Strategic Marketing Plan for Toyota Cars in Australia - Case Study Example

Executive summary Toyota is a market leader in the Australian car market. Toyota’s brands such as Camry, Aurion and corolla are a household name in Australia. There is growing competition in the market though which necessitates the need for Toyota to develop a strategic marketing plan to remain competitive in the market. Being a market leader, Toyota can only adopt a pioneer approach where by it should innovate and develop structures to increase market share and grow the profitability of the business. The plan also indicates how the strategies are to be implemented and analyzed to ensure they are as effective and efficient as they are intended to be by the company. Strategic marketing plan for Toyota cars in Australia 1 Product This strategic marketing plan is intended for Toyota cars in the Australian market. Toyota is a strong market player in the Australian automobile industry with its popular brands such as Camry, Prado, Rav4 corolla and more. Toyota car is manufactured and distributed in the Australian market by Toyota Motor Corporation Australia Limited a subsidiary of Toyota Motor Corporation. The mission of Toyota Australia is to deliver high quality products and services to its customers and enrich the community, partners and the environment (Toyota Motor Corporation Australia, 2013). Through the statement Toyota promises its clients and customers of high quality products and at the same time provide jobs, investment opportunities and care for the environment (Toyota Motor Corporation Australia, 2013). In reference to Toyota cars in Australia, this paper will among other things discuss the relevance of a pioneer strategy, a growth market strategy and possible strategic choices for Toyota to maintain a competitive edge in Australia. 1.1 Product life cycle Every product in a particular market goes through five distinct stages of a product life cycle. Each stage has unique characteristics from the others and thus necessitates specific strategies to deal with the challenges presented by each stage as well as taking advantage of the opportunities presented at each stage (Rigby, 2009). The product lifecycles are: 1.1.1 Introductory stage At this stage the product is new in the market. The market is small and consumers are not used to the product and as such sales are low and product awareness campaigns take a large chunk of advertisement expenses. A skimming or penetration pricing strategy maybe adopted at this stage (Walker & Mullins, 2010). 1.1.2 Growth stage At this stage the business or the product is already established in the market. More competitors appear in the market. There is increased revenue and expanding market. More versions of the product may be introduced (Fifield, 2012). The pricing strategy is one meant to gain more market share and achieve growth. Promotional activities are in top gear to deal with growing competition (Rigby, 2009; Walker & Mullins, 2010). 1.1.3 Shakeout stage There is a general fall in growth at this stage. Stronger firms consolidate their market share while weak firms opt out of the market. There is limited market growth and reduced product differentiation as firms focus on performing brands (Walker & Mullins, 2010). 1.1.4 Maturity stage The product at this stage is well known to the consumers and has gained a considerable market share. The main effort is to maintain the market share and grow it minimally. There are a limited number of strong players in the industry and pricing is a competitive model meant to retain market share. Products features and not function are regularly updated to package the product differently (Walker, Gountas, Mavondo, & Mullins, 2011). 1.1.5 Decline This is the final stage in a product lifecycle where the product sales start to dip due to consumer indifference to the product or market saturation by competitors. Efforts are usually made to ensure the business survives by keeping its expenses low. Bestselling products are retained and promotion is minimal (Rigby, 2009; Walker & Mullins, 2010). From the explanations above, it is clear that Toyota cars in Australia fall in the maturity stage of the product lifecycle. The cars have already acquired a high market share. The company held a market share of 18% to the end of the year 2011. Toyota recorded domestic sales of 181, 624 cars in 2011 raking in a revenue of $7.079 billion (Toyota Motor Corporation Australia, 2013). Ford and general motors are the biggest competitors for Toyota in vehicle manufacturing business in Australia. Other rivals in the market include Nissan, ford, Volkswagen, Mercedes, Mazda and Mitsubishi (Deloite Motor Industry Services, 2011). There is minimal growth in the market due to the extent of equally capable competitors who hold the rest of 82%. The market is very competitive and Toyota is regularly changing product features such as introducing hybrid engines to remain competitive in the market. The corolla has been rebranded several times with enhanced features just to maintain loyal customer base in Australia ( Toyota Motor Corporation Australia , 2013). 