Hearing from Honda

Boating Industry had the opportunity to sit down with John P. Fulcher, senior manager, Honda Marine and Steve Bailey, vice president, Honda’s Power Equipment Division last September during Honda’s national press launch of its BF90 and BF75 outboard motors.

The interview followed a morning media briefing on the new products and the direction of the company. Here is a transcript.

Boating Industry – You spoke [earlier] about wanting to focus more on the U.S. market than you have before. Why has that not been as much of a focus for Honda in the past, and what are you going to do differently now than you have before?

Fulcher – A couple of things. One is our overall strategy and looking at, with [the new 75 hp and 90 hp engines Honda was introducing at the event] we really feel there’s an opportunity to get more market share and we’re really focusing on the mid-range motors.

Then, with the fact that we’re getting a lot more receptivity to our motors with certain boat builders, we’re really focusing on some key segments to grow our business.

So with the support of R&D and executive management included, we feel we can go after the market through our dealer network and through our key boat builders and expand our business.

We’re looking forward to that, and it’s one of the reasons that we all got together as a team and, with our new 75/90 and how well it’s been accepted with the [Honda] Fit and the Jazz [automobiles] in other markets – and I had three trips and with the team with R&D and our head office – and we knew when we first drove the 90, we said ‘this is right on.’ We had the chance to run it against the Yamaha and the Suzuki, and so the [engineers] fine tuned it and really did their homework.

We spent hundreds of hours in our R&D test facility in Florida, we’ve showcased it at our boat builder meetings and got some more feedback from them, because they’re closer to the dealers and to the market place, in some cases, than we are. And they said, ‘You need to do this and you need to that.”

But it’s a real pleasure now to hear the feedback off of the dock. Because it’s one thing to use a PowerPoint and say, ‘It’s got boost, it’s got VTEC and all these good things.’ But to actually go out and see it being delivered and hearing from the media is so worth it. I think if the R&D guys were here they would be ecstatic, they would probably be doing a couple of cartwheels.

Boating Industry – Honda has had so much success in the automobile industry, does that cross over and help you much when it comes to marine applications?

Fulcher – I think it does, because we have a passion. It’s interesting, if you actually interviewed and do a background check on any of my team, or just do it in Honda Marine, or with Steve, or myself, everyone at Honda is kind of interesting. They have a unique background relative to their love and passion for speed, performance, technology. I literally have guys that can tear an engine apart – these are sales guys, not just the service guys – and put things together. The whole passion for driving performance, with the aspect of speed, but overall performance.

You asked me specifically if we leverage, do we leverage that? Absolutely. We look at our Indy cars, Formula One, our current technology that we have on current platforms in automotive or motorcycle, and Steve and I have an opportunity to go to and showcase all the new products that might be coming out in the next three years. So you can see how proud the engineers are, and they showcase how they leverage the technology and put it on lawnmowers or generators or motorcycles, whatever the case may be.

And the nice thing is they do a whole variety of the different products, and that way, as a senior member of the team here in the U.S., you can look over a variety of products and say, ‘Maybe here’s some technology that we might be able to adapt to a different product.’

So part of the R&D process is that we’re treated as the customer, so they are asking us ‘OK, this is what we’re looking at, where’s the market, what’s the opportunity? Is there anything we can leverage?’

So they just don’t show you one product line. They try and showcase the products and see where we can leverage the technology.

Bailey – I think that’s one of the things that’s unique in what we have, it’s a really good synergy among the different groups. I think that’s a strong point of Honda, that we do have different technologies that can be shared, whatever they may be.

Fulcher – We like to win in anything we enter. We’ve been to races and we also pick up things, relative to product presentations or new technologies, that we should look at. If you look at our watercraft, that we have some software program managers on, it’s interesting to see the actual guy who has a passion for our Indy engines, and he’s working up different ECU modules for our watercraft.

When I was in Japan and we were showcasing the 75/90, they actually said, (he whispers) ‘Hey guys, come on over here I want to show you what we’re working on, these new AquaTrax.’ So I called the vice president and I said, ‘Hey, I’ve seen the new AquaTrax,’ and he said, ‘You’re not supposed to know about that.’

It’s awesome, it’s great performance. It’s just so exciting. I think it’s the passion within the DNA of Honda. We try not to have walls. If there’s something you need, we have an open forum. We like to communicate.

I’ll meet with people at Honda Finance, I’ll meet with people in our other departments, and we’ll see how we can help each other with Honda Marine, whether it be technology marketing, promotions or learning new things that maybe auto is doing. So if you’re doing a better job of maybe satisfying the customer, they’re very open about talking about what things they do.

So there’s a real sharing in the company, and that’s one of the things I’ve felt in the 12-plus years I’ve been with the company is that they really – not just from a technology standpoint, but if one company is doing well – they really like to share the ideas because there may be some other applications. We can learn things, so we, as senior people, can go out in the marketplace and work with our dealers or our boat builders and say, ‘Hey, we learned something in another area,’ and we try and share that and leverage it.

