Toyotas Advertising and Sales Promotion Campaigns - Essay Example

Toyota’s Advertising and Sales Promotion Campaigns Introduction: In a period of about seven decades Toyota has emerged from being a fast follower in the automobile manufacturing industry, to a trailblazer. In 2003 Toyota overtook Ford to occupy the second position in the automobile manufacturing industry, and set its eyes on occupying the leading position by 2010, dislodging General Motors from that position. It is well set to achieve this objective, well in advance. Toyota has set its production target in 2006 for 9.06 million cars. The production targets of General Motors have still not been made public, but going by the industry consultant circles, it is expected to be 8.92 vehicles. (The Toyota vision). 1.1. Complete a comprehensive SWOT analysis for TOYOTA. Explain what some of their key success factors have been. Strengths: The strengths of Toyota make a formidable mix. This mix of strengths are, a very good understanding of market conditions in the different markets around the world, a very focused segmentation, targeting, and positioning to address these market conditions, speed and flexibility in manufacturing to meet the needs of these of these markets, commitment to lean manufacturing techniques and quality, to remain competitive, and provide value for money to their customers, and forward looking marketing strategy that attempts to incorporate new and emerging technologies into their products, to blaze trails in the new directions that automobiles are expected to take. Weaknesses: The weakness of Toyota lies mainly in its dependence on the automobile segment. Toyota has a diversified range of business activities that include automobiles, material handling equipments, textile machinery and electric components. Yet, there is over dependence on the automobile sector as can be seen form the revenue generation. The automobile segment contributes 52% of the total revenue of Toyota. Looking at the changes that have taken place from 2000 to 2004 in terms of sales per employee, there has been a reduction causing a decrease in revenue per employee. This has had a negative impact on the productivity and efficiency levels in Toyota. (Toyota Industries Inc. Company Profile). Opportunities: The oil prices have skyrocketed in the recent past and show no sign of decline with increased energy consumption from the emerging economies of populous countries like China and India. The worldwide focus has changed to looking for alternative sources of energy, including use in automobiles. Toyota has an edge here. In 1997 Toyota introduced a gas-electric hybrid engine for automobiles. By 2002 Toyota Prius models incorporating this technology started hitting the roads and have seen energy conscious customers appreciating the product and looking forward to further developments. (Hastings, M. 2005. Toyota's new hybrid may just be the biggest thing in cars since the combustion engine). The flexible manufacturing allows it to address the fickle nature of customer preferences in the different market niches. The efficient market research system of Toyota will enable Toyota to sniff out these preferences and make available these requirements of the customers and keep ahead of competitors, especially to prop up automobile demand in some of the markets. (Healey, R.J. 2003.Carmaker follows 'Toyota Way') Threats: Competition from other car manufacturers is a constant threat to Toyota in all segments of automobiles. This is especially true in the small car segment, where there are many players and in the luxury car segments from established European automobile manufacturers BMW and Mercedes Benz. The rising steel prices and the weaknesses in the automobile sector in the traditional markets of Europe and the United States of America are the other threats faced by Toyota. (Toyota Industries Inc. Company Profile). Key Success Factors: The wide range of automobiles to cater to every section of customers like the low cost Scions to the mid priced Camry’s and on to the luxury Lexus and finally the energy efficient Prius. The use of an advertising strategy that varies from country or region so as to present their products in a manner that highlights their features in keeping with the sentiments of customers there. Yet another factor is the creation of dealer network to provide customer service and look after customer needs like financing. The manufacturing facilities of Toyota are world class and quick and flexible too. The global appeal of Toyota is such that its sales in overseas markets show a marked rise. Sound investments in emerging markets like China that has boosted its sales. All these factors have contributed to Toyota emerging as the second most admired company in the world. (Demos, T. 2006. THE WORLD'S MOST ADMIRED COMPANIES). 1.2. Where is TOYOTA vulnerable? What should it watch out for? Toyota is a high volume car manufacturer, and requires producing high volumes of cars to maintain operational efficiency. Manufacturing facilities are high investments in expensive fixed costs, training, and retention of labor. Downturn in demand for automobiles would have a large negative impact on the fortunes of the company. Product recalls are a headache for any of the automobile manufacturers In 2005 Toyota had a high rate of recall in the sports utility vehicles and pick up trucks that were mainly sold in the United States of America, and the other affected markets were Japan, Europe, and Australia. The recalled vehicle totaled 880,000, and the cost of this recall ahs not been divulged by Toyota. The fluctuating economic conditions, and the lack of sufficient growth in demand for vehicles in its traditional strongholds of the United States of America and Japan has caused Toyota to shift its attention to the emerging populous market of China and India. Market entry and consolidation bring with it the need for heavy investment, and risks of these investments in unfamiliar grounds. In addition to this exchange rate fluctuations could have a further negative impact on the already narrow margins. (SWOT Analysis Toyota). 