The world is change from time to time, the demand of market become so different from day to day. Toyota Motor Corporation has been developing sharply to meet the demands of their market. With the information was collected from Toyota Motor Corporation, this report provide the company’s strategy, mission, vision, market that has been assisting Toyota was be a success global organization.
This paper is aim to study and analysis the current marketing strategies adopt by Toyota Motor Corporation. The author also explains in detail on Totoya’s current internal and external situational analysis and market program such as product strategy, price strategy, location strategy and promotion strategy that adopted by Toyota.
In this report, the Author also makes analysis on market segmentation, targeting and positioning adopted by Toyota. Besides that, the author also recommended objectives and goals of Toyota using SMART principals and recommend on the strategies and programs of Toyota.
PART 1
1.0 Introduction
A strategy is a long term plan that integrates the organisation’s objectives. Whereas, marketing strategy is a marketing plan which designed to achieve organisation’s marketing objectives with strategic marketing plan which explained in detailed on the marketing research and developing a marketing mix to delight customers. Therefore, every organisation needs to have clear marketing objectives because strategic plan help the organisation to achieve goals. (Business Case Studies, 1995-2013)
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2.0 Company Background
Toyota founded by Kiichiro Toyoda on 28th August 1937 is one of the world’s largest automobile manufacturers company and is headquartered in Toyota City, Aichi, Japan. Toyota had about 64 production facilities worldwide, despite with apparent diversity, 60% of production still occurs in Japan, 15% in North America, 11% in Asia and 8% in Europe. Every sector face with strong competitors in the market, for Toyota, the major competitors is Hyundai, Honda, and Ford but Toyota is working hard to set itself apart from the competition is more than one way. (Voon Yung Ming, 2011)
3.0 Situational Analysis
Toyota’s marketing strategy is focused on reliability and only little focus on discount and promotion. They are concern with the amount of cars still on the road and the amount of miles their cars can go. Toyota also point out that their competitors used to compare themselves to Toyota, this not because they are better but because Toyota has a long proven track record. As a secondary focus, Toyota’s strategy does use the discount niche, but primarily in comparison to other reliability niche companies such as Honda.
3.1 Distinctive Competencies of Product
There are three distinctive competencies of Toyota which appeal the consumers, build trust with them and thus help to achieves customer satisfaction. Firstly, Toyota is the well known for “popular economy car”. They have proved their success by selling the concept to the consumer and also successful in segmenting, targeting, and positioning their market. Secondly, Toyota keeps improving their design, comfort, fuel efficiency, and other technology improvements. Lastly, Toyota’s cars are distinctive with their low maintenance and low operating costs. This also is the answer for the question of why consumers purchase Toyota.
3.2 Strategic Business Unit
Toyota lately come out with energy efficient, green and economy cars, SUVs/ Van, hybrids and trucks with safety and comfort measures. Overall, Toyota produces more than twenty varieties model of cars which sold in over 20 countries across the globe. Meaning that, all of the cars are well known globally.
For the research and development, Toyota has focused on environment, safety and energy. They focused of the environment by expanding their hybrids car. Furthermore, Toyota also responds to the diversification of energy. For example, in 2007 Toyota has introduced a flex fuel vehicle in the Brazilian market that will run on 100% bio-ethanol fuel. In accordance with the infrastructure and customer needs, Toyota is striving for promoting efforts to develop environmentally friendly technology and vehicles.
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Whereas for human resources development sector, Toyota’s production center were established globally to spread Toyota’s manufacturing knowledge and skills throughout the world in pace with rapid growth of overseas manufacturing. 3.3 Developing a Strategic Focus
Toyota has differentiated them as a major strategy in market penetration and the strategy is working successfully. Toyota determined to use a pricing mechanism that will give it a competitive edge over their competitors. The cost of production for Toyota is very high but due to the mass production plants, the overall cost will not be a problem for Toyota. Meaning that, Toyota able to sell their products at lower price and at same time still generate profitable. So, Toyota is taking an advantage of this and using it to penetrate the markets of emerging economies with affordable products.
4.0 Segmentation, Targeting & Positioning
Toyota used the philosophy of right car in the right place to segment and targets its market. Toyota uses a behavioral and psychographic approach to segmenting the market. For example, it has segmented all the countries across the globe as its market, but has also identified its focused market such as the US, Canada, China, India and Indonesia.