And I think those are really the true traits of Honda, the sharing, the open forum and listening to customers and feedback, and those just aren’t the retail customer or our next-level customer, our dealer or our boat builder customers in our case, but also talking to each other, finding out what’s working and what’s not.

That is, I feel, a really big synergy and an opportunity for us to grow as a company.

Boating Industry – This morning you mentioned the “Proven” advertising campaign that Honda has launched. What does that word mean to you?

Fulcher – Well, the feedback that we’ve gotten through some focus groups, and I’ll be glad to share some footage with you, is that, without prepping customers, we’re known for durability, quality and reliability and excellent product and performance. People don’t realize that we’ve been in the outboard market for 40 years. So we asked customers, and they say ‘You guys are proven. Honda doesn’t break down. It has great performance, a great resale value, you guys should sound your own horn.’

So that’s what the customers are saying, and I don’t need [an advertising expert] to tell me what to do. Let’s use that.

So I said, ‘You’re right. The customer is telling us what our product is all about, and you don’t have to have a lot of buzzwords. One word really says it.

It’s really nice to be able to wear your employee badge or use your company credit card, and people will say, ‘Oh, you work for Honda, my wife has an Accord, my mother has an Accord, I have a Honda outboard.’ They want to talk to you for 15 minutes. It’s exciting. It’s a fun company to work for.

I think there’s a passion for wanting to make sure the company is successful and our dealers are successful and the boat builders are successful. Whether you interview me, or any members of my team, they just like working for the company because it’s fun.

Boating Industry – You mentioned that sales at Honda Marine this year are up, whereas a lot of companies are having more of a flat year. Can you characterize this year for Honda, is it a lot better or nearly the same?

Fulcher – Actually it’s better and there are a couple of things. One is, I think, our reach with the ‘Proven’ campaign, working with the key boat builders and getting our awareness out at the boat shows early and in the magazines, doing some joint promotions.

But one of the key things we’ve really been harping on is working on customer satisfaction issues. We have an operational checklist the district managers go through with the dealers, working with the dealers, and really getting the processes down and learning from that.

And then our support, I think the whole initiative within the industry about certification, and we’ve already got over 10 dealers certified and we’ve got probably another 20 who are on the cusp. And we want to support that, so right now we are co-oping 50 percent.

I think listening to our customers, and from focus groups, which we like to do because we get an idea of what they like about our product, but more importantly, what we can do different to improve the overall experience.

I really feel like how we’re going to differentiate ourselves, and we’ve done this in other industries, is the whole customer experience. So what I was alluding to is, I think through the certification process and really helping the dealers to get certified – and I just recently had a board meeting for Discover Boating and they brought that up again about the support and helping the dealers get certified – they realize it’s not the fact of getting certified, but it’s the understanding of how to treat customers, treat customers for life.

A store that has policies and procedures in place and respects and motivates their employees, that’s a powerful tool. That can have an advantage in downtimes and uptimes. So what I’m looking at is trying to get as many of our dealers certified as possible, and then using the dealers that are certified as word of mouth.

But I also want to make sure that we support the program. We’re co-oping, but I want to make sure that we don’t give anything for free. Because anytime you go out there and say, ‘We’ll pay for it,’ then they don’t go through their processes, and it is hard. They have to go through their policies and procedures, they have to look at what they do from a customer’s perspective, kind of looking in the mirror, and they have to make changes, relative to manuals and personnel and making sure they have the systems in place.

What they’re finding out is that they have fewer customer complaints, better treatment of customers, who are giving them better overall scores in the surveys they get back, from the manufacturer in our case. And then also there is more recommendation of their dealership, so it’s a win/win situation.

I think the whole industry needs to be revolutionized a little bit relative to other industries and I think [certification] will be very helpful in putting the emphasis on customer treatment, retention and satisfaction.

One of the things we’re focusing on this year and in our future strategy is using that as a differentiator. But we need to put some things in place. We put in the 5-year warranty, that’s been a big help and why our business is up.

Steve’s a big believer, and so I am I, of, ‘OK, did the initiative work?’ So what we do is we survey customers to find out, ‘OK, was that a differentiator?’ We talked to our dealers. And we found out that the 5-year warranty was a big differentiator. It really puts support from the dealer and us as the manufacturer, that we stand behind our products and don’t nickel-and-dime you for a $25 deductible, or we don’t cover this or cover that.

It’s the same warranty. It’s from us. It’s the same on day one as it is in the fifth year. People appreciate that the Honda brand stands behind its products. So I think that’s helped us a lot too.

Boating Industry – Are you optimistic about the economic climate over the next year or two as far as continuing to be able to grow and increase sales?

Fulcher – A couple of things. Gas prices came down and the interest rate moderated. Coming from the boatbuilders – and the advantage I have is talking to the board members at Discover Boating and I get a sense of what they think the market is, and also talking to the dealers because they have to buy boats for their inventory – I think overall they are positively optimistic, especially with the gas prices and the general economy, the consumer price index and the interest rate. I think they feel there will be a resurgence, as long as some of the key indicators don’t start to decline.

