Toyotas Green Marketing Practices - Case Study Example

Toyota’s Green Marketing Practices Name Institution Table of Contents Executive Summary 3 Introduction 4 Literature Review 4 Discussion of any personal unobtrusive observations in the context of the topic and the literature 6 Implications for green marketing best practice 7 Recommendations and justification 9 Conclusion 10 References 11 Appendix 1: any observation notes 12 Appendix 2: Personal reflection 13 Executive Summary Toyota Company is one of the leading vehicle manufacturers worldwide. It has enhanced its production and marketing methodologies by adopting and implementing green marketing. The paper has identified and analysed one of the main green products developed by Toyota. This objective has been achieved by conducting a literature review on journal articles. Therefore, the first section of the paper contains an introduction to Toyota’s green marketing practices, definition of terms and introduction to the entire project. The second section contains literature review from journal articles with an aim of analyzing Toyota’s green product; Toyota Prius. The third part discusses personal unobtrusive observations as identified in the literature review. The aim of this section is to enable the reader to acquire personal opinion on the green marketing product under analyses. The fourth part of the paper analyses the implications for green marketing practices. Under this section, the paper identifies green marketing practices in place. Afterwards, it discusses the implications and challenges that green marketing practices are facing. The last section of the paper has recommended steps that companies should adopt in order to ensure that green marketing practices are widely accepted and implemented. The paper has also formed conclusions, personal reflection and observation notes. Introduction Green awareness has enabled people to become more alert to issues pertaining to environmental goods and services. Green marketing refers to product modification and changes to packaging or production processes. It also entails modified advertising. This project will identify, analyse and discuss the application of green marketing strategies in production, distribution, promotion, packaging and marketing of Toyota’s products. This will be done in a manner that is responsive or sensitive to the environment. By so doing, the company stands to benefit from green corporate image. Corporate image refers to perceptions that an organization creates with its customers through its goods and services and branding. The aim of this paper is to identify how Toyota Motor Corporation has enhanced its corporate image by implementing green marketing strategies. Most specifically, the research will conduct literature review on the company’s green products such as Toyota Prius (Newell, 2012). These are environmentally friendly products which apply green marketing through fuel efficiency. The paper will also discuss any unobtrusive issues observed in the context of the topic and the literature. Green marketing implications will be discussed and recommendations and conclusions will be made. The appendices sections will contain observation notes and personal reflection. Literature Review Every generation is now coming up with environmentally friendly behaviours and sustainable values. Such activities range from use of recycle bins, to use of compact fluorescent lamps (CFL). As at 2010, U.S had started phasing-out incandescent bulbs. Businesses have also discovered the eco opportunity for modernization that boosts high level of revenues. This is due to the different precautions and marketing methodologies that green marketing uses. Companies such as Toyota are coming up with new greener technologies and designs. Such innovations are capturing consumer attention and setting up a competitive advantage. Toyota Prius, a model that comes in form of trucks and SUVs is one of the green products launched by Toyota Company. It has become one of the most thriving green products in the United States. The new brand has hybrid-engine capabilities which create fuel-efficiency. This capability enables the car to travel for many miles at high speeds. It also enables the car to have smooth rides because it does not idle at stoplights. It also meets the tastes of European and American consumers because it contains features of a sedan and it has attractive styling. Toyota’s customers in both Europe and America have been complaining that Toyota brands lack in style as compared to other brands. This was the motivation behind production of a classic Toyota Prius. Additionally, the car can drive for unlimited duration of time and for many miles without the need for refueling. This is as opposed to the ordinary models which may require 12-hour recharge. The vehicle’s dashboard has extra ordinary features. For instance, it has a screen which enables the driver to tell which one of the two engines is being used (Farfan, 2013). It also tells the level of fuel efficiency the car has at a given moment. This capability enables drivers to beat their preceding driving record. The new model’s level of fuel efficiency offers it economical efficiency given that energy prices keep on rising. it also acquires Public Relationships which attracts it to environmentally friendly celebrities. For instance, during 2006 Academy Awards, Ed Begley Jr., the founder of Hollywood green is known to have made entrance down the green carpet from his Toyota Prius (Ottman, 2011). Economically, many people are willing to pay a premium in order to acquire green products. Businesses such as Toyota are also investing heavily in the new technology. For instance, they use special ingredients and materials as well as high costs in production of such products. Sales are also increasing such that as at 2009, Toyota sold 140,000 units of Toyota Prius in the US alone. In the first quarter of 2013, Toyota Company recorded a 82.3% rise in sales of its Hybrid- Sales (Ottman, 2011). Discussion of any personal unobtrusive observations in the context of the topic and the literature Unobtrusive observation occurs when an experimenter or observer watches and takes notes regarding a given subject’s behavior without physically/directly interacting with the subject. In this case, Toyota Company has responded to the needs of environmental conservation by implementing green marketing. The company has done so by