2 New market entry The market for Toyota cars in Australia is very competitive even though the Toyota brand is very popular at 18% market share (Toyota Motor Corporation Australia, 2013). Toyota has to develop new market strategies to gain a higher market share and compete effectively in the market. Cost reduction is one production option for market leaders (Walker & Mullins, 2010). Toyota Australia may consider ensuring their products are affordable in the market. Such issues as car designs that consume less steel and other materials maybe paramount in cutting costs. Toyota Australia may also adopt more lean production that will eliminate non essential features that make the car expensive in the market. Toyota may also improve its existing brand of cars to bring in newer models of the older models so that they may accommodate new technology, comfort and desires of the existing market segments as this is also an appropriate strategy for a pioneer as suggested by Walker & Mullins (2010). Toyota may also keep on repositioning its products as high quality cars which have adopted the latest technology such as hybrid engines and fuel efficiency features. Such positioning will be vital since Toyota will respond to changing consumer taste in reference to fuel consumption and environment protection. Toyota should then position itself not as a luxury car brand but a decent car brand that is socially responsible and affordable to buy and to maintain while at the same time classy and worth the money. 3 Pioneer strategy The pioneer strategy offers several benefits to a firm such as enjoyment of economies of scale due to mass production. Distribution advantages can also be enjoyed due to an already established elaborate distribution channel (Walker & Mullins, 2010). Toyota is already an established brand in the market controlling a massive 18% of the market as of 2011 (Toyota Motor Corporation Australia, 2013). It is logical that Toyota commits itself to retaining and even growing the market share. To do this, Toyota has to adopt a pioneer strategy to target the mass market for cars in Australia. Toyota has to invest resources to produce more efficient vehicle that fit into expectations of clients such as price, comfort and eco-friendliness. The mass market will ensure large volumes are produced so that the firm may enjoy economies of scale and increased revenue for research and development. Toyota Australia has already dedicated its efforts towards this course by the fact that it is the first company to produce hybrid cars locally. The Prius and Camry brands are the pioneers of hybrid cars in the Australian market (Toyota Motor Corporation Australia, 2013). apart from Toyota targeting the mass market with the affordable range of efficient and decent cars the company is also targeting a niche market of consumers who are more aware of environmental change with cars such as Camry that consume less fuel saving money and the environment as well. An early withdrawal strategy may be employed in the form of exiting highly competitive market where almost similar brands from different companies fight it off in a market where there is minimal differentiation (Walker & Mullins, 2010). Toyota can target a small market share with huge revenues by relying on research and development to come up with high quality luxury cars. This is one option for implementing pioneer strategy where pioneers are expected to devise a way of dealing with entry of followers into the market with a withdrawal strategy. Toyota also has a range of luxury cars in the SUV division such as land cruiser, kluger, RAV$ and the Aurion which target the consumers above the middle income level who love comfort and classiness of the luxury vehicles (Deloite Motor Industry Services, 2011). This strategy is effective as the brand is known to be of high quality vehicle that can compete in any section. 4 Growth strategy With the kind of sales and market dominance figures, Toyota cars in the Australian market are leaders in the market. The brand visibility in the Australian market is quite high if the 18% market share is anything to go by. The growth strategy adopted by Toyota can only be in the category of a market leader. In such a situation, Percy (2012) and Walker & Mullins (2010) recomend that a company needs to particularly focus on expanding its market. There is an 82% of the market that is still not buying the Toyota brand presently. With a larger market, Toyota Australia will be able to enjoy economies of scale in production and transfer the same into the market with affordable cars produced using the revolutionary technologies to enhance performance, fuel efficiency, comfort and design. Toyota might as well implement a flanker strategy; a strategy where the leading firm prevents competitors from capturing market share through targeting a market that it’s not catering for. Toyota can invade other market segments which prefer luxury brands such as Mercedes and Mitsubishi. Toyota Australia should commit resources to produce high performance prestige vehicles to target the Australian market that has a higher income above the middle income earners. The segment does not consider price as a factor to influence their buying decision but rather look for prestige and high performance features (Sharp, Wright, & Goodhardt, 2002). If Toyota dedicates part of its focus on this segment with a new car brand or a variation of an existing brand, then it will grow the market share through a confrontational strategy to rival the competitors’ market share in this segment. 4.1 Shake-out stage strategies The shake out stage is characterized by a high growth trend chiefly because the consumers are familiar with the benefits of the product (Walker et al, 2011). For the Toyota cars in the Australian market this stage of the product lifecycle is no different; Toyota will have to adopt a strategy that will help the company’s cars gain a competitive advantage in the Australian market. Erasmus (2002) notes that this stage has many competitors in the industry who are attracted by the impressive growth record of the pioneer in the market. Toyota is the pioneer or the market leader in the cars market with an 18% market share. To gain a competitive advantage Toyota will have to continuously innovate to improve the efficiency of their existing car brands and also develop new product features to differentiate its products in the market. Gaining higher market share will also be a suitable strategy in this stage to ensure a company rakes in adequate revenues to enable the company become a market leader and also so that it can be able to engage in research and development to come up with innovative product features (Walker & Mullins, 2010). 