Toyota Motor CorporationMARKETING MANAGEMENT OF TOYOTAToyota's Major Car modelsToyota Prius Toyota Highlander Hybrid Toyota YarisToyota Corolla Toyota Lexus LX 570 Toyota AvensisToyota Camry Solara Toyota IQ Toyota AurisTABLE OF CONTENTSContentsIntroduction ........................................................................................................... 4Background/History ...............................................................................................4Current Market Position .........................................................................................6Vision .....................................................................................................................7Section 1The organization orientation ..................................................................................8SWOT Analysis ......................................................................................................9Financial ................................................................................................................10Section 2The competitive advantage of the organization......................................................12Section 3The Impact, Positive and Negative, of the Organisation's Marketing Mix......
Product.....................................................................................................................14Price .........................................................................................................................16Promotion .................................................................................................................21Place ........................................................................................................................25Section 4Marketing Success ..................................................................................................28Negative Impact of Marketing ..................................................................................30Route Map to Success.............................................................................................31APPENDISESPricing Strategies Matrix ................................................................
PRICE-QUALITY MATRIX .................................................................
INTRODUCTIONBACKGROUND/HISTORYToyota Motor Corporation was founded by Mr.Kiichiro toyoda in 1935 in Japan. The first vehicle launched by Toyota Motor Corporation was A1 prototype passenger car. Toyota Motor Sales, United States of America was established in 1957. Toyota started its business in United Kingdom in 1965 by launching Corona. In 1967, Pride & Clarke who were Toyota's sole UK importer became Toyota GB. The same year Toyota's famous 150bhp two-seater coupe, the 2000GT appeared on screen in the Bond flick, You Only Live Twice which made Toyota even famous.
In early seventies Toyota flourished even with oil crisis in 1973 as Toyota's vehicles where economical. Toyota made its ten millionth vehicle and entered rallying in 1972. In eighties, Toyota Manufacturing Ltd started their plants to manufacture the Carina E family car at Burnaston near Derby and Deeside in North Wales. In 1984 Toyota and General Motors joined hands in US to start New United Motor Manufacturing Inc. In 1985, Toyota launched its fifty millionth vehicle. Due to the importance given to designing, Toyota started own European design centre in the south of France. In 1997, Toyota's star - the Prius - world's first hybrid car with eco-friendly design was launched and is still one of the most significant cars ever launched in history of cars.
In late nineties, Toyota improvised its manufacturing technology to great level which got them the award "European Car of the Year" for its "Yaris" and was the first ever Toyota car to do so. In the new millennium, Toyota became the pioneer in hybrid car manufacturing which got them the European Car of the Year award in 2005, for its first hybrid car Prius. In 2007, Toyota went on to win Best Car Manufacturer and Toyota was also able to achieve 1 million hybrid sales.
Toyota's ever growing innovation like recycling the waste in its plants and the practice of applying almost 99% of its workers suggestions in its plants, keeps it ahead of its competitors. In 2008 Toyota created a world history by overtaking General Motors in sales to become the 'World's leading car manufacturer' title with a sale of 8.97 million vehicles.
CURRENT MARKET POSITION:Toyota has been continuously successful in introducing new models into the market and having a wide selection of new models which helped Toyota to constantly improve its sales figures and even bettering the market of other leading car maker like General motors, Renault , Ford and Volkswagen and hence has become the world's leading carmaker. Toyota's Hybrids have 75% of market share in US hybrid car industry which had 15% surge in its sales in 2007-2008.Toyota's management focuses on technology, supply, and utilizing all the sales capabilities to drive growth, with the support of quality, cost, and human resources. Toyota's plan is to achieve new levels in safety for their cars and eco-friendly motoring.
In year ended March 31, 2007, Toyota set new records with sales hitting 9.34 million with net revenues rising by 6.0% and net income showed a rise of 26%. Toyota has also has hiked the dividends paid to its shareholders by 20% in 2008 and has been successful in giving dividend hikes to shareholders for the eight consecutive years (Toyota, 2008). In the year 2008, Toyota's net sales reached an outstanding figure of 8.97 million which at that global situation was a remarkable achievement. Toyota's sale has been forecasted earlier to be 9.7 million in the fiscal year 2009.
Figure 1.Variation of Toyota's sales figures*9.7 million is forecasts sales which Toyota is not likely to achieve as a result of economic down turnToyota has been able to have increased revenues and earnings despite tougher-than usual business conditions in the automotive industry and the credit crunch. Toyota believes that global automotive industry has got a great growth potential which it believes is centred on emerging markets and has decided to have long-term view. Recently Toyota has been hit severely by the credit crunch as is expected to report a loss for the first time in history in the financial year ending March 31, 2009. Toyota has been continuously implementing cost cutting measures to improve their profits in the tough economic conditions.
Due to the high demand and cost of fuel, increasing concern over environmental and pollution issues world is shifting toward fuel-efficient vehicles and compact vehicles. So Toyota is focussing on eco-friendly, fuel-efficient hybrid cars as the plan for their success. Toyota's hybrids are the talk of the world automotive market which clearly states the current marketing position of Toyota (Toyota, 2009).
