Strengths and Weaknesses on the Brand of Toyota - Essay Example

? Brand Management and Research Inserts His/Her Inserts Grade Inserts (22, April, Introduction Toyota is a well known name in the automobile industry all across the globe. It is the largest automobile manufacturer by sales. The brand name of Toyota is known for its affordability and toughness. The company has been selling vehicles for from 70 years and its name is well established in markets all over the world. The company has its headquarters in Japan. Toyota has many product lines and models that are aimed for different genre of people. This allows the company to cater to demands of all type customers. In this essay an attempt will be made to highlight the strengths and weaknesses on the brand of Toyota. The assessment of brand will be done with respect to the concepts of value, image and position of the brand. In the end recommendations will also be made on how brand can improve its performance. Strengths of Toyota Value of a brand can be explained as the net trade off received by the customer from all benefits and costs delivered by the product (Snoj, Korda, &, Mumel, 2004). In simpler words brand value is the utility (benefits minus costs) that a consumer derives from a product. Brand image can be defined as perceptions people have about a certain brand name (Rotfeld, H. 2008). The first thing that comes to peoples mind when seeing a brand is called the image of a brand. Positioning of a brand is the place of a brand in the market with respect to other products. Four components of brand positioning include brand’s overall reputation, product performance, customer portfolio, and networks (Knox, S. 2007). It usually is related to the target market of the brand. The value of Toyota brand is very high among the customers all over the world and this is evident from the sales of the company. The company is known for producing cars that provide comfort, and are at the same time affordable. The company has product line of Camry and Lexus that are aimed at higher target markets. The brand value of Toyota is high because it provides more benefits in less cost, thereby increasing the utility of the consumers. This is one of the most significant strengths of the brand. It can provide high quality of comfort, at a relatively lower cost. This is the reason why the brand is famous in both the developing and the developed world. Almost all consumers like to have luxury but most of them cannot afford Mercedes or Ferrari. They are cost effective and for them Toyota is the answer. It has toughness, and at the same time it does not burden the pockets of the consumer. Recently the company brand value has decreased due to massive recalls of vehicles (Kageyama, Y. 2011), but before that the company enjoyed a leading position in the automobile sector all over the world. This is because of the way Toyota caters to the demand of everyone. This loss in reputation is great but still chances are that Toyota will come out of this crisis. Still it is the world’s second largest automobile company according to the brand value (Cato, J. 2010). The global presence of the company also aids in its brand value because the brand is exposed to many people all over the world. Toyota innovates according to its customer demands and Toyota Hybrid is one of the examples in this regard. The recent focus of people on environment was accounted by the brand and a new product was introduced called Hybrid that was environmental friendly. In a line Toyota delivers to clientele according to their demand and this is the reason of its high brand value. Brand image of Toyota has been positive for many years and only recently it was affected by the recall. Consumers regard the brand of Toyota not for luxury or style, but for reliability and predictability (Swanekamp, K. 2010). Toyota is a brand that is known for its affordable and tough cars. Affordability is also closely attached to the brand image of Toyota. The worldwide sales of Toyota would have been impossible if the company would not have been cost effective. A majority of people cannot afford highly luxurious cars so they opt for Toyota instead which offers reliability. For people who are cost conscious Toyota is the brand because they want the car to be tough and predictable. They cannot afford to purchase cars after every two years so they go for Toyota which they know will run fine for many years. This is how affordability is instilled in the brand image of Toyota. The brand appeals to a variety of consumers and that is the strength of Toyota. It has a global presence and people all over the world can associate with it. It is amazing to see how Toyota has over the years competed with brands like Mercedes and BMW. These brands are also known worldwide and people wish they can buy one of these brands. What Toyota has done is that it has answered to the demands of its consumers. The main strength of the brand is that it comes up with products which the customers want. This is the reason for the global reputation of the brand image of Toyota. Toyota Prius is a hybrid car that the company came up with. The people were increasingly getting aware of the problems caused by cars to the environment. Protests by environmentalist groups were also increasing. Toyota understood that there were many people who cared about the environment and so it came up with Prius. The car became famous and people who were environment conscious bought that car and it became a huge success. It is innovation like these that have made Toyota the brand it is. Brand image of Toyota is also famous and popular due to these innovations. A variety of people know about the brand and majority of them have a positive image of Toyota. This is a great success