Analysis of Marketing Strategy - Toyota - Essay Example

Analysis of marketing Strategy - Toyota Executive Summary Every company has its business goals and objectives which shape its policies and plans. Marketing being one of the most important functions of the firm draws its inspirations from the basic objectives and goals which are set by the management. The marketing plans and processes are again manifestations of the broad marketing strategies which are set to achieve the profit objective. Toyota being one of the primary automobile manufacturers has its own marketing strategies and plans which get reflected in its processes. The company follows a diverse strategy in conjunction with its wide range of product offerings. Through study of some important brands and their respective marketing strategies the overall position and pattern have been gauged in context of marketing strategies. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Analysis 5 Fundamentals of strategic marketing and Toyota’s strategies: 5 Product 5 Placement 10 Pricing 11 Possible recommendations 13 Conclusion 14 References 15 Introduction Toyota Motor Corporation is a big player in the world of automobiles. It manufactures various types of cars, trucks, passenger cars and minivans. Under the brand name Prius it sells hybrid vehicles. The company also has a wide range of SUV or sport utility vehicles as well as other speciality vehicles. One of the company’s primary objectives is to manufactures such vehicles which would provide safety, security and comfort to the consumers (Company Description, May 2009; Toyotas ITS vision, 2009). Toyota or for that matter any company would set up strategies to achieve its business goals or objectives. Similarly it creates marketing strategies to achieve its goals in terms of marketing objectives. Marketing strategy as a concept caters to three parts, the internal factors of the company itself, the customer and the competitors of the firm. A marketing strategy of a firm focuses on the market in terms of segmentation, targeting and positioning. Fig.1 Marketing strategy Source: Drummond G. and Ensor J., 2001 Segmentation is dividing the market into groups which have similar characteristics. This is used by the companies to target their products to cater to the specific segments. The company always focuses towards creating a higher position for its products in comparison to its competitors so that it can leverage this and sell more. Analysis Fundamentals of strategic marketing and Toyota’s strategies: One of the basic and most important concepts of marketing strategy is that of the 4Ps of marketing which constitute the marketing mix of an organisation. The marketing mix or the 4Ps are; product, price, promotion and placement. Product Toyota offers a wide array of automobiles. It produces trucks, minivans, luxury sedans and hybrids among many other cars. The company also offers various brands for its various offerings. The Lexus brand is its luxury offering. While the Scion brand which is a new one appeals to the younger consumers with its fun image the Prius brand is for hybrids. These different brand offerings cater to different needs in the market and they focus on different market segments. This is done through targeting the different needs and wants and manufacturing products according to these specifications. Positioning for Toyota’s different products and offerings are also different. The Lexus brand being a luxury brand is positioned at a high stratum. The Prius brand is positioned to appeal to environmentally conscious consumers. Scion on the other hand is positioned to attract the younger generation. Promotion (in terms of Nature, role and value of the strategic marketing activities) Toyota follows different marketing strategies for its different vehicles. Some of the strategies it has followed for some of its most well know brands are as follows: Prius- Prius, which is a hybrid car, is one of Toyota’s best selling products. Recently the company has launched its new marketing campaign for the brand. The tagline for the new Prius is “Harmony between Man, Nature and Machine”. The campaign focuses on all the positive attributes the car offers and very deftly focuses on them. In fact, with this campaign, Toyota becomes first company in the world that has been able to strike a fine and nuanced balance between nature and humans. This campaign has focused on traditional marketing mediums like TV and also on new age mediums like the internet. The company is also installing real world installations at places which are close to the ultimate consumer. One of the most innovative installations have been that of big sculptures of solar flower have been put in places of gathering which the public could use for relaxation and also for recharging their laptops or mobiles. These installations could also be used for “wifi” access as well. Toyota is making extra efforts to get into the online social networking and community websites like “facebook” and “twitter” to connect with the net savvy consumers. It has also planned to launch full fledged online promotions in collaboration with Yahoo and MSN. The company has leveraged the traditional media also. It ran a TV campaign called ‘harmony’ in some of the best channels during the prime time hours (Toyota Reveals Third-Generation Prius Marketing Campaign: “Harmony between Man, Nature and Machine”, May 2009). Scion- One of Toyota’s other brands is the Scion. This brand initiated its ‘united by individuality’ brand campaign. This campaign focused on refurbishing the brand identity by re-energising its communication and refreshing its basic brand values. The campaign portrays various Scion car owners with their customised cars. More than 300 of these cars appeared for the photo session and their owners were treated to lavish parties by the company. This also brought in the opportunity for these owners to meet each other and to form a kind a community (Scion Reinvents Individuality with New Brand Campaign – And