Global Marketing Strategy - Toyota Motor Company - Case Study Example

Global marketing strategy: Toyota Motor Company Contents Contents 2 What is a multinational company 3 Toyota Motor Company 3 Toyota Motor Company Marketing Strategy 4 Toyota Motor Company international marketing operations 4 Toyota Motor company future challenges and key issues 6 Models of international/global marketing 8 EPRG/EPG model 8 SME International Marketing Model 9 Article on EPRG/EPG model 10 What is a multinational company A multinational company is a business organization that has operations in more than one country. It is therefore a large organization that offers services and goods, on a large scale (Shang & Low, 2014). A multinational corporation normally deals with export and import of goods and services. Hino (2006) explains that when a multi-national company seeks to invest in a home country, they normally seek strategic alliances with a host company. This is for purposes of using their supply chains, and facilities to conduct trade. This essay focuses on Toyota Motor Corporation as a foreign multinational company. It also looks at its current marketing operations, future challenges, key issues the company faces which will be analyzed by the EPRG and the self driven SME international Marketing model . These models will be used analyze and also to offer solutions to problems which the company faces. Toyota Motor Company Toyota Motor Company has a robust strategy to ensure that it remains a successful multinational in the face of stiff competition from other automobile manufacturers. The company identifies its values and work methods as the Toyota Way (Hino, 2006). In relation to this Toyota in the year 2001 came up with ‘Toyota Way 2001’ which was simply an illustration of the way all its employees should conduct themselves with regards to the company’s values and regulations (Hino, 2006). The company emphasis on respect for people and continuous improvement is a clear indication of values and guidelines that all employees must observe (Shang & Low, 2014). The Toyota Way has been seen to consist of long-term thinking to assist with decision making for the management, way to solve problems, empowering tits workforce so as to add value to the company and coming to the conclusion that nonstop problem solving leads to learning within the organization. Toyota Motor Company Marketing Strategy With regards to operations, Toyota Motor Company operates on a multinational level and has expanded its markets worldwide. In relation to this it has adopted new technologies such as that of producing in large quantities hybrid gasoline vehicles. As of the year 2010 the company says that it has managed to sell two million worldwide (Shang & Low, 2014). This has been made possible by its presence in many countries for example Indonesia, Turkey, United Kingdom, Mexico, United States, Pakistan, Thailand, Portugal, Venezuela, and South Africa among others (Shang & Low, 2014). The demand for Toyota products compelled it to start the Innovative International Multipurpose Vehicle project in the year 2002. This was meant to maximize on the production of supply systems of vehicles demanded by over forty countries. Toyota Motor Company international marketing operations Wanting to maintain a competitive edge over other automobile companies globally, Toyota Motor Company is among the biggest companies to have advocated for the hybrid electric vehicles. In fact it led in the mass production of these vehicles and sold its first hybrid vehicle by the name Toyota Prius in the year 2007 (Plunkett, 2008). Toyota has involved itself with rigorous marketing strategies globally. For example in North America the company has put much effort in pointing out not only the beneficial experiences of owning a Toyota automobile but also on its quality. The company’s market share in the United States has risen since recession of the year 2001 (Shang & Low, 2014). Due to this the company has invested heavily in the United States. As of the year 2006, it had twenty three assembly plants. The rigorous marketing activities have made the company overtake motor companies such as Ford and GM (Mahadevan, 2010). This is due to the company’s high adaptability with regards to market demands. For example in the year 2007 Ford was below in Toyota in terms of United States Sales volume and overtook GM the same year becoming the leader in global car sales. This was mainly achieved due to its fuel efficient cost vehicles highly admired in the United States. The company’s presence in Europe is meant to ensure that it remains the leading global vehicle manufacturer. As of the year 2003, the company held market share of 4.4 percent through its Toyota, Daihatsu and Hino brands. In the same year, 1.3 million vehicles were produced in the European Union alone through its production units numbering seventeen (Mahadevan, 2010). It is this desire to exploit the European market that Toyota started to build an assembly plant in Russia’s St.Petersburg (Shang & Low, 2014). The assembly produces the company’s Camry models. Toyota is Europe is registering yearly increases in sales volume due to its identifying and fulfilling needs of the European population. In the Australian market, Toyota is concentrating in the production of Toyota Camry Hybrid car. The undertaking started in