Toyota Car Company - Case Study Example

TOYOTA CAR COMPANY The paper is an analysis of the Toyota Car Company and details aspects of the company such as the company’s management style, market segmentation, its target markets, 4C’s and Toyota Car Company’s vision. Introduction Today Toyota has claimed the top spot in the automobile industry by knocking off their long-term rivals General Motors (TrueTrends, 2012). In the year 1967 it entered the US motor market, 30 years after it set its foot for the first time in 1937. The company had successfully gained 20% of the US car market by 1980 when the customers were getting dissatisfied with the other indigenous car markers. Below are the entrant strategies formulated by the car maker in order to set its foot in the US: Efficient fuel consumption as compared to the gas operated American cars Environment friendly Better build quality Introduction of luxury car segment in the market Organizational Structure and Management Style The key to success for the company was the introduction of Japanese style in terms of operation, production and also management. Toyotas CSR Concepts (2012) states that it is necessary to extend the management principles beyond the floor of the shops, which is what followed by Toyota. The Toyota (Japanese) culture is connected to the set of standards, which are termed as the “Toyota Way”. These standards are virtually applied by the Japanese in all their dealings. The Japanese are generally moderate in nature and they seldom show some emotions they are always thorough and show the strong culture traits in everything that they do. The techniques that Toyota America Company had used in order to remain successful in their business and obviously there is culture difference between Toyota Japan and their biggest foreign subsidiary. The business culture of America and Japan is distinctly different. Though there were differences in culture the two countries could do business hand-in-hand for about decades. The striking differences between the two countries could be seen in their winning attitude, communication skills, methods for maintaining strategies and many others. Thus it can be concluded that it is important to understand the culture of the host country when a company from outside is trying to set up their business in that country. Long-Term Planning and Managerial Autonomy Most of the times, the Japanese employees take the employment as the lifetime engagement. For this reason the managers need not to feel pressured in terms of reaching the target for filling up the departments with human resources. Corporate Hierarchy and Rigidity Toyota is one Japanese company that maintains a high level organizational hierarchy and generally possesses bases that have autonomous powers. The main role played by the top managers is mostly towards the strategic development of the company. It is the business unit manager’s responsibility to look after the initiation and supervision of new projects. Participatory Decision-making The company had the practice of exploring the ideas of the employees in a given project, which is called as Nemawashi. The sole intention of Nemawashi was to engage all the employees in decision making process. The bottom up approach is the form of Japanese style management, which is in contrast of the typical top down approach. Position in the Market In 2013 Toyota retained its top spot in the car sales after beating rivals like Volkswagen Group and General Motors. The car maker achieved 9.98 million, which narrowly missed the 10 million marked. If the car maker would have achieved this milestone it would have been the first car maker to do so. But it stayed ahead of GM who was at 9.71 million and VG who was at 9.7 million. Since 2008 the Japan car maker was consistently at the top spot after beating GM till 2011. It got a hit in production after Tsunami hitting the country in 2011. The company stated in a press conference that it hopes to break the 10 million mark in 2014. The sales tally of the company includes the brands like Daihatsu, Lexus along with the truck-maker Hino. Segmentation of Toyota In the UK the company had clocked a total sales of 20,388 units of hybrid cars, which include 13, 826 Prius alone. The other cars being Lexus RX 400h with 5,582 units and Lexus GS 450h with 980 units. The market segment by Toyota was done based on three criteria – psychographics, demographics and most importantly the economic point of view. Each of the customer segments saw unique demand functions, which were based on three characteristics – non-physical attributes like performance and image, physical product characteristics and pricing (Mukai, A., Horie, M., & Hagiwara, Y. (2012). As per the segmentation, the company has a wide range of products on offer for different customers. Toyota has set up its car prices in such a way that it can suit all the customer segments. The large variety in the product segment has successfully created a positive image about the manufacturer in the customers’ mind and making it a people’s car. Target Market In the UK, the spending of Toyota in advertisement is £27,218,000. It is evident from the recent commercials of Toyota that the company is mostly availing women models for their car commercials. The example can be given here is the Prius “Harmony” advertisement where in the car moves towards a woman and sheds its emotion. Toyota is spending quite a lot of amount in Brazil, Thailand and India apart from the other Asian country like Indonesia. In the month of February of the running year the company had inaugurated the new manufacturing unit in India, which would raise its production capacity by 50% up to 310,000 units. The $100 million unit would manufacture mostly the Innova and Etios models. The company had opened its third manufacturing unit in Brazil and the fourth one is in progress, which would start production from early 2015. The fourth unit would have the capacity to produce 200,000 units and the cost of erecting this unit is $500 million. 