Toyota designed each of their products to a specific target market and where the criteria range from speed, capacity and design like color and shape (Thomas, 2001).
Toyota set their target market based on level of income, gender, life cycle stages, needs or desires and with a variety of product attributes it targets different age group and professional groups. For example, there is a high speed, small, two-seat model cars for the relatively younger and single people who are adventurous to the big five-seat models for the family set up. Recently, Toyota also designed environmentally green car – Prius target to environmentally sensitive people. Thus, Toyota’s marketing strategy include segmentation, targeting, and positioning is nurtured by the product attributes and variety of offers. (Jill Meredith G., Paul N. Bloom, 2004).
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Further, Toyota designed its market strategy based on the customer needs and want at different global, regional and national level. All the Toyota’s cars are designed focuses on comfort, kindness, and excitement. The successful key factors for designing segmentation and targeting is that Toyota’s analysis is always based on the condition of market, economy, purchasing capacity, and consumers’ taste. In terms of target, for example, Prius was designed to targets on consumers who are environmentally sensitive user and also targets on individuals who concern with gas pumps saver and care about safety. Whereas, Toyota Lexus targets on luxury users or individuals who have standard status and comfort. (Toyota, 2011).
Toyota’s analysis is always based on the condition of market, economy, purchasing capacity, and consumers’ choices. Based on these factors, Toyota is launched its global motorization strategy with leading-edge technology. Toyota has also using a very strong promotional strategy called integrated market communication (IMC) tool. Toyota’s blog is another successful mechanism of advertising and promotion where they focus on consumers’ voices and responses to their inquiry.
5.0 Portfolio Matrix
Based on the Boston Matrix, Toyota’s market situation is “Healthy” as Camry, Prius, and Corolla all fall into the category of Star. These three well established products are holding high market share and high market growth and the growth is also exciting which in turn create an opportunities too.
6.0 Elements of Market Planning
Toyota’s maintain their productivity efficiency and good quality by credited into its internal environment. The production team plays an important role to improve the efficiency and effectiveness of manufacturing operations. Strength and weaknesses are internal factors of the organization, while opportunities and threats are impact or generating from outside of the organization, hence it is called external factors.
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6.1 Strengths
Toyota has a very strong brand and image in term of quality in international market. They are also famous with environmental friendly and customized range. These all factors make consumer confidence with Toyota brand. In term of financial aspects, Toyota has a high financial strength which allows Toyota to do several activities like innovation and do more research and development to create the better cars (Marketing Teacher, 2011).
Besides that, Toyota also adopted “Lean Manufacturing System” and “Just In Time System (JIT)” and these system helps Toyota to be well known and become a good example in marketing subject and studied worldwide. Lastly, customer service including online booking for test drive, safety alert and customer relationship management are also an additional strengths for Toyota (Marketing Teacher, 2011).
6.2 Weaknesses
Toyota’s main image is a Japanese car manufacturer. Even if they has production plants in Thailand, but it’s always seen as a foreign importer, including some criticism made due to large scale recall made in 2005 on quality issues. Besides that, Toyota focuses in US and Japan market, this exposed to fluctuating economic and political conditions of the in that two markets. In order to retain its operation efficiency, Toyota needs to keep producing cars. Meaning that, Toyota needs to spend and invest more in fixed costs or the high costs of training and retaining labour. So the company could see over capacity that the market experiences a down turn. Toyota also have weaknesses in term of capacity, where Toyota produce most car in Japan and US, while their competitors produced car strategically located worldwide and take advantage of global efficiency gains. (Antoni, 2011).
6.3 Opportunities
Toyota has adopted three important elements in its market planning- green, safety and low operating costs. Based on these three important factors, Toyota has become successful to garner the market opportunity for Toyota than threats.
To meet the market demand and with the advanced of technologies development, Toyota now has build their image and reputation for manufacturing environmentally friendly vehicles like Prius. Due to the increase of the petrol, Toyota designed a hybrid and fuel saver car which do not harm to environment but contribute to society. Besides that, Toyota also creates job opportunity with their auto recycling system. (Antoni, 2011).
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The biggest opportunity for Toyota is that their market share is keeps on increasing while their competitors’ market share is declining. Although Toyota have the same segmentation and target market with their competitors, but in term of positioning, Toyota has come off much ahead because of their products’ attributes and advanced technology. For example, Toyota is the first automobile producer that introduced hybrid in the market. Today, the market share for its hybrid is growing exponentially, but consumers choose Toyota’s hybrid car more compare to other car producers. Meaning that, competitor’s hybrid products are not successful.