in itself for Toyota. Positioning of the brand also adds to the strength of Toyota. Toyota has been successful in making full use of its global presence and has positioned its brand in medium and lower income target markets. As mentioned earlier the brand is known for its reliability and durability so its positioning is in target markets that look for these two things and that are lower and medium income people. Product differentiation is another aspect of the Toyota brand. It has also made sure that it differentiates its products from competitors by focusing on its core values that is reliability and affordability. Cars, which Toyota produces for its major target markets, are tough and are cost effective. This is how Toyota tries to differentiate its brand from other brands. The company has made different product for different types of customers. This is an attempt made by Toyota to tap in other markets as well. Toyota is also making luxurious brands and this is how the company is aiming to position its brand for future. The company has developed its brand so much so that it is now trying to capture other markets as well. This shows the strength of the brand of Toyota. Weaknesses of Toyota Apart from many qualities the brand also has certain weaknesses. We will discuss these weaknesses in the light of value, image and positioning of the brand. Toyota is facing a very tough time now due to its recall of millions of vehicles. The brand of Toyota has been seriously affected due to these recalls. The trust people had for the brand has decreased and the company is facing many law suits. At the end of the 2009 customer started to experience some problem with the accelerating pad of the Toyota cars. The pad was sticky and was causing unintended acceleration in cars (Eisenstein, P. 2011). Because of safety issues the automobile company began to recall its vehicles in large numbers. This recall was financially a burden on the company and at the same time its reputation was seriously affected. The value of the brand has been seriously hit due to this recall. Consumers preferred the brand because they thought it was safe and reliable but recalls have made them skeptical about safety of the brand. The perceived benefits of the brand have decreased in the eyes of the ordinary consumer and this has led to the decrease in brand’s value. This recall has also shaken the confidence on the company itself. Managers at Toyota will now try to play safe and will fear in future due to the problems they have faced in the past 2 years. Their thinking will be affected and they will immediately become risk averse and that may also damage the brand value of Toyota. Global operations of Toyota are also affecting the value of the company. Toyota has to make cars for different types of customers so it has to innovate according to the culture it is operating in. Right now the company is producing similar cars for whole world. This is a weakness of the brand because perceived benefit of consumers may increase if products are introduced that are closer to domestic taste of consumers. The image of the brand is also tarnished by the recall of vehicles. Consumers will think twice before buying the product because their perceptions about the vehicle are negative now. Also in developed world safety is a major concern for consumers. If people start to think that Toyota’s cars are not safe then they will not buy the brand. That’s why brand image can have a deep impact on the profitability of the brand. Another weakness of Toyota is that it lacks luxury to some extent. Although cars of Toyota do not look bad but still people do not find them luxurious. This is a weakness because Toyota can easily market its cars as luxurious. This can give consumer additional incentive to buy the brand. This can be done easily without starting new product lines. Toyota can use its existing popular brand and promote a luxurious image of the cars. People just need to be realized that Toyota offers luxury too along side with affordability and toughness. Toyota has also not attempted to improve its image by launching its Prius model in developing countries. The company has launched it in many countries but in developing world the product is not sold widely. This is a weakness of because selling an environmental friendly car can improve the image of the brand. Sooner or later people in the developing world will become environment conscious and when that happens they should go for Toyota only. This is an area where the brand is lagging behind. The marketing of the car is not done in developing world heavily and this is why sales of Prius are concentrated in Japan, China and North America. The car is a huge success but Toyota is missing on a huge market of consumers in the developing world. This will improve the brand image of Toyota in the developing world. The positioning of brand of Toyota also has some weaknesses. The recent crisis of Toyota and its large recall has shaken in market badly. The brand is losing its target market to competitors like Ford and Honda. The problem is that the target market of Toyota is normal people. They are not very sophisticated and they do not buy Toyota because of luxury or social status. For luxury people buy BMW and Mercedes. That is why these brands have a relatively stable clientele which does not shift to other brands. In short the brand loyalty of these brands is higher as compared to the consumers of Toyota. This is why the recent crisis would damage greatly the brand. Customers are switching to other brands and Toyota is finding it very hard to retain them. Winning these customers back from competitors would be daunting task. The brand is also in danger due to the rapid growth of the company (Maynard & Tabuchi, 