Toyota and General Motors Promotional Strategies - Case Study Example

Toyota and General Motors al Affiliation: Toyota and General Motors Introduction Toyota and General Motors companies are some of thelargest automobiles firms in the world. Despite the increasing levels of globalization which results from liberalization of markets, efficient flow of information and integration of economies, the firms continue to register growth. Even with the entry of other multinational companies in the market majority of which have a huge financial base to segment the market, position their products strategically in the market, and attract the customers’ loyalty towards their products, the two organizations continue to record high sales. This is being attributed to their promotional strategies. This paper will analyze the types of marketing, pricing, and consumer-oriented promotional strategies that are used by these two global businesses. Promotional Strategies Both companies have been using traditional media to advertise their products. Despite the entry of the internet in the market, the two companies continue to rely heavily on the traditional marketing methods, i.e. the use of audio, visual, and print media in order to pass the message of the existence of their products in the market. This has been significant in ensuring that the customers remain loyal to their products. Moreover, this strategy has enabled the two companies to develop a strong brand which is distinct. A unique brand has been important in enabling the two businesses to penetrate the global market, an aspect that has expanded their profit margins (Witcher & Chau, 2010). In the meantime, the two firms have the most valuable brand names in the automobile industry. Both companies use after-sales surveys as a strategy to promote their cars. This strategy entails contacting the clients either through telephone or sending an email in order to enquire on their perception concerning the car. With the increasing level of competition, customer relationship management has become an important aspect towards the success of any business. Therefore, in order for the companies to understand the interests of the target market and factors that affect their consumption behavior, they have been using these surveys. This method has been significant in improving the customer relationship and understanding the tastes and preferences of these customers (Holmes, 2008). Moreover, during the telephone conversations or when the companies are sending an email, the firms advertise other cars in the market. This strategy has been significant in increasing the number of referrals. Both companies use causes and charity strategy in order to promote their new car models. Currently, the market wants to involve itself with companies that participate in corporate social responsibility. This is through funding a noble idea such as sponsoring the less fortunate children in the society or even participating in environmental conservation programs. For instance, the General Motors was selling convincing the customers that when they purchase the new Chevrolet model, they will be participating in conservation of environment, an aspect that will reduce global warming. On the other hand, during the economic crisis, Toyota started a promotional campaign which tried to convince the target market that every purchase made by the customers contributes some cash to feed the hungry children in Africa (Witcher & Chau, 2010). These strategies are used to improve the reputation of the companies in the global market. General Motors use customer referral program as a promotional strategy aimed at expanding its customer base. Over the years, companies have been striving to retain their loyal customers. However, GM uses the loyal customers to get other potential clients. This is through offering the customers who bring new clients with rewards or points which can be retrieved when purchasing new cars. This strategy has played a significant role in reducing the cost of advertising especially during this time when the media houses have raised the costs of advertising on their platforms in order to make immense profits from the high demand for their services. On the other hand, Toyota has been using customer appreciation events to popularize their brands in the market. For instance, the firm holds different shows which award some of the customers who have bought their cars. In addition, the best sales people are also recognized for their relentless effort to ensure that the company’ cars reach the customers who are located in different parts of the world (Holmes, 2008). Although this is taken as an appreciation event, in real sense, the event aims at persuading the customers to purchase the cars and remind other customers on the existence of the products in the market. This strategy has been important in strengthening the competitive advantage of Toyota Company in the market. In addition, it has improved the loyalty levels of the target market. Differentiation Strategy The companies can use marketing information on the consumer behavior of the customers to create products that are specifically designed for a certain market segment. For instance, through market research, the company can obtain information that young people admire cars that are small but fast irrespective of their fuel consumption. This means that this market segment can use all means to get such a car if it’s available in the market. Therefore, the companies can design a car that meets these specifications. This would play a significant role in satisfying the interests of the customers (Wiersema, 2001). As a result, the products would be distinct in comparison with those of the competitors which try to target the mass market. This strategy can differentiate the companies’ products in the market. The companies can use the marketing information to differentiate themselves through cost leadership strategy and focus strategy. The needs of the customers are very specific. Different customer segments have varying interests. Through the