6.4 Treats
As vehicle manufacturers, Toyota may meet product recalls problem. Same with other car manufacturer, Toyota faces with competitive rivalry in the car market because of the new entrants coming into the market from China, South Korea and some new plants in Eastern Europe. The company is also exposed to the increasing of price for raw materials such as rubber, steel and fuel which cause increasing the pricing of final product. Consumer may not able to buy because of the expensive price (Marketing Teacher, 2011).
In addition, environmentalists are calling the green movement a fashion trend and due to involvement of technology and product development, environmentally friendly products’ are very costly but there are Green consumers willing to pay more to benefit the environment. Environmental regulations and associated apprehension concerning carbon emissions have sharp sensitivity to environmental protection globally are all treats facing by Toyota (Toyota Motor Corporation, 2011).
7.0 Market Program
7.1 Product Strategy
Toyota believed to be moving with a strategy of mass production of which it has enabled it to sell widely in the global market. Furthermore, Toyota also concern with the strategy of hybrid product. As the need in the markets is increase and or the demand for hybrid product in the market is increase, Toyota can double the amount of production for hybrid products. 7.2 Price Strategy
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Toyota has built their image and reputation by producing high quality vehicles at reasonable price. They also use tactful pricing strategies through price differentiation so that they are different from their competitors and the success of this pricing strategy is proved. Toyota believes the role of purchasing is through long term and stable production of quality products at the lowest price in a fast and timely manner.
7.3 Location Strategy
Being a global producer and supplier of automobiles and components, Toyota has positioned itself all over the world giving it a clear cut within the market. Within three years to come, it is working towards the achievement of about 35% of the market share and this will make it to be best and top supplier of automobile products. It is also apart of marketing strategy they want to keep close to customers and try to over come the distance problem between them and customers they also try to make product more conveniently available for customer.
7.4 Promotion Strategy
Toyota is determined to use a pricing mechanism that will give it a competitive edge over its main competitors. This is a mechanism that it is using to market itself so that it can get hold of market share that will see it better in achieving the highest level in the market. Toyota also taking advantage through advancement of technology in which they promote via emails, web banners and expensive sites of internet, etc.
PART 2
8.0 Recommended Objectives and Goals (SMART)
Toyota is the world leading automobile manufacture. There are few recommendations for Toyota in term of their objectives and goals which would benefit the organization. Toyota should make use of their great size which will enable them to successfully meet the needs of this growing population of consumers in need of cars. Toyota should set the goal to achieving and satisfy customers need and make their brand become the first choice in consumer purchasing process. Toyota’s huge capacity gave benefit in meeting industry growth and the demand of car or need of cars is increase constantly, thus provide and create a bigger market for Toyota. Consumer also realised the important to have own car due to increased travelling needs. (Dobni, 2002, p.41).
Toyota should also keeps update their quality product and makes it a rule not compromise on this, or not to simply increase their prices so that consumers will remain loyal to Toyota. Bear in mind that by offering the high quality products at affordable price will make a consumer to go back and purchase another Toyota product. Consumer will has a chance to know the real values behind Toyota’s past, current, and future existence (Armstrong & Kotler, 2003).
Toyota is in the process of engineering lesser platforms to be used in the assembly of its different models. This is as a cost cutting measure; they intended to compress their platforms from 20 to ten in the ambitious exercise. This is especially important since their chief rivals; GM and Ford have made notable improvements in their production process. Toyota is also thinking twice about its bloated assembly points. It is thinking of best ways to reduce them without hindering its efficiency (Mullins, Walker & Boyd, 2010).
In term of sales, the authors suggest that it would be great if Toyota can state clearly the way how they care and concern with society. For example, how much they spend on donations and charity from the profit they earned. This may attract the consumer who is society concerning and charity lover, thus set Toyota the first choice when buy the car.
For environmental concern, the Author recommends that Toyota should design and offer their hybrid fuel saver car in different mode with different feature at different price so that all different level of income users are able to purchase it. Bear in mind, there are consumer who interested with Toyota product but not have effort to buy it due to the financial problem. Although Toyota has take part in green by offerings and introducing hybrid car in late April – Toyota Prius, but the price of the hybrid car are too expensive and not much users afford to buy it. So, in order engage more user to drive Toyota product, Toyota may need to think off offer lower price model of car.