Continues to Celebrate Owners, July 2008). Scion has also got into a very innovative tie-up with customised toy car maker known as RIDEMAKERZ to bring the Scion experience to the kids. Another innovative ploy of marketing and promotion on Toyota’s part was to partner with a renowned magazine called Tokian and come out with an exclusive personalised issue which featured the Scion owners who are a part of the aforementioned campaign. The Scion campaign brought together the owners and the brand in a synchronised manner and out forward an innovative strategy. The Scion brand’s appeal is mainly focused on the younger generation of buyers and also to the first time buyers of the Toyota brand. (Scion Partners with RIDEMAKERZ to Build Customizable xBs For Kids Of All Ages, October 20007). Lexus- In 2007 Lexus which is the Toyota’s luxury brand had its brand association with sports like golf and tennis but in 2009, the company made up its mind to focus more on the technological attributes and the environmental point of view of the brand. The Lexus has also reinvented its product offering by launching the RX450h and RX 350 which offer many innovative design attributes aimed specially at the driver. The company came up with a new marketing campaign to highlight these new innovative features over different media. The Lexus brand being a luxury one has focused on luxury lifestyle events and therefore had arranged for the Lexus Style Villa Sports in 2008 US Open tennis championships. As a part of this event the company had put up a living space which was high in luxury but pre fabricated. This was done to showcase the possibility of simultaneous existence of luxury and environmental consciousness. The Lexus being the auto partner with the Premier Golfing Association of the US has used the power of this luxurious game to add to its brand value. The brand’s tie-up with the prefabricated eco-friendly homes, which offer environment friendly solutions like solar panel, special wood, paint, installation process and energy saver appliances has been done to bring forth the brand identity of Lexus as a luxury come environmentally friendly product for the high end consumer (Reinventing the Vehicle that Invented it All, 2009; Lexus Brings Red Carpet Event to San Diego During U.S. Open, June 2008). Sports and Toyota- The Company has formed its association with various sports organisations as well as events to express a sporty image to the consumer which would accentuate the branding of its SUVs as well as its other offerings. Sports being one of the most popular events provides ample opportunity for the brand to be showcased in front of the consumers. From motor sports to swimming and even fishing, Toyota has formed alliances with all these kinds of sporting events to appeal to a very wide section of the consumer class. Toyota has formed an association with the BASS or the Bass Anglers Sportsman’s Society. Some of the best Bass anglers have participated in the event which offered huge prize money of $1million. Here also the main objective of Toyota was to strategically put forward its views on environment conservation and henceforth its hybrid vehicles through association with the Anglers event which contributes in spreading the message of conservation and environmental awareness in Texas. Moreover the BASS society itself has a huge number of members which stands roughly around 540,000 and also 2,400 chapters spread over different regions, which together provides Toyota with a considerably big probable base of future customers. Toyota looks forward to leverage this association from the standpoint of its trucks division as the company has got its truck designed by BASS which has become the official truck for the event. Toyota supports the association’s conservation efforts which are targeted at protecting the environment and natural resource. Toyota has been very innovative in its association with motor sports which has a huge following among its customers. It has become the title sponsor for the AMA series which is named the Toyota Motocross Series. Though this is a motorcycle racing event yet it appeals to a broad section of the company’s customers who have a love for speed. Toyota trucks section has been sponsoring the Cycle World International Motorcycle Shows which is a great opportunity for the company to showcase its cutting edge trucks and new concepts to these speed sport enthusiasts. Along with these motorcycle events Toyota has been famously associated with various other motor sports and auto racing events and associations. It has also been a part of action sports through its trucks division. All these associations with sports which are related with speed or action-adventure rubs off well with the Toyota’s image especially in context of its SUV and other xBs. One of the most prominent sports associations in the field of action sports is the Dew Action Sports tour through which Toyota targets the younger generation of present and probable future consumers. The company has also dabbled in sponsoring swimming and triathlon events. Toyota has become the official sponsor for USA swimming and also has been bestowed with the tile for being the official vehicle for the same. Through participation as a sponsor for the Danskin Women’s Triathlon Series which again has its own association with the cause of breast cancer, Toyota has been cleverly put forward a two pronged marketing ploy; one focused on projecting an adventurous image and the other a socially conscious one by supporting causes like breast consciousness and a women sporting events (Toyota Moving Forward, 2007). Through these varied associations with equally varied sports shows that Toyota has tried to follow a differentiated marketing strategy which targets a broad range of consumers. This differentiation strategy in terms of projecting its brand image is in alignment with Michael Porter’s generic strategies, one of which is ‘differentiation strategy’ (Marketing Plan, 2009). Placement According to research