4P’s (Product, Price, Promotion, Place) Product In the UK market, the car maker has launched a wide range of products. In the roads of the UK Toyotas cars making their presence felt. Some of the renowned brands on the UK roads are Lexus, Land Cruiser, Verso, Avensis, RAV4, Prius, Corolla, Auris, Yaris and Aygo. Almost all the car manufacturers are getting hit by the high price of fuel along with concern about the environment and saturation of the market. Price The buying capacity of the people in the UK is comparatively high due to the strong economy of the country. The company always tries to set price ranges keeping the income level of people in mind and always tries to offer more for less. The cars of Toyota start from £6500 and the highest price being £50,000. If it’s looked deeply, there are two types strategies that the company applies in its pricing, which are cars made for low income level people and cars for the people who generally distinguish themselves from the general people. Place In the initial stage the car maker did not see high success in the UK market though it had a great reputation in most of the markets that it has operations. It has made its mark on the UK roads with Prius as the company done a thorough research about the British taste for cars prior to the launch of the car. The car was priced at a price range that may not be suitable for the developing Latin American or Asian countries. The launch of the Toyota cars was successful in terms of strategy as the people of the UK are more sensitive towards the issues like the environment and they are the people who have the affinity towards new technology. Promotion Focused groups with target customers were used by Toyota in order to evaluate various aspects of Prius. It was found in the survey that people are mostly looking for affordable pricing, quality and technology. The company had spent a considerable amount of the advertisement budget of Prius for materials in order to help the dealers communicating the new hybrid technology to the customers. 4C’s (Customer Value, Cost, Convenience, Communication) The new consumer profile emerges with the vehicle values. After establishing the communication materials for marketing can be distributed along with brand loyalty incentive, which would help in understanding the mindset of the consumers. Though the marketing materials do have the potential to generate a measurable success but it can help the company to remain focused towards the individual needs of the customers. Distribution Channels The effective marketing strategy had helped the company to enhance its reach in the market, which had direct influence on the target market. The company had incorporated all the differentiators required in order to make Corolla to stand out in the crowd (Sirgy & Rahtz, 2007). Those strategies include: Differentiation of product in terms of performance, quality and features Differentiation of channels in terms of communication with the company Differentiation of image, which is perception and image of the brand in the entire marketplace (Toyotas Financials, 2012). The company had used the value message of Corolla – it’s new, again – in order to reach a greater market place in the car segment. The promotions for the other cars of Toyota, using the value messaging of Corolla, was done through various media channels like magazines, billboards, direct mails, television, internet and many others. The sole intention of using various media channels is to make the customers aware about the benefits that the company is providing to match their particular needs. This approach is mainly adopted in order to captivate and encourage the customers to remain loyal to the Corolla car (Vollmer, 2008). Mission and Vision The mission statement of the company states that they want to attract and attain the customers in America with their high value products and services and to create most satisfying ownership experience. The vision statement says that Toyota is aspiring to be the most respected and successful car brand in America. Conclusion To sum it up it is seen that the philosophy of the organizational culture of Toyota has helped building its organizational orientation and marketing mix. The company has put its customers and quality always at the first place. Whether it is product development or marketing strategy or after sales service the company has brought best possible service to their customers. The only weakness the Toyota has is the distinctive brand image. However, this would also achieve by the car manufacturer with its Lexus brand as the time passes. Quality control in the local market should have been more controlled while they are trying to move globally. Though it is not possible to control every macro factors but it is expected out an organization like Toyota to have enough reserves in order to tackle any kind of crisis situation. The hybrid car’s introduction by the company has extracted much of its investments. Now it is time for them to capitalize on their investments. There are number of ways that Toyota can look for – one of them is to make the hybrid cars available to as many customers as possible. It is critical to maintain balance between price skimming and low pricing. The biggest opportunity that the car manufacturer can see is at the growing markets of India and China. If the company can win these two markets they will cherish a big increase in their profitability. References Mukai, A., Horie, M., & Hagiwara, Y. (2012). Toyota Raises Sales Forecast, May Extend Lead Over GM, VW. Bloomberg Businessweek. Retrieved from http://www.businessweek.com/news/2012-08-03/toyota-profit-beats-estimates-after-sales-in-u-dot-s-dot-japan-surge [Accessed 17 Mar, 2014] Sirgy, M. & Rahtz, D. (2007). Strategic Marketing Communications: A Systems Approach to IMC. Mason, OH: Thompson. Toyotas CSR Concepts (2012). Toyota. Retrieved from http://www.toyota-global.com/sustainability/csr_initiatives/csr_concepts/policy.html [Accessed 19 Mar, 2014] Toyotas Financials (2012). Toyota. Retrieved from http://www.toyota.com/about/our_business/sales/index.html TrueTrends. (2012). TrueCar-Latest Automotive Trends. Retrieved from http://www.truecar.com/static/references/TrueTrends_November_2012.pdf [Accessed 19 Mar, 2014] Vollmer, C. (2008). Always on : Advertising, Marketing and Media in an Era of Consumer Control. New York, New York: McGraw-Hill. Read More