producing and selling motor vehicle brands with features that conserve the environment. Toyota Prius has an engine that is very efficient such that it can ride for several miles without the need of refueling. Also, it has a screen which tells the driver the engine in use. The screen also indicates the level of fuel efficiency at a given time. This capability enables drivers to be more conscious of their speed and fuel consumption (J & V, Terry, 1998). With increasing fuel prices, the car’s fuel efficiency capability makes the new model highly economical. Such a factor is likely to boost sales as consumers become more economically sensitive. Its publicity is also rising given that many celebrities are opting to use the new model as a way of acquiring class and publicity. More celebrities such as politicians, musicians and actors are expected to buy such brands in order to attain publicity. This would result to increased sales volumes over time. Toyota Prius has two engines which offers high speed capabilities. This reduces the level of power needed to charge the vehicle at any given time. This explains the car’s high speed records. Racers are likely to use this product due to the high speed capability. It is also likely that the car’s internal features are green. For instance, it should have seats that are made from environmentally friendly components. The car could also be accompanied by a guideline that helps in environmental conservation. This includes driving practices that can increase efficiency. However, there is a challenge of competition from other brands such as Honda, Aveda, Volkswagen and Ford. Pressure to implement environmental conservation is forcing many vehicle manufacturers to adopt green marketing. This is coupled with increased consumer demand for environmentally friendly products (Ottman, 2011). Implications for green marketing best practice Leaders and executives have identified the best practices in green marketing. Some of the practices are encouraging consumers to implement environmentally responsible actions and explain to consumers how purchase of green products can have direct impact on the environment. Other practices are (Heinzle, 2010). Organizations should concentrate on improving energy efficiency by emphasizing the benefits of environmental conservation to the locals. Organizations should give customers reasons for taking part in environmental conservation Companies should market their green products by offering information about the products’ benefits to the environment. The message should be personal such that a consumer’s purchase has direct results to the environment. Companies should avoid hard sales. Therefore, they should provide information to stakeholders in a dialogue manner Environmental benefits should be the main selling point for any green product Companies should consider waste as an opportunity rather than as a liability or cost Organizations should double their marketing skills by taking part in projects that boost productivity while at the same time reducing fuel emissions However, these best practices in green marketing encounter various implications. Although many buyers may be interested in environmental conservation, a small portion of consumers are interested with purchasing practice. This is referred to value action gap which is the difference between declared attitudes and reality. Energy efficiency gap is another major implication facing green products such as Toyota Prius. It refers to lack or insufficient supply of cost effective energy efficient products. Consumers can also under invest in energy efficiency due to various other factors such as (Heinzle, 2010). Lack of information: consumers lack guidance on the available green products. For instance, the developing world has little knowledge of Toyota Prius. This implicates on Toyota’s efforts to conserve the environment (Nawi & Chew, 2012). Imperfect markets: these are market conditions where product information is poorly disclosed to consumers or where few participating firms have high level of control on product information and prices. Such practices limit the extent to which consumers receive information regarding the importance of green products to the environment. Either such products are unavailable or they are too expensive to acquire. In other instances, the products may be available but the main market players may put in place conditions that make it almost impossible for consumers to access such products. For instance, in an African setting, Toyota’s products are the most common brands. However, very little information is known about the company’s green products such as Toyota Prius. Therefore, the company’s products imperfectly market each other with wide marketing being done on fuel inefficient brands such as Hilux (Heinzle, 2010). Organizational barriers: consumers may under invest in fuel efficient products due to a company’s limited access to capital. Toyota Prius is made up of very expensive products which can limit the number of units being produced and sold at any given time. Additionally, producing green products requires special ingredients which can take time to acquire. Costs of producing such units is passed to consumers which reduces demand\(Heinzle, 2010). Individual decision making: various consumers have to compare between a product’s cost efficiency and energy efficiency. Cost sensitive consumers prefer products that offer high implicit discounts. Such discount rates can range between 25% and 100%. Considering the level of time and costs invested in producing green products such as Toyota Prius, it would be almost impossible for consumers to acquire such high discounts. This is one of the biggest implications facing green marketing (Heinzle, 2010). Trade barriers: this occurs through introduction of tariffs and high tax rates in countries where a foreign product is being sold. For instance, with recent introduction of elements such as VAT bill on imports in countries such as Kenya can limit Toyota’s marketing capability. Trade barriers have an implication to green marketing because they increase product prices and limit sales volumes (Heinzle, 2010). Recommendations and justification Toyota Company is promoting green marketing by producing and selling green products such as Toyota Prius. Although the company’s aim is to encourage consumers to be environmentally conscious, it is recommendable that it should consider the