by a renowned consulting agency, Toyota along with the other two big Japanese automakers Honda and Nissan have the leading network of dealers in the US. Toyota has the leading position in terms of single line dealers. This gives it better coverage of the country and access to the customers and also a focused approach on regional bases each of which have their won unique characteristics. These single line dealers only sale Toyota vehicles and are therefore more trusted and are in a position of strength as far as customer centricity is concerned. Fig.2 shows Toyota’s leading position in terms of single line dealerships, which are again a very important part of their distribution strategy. Fig.2 Network of Dealers Source: Demand-Driven Automotive Sales and Distribution, 2007 Toyota understands the value of incentives and gives the highest incentive to its dealers and customers. It emphasizes the importance of incentives in the regional and local level also. The famous ‘Toyota way’ allows its regional and local dealers to leverage this flexibility and put forward its own communication and advertising plans, which they deem fits locally. This strategy of balancing and bringing together Toyota’s global expertise and local flexibility in terms of operations is of considerable strategic importance. In comparison to its competitor Mitsubishi, Toyota makes twice the profit (Demand-Driven Automotive Sales and Distribution, 2007). Pricing Incase of Lexus which represents the luxury brand of Toyota has increased prices by one or two percentages. This shows that the company is confident about the sales of its vehicles even on face of a price increase. But again for some other models the company has stuck to the previous prices (Lexus Announces Price Changes on Four Models, 2009). Again incase Avalon there has been an increase of 1.7%, incase of FJ SUV price has increased by 1.1 % with addition of different features. The Runner model of SUV has seen 0.7% of increase in price. The mid sized SUV known as Highland has gone for an average increase of 1.4% in price. The Scion on the other hand has gone for an increase of $100. Fig.3 Change in Price Source: Toyota and Scion Announce Prices on Select 2009 Models, 2009 Overall the company has been confident to increase its price over various models and also has added new features to its vehicles simultaneously. Possible recommendations To sustain the growth, Toyota has seen in its business and to enhance this, in future the company should go for an even more multipronged strategy and marketing process. Different types of cars and vehicles are manufactured by Toyota today, which cater to specific base of consumers. Toyota or any other firm cannot follow a singular strategy for the plethora of brands or products it produces. For example for its truck business Toyota would have to follow a completely different strategy and plan in comparison to its Lexus brand. Lexus being a luxury brand would need association with high end lifestyle. Some of the strategies which are suggested are: Better utilisation of Internet: The power, reach and interactive feature of the internet could be leveraged to build a stronger brand following. Internet can be used to build a much stronger one to one relationship with the present customer base through its interactive offerings. Internet could again be used to attract new probable consumers and specially the youth who are a major portion of the internet’s user base. Better utilisation of mobile phone: Today, the mobile phones have become a necessity. Cutting edge technology available in these phones in terms of 3G and other services can be utilized to reach out to the consumers and also the younger generation. Brand building activities, small mobile video advertisements are just some of the methods which can be leveraged. Conventional Media: Though in the 21st century, mobile and the internet have gained in terms of importance; however, older and conventional media like TV, Radio have not ceased to exist or haven’t decreased in terms of their influence. Therefore it would good on part of Toyota to infuse new thoughts into the process of utilising these mediums also. Even in TV there has been an influx of newer technology like DTH or Direct to Home Service which provide interactive opportunity for the companies who are putting up their advertisements. Local flavour: Consumers are not of a single type or kind. They differ from one region to the other. So Toyota should ensure that its strategy of encouraging localised advertising and promotion which concentrate on the local flavours, need and wants is continued and accentuated through newer modes and media. This would connect directly with the specific customer at a deeper level and brand equity would be even stronger. Conclusion Toyota has followed a multipronged marketing strategy and has done well in terms of business which is evident form its position of being one of the premium automobile manufacturers. But in face of ever changing technology landscape and ever increasing competition from the competitors the company would do well to look into newer best practices in context of marketing strategies and techniques. This would ensure that the company continues to grow and is well prepared to face the competition in future also. Marketing strategies if developed well could always act as a very strong base for any company and provide the extra impetus for its continued growth and success. References Company Description, (May 2009), Toyota Motor Corp, Business Week, retrieved on 15th May, 2009, from: http://investing.businessweek.com/research/stocks/snapshot/snapshot_article.asp?ric=TM Demand-Driven Automotive Sales and Distribution, 2007, Deloitte Development LLC, retrieved on 15th May, 2009, from: http://www.deloitte.com/dtt/cda/doc/content/us_mfg_demanddrivenauto_lowres_270207.pdf Drummond G. and Ensor J., (2001), Strategic Marketing: Planning and Control, Published by Butterworth-Heinemann. 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