9.0 Recommended Marketing Strategies and Programmes
As Toyota operates globally, they will always face with the issue of mismatch culture between companies in Western Country and Asia. The author suggest that Toyota in a high-context company like Japan may needs to provide training for American executives, so they can understand more of the differences of cultures between two countries and also understand Japan’s collective culture and the cultures in other Asian Country as well.
Toyota has set their business worldwide, so executives’ level at different Toyota subsidiary may have different ideas on design, manufacturing process and so on. Communication among executives from different Toyota subsidiary is also important to bringing the organization into success. In order to resolve this problem, Toyota can have electronic meetings to discuss and share the ideas and have the best solutions. They could send managers and engineers to each subsidiary or interchange to get known the design, learn different ways, and find the necessary changes to remain consistent with each other.
The Author also recommend that Toyota may also try to entering new markets in Asia like China and Europe by setup manufacturing plants because Toyota presently focused on Japan and America markets and it needs to setup strategies to penetrate the other markets as well. These may also helps to reduce the operating costs in Asia country. Toyota make used its strengths and opportunities to gain competitive advantage in automobile industry. They currently used differentiated product line to helping them to have more global presence.
Toyota should increase competitive strength through advanced technology due to the increasing of the fuel price. When purchase a new car, user always concern of fuel consumption, emission, recoverability or hybrid vehicles and next generation fuel cells cost reduction. The Author suggests that Toyota should make improvement and continued investment in hybrids in all types model of Toyota’s car.
Toyota’s marketing strategy is tends to revolve around reliability with focus less on discount and promotion as well as pricing strategy. So the Author highly suggests that Toyota should do more promotion and sales frequently during festival or celebration period like national days as what their competitors done. The Author suggests that Toyota should also pay attention on lower income group by provide them with a basic mode of transportation of which is within their price range and efficient (Toyota, 2011).
Human resource is one of the most important aspects in Toyota’s strategies. Toyota should always make sure they have highly motivated staff as this is directly proportional to good production. To build up motivated staffs, Toyota can always coming up with the staffs’ rewarding schemes like helping them own cars subsidized rates. The company should also make sure the personnel are the best in terms of technical know-how. The company needs to carry out frequent training towards this end.
Toyota could improve its strategy concerning the price. Toyota offer similar products to a specific region, but there are huge differences concerning the price. A good example lies between Ireland and Germany that are in the same region and where the Toyota Yaris is 3000 euros cheaper in Germany. This difference is not really understandable, as Germany is one of the most powerful countries in the European Union and the world, and consumers have one of the highest purchasing power. Ireland has recently known an economic crisis and consumers do not have the same purchasing power as German people. The same report can be made concerning South Africa and it is even more significant. The Toyota Yaris costs 7000 euros more than in the Germany, most of the South Africa could not even afford the German price. And Toyota is trying to reach a ‘rich’ minority to purchase its cars.
One of the Toyota’s weaknesses is not to have a distinctive brand image although this weakness is going to be eliminated by the eventual success of Lexus as time goes by. Localizing, while moving to new markets, should have more focus on quality control. Although the organization cannot control the macro factors which can affect it at any time, still a big organization like Toyota is expected to have enough reserves to tackle any situation of such sort. The introduction of Toyota’s hybrid technology has extracted a lot of investment from the company. Now they need to capitalize on the expense they have made. This can be done in a number of ways like Toyota has to make these hybrid products available to as many customers as possible. The balance between low pricing and price skimming is crucial. The growing markets of China and India are one of the biggest opportunities for Toyota. Toyota can have big increment in their profitability if they can win these markets.
Lastly, Toyota could improve its strategy by being more adapted to the local demand and work deeply on that to remain the leader brand within the automotive industry and increase its sales around the world.
10.0 Conclusion
In marketing strategy perspective, Toyota consider as a company that has successfully achieved its mission, goals and objectives. They also had successfully branded their distinctive competencies. This success is based on its successful market strategy. In quintessence, it can be said that Toyota is an outstanding case for learning how to build and implement market strategy, get penetration in the market, manage product life cycle, uphold market positioning, best use of integrated market communication (IMC), and branding its product in the mindset of the customer. In short, Toyota is a notable example that proves how important is marketing strategy in the life of a company and managers. (3605)
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