How Toyota Motor Corporation Has Become the Largest Automobile Manufacturer - Case Study Example

Toyota and its USA target market Toyota and its USA target market Toyota is among the companies that started from humble beginnings and have grown to become one among the large companies in the automotive sector. Sakichi Toyoda and his two sons started the company and they lay the foundation of the giant automotive that is in place today. The company has risen to great heights following the invention of an automated loom by Sakishi that ensured one operator could handle dozens of looms in one operation cycle. The loom ensured that production stooped when low quality products were produced by snapping its threads (Fujimoto, 2012). The guiding policy of the company has been production of best quality vehicles at the lowest possible cost and in the safest environment. The company has expanded to other countries including the USA where it has created a firm base in vehicle production. Over the last decade, they have experienced rapid growth and diversification in the USA market in an attempt to increase their scope and quality. In the USA, the automotive sector is very competitive with companies like Toyota, Ford, Chrysler, Chevrolet, Dodge, Jeep and Hummer all competing against each other. With such companies in the industry, Toyota has had to employ superb marketing strategies in order to maintain and increase its customers. They have also consistently improved the quality of vehicles they produce with major improvements in the body shape, speed and luxury. Their improvements in quality of vehicles have earned them customer loyalty that has ensured that the companies’ sales continually increase. Marketing strategies The management of the Toyota Company has employed different marketing strategies in order to overcome the stiff competition in the USA. Toyota has designed implementation and control programs that are aimed at increasing the acceptability of its products in the USA market. Its competitors have produced vehicles of similar quality like theirs but social marketing has done a great deal in ensuring they maintain their customers. The company has involved itself in community work, which has made the public appreciate the company and thus purchase their products while in need. Toyota has been in the forefront in environmental management and has organized cleanings exercises in cities such as New York and Michigan an act that publicizes them more and makes the pubic accept them more. Increasing the social acceptability has helped them gain competitive advantage over their competitors and thus thrives in the USA market. Toyota has also implemented augmented marketing by providing additional services that benefit the customers by increasing their level of satisfaction. Unlike other companies in the USA, Toyota offers high quality servicing of vehicles and machinery at a lower cost to vehicles for a period of eighteen months after purchase. This has lured many customers into purchasing vehicles from the Toyota Company in order to enjoy the servicing benefits. The company has improved their technology in controlling the sound produced by vehicles in order to match customer needs. The company produces both high sound and low sound vehicles since customer tastes vary. The ability to produce similar vehicles but with varying engine sounds has helped win many customers and dominate the USA automotive market (Toyota Foundation, 2007). However, other companies like Ford and Chevrolet have capitalized on the same strategy in order to compete with Toyota. The company has invested a lot of funds in marketing their products especially through direct marketing. The company has used media that customers interact with directly which has a characteristic of prompting immediate customer response. The company has advertised its products through mediums such as catalogues, mail orders, TV shopping and person to person advertising. This has increased its popularity and hence the high volume of sales experienced in its successive years of operation. The unique technique of person marketing has helped in creating, maintaining and changing of people’s attitudes and tastes in favor of the company. Toyota has associated itself with films and sports in order to gain publicity and has sponsored competitions as well as teams. The management of the organization has worked hard to ensure that figure of the organization is not ruined. The company is among the highest paying organizations and is recognized in the USA for treating their employees well. They have won the best employer award three times in last decade and this has improved their reputation among its target market. Toyota has improved their reputation among the public by relating well with other companies despite being their competitors. USA being a large market with many diverse people, Toyota has used differential marketing strategy in-order to serve different markets in different ways. The company has produced vehicles that suit gender, age and class and providing these varieties has ensured they win many customers regardless of their age ,gender or social class. This is unlike other companies such as hummer that produces only vehicles for the higher social class and leaves out the majority middle class group. The economy of the USA changes from time and Toyota has tried to balance the fluctuations in irregular demand by using measures such as flexible pricing, and other incentives. They regulate the prices of vehicles depending on economic seasons and this ensures that there is a continuous sale of products even in low economic seasons. Toyota has also employed concentrated marketing by locating their sale shops at urban areas where there are many customers and thus fetching a bigger volume of customers. Despite their expansion into many regions, there have also withdrawn from some areas as a result of low volumes of sales. This has helped reduce the chances of losses and hence promoting the growth of the company in order to out-do the rest of the competitors. Political environment The USA government provides safety and environment laws that have influenced the Toyota Company both positively