Using Direct Mail to Develop Sales Outlets
for the Cub F-Type / 1952
By the time Fujisawa joined the Honda management team, Japan had already bade farewell to the days when dealers came with cash in their knapsacks and paid in advance. A lot of motorcycle manufacturers had started up and it was now a buyers’ market. There were only about 300 dealerships in the whole of Japan and of these about twenty represented Honda but they were not, of course, exclusive Honda dealers. As a late comer into the field Honda had to supply all its products on consignment and the payment terms had to favor the buyer. Up until that time, there had been an extreme imbalance between Honda’s production capacity and its sales capacity.
The Cub F-Type, "the red engine with the white tank", was a hit creation that dominated its time. As a result of Fujisawas direct mail strategy, it was sold in about 15,000 bicycle shops, and was widely used throughout Japan.
Soichiro Honda gave Fujisawa complete responsibility for strengthening the company’s corporate sales position and conducting negotiations with its bankers. Another difficulty at first was finding a way of improving the inefficient system for collecting payment, but the biggest fundamental problem was to break free of the company’s weak marketing position and develop networks of agents and dealers.
Kihachiro Kawashima, who eventually reached the position of executive vice-president, was close to Fujisawa during those early years and had a chance to observe his clever planning, careful thinking and decisiveness. "I joined the company in 1951, much later than Mr. Kiyoshi Kawashima and Mr. Shirai. After graduating from the university I went back to my home town in Shizuoka and ran my own oil business. I heard that a motorbike manufacturing company called Honda was looking for salesmen. Since my own business didn’t look as though it had much of a future and I thought Honda seemed like an interesting company, I thought I would have a look and went to Hamamatsu. The first person who interviewed me was Soichiro Honda. Even though he looked just like the boss of a small local workshop, at this first meeting he remarked casually ‘Our company is going to be the world’s biggest motorcycle manufacturer’ but even so there was nothing unpleasant or arrogant about him; he was surprisingly charismatic. ‘If you want to be a salesman,’ I was told, ‘you’d better meet Fujisawa,’ so I went off to Tokyo where I found Mr. Fujisawa in a residential building next to a fishmonger’s shop, holding a flyswatter to keep off the flies that came from the shop," he laughs. "At first glance, it didn’t look like the sort of place one would entrust one’s future career to, but it was clear that Mr. Fujisawa was thinking on a grand scale. He explained that Soichiro Honda was going to make the best bikes in the world and that his job was to work out a way of selling them. I could see at once that Fujisawa was captivated by Honda’s technical knowledge and philosophy of production."
Despite the company’s uninspiring appearance, Kawashima was strongly taken with both men and decided on the spot to join Honda. After doing three months’ practical experience at Hamamatsu Factory on his own suggestion he went up to work at the Tokyo Sales branch.
About the time the E-Type was launched, the Japanese economy started to turn around and sales were on the up, but Honda was still working within the same old-fashioned marketing culture. It wasn’t going to be an easy task to transform business habits that had developed over many years. The Tokyo branch’s sales territory covered the area from the Kanto region northwards. Kawashima and the other young sales people dashed around all over Tokyo and right up to the north-east of the country in an effort to develop new-style agencies. Often when they called on car dealers they would be asked, "What does this Honda company do?" Still, with a great deal of effort they managed to secure contracts with a few dealers.
In April 1952, Honda’s Head Office was transferred from Hamamatsu to 3-3 Maki-cho, Chuo-ku, Tokyo. But the office looked little better than it had before.
"Fujisawa was always waiting for the right moment, hanging on patiently until the time would come when the company could take a big gamble with a product that suited the mass market", explains Kawashima.
The Cub F-Type, as the latest auxiliary bicycle engine was known, was that product. Known as "the red engine with the white tank," its fresh-looking design fitted perfectly with Fujisawa’s dream of a mass-market product. The Cub F-Type was a small, lightweight, 50 cc 2-stroke engine made with as many die-cast components as possible. Its smart but cute appearance made everyone feel that they would be happy using it.
According to Kawashima, "I don’t know when Mr. Fujisawa hit upon his extraordinary new sales strategy, but the manufacturing trials were completed in March 1952 and I think he probably worked it out carefully in the time between then and the launch in June."
Fujisawa realized there was a completely undeveloped distribution network that everyone else had ignored. He was the only one in the company who was able to understand its potential. Fujisawa was thinking of the bicycle shops that one could find all over Japan. The management team were amazed by his fresh thinking and insight.
Kawashima recalls: "And so it was that we carried out our plan to contact the country’s 50,000 bicycle shops by direct mail. Mr. Fujisawa wrote the DM brochure and it was a masterpiece, very carefully prepared and skillfully composed. Both stages of his campaign showed just how thoroughly he had understood his potential customers’ way of thinking. ‘After the Russo-Japanese War (1904-05), your ancestors took the courageous decision to launch the imported bicycles in Japan and they are still the basis of your business today. But now customers want bicycles with engines. We at Honda have made such an engine. Please reply if you are interested.’ That was Mr. Fujisawa’s first message and he received 30,000 enthusiastic replies. He immediately embarked on the second stage of his campaign. ‘I am delighted to learn of your interest and we shall be distributing one machine per shop, on a first come first served basis. The retail price will be 25,000 yen and the wholesale price will be 19,000 yen. Payment can be made by postal transfer or through the Kyobashi branch of Mitsubishi Bank.’"