the year 2010 and involved production of cars that are driven by electricity and gas (Shang & Low, 2014). This a highly lucrative venture as it expected the demand for highbred vehicles will skyrocket because of the ever increasing fuel prices. The increasing global temperatures are also seen to play a vital role towards a demand for these types of cars (Plunkett, 2008). In order to penetrate markets of countries such as India, China and Russia, Toyota Motor Company has had to adopt other marketing strategies. Chief among them has been to produce low cost vehicles. The company prior to the year 2010 panned on constructing three new factories that would be tasked with manufacturing 450 units per year purposely to satisfy the market demands of Asian countries mainly China and India (Shang & Low, 2014). This was to make sure that within the same year the company held over 12 per cent of the worldwide markets as compared to other car manufacturing companies (Shang & Low, 2014). The strategy employed by Toyota Motor Company to penetrate and succeed in foreign markets is usually developed by specialist from Japan. The strategy used is the KAIZEN which simply implies continuous improvement and how it affects the quality. As such emphasis is placed on developing new technologies incorporating new research and also employing the spirit of hard work (Kurtz & Young, 2009). It is due to this that Toyota is regarded as the leader in automotive research focusing on addressing challenges and foreseeing future ones. For example to address the problem of air pollution, the company has started to manufacture hybrid vehicles that do not pollute the air. It thus goes without say that Toyota vehicles are usually not only cost effective but comfortable and offer its customers a variety of vehicles basing on demand (Shang & Low, 2014). Toyota Motor company future challenges and key issues Toyota Motor Company just like other multinationals faces future challenges. For example in North America, the company’s Prius models which 12 percent its America sales is attributed to it, could diminish due to entry of better hybrids brought in by competing companies (Shang & Low, 2014). An example is C-Max which is a For’s Hybrid launched in the year 2012 and which has gone on to attract positive attention and in the process sold more units than Toyota’s Prius model. Other competing hybrid cars such as GM’s Spark EV and Ford’s C-Maxi are also slowly eating into Toyota’s sale base in North America (Shang & Low, 2014). The second challenge stems from the negative markets in Japan. Natural calamities such as the Tsunami of the year 2011 battered the Japanese economy (Shang & Low, 2014). To address this, the Japanese government came up with plans to a tax incentive meant to persuade people purchase vehicles. The measure encouraged Japanese buyers to purchase new vehicles before the expiry of the period. This expiry period happened in September meaning that the market has gone back to its declining state. This has made Toyota Motor Company to forecast a drop of 20 per cent in sales come next year (Plunkett, 2008). This is a significant figure as the company depends heavily on local sales which account for the company’s 30 percent of its sales volume (Plunkett, 2008). Finally the company is threatened with more recalls as the quality of its vehicles is put into question. The first of the recalls happened in the year 2009 and the second in the year 2010 (Mahadevan, 2010). By the 2010 the company had recalled close to 7. 5 million vehicles for foot peddle and accelerator related problems. The company’s rapid growth has been blamed for the drop in the quality of its products (Shang & Low, 2014). The company has been said to compromise on quality of its product prompting a safety scare for its global customers. The recalls that have already taken place have threatened to negatively impact on the image of the company already facing possible lawsuits from disgruntled customers (Adetule, 2011). This further threatens to eat into the profit levels of the company and its completive edge in the global market (Shang & Low, 2014). Toyota is faced with threat of distrust from its once loyal customers who held it with high esteem and once made it the global leader in automotive industry. This negative turn of events has emboldened its rivals such as GM, Ford among other vehicles which are slowly eating into its market globally (Shang & Low, 2014). To counter this negative publicity, Toyota will have to come up with direct marketing strategies in order to win back distrustful customers. Models of international/global marketing EPRG/EPG model Two global marketing models can be used to evaluate issues affecting Toyota Motor Company. EPRG model also known as EPG model was developed by Pelmutter in 1969 (Mahadevan, 2010). Here ethnocentrism, geocentric and polycentrism mark the strategy of the company. It also includes regiocentrism. The aim of this model is to know the organization’s orientation. This implies that there is difference in ways that profits and costs are generated (Adetule, 2011). As such it is necessary for the organization’s activities to be at par with each other at different stages. The same should apply to the organization’s way of doing things or its culture and marketing strategies for the organization in question to succeed in