VISION1. Toyota's main vision is HARMONY WITH PEOPLE, SOCIETY AND THE ENVIRONMENT.
2. Main aim of Toyota is enrichment of society through car making. Toyota's goal is to be a GOOD CORPORATE CITIZEN by winning the respect and trust of International community.
3. Toyota is aiming for a stable long term growth with its practice of openness and fairness in their business and implementation of cleaner and safer car making.
4. Innovating advanced technologies in its products and services for its international customers.
5. Creating corporate culture which develops creativeness and team working possibilities with good understanding between workers and management.
6. Managing the changes worldwide with implementation, strategies and tools.
7. The root cause problem solving in all aspects of its business and manufacturing through continuous learning and taking suggestions from employees and consumers.
8. Development of exceptional people and partners for providing unconditional support to customers.
9. The idea of creating lean processes throughout its enterprise for preparing to face the future.
10. The process of "sticking to basics" that of by keeping the business processes simple and friendly.
The organisation orientation of Toyota:Toyota in early nineties used a PUSH strategy for the achievement of its short term targets in sales to sell its low priced Japanese cars, which was supported by tactical incentive programme with not much brand investment or marketing strategies. But that success did not last long as the new low-price competitions started matching its offers. So the profits lowered.
Toyota converted itself into a marketing oriented company following a leading consumer research survey(Jobber,D.2006:p.7) It switched its focus from its aggressive selling strategy to sell its cars by understanding what the consumers want from Toyota and what it can do satisfy them. So the expenses were diverted from tactical incentives to advertising media.
Toyota made its dealers to change-over to its new culture and values to all its car showrooms. It also improvised on the services it provided to the customers which created a average owner's purchase cycle to almost 3.7 years. Then Toyota introduced a single window communication channels for its customers to increase the attachment with the company known as the single customer database which is the backbone of Toyota's communication revolution. It even created improvised and interactive website, Toyota club for premium segment, customer experience surveys and customer magazine.
Figure 2: Marketing Orientation (Jobber, D.2006:p.6)This made Toyota's brand image change from 'cheap and reliable' to 'quality at competitive price' in customer perception which made its profits to rise.
Four points that Toyota makes clear is1.Marketing should be the number one priority of the company2.Customer views are more important than the company's views3.Investing and focussing on future4.Be patient after doing all theseSWOT ANALYSISSTRENGTHS:Toyota's strong brand name and the title as the 'world's leading car manufacturer' in the world with operations in 170 countries in world is the greatest strength of Toyota. Toyota has a strong R&D team which helps Toyota to identify the needs of the customers and to launch new attractive models according to the trends in the car market. The R&D team also advices Toyota the necessary modifications to be made to the existing models in order to improve customer satisfaction and to attract new customers. Toyota uses Quality function deployment (QFD) in which quality products are developed and delivered by focusing the various business functions in order to achieve greater customer satisfaction.
Toyota has a unique process called Toyota Production system which helps Toyota to minimise the wastages in their production cycle and to maximise the profits. Toyota has an approach called Just in time whereby the products are manufactured according to the demand from the customers which helps Toyota to improve their Stock turnover and thereby reducing inventory wastages. Toyota offers right mix of products for the areas its serve which helps Toyota to achieve higher sales and profits. Toyota has very sharp targeting, segmentation and positioning. Toyota's diversified product range, efficiently targeted marketing and a good quality manufacturing differentiates Toyota from its competitors. Toyota has its products lined up for all segments of the society, whether it is small cars for private customers or huge trucks for commercial organisations. It uses creative marketing strategies to identify and satisfy its customer wants. Toyota is now a household brand globally which increases its profit through unique manufacturing techniques with good quality. Toyota has its future in hybrids, the sales and demand of its hybrid "YARIS" itself tells the story of what future holds for Toyota.
WEAKNESSES:Toyota has not been successful in Europe as it was in America and Japan .Toyota has less market share in the European car market as it has not been successful in convincing the European Consumers as the European consumers prefer highly prestigious brands like BMW and Mercedes Benz. The current condition in global automotive industry is over supply and Toyota too has the same problem, so it has to confirm that the consumers go for its products. As Toyota's main markets are Japan and America, it relies mostly on the sales done in these markets and the varying politics and economics in these regions affect the company as well. Toyota is looking into emerging markets like India and China. The company is doing heavy investments in fixed costs, training and retaining of work force and other institutional costs in these countries which is not good in this current market condition globally and has increased the costs of the company to a large extent and as a result Toyota is expected to report first loss in its history in the fiscal year 2009. With Toyota's huge volume of car manufacturing and dwindling sales these are the typical problems it has to face.
