The Pricing Strategies, Promotional Strategies, and Supply Chain Strategies - Literature review Example

Pricing strategies As stated there above, the marketing objectives set by Toyota Australia for its Aurion V6 include ensuring that average sales hit or reach 75,000 cars by 2014 and aiming to raise local customers by specific percentage by the end of 2014 in terms of creating a new product. In order to achieve these specific, measurable, attainable and realistic objectives the company’s pricing strategy must be selected to support the above objectives. According to Kotler & Armstrong (2010) pricing strategy is an important issue in any business because it is directly related to a number of other marketing concepts such as positioning of the product in the market. Kotler and Armstrong (2010) held that pricing of the product or service affects other elements of the marketing mix such as channel decisions, product features and promotion. In this regard, the pricing strategy that need to be adopted by Toyota Australia for its Aurion V6 product must be developed after the marketing strategy for Aurion V6 has been developed, decisions of the marketing mix have been made, the demand curve has been estimated, costs have been calculated and this includes both the variable and the fixed costs, environmental factors have been understood, pricing objectives have been set such as maximisation of profits, maximization of revenue or stabilization of prices. From the marketing objectives stated above, it is clear that the pricing objectives of Toyota Australia towards its Aurion V6 is to maximise revenues and maximisation of the quantity of the Aurion V6 vehicles sold in the Australia market by 2014. Nagle and Holden (2002) held that the objective of the firm which seeks to maximise revenue is to maximize profits in the long-term by lowering the operation costs and increasing the share of the market commanded by the company. Nagle and Holden (2002) also noted that the objective of the firm which seeks to increase the quantity of the products it offers in the market is to decrease costs in the long-term and increase the number of customer base. In this perspective, Toyota Australia needs to adopt a number of pricing strategies in order to achieve the above mentioned pricing objectives. The first pricing strategy is penetration pricing. According to Monroe (2003) penetration pricing is a pricing strategy used by the company that seeks to increase or maximise the quantity of the products or services it offers in the market. Since, one of the marketing objectives that Toyota Australia seeks to meet is to increase the number of V6 cars sold in the Australia market to 75,000 by 2014 penetration pricing is therefore an important strategy. Monroe (2003) observed that penetration pricing functions through the mechanism of lowering prices. Since, the Australia customers are sensitive to prices of the vehicles they purchase, penetration pricing takes into consideration the elasticity of demand, that is, as the price of the product falls the demand for the product raises. In order to ensure that Toyota Australia meets the objective of selling more than 75,000 V6 Aurion cars by 2014 penetration pricing should be adopted by the company. Penetration pricing would also ensure that as the volume of the V6 vehicles sold in the Australian market continue to increase the cumulative costs incurred by the company falls. Penetration pricing would also ensure that the company gains a significant market share in the Australia market for the Toyota Aurion vehicle brand. The other pricing strategy that needs to be adopted by Toyota Australia towards the Toyota Aurion brand is discriminative pricing. According to Morton and Devine (1987) discriminative pricing is setting differences prices for the same product in different segments of the market identified by the company. The segmentation of the market can be done using different criteria such as differences in income, age and class. It can also be done by segmenting the market in terms of geographical locations where the price of the product is sold at a higher price in rich geographical locations and at a lower price in middle and poor geographical locations. It is imperative to note that one of the marketing objectives of Toyota Australia is to increase the number of local customers by a specific percentage by 2014. The composition of the customers should be wide to ensure the continuity of sales after 2014. In this regard, by offering different prices to different segments of the market the company will be able to draw both the young, old, rich, poor, female and male customers into its customer base thus widening its market catch. Discriminative pricing will ensure that that company increases its sales revenue as well as the number of customers in its customer base. In the long-term this will translate into increased profits realised from the increased sales revenues earned from a wide segment of the market. Having sold 21,000 Aurion cars in 2007 and with the target of 75,000 cars in 2014 it is evident that the price of Toyota Aurion should be pegged at a low price in order to meet the 75,000 car mark in terms of sales by 2014. Hence, the price of the vehicle should be stated as $1500 AU. This would ensure that both the high, middle and lower class customers can afford buying the car in order to maximise revenue and increase the customer base. Promotional strategies According to Baker (2008) promotional strategies include all the activities aimed at informing, influencing and persuading the customers to purchase a product offered by the company in the market. In order to