any market. With regards to Toyota Motor Company, this model can be used to better its marketing strategy. For example on issue of regiocentrism the company should come up with strategies that target a particular region for example North America, Europe, North Africa or Asia (Adetule, 2011). The company should market cheaper cars that consume less fuel in less developed regions such as in East Africa whereby fuel prices are high while regions in North America with a large population of the wealthy should see more expensive high class vehicles dominate the market. This approach will surely increase the company’s sales margin. The company should also learn to treat all foreign market as one through geocentric (Douglas, 1995). As such the quality of produced automotives should be uniform regardless of the country that they will be sold. This will not only help to develop consumer trust and confidence but help come up with a strategy to address local market needs and boost sales levels. SME International Marketing Model The second model is the self driven SME international Marketing model. Here companies concentrate on making international sales. The companies do not have power in the market and hence offer no control over them. Instead of marketing being relationship oriented it is transaction oriented. The relationship is usually initiated by the international customer who makes the first contact and asks about available products and therefore there is no effort is made to make it last beyond the period of sales (Pride & Ferrell, 2010). This model has characteristics unique to it for example the minimal relationships between the international clients or customers implying that the company has to go to great lengths to fulfill the customer’s demands, having no power to choose both customer and agent and very minimal adaptation to meet customer needs in the local market. With regards to this model, Toyota needs to improve its relationship with customers across the globe (Adetule, 2011). This will be vital when it comes to assessing regional or individual needs. For example it is only through good relationship with customers that the company will be able to get a report from customers with regards to quality of products on offer. This will in return help avoid embarrassing situations such as the car recalls of the years 2009 and 2010 (Williams, 2011). Toyota needs also to be at the forefront in initiating relationships with potential customers. This will not only help improve on their sales volumes but will land them better deals as opposed to competing companies. Toyota needs to also be in a position to choose customers and agents in foreign companies and task them with conducting research with regards to product improvement, efficiency and future trends. This will also contribute greatly to marketing strategies that will cut across cultures and lead to increase in sales volume. Article on EPRG/EPG model Journal Article by Drachal (2014): Drachal (2014) explains that as globalization spreads, companies across the world experience changes that are crucial in their survival. With regards to this model companies tend to move from geocentrism to regiocentrism among other orientations. These orientations have their own benefits and shortcomings. For example the simple nature of the organization structure is associated with the ethnocentric orientation. It is also associated with a simple flow of information. Toyota Motor Company needs to put in place this measure to ensure that the organizational structure is known to both employees and customers. This will ensure smooth running of among other things transactions globally and in the local market. Also information will flow freely from top management to low management contributing to sharing of technological experiences from branches across the globe. Polycentric orientation which puts its focus on deeper entry into foreign markets regardless of their locality ensures enhanced sales on the part of the company. Thus Toyota Motor Company needs to adopt this orientation so as to ensure that it has a footing in all geographical regions across the globe. This will lead to larger customer base and hence higher sales and profits. Moreover this will provide it with the chance to know the local markets better and assist in future decision making. This orientation will help build a relationship with local governments and understand local policies such as taxation, availability of raw materials among other process that are vital to smooth running of a multinational company operating in a foreign country. Toyota Motor s needs to adopt a global marketing model that will address challenges that it is currently facing. It is only after doing this that it will retain if not to remain a leader in the global automotive industry. Bibliography Top of Form ADETULE, J. (2011). Handbook on management theories. Bloomington, Author House. Bottom of Form DOUGLAS (1995).Global marketing strategy. New York, McGraw-Hill DRACHAL, K. (2014). WHAT DO WE KNOW FROM EPRG MODEL?. Ecoforum Journal, 3(2), 10. HINO(2006). Inside the mind of Toyota: Management Principles for enduring growth. New York, NY. Productivity Press. Top of Form KURTZ, D. L., & YOUNG, V. (2009). Contemporary marketing. Mason, Ohio, South-Western Cengage Learning. 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