2010). Every brand has to focus on its core value first and then move in other markets. The core value of the company is its reliability and toughness with affordability. The rapid growth of the company may affect the brand because the focus may shift to other markets. It is important for Toyota to keep in mind its main clientele. Any rapid move in other markets can damage the company. By introducing different product lines the company is creating problems for itself. People at Toyota should know what their target market is so that innovation at Toyota should be in line with their target market. It is not a bad thing to move in other markets but it should be done slowly and gradually so that the company itself, its managers and consumers as well can swallow the change. It is not easy to change the perceptions of people about a product. People associate Toyota with reliability so this association cannot be changed in a day. Also Toyota will have to market its vehicles in selected target market. Competition is also increasing in the automobile industry and this is another problem the brand is facing. In today’s world Toyota cannot just sit back and enjoy its market share on the basis of its brand and global presence. It has to innovate in order to survive. This means high R&D costs and when Toyota will continue to recall its vehicles then it will be tough to finance that R&D cost. Recommendations for Toyota First thing that Toyota has to do is to solve its brake pedal issues. The company should immediately try to fix it as it is damaging the company a lot. This problem should also be seen as an opportunity by the company. All major agencies for car safety have cleared Toyota from any problem (Keane, A. 2011). Toyota should use this as its marketing strategy. They should market that they care so much about the safety of the customers that even though the problem was not evident still they recalled its vehicles to ensure safety of consumers. This should be used as a marketing strategy and people should be informed how Toyota cares about them. This will improve the brand image of Toyota in the eyes of the consumers. All mediums should be utilized including internet and television to market this fact. In developing world people do not know much about the problem so they will be impressed to hear that the company cares so much about the safety. This would decrease the damage done to brand image of Toyota. Toyota should also try to secure its Asian markets. Ford and Honda are trying to make full use of the recent troubles of Toyota. They are trying to enter the markets which belonged to Toyota. In such a situation the company should try to take steps to secure its market. This can be done through advertisement and public campaigns. Toyota needs to establish barriers of entry so that no other brand can capture its market share. Toyota should also try to associate its brand with positive events. It should invest heavily in corporate social responsibility. People should have a positive image of the brand. Toyota should be seen doing something positive. This should be done in North America especially because the damage done to the brand in the region is great. It is vital that consumer change their perceptions about the brand Toyota. Toyota should associate itself with social causes like education. This will enhance the brand image of Toyota. Environment is a major issue today and Toyota has developed its Hybrid car long ago. It should try to highlight this in its advertisement to regain the lost confidence of customers. Hybrid car is something that can be used to attract customers as well. Environmental programs all over the country can be held and this can easily be done in association with any NGO. The cost of such a campaign can be significantly less as compared to its benefits. It is expected that Toyota would lower the costs of some of its models (Kitamura & Hagiwara, 2011). This should not happen because it will cause people to believe that the company is facing trouble. In the age of information people have access to information and this move can strongly back fire. It would look like people Toyota is trying to increase its sale because it is not being able to sell its car. Prices should not be decreased now because people will get a bad signal. At this time Toyota should try to contain the damage and improve its brand image by excessive marketing. This would be a better way to improve performance. Another aim of the company should be to expand slowly. The company should immediately draw plans for the next ten years. These plans should not be too audacious. The brand should aim to capture new markets but this should be done by keeping the quality standard in place. It is not advisable to ignore quality in increasing the rate of growth. Conclusion Brand name of Toyota is very well known because of its history and global presence. Toyota is an international brand and enjoys a very strong brand image. But recently due brake problems and massive recalls the company is facing a lot of problems. This has also decreased the brand value of the company and has weakened its grip on markets. Competitors like Ford and Honda and trying to take full use of the situation. So all in all it is a tough time for Toyota. In such a time the company should try to associate itself with positive events and should cash in its Hybrid car by marketing its concern for environment. All this can help Toyota in enhancing its brand image. Bibliography Cato, J. 2010. Toyota's brand value takes a beating, The Globe and Mail. Retrieved from http://www.theglobeandmail.com/globe-drive/driving-it-home/toyotas-brand-value-takes-a-beating/article1549890/ Eisenstein, P. 2011. 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