Competitive Advantage of Toyota Motor - Case Study Example

Competitive Advantage of Toyota Motor Toyota Motor is renowned for its quality controls and operations management. There has been a long history of mergers of Toyota with others companies globally in order to pursue the strategies of global player and potential markets expansion in order to face head on the competition on the global level. Toyota has diverse portfolio of its vehicle manufacturing expanding from compact cars and luxury cars, SUV up to pick up and other product line. In the last couple of years scenarios of Toyota Motors, they are pursuing aggressively in the market segment of Hybrid where they are in direct competition primarily with Honda. Internal Analysis:- In order to analyse the internal competencies of Toyota motors, the model can be used is traditional SWOT analysis in order to evaluate strengths and weakness of Toyota Company and what leads to their opportunities and threats. Strengths Toyota is among the world’s largest car manufacturers today, and has the most comprehensive global presence. Toyota Company has been able to maintain an image of quality and reliability. Moreover, Toyota Motors has been renowned for its quality controls and management operations efficiencies that enable them to capitalize on cost cutting against their competitions. Toyota is following just in time production system successfully. Toyota is the largest spender on Research and development among the car manufacturers and has been renowned for its innovation. Above all Toyota is leading the hybrid cars market. There have been investments in 2009 by Toyota in US and China and able to get the Net profits rose by 0.8% to 1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion yen. This is against the global auto industry. Analysts are off the view that this profits and growth is because of strong mix of vehicles manufacturing. Weaknesses Some others and internet resources were of the view that the Toyota have been observed not to be the bold one pursuing the innovation at the first place but it plays fast second player role that is among the weakness or also can be termed as defensive measures. Nonetheless, they lose their first mover advantage at that time. As Toyota is now huge base all around the globe and being big has its own consequences. Toyota was supposed to follow just in time manufacturing system that is difficult to manage on this wide scale but Toyota is doing well but the threat remains there. As Toyota is working on the demand bases and just in time any fall in their own demand of vehicles can easily resulted in excess capacity and can suffer fixed costs without sale. This weakness is embedded in their operations and sales system and can prove to be fatal in the time of crisis. Opportunities:- Lexus, the luxury line of Toyota is renowned to be environment friendly vehicles along with many other product lines of it. Prius and Hybrid techs of Toyota along with ever fluctuating oil prices of our times lead to the time of Hybrids to get on the roll and Toyota has the opportunity above all others to be aggressive in the upcoming market as it has already its significant presence unlike other competitors. The target segment “urban youth” has been specially catered with Aygo with the image of DJs culture has been carved a very narrowly but well defined niche to reap out some premiums. Threats:- Intense and aggressive rivalry is the threat to all the players in the Global Auto Industry. And it is going to be intensifies as Manufacturers from China, South Korea and Eastern Europe is ready to raise their heads and play their roles. With the new competition and economic recession of US and Europe can impose threat to Toyota and its profits. External Environment:- In a report from Professor Noel Capon and other member; there is a brief but comprehensive PESTEL analysis was done on Toyota Motor. On the political scenario, the world has been consistently facing instability in political affairs of Middle East and wars in Iraq and Afghanistan along with tension between Israel and Palestine can have impact on the sales of Toyota from these regions. Economically, there have been fluctuations in oil prices primarily the rise in oil price can give the strategies of Toyota about Hybrid market new direct and boom if the rise remains persistent. Moreover, increase in demand of oil from India and China can ensure the rise in oil prices if the demand remains low. When talking about socio culture aspects, there has been awareness among the customers and increasing concerns of environment, global warming and the oil prices hype leads the customers to think about Hybrid cars as a serious alternative investment. This is among the most feasible air for the Toyota to sail in and venture the industry of Hybrids more aggressively and devise according strategies. Technology will be among the critical success factors when talking about the Hybrid car solution to the customers. Toyota has been innovative and carries largest R&D budget as compare to its competitors. Honda is the competitors who is coming second to Toyota in the field of Hybrids and have strategic aims in this segment. Legal conditions in US have