"In a further effort to secure orders," Kawashima continued, "Mr. Fujisawa got the Kyobashi branch of Mitsubishi Bank to help by sending out a letter signed by the manager requesting customers to send their remittances to Honda through the Mitsubishi Bank’s Kyobashi branch. Excited and apprehensive, we all waited to see what would happen."
Forty-seven years ago there were no automated means of sending out 50,000 letters. Every single address had to be written out by hand. This work was put out to freelance clerks but even so there was not enough time and all the staff had to join in as well, helped by employees of the Mitsubishi Bank’s Kyobashi branch.
"The response was incredible. We had immediate replies from 5,000 shops and the figure just kept on going up.
We got the Nichigeki female dance troupe, then at the height of its popularity, to put on a splendid parade riding bikes fitted with the Cub F-Type engine through the main street of Ginza, Tokyo. The route was lined with cheering spectators and it was reported all over the country. The Cub F-Type immediately became known as a bike that women as well as men could ride.
A grand demonstration of the Cub F-Type that garnered attention at a Motorbike Festival held in August 1952. The Honda Monthly (No. 12) published that same month says, "More than 150 promotion vehicles from Honda and other manufacturers paraded from Hibiya Park through the main streets of Nihonbashi, Ueno, Ikebukuro, Shinjuku, Shibuya, and Shiba in Tokyo in a major demonstration to make motorbikes better known.
The bicycle world was used to ordering goods on consignment and the idea of pre-payment came as a bit of a shock to them but it fitted their needs perfectly. If you ask me, Takeo Fujisawa had real guts and knew how to take a finely-balanced gamble," he continued, laughing. "He succeeded in creating an independent sales network in almost no time at all." Fujisawa also developed techniques for following up the response from the bicycle shops. He bought light aircraft for the company and used them to shower promotional leaflets from the sky all over Japan – of course the leaflets always included the names of the local outlets.
"In order to build up a sales network you have to stimulate customer demand and the secret is to make sure that the desire to buy and the desire to sell both happen at the same time," said Kawashima. "It was instructive to observe how this multiplication effect worked out." In later years Kawashima found this experience very useful when he was developing the U.S. market.
"Mr. Fujisawa’s writings include a book entitled ‘Light the torch with Your Own Hand.’ This title means that ‘If you don’t carry your own light you can’t lead the way. If you walk with light provided by others, you will always be bringing up the rear. You may be sure of never losing your way or stumbling, but you’ll never be a leader.’ In terms of marketing networks, ‘If you simply make use of existing methods you’ll never be able to make real money.’ The essence of Mr. Fujisawa’s sales strategy was to build up networks using your own ideas and policies so that you can do business exactly the way you want," said Kawashima.
Honda took the initiative, deciding on its market, establishing a production plan, and using it as a basis for the allocation of resources and placing orders with suppliers. With all the necessary information at their fingertips, it became possible to make independent decisions. But to achieve this, an "independent sales network" is necessary.
From the moment they first met, Honda and Fujisawa would get together every day and every evening, sitting up into the night talking together, encouraging each other in endless conversation.
"They never told us much about the subjects of their conversations so I can really only guess, but I think they were plotting, exchanging their innermost thoughts. And I suppose that’s how the two of them, although they were so different, were able to share so completely everything that lies at the heart of what we now call the ‘Honda philosophy’. For example Mr. Honda used to say that ‘the basis of a successful business is not capital but ideas’. Mr. Fujisawa could agree with that – both of them always worked hard at thinking. Well, as they hadn’t got any money, they had to have ideas!," said Kawashima, laughing. "It was their duel of wits that built the company. Anyone in our generation – and later generations – who knows them first hand would probably agree. They were ideal partners but they were also friendly rivals. ‘Leave me to get with my business!’ ‘Hey, look at what I’ve done!’ they would say as they tried to outdo one another. They were a fantastic team!" said Kawashima.
This independent and totally original sales network, dreamed up out of thin air, made the most of the Cub F-Type’s special qualities as a consumer product. Fujisawa, the salesman, responded to the wishes of Mr. Honda, the maker, and turned in a superb performance. Around this time Fujisawa also put in place a unique consumer hire purchase system of payment by monthly installments. Although the Cub F-Type was only 25,000 yen, that was still more than three months’ starting salary for the average white-collar worker. So Fujisawa thought up a revolutionary way of organizing loans. The way it worked was that if, for example, a customer wanted to pay in twelve installments, he or she would sign twelve promissory notes which were endorsed by the retailer and passed on to Honda. This was a good system both for the customers and for Honda. It meant that Honda could be sure of getting paid and if by any chance there was a problem it only applied to a single purchase, thereby minimizing the risk.
"There’s another very important thing I’d like to say about Mr. Fujisawa," Kawashima continued. "When the direct mail program was launched, the Kyobashi branch of Mitsubishi Bank gave Honda a personal reference. At that point Honda hadn’t received any finance from Mitsubishi, but from the moment Mr. Fujisawa started doing business with them he always treated them in the same way, offering them full disclosure of the company’s accounts and management plans in both good times and bad. Mr. Fujisawa used to teach us ‘When you deal with banks, never hide anything. If you give them a completely logical explanation of your present situation and future plans they will always understand.’"
So the Cub F-Type went into mass production. It was a fantastic success, shipping 6,000 units in October and 9,000 in December.