Management of Global Trade Distribution of Toyota Motors Company - Case Study Example

Management of Global Trade Distribution of Toyota motors Company Name: Course: Course code: Tutor: Date: Introduction Toyota Company is one of the successful and best-known businesses in the world, operating in more than 25 countries in the world with more than 160 markets globally. Its global production was 10.1 million brand vehicles in 2015. A major element in the company’s success is its commitment to designing, engineering and building cars in the global regions where they will be marketed. The Company’s history is dated back to 1918 with its success built on innovation both regarding its products and process by which they are made. Sakichi Toyoda brought revolution in the weaving industry by inventing an automatic loom. Toyota Motor Corporation was formed in 1936 after the name was favored through competition as it comprised eight strokes in Japanese script. Toyota had some difficulties in establishing itself since the market was dominated by Ford and General Motors. Toyota developed itself into Toyota Production Systems in the 1950s after surviving challenges during the Second World War. The company set up various overseas productions in the 1960s in countries like Taiwan, and Saudi Arabia before venturing into European markets. Since 2008 to date, the sales of the company have risen irrespective of lawsuits filed against the recalled vehicles. Toyota’s Growth Strategies Market Penetration- This is one of the growth strategies being adopted by the company. This strategy supports the growth of the business by attracting more customers in the company’s current market. To achieve this strategy, Toyota ensures that it offers products for each and every market segment. For instance, the company has trucks, sedans, luxury vehicles, SUVs and other product lines for each customer. This type of growth strategy supports the company’s generic strategy by allowing the company to maximize sales leading to profits irrespective of low selling prices. Product Development- This becomes the company’s secondary growth strategy and supports the growth by attracting new customers to the new product. Toyota uses this strategy through continuous innovation. For instance, through Toyota Prius, this strategy empowers the company to attract those customers whose major concern is the environment. This type of growth strategy supports the company’s general strategy of differentiation by coming up with innovative products that have unique features. Market development-Toyota is already established globally. Therefore, market development just supports the growth strategy for the business. The company through this strategy aims at entering into new markets as it also tries to maintain the current market. This growth strategy supports the company’s cost leadership generic strategy by utilizing the Toyota’s global market presence Toyota’s Marketing Mix The company’s marketing mix shows how the strategies adopted by the firm for interacting with its target markets. Toyota Motor Corporation being one of the leading firms in the automotive industry in the world, its target market is different regarding consumer needs and local and regional market conditions. As a result, the marketing mix of the company is tailored to address these discrepancies (Paliwoda, 2013). Toyota’s marketing mix comprises of product mix, place or distribution, promotional mix, and pricing. Its present dominance partly shows the company’s effectiveness in implementing the organization’s marketing mix Product Mix Toyota has various types of products, and the element of product mix recognizes the organizational outputs for the potential customers. Some of the company’s product lines include; Toyota automobiles, Welcab series, Lexus automobiles, engines, Marine products and spare parts and accessories Place/ Distribution The dealership is the major places of distributing the company’s products. This component of the marketing mix defines the places where customers can easily access the products of the company. Toyota’s major places of distribution strategy are dealership and retailers. The company’s dealerships are places where sales transactions happen. In most cases, Toyota relies heavily on dealerships as a way of selling its products to the target market. Promotional Mix The company’s promotional mix concerns with how the company communicates with its target market. Toyota uses the following promotional activities; personal selling, public relations, advertising, direct selling and sales promotion. The company uses personal selling through dealerships sales people, who promotes the products personally to the potential buyers. Toyota also utilizes advertisements on various media such as newspapers, TV and websites. Public relation activities comprise of Toyota Together Green programs aimed at promoting environmental initiatives. All these public relation activities improve the company’s image leading to more sales Pricing Strategy The company’s prices vary depending on the product line, type or model. It identifies how the company sets the prices of its products. The following strategies are adopted by Toyota while setting the prices of its products; market-oriented pricing and value-based pricing. Market-oriented pricing strategy is used to determine the prices basing on the prevailing market conditions and prices of other competitors within the market. This strategy is utilized in various Toyota products such as trucks and sedans. Nonetheless, the company also uses value-based pricing strategy which sets the prices basing on the actual and the perceived value of the product. Also, Toyota also uses value-based pricing for more expensive or high-end products such as Lexus and Prius cars. This marketing mix strategy is a clear indication that the company fixes price levels basing on the prevailing market conditions and the customer’s perception How Toyota Company can improve global trade distribution activities Improving the customer service and cost reductions are necessary but not enough to transform auto retailing channels. Achieving the full potential of such programs is impossible without a sound view of the targeted customer segment, the right mix and marketing and distribution functions necessary for each market segment, and the best portfolio forms of distribution and channels of reaching the targets (Branch, 2009). Just as the particular set of customers have their unique requirements, various consumer segments also their needs for the buying and ownership experience. These needs can be targeted effectively with channel, format, and soft offer variations of packages such as service contracts, sales or financing incentives. In the end, the requirements for the consumer-segment will drive the service needs and eventually help in determining the greatest cost and the operating structure for a particular form of distribution and customer-value proposition. For the company to expand its distribution activities, it has to create a flexible and a targeted mix channels that will be hard to be emulated by other competitors in the market. The company has to collect continuous and quick feedback for new retailing approaches and ideas, in line with a strategic path that can easily adapt to the changes as the company learns over time. To improve the future accuracy of demand visibility and forecasting, Toyota has to use improved marketing techniques and information systems to follow-up customer and sales information, renewal of leases of marketing campaigns and data on the effectiveness of sales promotion. Another effective way that the company can enhance its distribution channel is by offering various “soft offer” services to complement their products i.e. insurance, financing, extended service contract, etc. in a standard manner instead of creating high –value bundles made to suit particular consumer ownership segments (Paliwoda, 2013). In some parts of the customer markets, Toyota has to carry out extensive sales network as this forms an important factor in the company’s success in increasing its distribution activities. It has been realized that several vehicles were bought from salespersons who visits customers in their offices or homes. Currently, this traditional method of sales through an office and home visits has been replaced by show room sales where the percentage of car purchases through the showroom has been increasing. As this trend is expected to continue, Toyota Company should open more showrooms globally and improve its sales activities like customer reception and careful service in showrooms so as to increase customer satisfaction The company should adopt its global strategy, carry out research and continuous quality improvement, technological innovation and offer respect to customers around the world. References Branch, A.E., 2009. Global Supply Chain Management and International Logistics. Routledge. Brenton, P., 2014. International Trade, Distribution and Development: Empirical Studies of Trade Policies. World Scientific Publishing Company. OECD, 2001. Environmental Goods and Services The Benefits of Further Global Trade Liberalisation: The Benefits of Further Global Trade Liberalisation. OECD Publishing. Paliwoda, S., 2013. International Marketing. Routledge. Toyota, (2007), About Toyota, available on (http://www.toyota.com/about/whynot/index.html, Read More