And there is also some sentiment about the weather conditions. There were four or five hurricanes last year, and who would have ever expected that and the damage?

Bailey – That’s still impacting people.

Fulcher – We haven’t had any hurricanes yet this year, but that does put people off, because they try and get insurance and there are a lot of categories of what’s covered and what’s not and they find out that something isn’t covered as much as they thought, so sometimes they do put off their new boat purchase until a later date.

We feel, with boat show season coming up, a lot of those people who have rebuilt their homes and got their families back together, this is kind of their reward. They got themselves back on their feet and now is the time, there are some great deals out there in the market place.

It’s very encouraging having just come from a board meeting, and the whole amount of money that Grow Boating Initiative has put into the advertising campaign, and from the recent focus groups they shared with me, I think there is a real opportunity there to really turn on and help the industry.

I think they’re doing the right thing, as far as advertising, the campaign, the whole lifestyle and the family aspect of it. I tried to really harp on, to the builders and the engine manufacturers, to use this unified voice that boating is fun. It’s a family thing, it’s a tradition, but in order to earn that business – because it’s not something like a car that you have to drive to work – you have to go the extra mile as far as customer treatment.

That really is going to be the differentiator as far as growing the industry – not only the technology and the different boating applications, but the fact that the customers feel comfortable and get treated well and they have fun out there. Then they’ll keep on coming back.

Boating Industry – Even before the latest pricing issues with oil, Honda has always been known for fuel efficiency, why is that something that has always been so important to the company?

Fulcher – It’s interesting, being an American and going to Japan, is the respect for the environment and natural resources. So the company, in R&D or listening to the customers, it’s important that we have good overall performance, and one of the key things that we’ll look at is the efficiency of our engines.

So rather than going the easy route, and I’ll use as an example our 75/90 engine, we could say, ‘OK, we’ll build that same horsepower in a two liter but it will be heavy,’ but that’s not what the customer wants, or it will eat a lot more gas, well that’s not what the customer wants.

Take the sense of being responsible with the natural resources and put that with optimizing the overall performance, and we feel that fuel efficiency, whether it’s on a 20 horsepower or whether its on a 2 horsepower or on a 150, it’s a critical thing the customer wants.

It’s also being respectful of the natural environment and not using all of our natural resources. So if we can save the customer 20 percent or 30 percent, it’s not so much marketing as it’s inherent in the company as far as our DNA.

We say, ‘What are all the customer’s needs and as a company what can we do better, as far as technology or engineering or cost of operations standpoint?’ Because we know that will pay dividends.

There will be stories like, ‘I can’t believe it. I put $20 of gas in that boat and it ran all day.’ ‘What, $20, that’s all it cost you for the whole day?’ And they’ll say, ‘Yes, it’s a Honda.’ And that’s great word of mouth.

Bailey – I think it gets back to designing and producing products that benefit society. That’s a pretty broad statement, but it covers pretty much everything we do.

Boating Industry – Suzuki recently introduced a 300 horsepower engine, do you also see the potential in building larger horsepower engines, or does Honda have a different philosophy as far as engine size?

Fulcher – I think there is potential in larger horsepower, certainly, if you look at the industry statistics. In our case, with where we are, we feel midrange makes a lot of sense. It’s a broader segment and there’s more growth opportunity from 40 horsepower to 225, we feel as a company.

That’s not to say that we’re not looking at that opportunity. That would be naïve. But we feel that midrange, and also broadening our overall experience with the boat manufacturers and really being known for saltwater and getting that recognition, is important. We’ve earned respect and we’re going to grow that opportunity. [Larger horsepower engines] is something we are looking at and not something we’re naively going to turn down as an opportunity.

Boating Industry – You mentioned that Honda will be introducing four new models in the next five years, does that include the 75/90 models you are debuting here, or are those four other models?

Fulcher – What we’re trying to do is set the stage for Honda Marine’s growth, and 75/90 – and it’s not just me saying this but listening to the comments from others – will set the stage for other models being best in class, both in terms of design and technology and also fuel efficiency.

But each of the new models that we do, that’s going to kind of set the benchmark of expanding our opportunities through our new models, new platforms. And we’re going to go for the volume motors. That’s where we want to go, that’s where the boat builders want us to go and that’s where the customers want us to go.

With the 75/90, you saw all the different boat applications and we just have 10 or 12 boats here, you can imagine that we could probably have 25 or 30 that the 75/90 is perfect for.

The boat builders, I asked them individually, and it’s really nice hearing all the feedback from the boat builders. They say we have a really great motor. We’re excited. Our team is excited and hearing all of the feedback from the boat builders and the journalists makes us excited about the opportunity and about how we’re going to grow in the future.

Boating Industry – What else do you want people to know about Honda?

Fulcher – I think the passion. We have a passion for the marine business and we’re going to be successful. We’re going to study things for maybe a little longer than some people want, but we’re committed to being successful in the marketplace and helping our dealers and our boat builders grow their businesses.

I think Honda Marine is going to be a powerful force in the industry and I think customers are going to speak highly of our products and that’s what the future of Honda is going to be, especially Honda Marine.

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