4.2 Maturity stage strategy At the maturity stage products usually have gained a considerable market share and have attracted more competitors in the market (Walker & Mullins, 2010). Buyer power is high and maintaining a market share is the prime concern of a business (Fifield, 2012). To sustain the profitability Toyota will have to adopt a market expansion strategy to compensate for the increased competition encroaching into its market share. Market expansion will be achieved through extension of the product line to ensure each market segment in the Australian car market is served by the Toyota brands. This way, more Australians will buy the Toyota cars and increase the company’s market share. Increased penetration into the market with a view to satisfying the needs of certain niche markets will also be an appropriate strategy to sustain growth and profitability at this stage for such a market leader (Walker et al, 2011). Toyota has already started manufacturing hybrid cars in Australia to satisfy a growing market for fuel efficient hybrid cars which have minimal impact on budgets and environment as well. This is niche marketing targeted to penetrate the market further with niche specific products. Toyota’s SUVs also mirror the company’s desire to penetrate the market further with luxurious comfortable and high performance vehicles such as Kluger, Prado and Landcruiser. 4.3 Decline stage For this stage the main focus is usually to remain profitable in a market where competition has eroded the attractiveness of the market and made doing business almost impractical (Erasmus, 2002; Walker & Mullins, 2010). The strategy that Toyota can adopt in this stage is to maintain good sales revenue by eliminating product lines that are not profitable or those that attract few sales in the Australian market. The production methods should also be as lean as possible to cut production costs so as to increase the profit margin when the product is offered in the market at a low price. 5 New economy emergence Computing, internet and digital media have changed how companies do business and even how they relate with their clients (Evans, 2010). It will be a strategic move if Toyota Australia continuously uses its website to market its vehicles to the targeted market segments in Australia. The website can be used to highlight the benefits offered by particular brands of vehicles. Consumers can also get to see how much the cars cost in the Australian market and also where they can get their Toyota cars serviced. The website is also another strategic idea of responding to consumer queries and conduct research by asking feedback or comments from Toyota users in Australia to see what can be improved on and what should be sustained. Toyota can also take advantage of social media to increase brand visibility in the market and market its brands as well. The social media has been accepted as part of new digital media by a majority of people in the world. People use it to socialize and more so to get the latest about their favorite brands (Evans, 2010). As such these sites provide an opportunity to conduct promotions, advertisements and engage with Toyota customers through out Australia. 6 Organization structures Toyota is a multinational company with presence all over the world. The company has been able to dominate motor vehicle markets in most countries all over the world (Hino, 2006). In Australia Toyota brand is a market leader with 18% market share. Toyota austral is a subsidiary of the Toyota motor corporation (Toyota Motor Corporation Australia, 2013). The greatest achievement by the structures put up by Toyota has been to ensure continuous improvement (Kaizen) of the Toyota brands all over the world. A functional organizational structure is the most appropriate for toyota as it isa large company operating in a mature market where growth is minimal and market changes highly predictable. This structure is founded on the functions of each department where a hierarchy is utilized to ensure that managers and supervisors report to a senior manager in regards to the functions given to their departments such as sales, marketing R$D. Toyota assembly lines have been praised for Just in Time production methods where raw materials are sourced at the time they are needed to minimize costs. Toyota cars are also produced through lean production methods that reduce wastage of materials (Hino, 2006). By giving the subsidiaries the ability to manufacture under the specifications of the parent company and market their products, Toyota has put up a sustainable organizational structure that encourages innovation and product development (Hino, 2006). 7 Marketing plans 7.1 Strengths of Toyota car in Australia Toyota has been able to consolidate a large market share in Australia and thus enjoying economies of scale through mass production. Toyota cars are therefore affordably produced and have revolutionary features due to extensive research and development efforts (Hino, 2006). The high revenues have also enabled Toyota to conduct an impactful promotional campaign in the Australian market to increase brand visibility and stimulate sales of the Toyota brands in the market (Deloite Motor Industry Services, 2011). 7.2 Weaknesses Toyota has been largely viewed as a mass market brand and as such wealthy people prefer other brands which seem to reflect their financial status and taste. Brands such as Mercedes and Mitsubishi are preferred due to their high performance and as status symbol (Hino, 2006). This notion may work against Toyota as incomes in Australia middle income level start rising. However Toyota can counter this through high performance vehicles enhanced in terms of looks and luxury features. 