OPPURTUNITIES:Toyota has a great opportunity in its hybrid cars, especially in Lexus RX400h and Toyota Prius. As the global demand and price of oil increases day by day, the market for hybrid cars which are highly fuel efficient also increases. As Toyota is the pioneer in hybrid technology it makes it further easy for it to explore the current market condition and cater the demand of the market. Toyota can use its opportunity to the maximum by selling its hybrid technology to other car manufacturers; it has already sold its hybrid technology to Ford for its new hybrid SUV. So that will increase the flow of funds to its Research and Development. Toyota has planned to cover the youth market with its launch of AYGO which targets the trend and culture of youth. Toyota has plans to strengthen its grip in the European market by launching zero-interest schemes in Europe(Economic Times,2008).Toyota has been successful in USA with similar strategy. Toyota has huge opportunity for expansion in developing countries like India and China. Toyota has plans to increase market share in India by introduction of hybrid cars which would benefit the Indian consumers with environmentally friendly fuel efficient cars.
THREAT:Main threat for Toyota is the current global economy slow-down which has affected automotive industry worldwide and Toyota is expected to incur a heavy loss of 150 billion yen in the financial year ending March 31, 2009. The other un-avoidable threat Toyota has been facing is the PRODUCT RECALLS due to faults in the engine parts which has been costly for Toyota. The company incurred a major setback in 2005 when they had to recall 88000 sports vehicles and pick up trucks due to the faults in the engine suspension systems (Marketing Teacher.com,2008). The government has been imposing heavy taxation on cars which forces the people to use public transport there by reducing sales of the cars which forms a threat for all the car manufacturers. The company also has risk from the rapid fluctuations in the raw material prices like rubber, steel etc. The huge fluctuation in fuel prices also is a threat to the car manufacturers as people will go for more economical means of transportation (Toyota, 2008). Another difficult threat Toyota is facing is never ending competition and rivalry from the existing and new competitors especially from China, Korea and Eastern Europe.
FinancialFinancially the world's largest automaker is not in a good situation .Toyota also has been hit severely by the global economic meltdown and is expected to report its first ever loss in a financial year in March 2009.Toyota is facing severe liquidity problem due to credit crunch. Toyota has asked for an emergency loan of 2 billion dollars in March 2009 to get rid of crisis from Japan Bank for International Cooperation (China daily, 2009) .Due to economic slowdown Toyota's sales dropped by 4% in 2008 to 8.97 million vehicles due to the severe demand slowdown in Japan, United States and Europe. Earlier its sales rose to 9.37 million vehicles in 2007. Toyota has been temporarily closing factories in Japan and the US and axing temporary workers (Just-auto, 2009). Toyota lowered its global sales target for 2009 by 700,000 vehicles to 9.7 million on August 2008, owing to rising material costs, a slowing U.S. market and soaring gas prices (msnbc, 2008).
*9.7 million in 2009 is Target Sales which is most probably not achievable in this economic situation.
Figure 3: Sales variation of Toyota Vehicles across GlobeThe above graph shows the variation of the sales in Toyota vehicles .It can be seen that the sales dropped owing to recession and is again expected to fall more on account of credit crunch. Toyota is unlikely to achieve its targeted vehicle sales in 2009.
Competitive Advantage of ToyotaToyota has a well earned reputation for excellence in quality, cost reduction, and hitting the market with the vehicles they sell. Earning billions of dollars per year and amassing at any point time $30 to $50 billion in cash reserves would be enough to convenience anyone that this company must be doing something right. Toyota's impact on the world has gone beyond making money. It has even gone beyond making excellent vehicles people can enjoy driving (Liker,J.2008: p.25). Toyota's strong competitive position in the market helped the company to achieve this. A competitive advantage is the achievement of superior performance through differentiation to provide superior customer value or managing to achieve lowest delivered cost. The most successful methods are built upon some combination of three advantages:1.Being better2.Being faster3.Being closer.
Competitive advantage is fundamentally about the value that the customers put on the product assessed by how much they are willing to pay, and the organization that better serves the customers has the differential attribute or dimension to create better customer value (Jobber,D.2006:p.53)The success and reputation of Toyota in the global market is associated with the targeting of the market with the vehicles which are highly reliable, superior quality, less maintenance cost and stylish features. These features differentiate the Toyota vehicles from its major competitors like GM, Ford and Fiat. Toyotas cost leadership strategy is the other major factor that differentiates the company from its competitors. Toyota has launched many vehicles across the world whose price range is around the industry average price and offers a superior performance.
Another factor which provide a competitive advantage to Toyota is that ,Toyota always study the market and if they found that the competitors are underperforming they will understand the needs of the target group and offer differentiated products to one or few target market segments. Another factor that provides an advantage to Toyota with respect to its competitors is that Toyota maintains a superior and a closer relationship with its customers and offers them attractive margins. This superior quality assurance skill can also results in higher and more consistent product quality.
Toyota's number of sales persons in the market is the other factor which provides a competitive advantage to the company. Toyota has more number of retailers who keeps an inventory of the products in their own regional market. This distribution coverage provide an advantage to Toyota than its competitors(Jobber,P.787) .Toyota's corporate philosophy, which includes the set of rules and attitudes that govern the use of its resources, is one of the major reason for Toyota's global market success.
The Toyota philosophy is often called as the Toyota Production System which provides a differentiation of production with respect to competitors. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also, on a highly efficient network of suppliers and components manufacturers (Liker,J.2005,p.25).Toyota generates value for its customers with its manufacturing technologies, the method of delivery and order processing and with the kind of service that the company offers like repair of vehicles and training of the customers in how to drive and use the facilities in the vehicles. This value generation for the customer, society and the economy is the other factor which provides advantage to Toyota than the competitors.
