Social Media in a Crisis: Toyota Case Study

Department of Marketing Assignment Customer Management 2 - Customer Led E-Marketing HEMPLE, James Grant ‘Taking a company or organisation of your own choice, critically evaluate the opportunities and threats presented by Web 2.0/social media. Evaluate the progress made in responding to these opportunities and threats making strategic recommendations for improvement in this area.’ Dr. Jim Hamill | Customer Management 2 - Customer Led E-Marketing | MK936 | Elective Individual Essay | Session 2009/2010 | Semester B | Submission Date 20/04/2010 | Msc International Marketing

Contents 1.0 Introduction ................................................................................................ 3 2.0 Company Profile ........................................................................................... 4 2.1 Opportunities and Threats of Social Media ....................................................... 4 3.2 Evaluating Toyota’s Opportunities and Threats of Social Media ........................... 5 3.1.1 Pre Recall Social Media Strategy.................................................................. 7 3.1.2 Post Recall Social Media Strategy ................................................................ 8 4.0 Recommendations ...................................................................................... 11 5.0 Conclusions ............................................................................................... 13 References ......................................................................................................... 15 Appendix i – Social Medias Balanced Scorecard ....................................................... 16 2

1.0 Introduction Jackson (2010, pg 56) comments that: “New media technologies (internet, mobile broadband, e-commerce, internet-enabled entertainment, social networking) are fundamentally changing the way people interact with each other and the world.” The terms social media and web 2.0 can be seen as transposable (Constantinides and Fountain, 2008). Constantinides and Fountain (2008, pg 231) recognised the subsequent foremost types of social media: • “Blogs. Comprising individuals' or firms' online journals often combined with audio or video podcasts. • Social network. Applications allowing users to build personal web sites accessible to other users for exchange of personal content and communication. • Content communities. Web sites organising and sharing particular types of content. • Forums/bulletin boards. Sites for exchanging ideas and information usually around special interests. • Content aggregators. Applications allowing users to fully customise the web content they wish to access.” Ostrow (2009) surveyed senior executive who identified the chief benefits of social media which can be seen in Table 1.0: Table 1.0: Main Benefits of Social Media Marketing Customer Engagement 85.4% Direct customer communication 65.0% Speed of feedback/results 59.9% Learning customer preferences 59.1% Low cost 51.1% Brand building 48.2% Market research 42.3% Credibility of the crowd 40.1% Reach 37.2% Source: adapted from Ostrow (2009) This essay will utilise Toyota as a case study and critically evaluate the opportunities and threats presented by Web 2.0/social media to the organisation. Additionally, the essay will evaluate the progress made in responding to these opportunities and threats. Moreover, this essay will make strategic recommendations that Toyota can utilise to create sustainable long term growth. 3

2.0 Company Profile Toyota was founded in 1937, Mintel (2009) states that Toyota now owns and operates the Lexus and Scion brands and has a majority shareholding stake in Daihatsu and Hino Motors, and minority shareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha Motors and Mitsubishi Aircraft Corporation. Since its inception Toyota has grown to become the world’s leading manufacturer in 2008 a title previously held by General Motors. It also held the label of being the most lucrative vehicle manufacturer in 2006. Toyota’s success is mainly due to a large US market share with the company having a smaller segment of the European market (Mintel, 2009). In May 2009, Toyota announced a record yearly net loss of £2.9 billion for the previous year as a consequence of the global downturn in vehicle sales caused by the 2007-09 financial crises and the company predicted it would lose £3.7 billion in the current financial year (Mintel, 2009). Most recently the Toyota brand has suffered due to the company announcing the recall of vehicles across its main markets namely China, Europe and the United States. Toyota’s brand image of creating reliable and efficient cars is under threat due to accelerator pedals getting caught on floor mats. Toyota is recalling over 1.1 million cars and had to suspend sales of eight models. 2.1 Opportunities and Threats of Social Media This section will highlight the opportunities and threats presented by Web 2.0/Social Media that are most pertinent for Toyota. Toyota’s most prevailing threat in regards to social media has been created from the recall scandal. This threat can severely damage the brand as customers and potential customers will be ever more likely to criticise Toyota’s faulty products and also the service offered. Research by social media analyst Webtrends proposes that 60% of all online mentions of Toyota during the first week of February were made in a negative with key words such as 'recall', 'pedal' and 'fix' were most frequently associated with the brand (Brownsell, 2010a). Brand valuation consultancy, Brand Finance, has stated that 25% of the organisations overall £17bn brand value may possibly be lost due to the recall crisis (Brownsell, 2010a). Interestingly, the recall crisis is not just the most important threat affecting the social media of Toyota; it is the most important threat affecting the entire business. Toyota’s main opportunity presented by web 2.0/social media is utilising it to respond to prevailing recall crisis. Social media provides Toyota with a platform that can extend across copious channel reaching many of its customer groups. 4