2. How has TOYOTA tried to address shifts/changes in the external environment? Toyota is extremely proactive in reaction to changes in the external environment. Examination of three factors of customer preference, rising fuel costs, and social requirements on environment makes this amply clear. The rising price of petrol is a matter of concern for some of the automobile users. So is the issue of environment pollution and global warming. Carbon dioxide emission from automobiles contributes to this in a very large manner. This has led to consumer preference, and social demands for vehicles that emit less carbon dioxide, and use less petrol or preferably an alternative source of fuel. The reaction of Toyota was to create the new breed of hybrid petrol electric automobile, the Prius, to cater to this concern. The Prius is an automobile with a hybrid petrol electric engine that reduces emission of Carbon dioxide by 50%, when compared to other automobiles of its size. In addition it reduces consumption of petrol by 50%. This has led to Prius being acclaimed internationally, and the awards it ahs received include the European car of the Year and International best Engine of the Year. (Environment and Community Report 2005). Traditional markets have seen a reduction in the growth rate of demand for automobiles, and the emerging markets of China and India provide potential for huge markets for automobile manufacturers in the current world scenario. The reaction to this from Toyota was to make huge and sound investments in these countries. This has resulted in these markets generating revenue that has contributed to its growth. (SWOT Analysis Toyota). 3. Describe the research methods TOYOTA should use to find out what potential customers expect from an environmentally friendly motor car. Toyota would be best served by research methods that enable it to identify moderating variables such as involvement in purchase, household incomes, and environment consciousness that would have utility in identifying customers segments that could be used as targets for an environmentally friendly motorcar. This would enable targeting of messages to these segments for better results in sales. Towards this end the research should focus on their dealership network, and examine the customer behavior patterns in among those that are repurchasing vehicles and among first time buyers. The methodology of the research should be such that the underlying customer preference for purchase is clearly identified, and whether the preference would have been altered had there been an alternative vehicle with environmental friendly feature. The customer preference of features of the environment friendly car must also be addressed in the methodology of this research. Keeping in mind that the environmental friendly car of Toyota is to be a hybrid petrol electric vehicle, that looks after the drawbacks of a purely electric vehicle like power and coverage distance factors, the methodology should also include the limits of compromise that customers would be willing to make for an environmental friendly car to ensure that the environmental car adequately covers these aspects. The methodology needs to cover the extent of initial investment that customers would be willing to make for an environmental friendly car over and above the conventional car of the same capacity. This would ensure keeping the cost parameters of the environmental car at affordable levels, and not priced beyond means of the customers that may be willing to invest a little more for an environment friendly automobile. (Seiders, K. et al. 2005. Do satisfied Customers Buy More? Examining Moderating Influences in a Retailing Context). What recommendations would you make to senior marketing executives going forward? What should they be sure to do with its marketing? Customer preferences are fickle, and so too is customer loyalty. This means that there should be constant knowledge of customer preferences to ensure that the products of Toyota meet with customer requirements. This means that constant marketing research needs to be done at the dealer end, which is the point at which the maximum interaction between the customer and the company occurs, to enable gleaning of customer preferences. This feedback then should be the basis on which market segmentation is done, and models are made available in the market. A perfect model for every niche should be the objective of the marketing effort. It is only when this happens and continues to happen that Toyota can be assured of customer loyalty, which is an achievable aim for Toyota. The services at the dealer end should be tailor made to take care of the needs of the customers. Easy finance options, vehicle insurance, and proper service facilities are a must at the dealer end, besides the friendly approach. Sufficient inventory of the various models should be available. The different market segments that are the likely customers of each dealer need to be identified, and the make of the customer base done to ensure that the inventory is such that it reflects this. This would ensure availability of the right car for the right customer. Advertising and sales promotion campaigns need to be created in such a manner that they reflect the sentiments of the different demographic markets, and be effective in these markets. Marketing has to ensure that customers purchasing Toyota automobiles have the best purchasing and ownership experience with Toyota. A customer first strategy would ensure that customers remain with Toyota for a lifetime, and enable Toyota to achieve the objective of becoming the foremost automobile manufacturer by 2010. (The Toyota vision). Literary References Demos, T. 2006. THE WORLD'S MOST ADMIRED COMPANIES. Fortune. Vol. 153, Issue 4. Environment and Community Report 2005. Retrieved March 25, 2006 Web site: http://www.toyota.com.au/TWP/Upload/Media/368.pdf. Hastings, M. 2005. Toyota's new hybrid may just be the biggest thing in cars since the combustion engine. Retrieved March 25, 2006, from MSNBC. Web site: http://www.msnbc.msn.com/id/5963500/site/newsweek/ Healey, R.J. 2003. Carmaker follows 'Toyota Way'. Retrieved March 25, 2006, from USA TODAY. Web site: http://www.usatoday.com/money/autos/2003-10-16-toyota-cover_x.htm. Seiders, K. et al. 2005. Do satisfied Customers Buy More? Examining Moderating Influences in a Retailing Context. Journal of Marketing. Vol 69. October 2005. Pp 26-43. SWOT Analysis Toyota. Retrieved March 25, 2006, from Marketing Teacher. Web site: http://www.marketingteacher.com/SWOT/toyota_swot.htm. The Toyota vision. 2006. Retrieved March 25, 2006, from the MANUFACTURER.com. Web site: http://www.themanufacturer.com/us/detail.html?contents_id=4048. Toyota Industries Inc. Company Profile. 2005. Data Monitor. Reference Code 5445. 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