and negatively. The government has influenced the manufacture of vehicles by creating a regulation for safety requirements (Liker, 2004). The USA government requires that each automotive company provide several facilities such as airbags and safety belts. Toyota has improved in the levels of safety in the vehicles by providing airbags for all passengers in vehicles unlike its competitors who only provide airbags for the driver’s seat. Toyota has also adhered to the government regulations on environmental by manufacturing vehicles that do not pollute the air and have a higher rate of oil consumption. With the introduction of this regulation in 2006, the production rate reduced but new technologies have been introduced and the Toyota Company now produces such vehicles even at a cheaper cost (Shingō, & Dillon, 2004). Economic environment Toyota Company influences the economy of USA directly and is termed as a flag of economic progress since it employs thousands of people directly and many more indirectly. Toyota being the largest car manufacturer, it contributes to the steel business, glass sector, aluminum, copper, iron, plastic, lead, rubber and vinyl which stimulate the economy of USA. The company has contributed to the USA economy by their unique economic phenomenon that helps them outdo their competitors. Their economic success has however not happened on a silver platter. The recent series of economic downturns and structural schisms in USA has affected the performance the automotive industry and had led to quitting of some companies and closure of branches e.g. the Toyota branch in lost springs in 2013. The economic downturns has also led slowdown in the car market and reduced sales due to financial problems. This problem has affected all the companies in the automotive sector and hence does not affect the levels of competition. Despite all, the Toyota Company has made profits all through and is the only automotive company in USA that has not made any losses in the last two decades (Shingō, & Dillon, 2004). Social cultural environment The Toyota Company has transformed the society by changing their way of thinking as well as their lifestyles. This has been achieved by converting dreams into reality and manufacturing vehicles that did not exist before. An example of a dream car is the Toyota hybrid that was introduced in the USA and has continually become a symbol for UK and USA. Toyota has increased the comfort of people who travel long distance by manufacturing vehicles with ability to travel long distances and at the same time be comfortable. The hybrid vehicles introduced are luxurious, aesthetically pleasing and fuel-efficient. Technological environment Toyota has introduced a super website whereby customers can purchase vehicles and test-drive them online. This has created a competitive advantage over the other companies and has increased the sales of the company. Toyota vehicles and machinery have been installed with hybrid technology with technologies such as digital maps and car trackers. Such technologies have drawn customers more to the Toyota Company. What strategies went right and what went wrong in US market The company had stated as a textile industry which opened a car department and has how grown to a multinational company. They manufactured their first car model named AA in 1935 and have improved on their production methods over the year to a position that they can now produce good looking and more efficient vehicles. Toyota was introduced in the USA in 1953 and their first attempt to export vehicles to USA failed drastically due to poor market research. Many citizens of USA were economist and they did not like the rate of fuel consumption with the vehicle. In 1961, the company produced a smaller economic car that was named as Publica and it gained popularity in the USA. This was the start of success of the company in USA and the company celebrates annually (Chambers, 2008). The managers of the organization began to understand the USA market and in 1966, they produced the most popular car the corolla and is still the most popular car up to date. In order to create a good foundation, the Toyota motor company integrated with the Toyota motor sales and formed the Toyota Motor corporation that become the largest automobile manufacturer. In USA Toyota signed an agreement with General motors and produced high-end cars. This agreement helped Toyota gain popularity in the USA and won the loyalty of many customers. Over the years, Toyota has surpassed the market and has outdone companies like the GM, Ford and Detroit. Being in the front line, Toyota has been more sensitive and cautious with the American politics that have failed many companies (Fender, 2001). They have conducted research on manufacturing techniques and thus gaining manufacturing prowess. Future strategies Being at the crown of economic excellence has not exhausted Toyota from seeking opportunities for growth. The company plans to continue seeking for dominance in the US market. They are looking forward to get solutions for the high gas prices and more fuel-efficient vehicles. The company is also looking forward to expand into developing markets particularly upcoming towns in USA as well as upcoming countries such as china. The company is also looking forwards to being a unique corporate organization with different cultures rooted with obsession for better crafts-man ship and improvement. In conclusion, Toyota has been successful in their venture in USA and has set the pace for the other automotive companies. Reference Chambers, K. D. (2008). Toyota. Westport, Conn: Greenwood Press. Fender, K. (2001). Toyota technical review. Toyota, Aichi: Toyota Motor Corp. Fujimoto, T. (2012). The evolution of a manufacturing system at Toyota. New York: Oxford University Press. Liker, J. K. (2004). The Toyota way: 14 management principles from the worlds greatest manufacturer. New York: McGraw-Hill. Shingō, S., & Dillon, A. P. (2004). A study of the Toyota production system from an economic viewpoint. Cambridge, Mass: Productivity Press. Toyota Foundation (2007). The Toyota Foundation: 30 years of history 1974-2004. Tokyo: Toyota Foundation. Read More