Just in time supply of the products by its suppliers which interns results in lower inventory cost makes Toyota to stand high from its competitors (Jobber, D.2006, p.788). Another factor which provides competitive advantage to Toyota is the redesigning of work process which help the company to achieve a flow which helps to complete the projects or products in one tenth the time which was required previously. The Pull system, which is a system of holding minimum inventory and manufacture according to what the customer actually takes away, is one of the important factors which provide a competitive advantage to Toyota. The main advantage of pull system is that it eliminates over production. Maintaining firmness in the workload is the other factor which gives an advantage to Toyota when compared to its competitors.
Spikes and peaks are managed through a springy workforce brought in from contracting companies and suppliers (Liker, J.2005, p.32). The usage of all the latest quality assurance methods which are become the standards in the industry makes Toyota to stand high from its competitors. Toyotas philosophy of building quality is that when there is a problem, instead of keep going with the intention of fixing it later the company stop and fix the problem. The usage of dependable and thoroughly tested technology by Toyota serves the people and process. Toyota always encourages their people to think outside the box. Huge investment in Research and development and a highly advanced research and development wing played a major role in helping Toyota to achieve and maintain its competitive position in the market. The reliability of Toyota product which is attributed to the lower maintenance and fewer problems adds to brand image of Toyota. Toyota's promotional activities which include free or low cost trial, advertising, free demonstrations of the vehicles add value to the company (Jobber, D.2006, p.790). This activity helps the customers to reduce perceived risk of purchasing a new car which may result in superior brand personality. Fast complaint handling which results in fewer problems of vehicles provide an advantage to Toyota than when compared with its competitors.
Another factor which provides competitive advantage to Toyota is that Toyota does not use and abuse their partners. A partner becomes an extension of Toyota. Giving respect to their worldwide group of partners and supporting them to grow is the other factor which makes Toyota to stand apart from its competitors. The making of decisions cautiously by evaluating all the alternatives and implementing the decisions quickly is the one of the main advantage of Toyota motor company. Another factor which differentiates the company from the competitors is that in the process of learning the company moves forward and builds on their past starting with each new project. By bringing the customers into product development process and aligning the product with the brand, Toyota has consistently established a strong competitive position in the automobile industry.
The Impact, Positive and Negative, of the Organisation's Marketing MixPRODUCTLaunching a product in to the market is done after doing a research on the market. Industries will try to study what customer need from them. It mainly deals with products and their services. After analysing the report of that research they can launch the product at a perfect price. Price can be related with the place where this has to be launched. Then industries will have a look about the promotion part as it is very much important for a product to sustain its position in the market. And all these four sectors like product, price, place and promotion constitute the product life cycle.
Toyota has launched a number of products. Almost all the products have attracted people around the globe. Toyota has got a strong brand value and that can be considered as the added advantage in this field. Brand value alone can attract some customers to buy their product. One of the reputed firms from Japan has got worldwide acceptance in the light motor vehicle field as a result of this. Every year they will be coming with a new product and some additional features will be there for each and every product (Automotive News,2009).
Toyota is one of the reputed industries in the world as they consider their services to be at the best. They are listed among the top 50 automobile industries in the world. This standard not only comes with the brand name but the services what they can provide to their customers to satisfy them. Services can be of two types. They are services for the sold product and presales services. Services after the sale of product can add some revenue to them. But the services what they are ready to do even before the product got launched can attract customers to them (Toyota,2008).
Toyota is an innovative company as they not only concentrate in the styling part but they will try to invent some added features to their product. Toyota is very strict on finding out safety measures and implementing it in the new models. All leading car manufacturers are trying to do the same like Toyota. Toyota is using some features like ABS but this feature is not only used by them. This feature helps in ant locking the tyres which helps in preventing many accidents.
Toyota has tried their best to prevent wheel spinning. They have given air bags all over the sides of the vehicle to protect the passengers their customer at any means. They have reduced the lateral skidding on the roads. All collisions like front, rear and sides are given special care and they have tried to reduce that. Toyota hasn't compromised their word in that by just preventing from them but they tried in thinking ahead. They have given their customers a safety feeling even at longer rides. Toyota is still trying to add some additional safety features to the new models which are yet to come in to the market (Safetytoyota.com, 2009).
Quality, dependability and reliability are the primary motivators as this is rated universally. All automakers are giving special care in this field as this can make them separate from their competitors and it must be following some standards. Brand image, styling and performance is also important for many customers. But consumers will also think about the things after the purchase of a product. Toyota has supported their customers after their purchase for many years. They took all the positive steps towards improving their technological department for their after purchase support.
Toyota has been in this field for many years. So they have to take care of their old clients as well as new clients in the same manner. Toyota has to face some challenges in taking care of their after support team as they have to know about the new inventions and the technologies used in the new built cars. Then only they can help their customers. Toyota is running a lifeline service for its customers at every time in major cities to make their customers feel good. Toyota has to look forward on the future cars and the upcoming inventions which can be treated as a challenge in the after purchase support (Digital literacy project.com, 2009).