7.3 Opportunities The market for cars in Australia presents various opportunities for the Toyota brand. Toyota can for example target the high income segment through high performance and luxurious vehicles through a different brand affiliated with Toyota just to avoid the consumer perception that Toyota is a mass market product. A new brand may position itself as a luxury car brand produced through high precision technology and revolutionary engineering. A company can redeem its market share through a different brand in the market although from the same producer (Fifield, 2012). Electric cars may also be a wonderful introduction in the market as the Australian population gets more sensitive to the impact of their vehicles to the environment. Electric cars don’t emit harmful gases and rely on renewable energy unlike cars which rely on oil to run their engines. 7.4 Threats There is a growing competition in the market from relatively large car producers such as ford and general motors (Deloite Motor Industry Services, 2011). The growing competition threatens to cut the Toyota’s market share with vehicles that offer basically the same features as Toyota cars at affordable prices too. This will result in reduced revenue and also increased costs on promotions and product development to remain competitive. Threat of entrants in the market is also a reality that Toyota will have to deal with. Mazda, Volkswagen and Honda all present the new strong entrants into the market. The capital outlay required to reach Toyota’s success is massive and such a coup may take a longer time. Supplier power is high as well with volatile steel prices affecting production schedules and profit projections on the side of car manufactures (Deloite Motor Industry Services, 2011). The cost of engaging in efforts to target the upscale market will be worthy considering the market is largely untapped by the Toyota brand even though it represents a large revenue bracket that may bring in high profits if well exploited by Toyota through targeting to satisfy the market needs. The Toyota subsidiary in Australia needs to take engage in rigorous promotional activities to counter the effects of new entrants in the market. Research and development efforts are also vital in ensuring the company continuously improves on the product offering to counter future competition threats. In terms of supplier power, new sources of raw materials and supply chain shocks management strategies should be established to ensure raw materials will be received in a consistent manner and at predictable prices to sustain the normal production of cars for Toyota. 8 Marketing metrics Toyota held a market share of 18% to the end of the year 2011. Toyota recorded domestic sales of 181, 624 cars in 2011 raking in a revenue of $7.079 billion for 2013 (Toyota Motor Corporation Australia, 2013). The corolla brand has recorded sales of 25,000 in Australia alone which is 13% improvement from the same period last year according to the company’s data (Toyota Motor Corporation Australia, 2013). Profitability analysis can be conducted for each brand of Toyota in the Australian market. This should factor in the direct and indirect costs of marketing a brand to know how profitable the brand has been and whether its sales should be sustained further due to good returns or otherwise for less profitability or losses (Walker & Mullins, 2010). 9 Marketing audit Toyota will initiate a set of strategies as highlighted in this document. It is important to ascertain what has been achieved by the implemented strategies. This can only be done through a marketing audit. Such an arrangement according to Hino, 2006 and Walker & Mullins (2010) will ensure that the set objectives will be audited regularly to know how much progress has been made towards achievement of the goals reflected in the specific objectives such as sales increase, market share increase, waste minimization and other objectives. Marketing audit will also be conducted in the market environment to understand how well the strategies are fitted with the market dynamics. It will be important to know whether the target markets are satisfied with the product offering. If there is a discrepancy between what the customers want and what the company is offering, then the company will not be able to reach its goals as set out in its strategic objectives (Sharp, Wright, & Goodhardt, 2002). 10 Conclusion The strategic marketing plan outlined in this paper builds on an earlier marketing plan for Toyota cars in the Australian market. This plan is intended to give a strategic direction for the Toyota brand in the Australian market in such issues as new market entry, pioneering strategy, growth strategy, growth stages strategies, marketing plan and audit. Toyota has to adopt a pioneer or market leader position while developing its strategies in order to beat competition and stay ahead of the game in regards to market dominance. To do this Toyota Australia will have to convert several threats such as growing competition to opportunities and take advantage of available opportunities to grow market share and profitability. References Toyota Motor Corporation Australia . (2013). Corolla Extends Sales Lead: Toyota. Retrieved August 23, 2013, from Toyota Motor Corporation Australia Website: http://www.toyota.com.au/news/corolla-extends-sales-lead Deloite Motor Industry Services. (2011). Australian Industry Overview 2011. Sydney: Deloite Motor Industry Services Pty Limited. Erasmus, A. 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