been encouraging to prefer low emissions and environmental and fuel efficient cars that are among the plus point of Toyota. Technology and Legal point cover the E of PESTLE that is environment where the customers are awarded and concerned about the Globe and ready to prefer the technology of Automotive that can be friendlier to the nature. Customers:- Toyota is considered to be the second to GE after beating Ford in competition while back in 2003. Toyota has been catering to the diverse customers by its wide range of Product lines. Customer base of Toyota is deep and strong moreover as talked a lot already in the above stated discussion about the Hybrids the customers will be more willing and loyal segment in this specific fragment of the overall industry. For Toyota, marketing is the key to reach its customers. Toyota is reputed as the organization that listens to its customers and has external focus, relentless in Customers. Moreover, the steps to carry out a decision of purchase are based on Recognition of brand and product, Information, evaluation and Final choice of the customers and Toyota is well aware of it. S.M.A.R.T The perfect fit is the aim of every marketing strategist to find for its objective to suit the criteria of S.M.A.R.T. (Specific, Measurable, Attainable, Realistic, and Tangible) In order to have the perfect fit, following the basic marketing techniques is the key to get the things close to fit if not a perfect fit. Toyota has to be specific about its product lines to their respective customers and should devise the target segment for the Hybrid in order to venture more officially and formally equivalent to the other segments. Toyota has its set direction in the already established segments and surely knows how to measure the effectiveness of their moves. While, Toyota wants to capture PHEV market they way it capture hybrid market. Setting strategic direction for both of these segments is integral to make these moves effective, measurable can tell the ways to attain it. Designing the market offer to customer by getting differentiated is the point to make the brand image in the minds of the customers and this is the very point where the true execution of strategies can be converted into realistic and in tangible profits. Customer Driven Marketing Plan:- Toyota has been developed a special website for interested customers about Prius development which was in fact earlier from the launch of the product. Focused groups were used to testify different aspect of Prius. These examples lead to the conclusion that the strategies of Toyota are already customer driven even to the point of product development as well. In a relatively old paper by Ann Rodriguez and Chris Page, Sept 2004, the analysis of strategies for Hybrid car business was analysed. In this paper, it is stated about the website of Prius. Moreover, the effects of Toyota that are discussed as very effective in order to covey the evolutionary aspects of hybrids to the customers. There were brochures and 17 second clip that was directly conveyed to 44,000 people. These marketing tactics so having so much relentless focus to the customer tells who much customer driven is the marketing plans of Toyota and its product lines like Prius. Marketing Segmentation:- A number of product line to a number of people, focus to need of different segments, luxury to high class with the name Lexus and pickup who want to work with the name Vigo. Hybrid tech brands with the name Prius. A strongest and well diversified portfolio is in the possession of Toyota that kept it away from losses in the recent years where other players crumbled. Competitive advantage through marketing mix and marketing communication mix:- Toyota has to focus its marketing on the brands that are new in the market or needs to build awareness about the evolutionary aspects of the products. More over the communication style and mix of the products directly depends on the stage of growth that they are in. For example, the customers of high end should be focus to developed sense of loyalty and pride for the brand they are driving. And the brands for youth should give impression of cool or Dj like as discussed earlier. Communication of Go green strategy and related brands should be communicated differently from other product lines. Weighting of Promotional Activities and Suggestions:- Likewise, Toyota have to communicate its innovations and new products by remaining customer focused as they did and are doing as we have observed in Prius launch. Today, Toyota is the leading player in Hybrids and New Era vehicles of efficient fuel and energy, so it depends on the marketing and promotion of Toyota to make the customers aware and realised about the upcoming products and their benefits. Toyota needs to remain aggressive as these Hybrid and Hi-Techs vehicles are the future of Automobile Industry. For the existing marketing segment, Advertisement is of importance in pre purchase marketing campaign while sales force is critical for during purchase and post purchase relationships with the customers. And have their own weights like advertisement for new product line will be having more weights than old lines and vice versa. Read More