Perfectness in the packaging is a highlighted feature in the quality. Toyota is renowned for the best packaging. The product must be in a safe state after its manufacturing is been done. Packing of a product deals with its safety and reducing unacceptable damage or loss in the shipping process. The goods produced must be packed properly to make it reach their destination safely. Toyota has many tie ups with good corporate in the packing market to make their products reaching the places safely. The important component in the industry is the engine which weighs more and need special attention is packed separately (Orbis, 2008).
Toyota has never compromised in letting their quality down. Toyota is making most of their cars in Japan and from there they are transporting their product to different parts of the world. They are the No. 1 car company in Japan for many years regarding the quality which they are providing. They have captured a position in the other parts of the world too in the early times because of their quality and promotion work. But due to the competition from their competitors and because of the increasing requirements from the clients Toyota is facing a stiff back from at least some parts of the world. This can reduce their sales too.
Toyota is providing one of the best warranty providers in today's automotive market. Every vehicle comes with the warranty cover in connection with the distance they have to cover or in regular interval of time. It might vary with the class of the vehicle. This covering can even be extended by adding the service package. The warranty what they are providing gives Toyota much customer satisfaction as they are covering almost all the components. This warranty covers can be divided in to three if they are providing extended warranty coverage. They are Comprehensive warranty, Limited Power train warranty and Roadside Assistance (Toyotacertified.com,2008).
Figure 4: Extended Warranty slip of Toyota(Toyotacertified.com,2008)PricePrice is the most crucial element of marketing mix as it is the only revenue earner for the business where as all the other elements of marketing mix are costs(Jobber,D. 2004:p.376).Toyota uses the value based method of pricing its cars rather than the conventional cost plus pricing methodology. In this methodology price is charged according to customer's perception of the value of the product based the benefits the product offers to the customer. The benefits of the product are clearly defined for the product over the competitor's products and based on the value the product offers to the customer the price is determined. Toyota has been very successful in their pricing methodology which helped them to snatch the title of "world's largest automaker" in 2008(Washingtonpost.com, 2009).
Pricing AdjustmentsToyota uses various pricing adjustments on changing sales to boost salesDiscount PricingIn discount pricing various discounts are offered to customers in the form of Cash discounts, quantity discounts, trade discounts, seasonal discounts, allowances (Marketingfan.com, 2009).Toyota used discount pricing to boost sales. Toyota offered discounts worth $2000 on Prius , best-selling hybrid in the United States in March 2007 to meet their sales targets(Iht.com, 2007). They offered low-cost lease and no interest financing also in January.
New product Pricing TacticsPenetration pricing:In this pricing strategy the price of the high quality product is initially kept low to gain entry into the market (Marketing teacher.com,2009).Toyota used penetration pricing to enter the US car market (Sitenet.com,1997).
The cars were cheaper in the beginning with better quality than the competitors. Once they have penetrated the market they grab majority of market share .In this pricing methodology the company will not get profits in the beginning. Once they have established their brand name they increase the prices.
Economy pricing: In Economy pricing low quality products are sold at low price (Marketing teacher.com).The pricing strategy of Toyota Corolla is based on Economy pricing. The Toyota Corolla ranks 13 out of 35 in the list of 'Affordable small cars' in 2009(Usnews, 2009)Premium pricing: In this pricing high quality products are sold at high price (Marketing teacher.com).Toyota used this pricing strategy for Lexus. Every luxury brand follows this pricing strategy, which is keeping the price of a product or service high, so that buyers will favourably perceive it as superior or exclusive.
PROMOTIONAL MIX:Toyota is accelerating its sales through huge promotion. They segment their brand according to age, sex, race, and lifestyle. They generate their sales through attracting all types of customers by different promotional mix. Toyota has followed a tailor-made approach to advertising its various subsidies. Whether it is the luxurious Lexus brand or the youth oriented Scion, the company's intent has always been to reach their target in a way that appeals to the demographic. A major portion of Toyota's advertising budget has been geared towards television commercials. The current economic situation has led the car manufacturer to adopt more frugal ways to advertise their brand. While the web provides a convenient and cheap advertising outlet for Toyota, it does have limitations. In the section below we will discuss how Toyota uses all the elements of promotional mix.
ADVERTISINGIt is the most effective element in the promotional mix. Advertising helps to introduce the products to a wide audience quickly by means of television, the press, outdoor, cinema and radio. (Jobber, D.2006: p.498). The aim of advertising is not only to make high volume sales but also to create a brand loyalty among customers. Toyota has been spending 100 billion Yen every year for overall advertising .Toyota, which has its own advertising department also, has collaboration with external agencies for advertising its brands. During the launch of the Prius Toyota joined hands with Saatchi & Saatchi and Oasis Advertising of New York to formulate an "integrated media plan" to inform and persuade customers about the features and benefits of the eco-friendly car, Prius.