information obtained through surveys, the company can know the best pricing strategy to use for a particular market. In addition, they would know the best product to satisfy the interests of the target market. This would increase customers’ level of satisfaction. Therefore, they would stay glued to the companies’ products. On the other hand, a market is characterized by various demographics. For instance, cars that would satisfy the interests of high income earners are not the same that would make the low income earners to feel comfortable (Holmes, 2008). Therefore, the marketing information can be used to understand which product fits well with certain demographics. Therefore, they can brand the cars according to the needs of the customers, an aspect that would differentiate the cars with those of the competitors. Consumer-Oriented Promotions Consumer-oriented promotions such as use of discounts, premium offers, and exchange schemes can be used in enhancing the customer loyalty and improving the reputation of the company in the market. With the increasing levels of competition in the market, companies are using all means possible in order to remain competitive. Many of these companies have diversified their operations to different markets in order to reduce the risks and uncertainties associated with concentrating on a single market. Therefore, in order for Toyota and General Motors to remain competitive, creating customer loyalty is a very significant strategy (Holmes, 2008). Loyal customers are willing to go to any extent in order to purchase the companies’ products. Therefore, the firms can be assured that there is a ready market for their cars. As a result, the marketing departments would only focus on retaining and attracting other customers towards the companies’ products. On the other hand, the promotions improve the reputation levels of the company. Customers want to be associated with firms that appreciate the fact that they selected the cars among the substitutes by the competitors. Therefore, these actions would assist the businesses to forecast the future after being assured of the present. Pricing Decisions The two companies have made its pricing decisions based on the need to survive and maintain the status quo. For instance, Toyota prices are flexible. The company can lower the prices of its cars when the pressure from the competitors intensifies. The company uses a survival-based pricing strategy by willing to accept short-term losses for the sake of the long-term viability of the business. In an example, with the high competition in the Chinese market, the company lowered the prices of its cars in order to attract the customers. However, after penetrating the market, the prices stabilized. This tactic has been critical in ensuring enabling the firm to expand its operations in less competitive markets. On the other hand, both companies have been pricing their products with the aim of maintaining the status quo. General Motors has been using this strategy to retain its position in the US market. This is through lowering the prices of the cars to a small margin over the breakeven price. This is to put off the competitors who would like to penetrate the market and reduce the market share of the business (Holmes, 2008). This has enabled the business to continue its dominance in the US market despite the entry of other multinational companies such as Honda. Both companies have been using profits and sales pricing decisions. The existence of any company in the market depends on its ability to cover the cost of production and adding a small profit margin in order to survive in the market. The number of products influences the profits through economic of scale. This explains the reason why both companies have been in the forefront to increase the number of units being sold in the market. The companies have also focused immensely on increasing the sales through producing cars and car accessories that meet the demand of all customers. One of the strategies that can be used by other companies in the same group to gain competitive advantage would be to create a strong brand name. This would be achieved through intensive advertising and using various promotional strategies in order to reach the potential customers. The companies can differentiate themselves through offering high quality products. In the past few years, Toyota has been faced with a challenge of some of its cars failing to meet the quality standards. The company was forced to call back some of its stocks (Hill & Jones, 2013). The competitors can use this as an opportunity to penetrate the market through providing high quality cars that meet specific needs of the customers. Advertising medium The best advertising medium is the social media. Currently, many people have devices to enable them access the internet. The customers are using the social media to search for their products of choice. In addition, they are using the platform to check the views of other customers who have used the products. The two companies can therefore, use the medium to reach the global market (Daveni, 2014). Moreover, they can use social media to conduct research, an aspect that would enable them to chat directly with the customers and take their grievances concerning the products in the market. Such grievances can be used to make changes in the production process. This would make the customers to feel as an integral part of the organizations. References Daveni, R. A. (2014). Strategic supremacy: How industry leaders create spheres of influence from their product portfolios to achieve preeminence. S.l.: Free Press. Hill, C. W., & Jones, G. R. (2013). Strategic management: An integrated approach. Mason, OH: South-Western, Cengage Learning. Holmes, A. (2008). Commoditization and the strategic response. Aldershot, England: Gower. Wiersema, F. D. (2001). The new market leaders: Whos winning and how in the battle for customers. New York: Free Press. Witcher, B., & Chau, V. S. (2010). Strategic management: Principles and practice. Andover: Cengage. Read More