in the country, when it slashed the price of its high end model, Cielo. Also Maruti India had slashed the prices to compete with Tata Indica in late 1990s or so. However, at that time there was no major affect, as rivals were few and Maruti India was always ahead of everyone. As per the industry experts, Tata Nano and the very well known Mahindra Logan lost all the charm with its cheap price tag. However, Mahindra Logan still managed to make few more sales with its frugal engineering.
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It is a fact that no one likes to be connected to the cheap product and it is absolutely true all over India. However, as far as the slashed prices of Honda City and Honda Jazz are concerned, they were specially done to compete with the diesel variants of numerous cars currently in the Indian car market. Honda India tumbled the Honda Jazz price by a whopping figure of Rs. 1.5 Lakh. Now the current Honda Jazz price starts from Rs. 5.5 Lakh or so. On the other hand, the Honda City price was slashed by upto Rs. 66000.
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There is no question on quality of Honda cars. they are leaders in their own segment. New jazz will certainly give stiff competition to swift / polo and i20 and will churn good numbers for Honda but at the same time 20 pct reduction in price implies that in past Honda cheated its customers in the name of brand. Think of a customer who had bought the jazz in may/june 2011 and image of your so called brand in his mind.