Toyota uses television, press and billboards commercials for advertising its products. The promotion done by television, billboards commercials for Toyota products are in sync with the consumer's cultural and social background. The commercials are generally meant to create a connection between the car and the target audience. In their famous "human touch" commercial, a Toyota Camry's components are replaced with living beings, such that the driver sits atop of a man playing the role of the car seat while two people in the back whistle the song being played in the car. There is also a surprising small man holding an airbag by the accelerator. The commercial is obviously a satirical take on how far the company goes to bring natural appeal to its vehicle, but it succeeds both in its humour and message equally. Toyota takes lot of high profile celebrities as brand ambassadors for their products in advertisements for promoting the brand.
INTERNETInternet is the cheapest method of promotion. Toyota uses electronic media to advertise its products. Toyota has a website from which consumers can obtain instant information on products or services to aid them in their crucial purchase decision (Toyota, 2009). As part of the cost cutting measures Toyota has been increasingly using electronic media since 2006.In 2006 Peter Evans announced that Toyota will be going online to reduce advertising expenditure (Fairfax Digital, 2007). He increased the annual budget for website to double since 2006.Based on geographic location; Toyota uses heavy flash-based websites to reach countries where broadband access is available. The Scion, for instance, has a social networking page for prospective and current owners. The Scion brand is targeted at college students and this strategy works wonders because it allows users to communicate with other buyers when deciding to purchase or buy accessories for their vehicle. The internet may not generate any considerable revenue for Toyota, but it serves as a slick tool to reach the customer. In these days BLOGS and discussion groups have been increasingly used to increase the popularity of the products. There are lot of blogs available that discuss about various cars. Some of the most popular blogs include Hybrid Car Blogs and Auto blog and popular discussion group include Prius Chat .
PERSONAL SELLINGPersonal Selling is a promotional measure which involves oral communication with the prospective customers in order to sell products (Jobber, D.2006, p.545). This type of promotion is done in exhibitions and shopping mall where large number of people gathers. Toyota occasionally uses this method of promotion. Toyota launches their product in public places and takes feedback and recommendations from public. It is an expensive way of promoting a product, but has been done in order to launch products in certain markets. During the launch of Prius, Toyota used personal selling, which they did on the Earth day held in year 2000, where they allowed the customers to test-drive.
PUBLIC RELATIONSPublic relations is the effective management of relationships and communication to improve the mutual understanding between the company and its public.(Jobber,D.2006: p.646).Public relations can be used as a powerful tool for creating awareness and to improve the reputation of the company. Toyota focuses on maintaining good relationship with press, media and the general public. The media in turn gives Toyota good coverage whenever they launch new products or take any strategic decisions. Toyota's website has been used as an effective communication medium between the organisation and the public. It has extensive information on all the Toyota's vehicles, the promotional offers, the location of its dealers, service centres, showrooms etc (Toyota, 2009). Integrated Marketing Communications is to coordinate the various communication channels such as advertising, personal selling, public relations etc (Jobber, D.2006:p.158). Toyota is a perfect example of IMC .This is evident from its success in coordinating all the communication channels successfully and making a clear message that Prius, its top model is going to propel the automobile industry forward during its launch stage.
SALES PROMOTIONSales promotion is a crucial component of promotional mix. It is providing incentives to customers in order to stimulate sales(Jobber,D.2006,p.448).Following the credit crunch Toyota sales have been deeply hit. So Toyota has been offering numerous promotional offers to the customers. The most commonly used promotional method used by Toyota is to offer money off on its cars .Currently Toyota UK has declared numerous discounts on the purchase of AYGO, Avensis, Auris models (Toyota, 2009). Earlier in October 2008 Toyota announced 0% finance on a dozen models by an offer called 'Saved by Zero' .Toyota Canada has announced Gas Card or equivalent cash discount on its 2009 Tundra model and .9% financing for Camry and Camry hybrid 2009 models. Toyota's sales promotion team was recognised globally in 2003 when Toyota won the Gold award from the Institute of Sales Promotion for 'Flowers ', a creative 'Direct Mail' promotional campaign (CarPages, 2003). The campaign was organised to introduce fifty new prospects of Avensis.
DIRECT MARKETINGDirect marketing is the distribution of information about products , products and the promotional benefits to customers through interactive communication campaigns.(Jobber,D.2006,p.498).This method of promotion is beneficial as it would help to establish direct relationships between the organisation and the customer. Toyota uses direct marketing before the launch of new models. Toyota organised a direct marketing campaign before the launch of Prius to inform the public about the car. In order to reduce the advertising costs electronic direct marketing has been gaining importance. Toyota's head of marketing communications, Peter Evans, announced in 2006 that Toyota would be increasing target budgets for direct marketing expenditures by 7 times in the coming years and would be using direct marketing ,internet and the press more in the launch of the new Camry and Orion to cut costs(Fairfax digital,2007).
PLACEThe main objective of place decision is to choose the distribution channels, location of outlets, methods of transportation to make sure that products are available to the consumer in proper quantity at the right time and place. Generally the elements of distribution channel consist of wholesalers and retailers through which the goods pass on to the ultimate customer (Jobber,D.2006, P.21). There are several ways of making products available to the consumers. Companies choose different ways based on their sales considerations and contractual considerations. The sales and distribution functions for Toyota Motor Corporation is provided by Toyota motor sales. The major accounts of Toyota are divided in to1. Dealership2 .E-commerce customers3. Direct sales to corporate/rental fleets.