following factors: It should increase marketing of its green products in order to boost consumer awareness. This is because the products’ awareness in some developing nations is very shallow. Aggressive marketing should also be conducted in developed nations in order to convince more consumers to buy green products. Toyota should subsidize costs of such vehicles by negotiating with the governments of its target markets. Such negotiations can reduce tax rates on green products or reduce trade barriers. With subsidized prices, consumers would be in a position to acquire products such as Toyota Prius. Toyota should also reduce the impact of imperfect markets by increasing consumer awareness. This can be done by use of road shows or bill boards. By so doing, the company would stand a chance of improving product awareness which can boost sales. Conclusion Toyota Company had successfully implemented green marketing by manufacturing vehicles with fuel efficiency capabilities. Toyota Prius is one such product. The product’s features include hybrid-engine capabilities which create fuel-efficiency, high end design that meets the tastes of European and American consumers, long hours of drive without the need for refueling, smooth rides, and screen which tells the level of fuel efficiency. The paper has assessed the implications that green marketing practices face. This ranges from inadequate consumer knowledge to imperfect market conditions. The paper has also analyzed unobtrusive observations relating to Toyota Prius. Such observations include the products physical features as well as technical capabilities. Lastly, the paper has made recommendations as to the best practices that Toyota should implement in order to boost green marketing practices. References Farfan, B. (2013). 2013 Best Green Cars & Marketing Trends. Retrieved from http://retailindustry.about.com/od/retailbestpractices/a/2013-Best-Green-Cars-and-Marketing-Trends-Tesla-Toyota-Ford-Honda-Nissan-Expert-Reviews-Ranks.htm Heinzle, S. (2010). Behavioral models of decision making and implications for green marketing. Centre for European Economic Research, 1(14), 1-19. J, Ottman and V, Terry. (1998). Strategic Marketing of Greener Products. Journal of Sustainable Product Design. 1, 53-57. 1-2. Nawi, R.M., & Chew, B.C. (2012). Implementation of Green Marketing Strategy to Enhance Green Corporate Image: A Case Study in UMW Toyota Motor Sdn. Bhd. Power and Energy Conversion Symposium. 1 (1), 1-2. Newell, G. (2012). How Emotional Marketing Turned the Toyota Prius into a Social Revolution. Retrieved from http://602communications.com/2011/08/how-emotional-marketing-turned-the-toyota-prius-into-a-social-revolution/ Ottman, J.A. (2011). The New Rules of Green Marketing: Strategies, Tools and inspiration for Sustainable Branding. Greenleaf publishing, 1(1), 1-242. Appendix 1: any observation notes From the literature review it is clear that Toyota Prius has managed to achieve fuel efficiency. However, this capability has been achieved through installation of two engines which makes the car expensive. The car also comes with a screen which indicates to the driver the engine in use and the level of fuel efficiency. Such features can be very expensive. Therefore, although the car’s design and features meet green marketing requirements, the car might be too expensive to acquire. Toyota should source for more economically viable products. Toyota is giving drivers to experience smooth rides though installation of hybrid engines. This means that even after depreciation, consumers expect less noisy and less smoky exhaust pipes With two engines, it is easy to startup the car especially during winter. Multiple engines reduce the chances of the car’s ignition failure Other vehicle manufacturers face a challenge of producing similar products because many consumers will increasingly become environmental conscious Green marketing can also apply during car washing. This would mean that any waste water discarded during vehicle cleaning is used to growth plantations or it gets recycled. Drivers can use manuals that provide guidelines on how to observe green marketing. Such guides can contain elements such as fuel conservation by switching off engines when the vehicle is not in use. Appendix 2: Personal reflection Innovation is key to growth in any given company. Companies are in a position to promote environmental conservation awareness through production of economically friendly products. Other than cars, companies can develop other products which they can test with the neighbouring communities. For instance, it can manufacture spare parts such as tires, side mirrors and windscreens. Such products would enable consumers to have access to affordable vehicle products. Green marketing is getting widespread in other countries. Other producers are promoting the company by introducing laws to abolish use plastic bags. Therefore, buyers are required to use recyclable bags to carry groceries and household commodities. Green marketing messages are also spread through the internet. For instance, many emails are sent with a message requesting recipients to print contents only when it is very necessary. Paperless banking has also become a trend. For instance, instead of customers filling up transfer forms, mobile banking services such as Mpesa have made the process easier. This facility, which was successfully introduced in Kenya enables customers to withdrawal, deposit and transfer funds between bank accounts with the use of a mobile phone. Consumers also use the facility to buy airtime instead of buying paper-coded airtime. Research companies have also introduced paperless research techniques. This requires persons to use internet facilities to answer survey questions. Most of the office information and advertisements that required printing are now available through the internet. Fuel suppliers are also encouraging consumers to use unleaded fuel which causes less environmental pollution compared to leaded fuel. Nations are also boosting green marketing practices by observation occasions such as national tree planting day. This enables citizens to take part in environmental conservation. Tree cutting has been abolished worldwide and laws against the practice have been put in place. By introducing Toyota Prius, Toyota Company has managed to take green marketing a step higher by enabling car drivers to contribute to green marketing campaign. Read More