generate buzz in the promotional strategy adopted by Toyota Australia heavy advertisements need to be released in all local channels of communication in Australia. Among these channels include the social media such as facebook and the internet. This is particularly important for the young and the middle class people. The other channel of communication is the digital media such as radio and television networks where continuous advertisements of Toyota Aurion are released. Additionally, the spacing of the advertisements should be close enough to ensure that the consumers do not forget about the product. However, a consistent message about the product should be developed by having only one source from where adverts are developed. This will ensure that only one advertising message is generated at a time in order to maintain consistency of the messages released in different forms of media channels. Some of the approaches to advertising that should be used include using media channels identified above such as digital, social and local newspapers to advertise the Aurion car. Raymond (2003) held that some of the approaches to public relations that should be used to promote Toyota Aurion in the Australia market include taking the message about Toyota Aurion in events organised by the company such as sports or during social responsibility events (Raymond, 2003). Some of the approaches to sales promotion that should be used to market the Aurion product in the Australia market include organising road shows where a few Aurion vehicles are demonstrated to the consumers. This will make it possible for the consumers to understand the vehicle brand and also feel the real touch of the car. In the marketing communication plan the sales force should play the role of organising for the events and ensuring that necessary materials containing Toyota Aurion model are distributed to a wide segment of the market (Cutlip, 1994). The sales force should also ensure that bill boards and other forms of advertisements are strategically placed in different strategic locations where consumers can see. Direct marketing can also be used in marketing Toyota Aurion model in Australia market. This includes the use of email-addresses and messages over the phone to inform potential consumers of the availability of Toyota Aurion brand (O'guinn, 2008). Hence, direct marketing should be used particularly to reach those customers that have shown an increasing trend of purchasing Toyota vehicle brands. This information can be drawn from the retailers in different market regions. Supply chain strategies It is evident that in order to meet the marketing objectives the “pull” strategy of selling the Toyota Aurion product is advisable. According to Simmons (2007) the pull strategy functions through spending heavily on advertisements in order to create and build the required demand for the product being offered in the market. In this perspective, Simmons (2007) held that a successful pull strategy works effectively where consumers enquire from retailers and the retailers enquire from the wholesalers. The wholesalers enquire from the manufacturers. Adook (2007) observed that making the product available to the customers increases the value of the product in the market and it also increases the competitive advantage of the company. One of the supply chain strategies that can be used by Toyota Australia is the use of the web to directly service its customers. This would ensure that the company has the control over its product’s price, quality and delivery times. However, in order to reach other market segments that cannot be reached via the internet, Toyota Australia should implement an indirect supply chain structure where the retail stores located in different market segments are used in selling the product. This would make it possible for the consumers to see and touch the Toyota Aurion vehicle before making the decision to buy the car (Adook, 218). The type of retailers to work with is those with large and spacious stores where a number of Aurion vehicles can be stored. This would ensure that the demand of the vehicle in every market is met within the required time. In order to maximize the value offered by the company to consumers and to other stakeholders it is prudent to make the vehicles available in different market segments and encourage physical selling of the vehicles rather than the internet selling in order to ensure that consumers have a physical location where they can launch their complains and be attended to immediately. The supply chain will consist of the manufacturers, the retailers and the consumers. Manufacturers Retail stores Consumers References Adoock, D. (2000). Marketing strategies for competitive advantage. Chichester: John Wiley and Sons. Baker, M. (2008). The Strategic marketing plan audit, New York: Sage Publishers. Cutlip, S. (1994). The Unseen Power: Public Relations, A History. Hillsdale, N.J.: Erlbaum Associates Kotler, P. & Armstrong, G. (2010). Principles of marketing 13E, Pearson: Prentice Hall, p.293 Monroe, B. (2003). The pricing strategy audit. Cambridge: Strategy Publications, p. 40. Morton, J. & Devine, H. (1987). How prices really affect your sales. Business marketing, New York: Sage Publishers. Nagle, T. and Holden, R. (2002).The strategy and tactics of pricing. New York: Prentice Hall. Pages 84-104. O'guinn, T. (2008). Advertising and integrated brand promotion. Oxford Oxfordshire: Oxford University Press. p. 625. Raymond, M. (2003). Organizational strategy, structure, and process. Stanford: Stanford University Press. Simmons, M. (2007). Marketing concepts. New York: Harper Collins. Read More