Dealership provides services to the customers by maintaining an inventory of vehicles. Dealers also provide after sale follow up. The sale of the vehicles through the electronic world is done by e-commerce wing of Toyota. The company also provide straightforward sales to the corporate. Toyota maintains a low level ratio of day today stock by maintaining a minimum count of dealers with respect to their rivals.
Vehicle Assembly PlantVehicle Assembly PlantNational Dealership NetworkCorporate Fleet CustomersPioneers, Laggards, ShowboatsFigure 7- Toyota's Distribution System (Capon, 2007)From the vehicle assembly plant the vehicles are shipped to the dealers who supply the vehicles to the consumers. Toyota does their operations with fleet consumers without the support of dealers because the fleet consumers are corporate.
Flow of Products and ServicesFigure 8. Flow of Products and Services (Capon, 2007)Manufacturing companies of Toyota in Japan and overseas manufacture the products for Toyota Motor Corporation. In Japan the company supply its products and services to the customers through the dealers in Japan. Most of the operations of the dealers and distributors are mediated financial companies by which are owned and controlled by Toyota. But in the case of an overseas customer the company supply the product to the overseas distributor which intern supply the goods and services to overseas dealer, the overseas dealer provide goods and service to the ultimate consumer.
Sales channels of Toyota can be divided into two,1. Dealership2. E-commerceDealership channel handles the vehicles stock line up. One of the main functions of the dealers is to provide maintenance, offer help and to serve the clients. On some instances a big dealership is distributed in to tiny ones. The vehicle distribution to the group buyers is done by the domestic dealers even though they are administered directly by the international Toyota sales force. The benefits to the corporate consumers are also given by the dealers. Ecommerce channel performs the sales of the vehicles through the medium of internet and it also deals with the block of vehicle line up. The ecommerce wing also keeps in touch with the dealers (Capon, 2007). There are mainly three strategies of distribution placement for Toyota. Initially Toyota makes their brand perception powerful among the consumers by launching core models. then a restructuring of the sales network is done by the company. As a result of the rising markets and increasing competition which is boosted by the liberalization Toyota splits their distributors into subsidiaries and makes their operations in the headquarters much powerful and elaborates the sales network. Then the company will strengthen the domestic production capacity, cut down the cost and increase the production quantity (Toyota, 2002).
The distribution system which is followed by Toyota is demand driven. The matching of the total supply/demand decisions with the short span sales and distribution processing is done by the company. A good relationship with the dealers is maintained by Toyota and the company considers the dealers as their partners in business. Toyota permits their regional group of dealers to do investment in domestic marketing dollars and there bringing the Toyota way to its channels of distribution and sales. Toyota dealership best understand their local market place and have the autonomy and flexibility to invest in the sales and marketing programs that work for their region. Toyotas matching up with the long term global supply and demand planning with a short term regional sales and distribution operation help the company to give the right car at the right place at the right time (Deloitte, 2007).The functional victory of Toyota is mainly associated with its inventory reduction system. The inventory range is maintained on a small volume by Toyota by eliminating spikes in demand and cutting down the overall supply chain cost. The company is maintaining a low level of inventory because they are able to produce vehicles in the same order the consumers buy them. The feature of flexibility to the demand has given the company to maintain a least stock in the automobile industry. The suppliers of Toyota are also required to improve their activities to improve the overall customer to customer cycle. Toyota also acts as a teacher to its suppliers by teaching them lean manufacturing techniques (Martin, 2005). The lean manufacturing technique makes sure that a short period of time is required from the needing of an item by Toyota and the manufacturing of that item by the suppliers.
Marketing success of Toyota.
Toyota is the front runner in innovation in the automobile industry. This is evident from their history. They were the first ones to introduce the hybrid technology. Innovation was the main reason that they were very successful in marketing their cars efficiently. From the product life cycle figure shown below it is evident that main sales are in the first few month or years when the product is in the introduction stage. By continuously innovating new products Toyota always maintained the top market share and in the introduction stage the cars attracted most customers.
Figure 9.Illustration of Product Life Cycle(Tutor2u.net,2008)It can be seen from the latest conditions of the market that Toyota has suffered the least as compared to General Motors and Ford. This is due to the reason that Toyota has maintained the quality of its products by following different techniques such as lean management and supplier development .Because of these reasons they maintained the quality of its vehicles, which helped them to increase the reputation in the market. This reputation helps them in the sales of its vehicles as customers believed in Toyota products .Toyota has collaboration with General Motors produced identical cars in a plant in United States of America .But from the sales results it was seen that Toyota had managed to sell more cars then General Motors just because they had a better reputation in the market than General Motors(Jobber,D.2004:p.329).In order to cope up with drop in sales following recession, Toyota launched a new advertisement of zero interest on their cars. The tag line "saved by zero" was taken by customers in a good sense and helped them increase their market share more. Hence it can be seen that Toyota made new innovation contributions to the society with the help of new marketing strategies which helped them increase their market share and also improve their current standing in the world(Time,2009).
Key factor in which Toyota differs from its other competitors is that it does its marketing according to the demographics of the country and the region it is targeting. It understands the market conditions and attacks the mindset, which helps in winning the minds of the customers and increasing sales. This is evident from the difference in sales strategies between Middle East where Toyota organises lucky draw whereas in western country they do it my giving more after sales services.
Toyota is also being very successful in the market mainly because they are taking care about their employees who in turns help to treat the customers until they are satisfied and as a whole, the society is beneficial. They always ahead in every car industry but they think for long-time, that they keep the quality up to standard and that the reason people are more reliable to Toyota. They also introduced DNA system of production in order to give better performance and to be successful over all and be the best in manufacturing according to the Quality standard.
Negative Impact of MarketingToyota has been hit severely be recession with sales plummeting severely. Toyota is expected to report an operating loss of $2.5 billion in the fiscal year ending March 2009.Earlier in October 2008 Toyota's sales dropped by 23%.In deep agony Toyota started offering huge discounts and advertising heavily. They advertised so heavily that people starting hating the usually admired brand.
Toyota introduced a Zero percent financing scheme for a dozen models of Toyota. They introduced a commercial which lasts for 30 seconds called "Saved by Zero"-financing get it?. In this commercial a huge red coloured zero moves around the screen while a man drones the line "Saved by zero" - financing, get it? - over and over(Times CNN,2009) .
The advertising started saturating the televised sporting events and Prime time Tv Programmes. The commercial is good enough to get stuck in head but not good enough that a Peron likes it. This commercial keeps on repeating several times a day which has left the viewers get distracted and hence has negatively affected the brand image of the company.
Another scenario in which marketing had a negative impact on the company is during the release of the model Scion. Toyota marketed this model as a model for the youth. Toyota did not realise that young buyers will pick even small defects quickly and have high expectations.
Even though the sales was more than Toyota expected in the beginning the biggest blow came for Toyota when Scion scored badly in the quality survey conducted by JD Power and associates as Toyota was considered synonymous to quality. The company received 158 complaints for every 100 cars sold which was very higher than the industry average of 119 thus affecting the brand image of the company(Business week,2004).
Toyota has marketed itself heavily as 'green car' manufacturer ever since the introduction of Prius model in 1997.When people view Toyota they view Toyota in not only in terms of 'green' but in terms of 'quality' .Toyota's claim has been weakened lately by consumer questioning about the price-worthiness and fuel-economy performance of hybrids as clean diesel can be used as an alternative technology. Moreover Toyota also has been introducing vehicles such as pickup trucks and large Sport utility vehicles that are not environmentally positive which has tarnished their claim as 'green car' manufacturer. All these factors have negatively impacted the brand image of ToyotaROUTE MAP TO SUCCESSToyota is one of the leading names in the automotive making industry. The brand name is being reflected with their styling and quality along with the performance of the products from those corporate giants. It's mainly working with keeping Japan as its base. The main manufacturing unit is at Japan which is the base for all the operations for the industry. The industry slowly has moved to other parts of the world and has attracted many customers across the world with the added comforts. It grabbed a good position in the automotive market slowly and has resulted in pulling it to the top positions in the world.
Due to the current credit crunch and other problems which have affected the world economy Toyota too have faced some problems. The company deals with the comfort and the special additional features so the products of this automotive industry seem to be costly. Customers are now a days not interested in spending much due to the present situation. The production cost of the products from Toyota must be decreased in order to attract lot more customers.
Toyota was one of the makers much relied on the quality. But a slight distraction from the quality has occurred in the industry as they are trying to come out with new and more products year by year. All they are trying to do is to make new products and to establish themselves as a world wide automotive maker. As they are concentrating in more products with additional features quality is becoming a problem which affects all the other components like service, warranty, performance, after sales service and particularly dropping their brand value.
The difference in the quality has decreased their sales and has lost their revenue to a great extend. The recession time also is making the situation even worse. So to get rid of this they have to make some movements to improve themselves by making their products of high standards by reducing their costs. They can capture the market with the best products at suitable places. The promotion of the products depends upon the place and the standard of the product. So the product must be of international standard to attain their favourite position at the top of the market (247wallst.com,2009).
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Economy pricing is used for products which are of not the top quality. The prices are kept low by reducing the manufacturing costs and marketing costs. Toyota used this strategy for Corolla brand.
Price Skimming is used by companies when they are introducing something new in the market. The prices are set very high in the beginning so that they can get the maximum out of market in the beginning and later they reduce the prices when the market gets saturated. Toyota used this strategy when they introduced the hybrid car. When the competition became severe for hybrid cars they reduced the prices by small margins even though the manufacturing expenses increased.
Price Quality MatrixPrice Quality Matrix shows the positioning of the products of a company according to quality and price.Toyota has positioned its Luxury brand Lexus in the High Quality -High Price section of the price quality matrix.It has positioned Corolla which is a economy model in the Medium price -Medium Quality section of the price quality matrix.