3.2 Evaluating Toyota’s Opportunities and Threats of Social Media Hamill’s (2010) four I’s of Social Media seen in table 3.0 will be utilised to evaluate the progress made by Toyota in responding to the opportunities and threats previously highlighted. Table 3.0: Four I’s of Social Media Involvement network/community numbers/quality, time spent, frequency, geography Interaction read, post, comment, reviews, recommendations (actions they take) Intimacy affection or aversion to the brand ; community sentiments, opinions expressed etc Influence advocacy, viral forwards, referrals and recommendations, social bookmarking Source: adapted from Hamill (2010) Kaplan and Norton (1996) developed the Balanced Scorecard approach to implement performance measurement. In figure 3.0 Sheridan (2010) proposes the Social Media Balanced Scorecard. For a more detailed explanation of the four factors see appendix i. Sheridan (2010) model will also be utilised to evaluate the progress of Toyota in responding to the opportunities and threats of social media. Figure 3.0: Social Media Balanced Scorecard 2. Community 1. Soical Vitality: Health: Sentiment, Outisde Belonging, Conversation, Trust , Survey Trawled data data 4. 3. Capital: Integration: Financial, Process, Human, Engagement, Internal Internal reporting reporting & Surveys Source: adapted from Sheridan (2010) This section will firstly evaluate the pre recall social media adopted by Toyota. Secondly, this essay will evaluate how Toyota has utilised social media as a key strategy to engage with customers and attempt to rejuvenate the brand following the recall crisis. Toyota is particular engaged internally and externally in the following channels: Facebook, LinkedIn, Flickr, Digg, Twitter, YouTube and with RSS feeds. Each of these channels is currently being used by Toyota to react to their most widespread threat. 5

According to the Engagement db ranking (figure 3.1) Toyota is highly engaged in social media and ranks 21 in the top 100 most engaged companies. Figure 3.1 highlights that Toyota is present across many social media channel and engaged within these channels. Figure 3.1 suggests there is scope for Toyota to increase the amount of channels that it is involved on and also increase the engagement within these channels. Figure 3.1: Engagement db ranking Source: adapted from engagement db (2010) Additionally, ‘Howsociable?’ was used to evaluate Toyota’s engagement with social media with Toyota scoring 3,102. Figure 3.2: ‘Howsociable?’ ranking Source: Adapted from ‘Howsociable?’ (2010) 6

Toyota is active in seven social media channels and therefore classed by the engagement db study as a Maven. Maven brands sustain an elevated level of engagement across numerous social media channels. Mavens have a vigorous social media strategy sustained by devoted teams. Active engagement across is key to Toyotas brand management strategy. 3.1.1 Pre Recall Social Media Strategy Toyota utilised Social Media to attempt to engage and energise its Yaris brand. Toyota hired Saatchi & Saatchi who opted to run a competition where customers were to make a video about the Toyota Yaris for a monetary prize. To compliment the competition a Facebook page was created and music videos that had previous viral success to inspire entrants. The target audience deemed these virals as outdated and did not match Facebooks images as somewhere cool to hang out and catch the latest news. This resulted in an extremely small amount of fans joining the group. Similarly the Twitter followers were also extremely low. Toyota and Saatchi & Saatchi failed to ascertain exactly, who the Toyota customer was, where they could be found and most appropriate way to engage and energise them. Twitter and Facebook were rarely used during the competition suggesting that their level of involvement was not great enough to capture the customers’ interest. With no entrants in the competition Saatchi & Saatchi decided to abandon the idea of user generated content and promoted the contest to its own network of contacts. Competition winners were chosen by Saatchi & Saatchi and Toyota employees. The winning video featured a girl’s father and boyfriend having an innuendo-laden discussion about taking her virginity and “having her on her back”. Toyota faced angry customers who were leaving comments on the Facebook page and the YouTube channel. Toyota was initially unaware of the comments being posted as they did not monitor and moderate the responses. Although Toyota was ‘involved’ across three channels (Facebook, Twitter and YouTube) they did not spend much time providing rich content to invigorate customers. Toyota’s ‘interaction’ was almost non-existent and did not ignite discussion amongst the target audience. The ‘intimacy’ of the campaign was severely lacking and appeared to create brand aversion. Surprisingly the social media campaign did have ‘influence’, with Toyota successfully creating a negative groundswell regarding the competition. Considering Sheridan (2010) Social Media Balanced Scorecard Toyota failed to utilise ‘Community Vitality’ correctly. ‘Community Vitality’ is imperative to understanding the Community Experience through implementing primary research with community members. 7

3.1.2 Post Recall Social Media Strategy Despite being classed as highly engaged Toyota still failed to utilise its social media channels at the early stages of the recall process. Information was released through the company’s website and traditional mediums such as TV, Radio and Print (Lawrence, 2010). Toyota failed to engage their brand ambassadors who were anxiously waiting for information which represents a complete misinterpretation of the influence that online areas exercise during a crisis. In a web 2.0 environment brand ambassadors can be used to defend the brand in online communities (Lawrence, 2010). Toyota missed the opportunity to apologise to the network for its mistakes and to set the record straight. However, Toyota now appears to be challenging the threats of the recall by utilising social media effectively. Firstly, Toyota created an internal Micro site that is dedicated to recall information for customers. The micro site encompasses many web 2.0 aspects such as a customer comments section where existing customers can leave comments on what is happening with their Toyota. Within the micro site Toyota has included a live update counter to emphasise the speed at which it fixing the accelerator pedals. Figure 3.3: Toyota Recall Micro site Additionally, the internal micro site is attempting to highlight Toyota’s speed and effectiveness and responding to the recall crisis (Figure 3.4). Toyota have utilised a timeline to highlight the importance the company is paying to respond effectively to the 8

recall. Additionally, Toyota set up a facts and figures section to appease their customers reassuring them that the company had the recall under control. Figure 3.4: Toyota Recall Timeline Toyota’s external social media channels such as Facebook, Twitter and YouTube pages direct costumers to the micro site page. Toyota has also created “Toyota Conversations” a site powered by “Tweetmeme” that collects tweeted news, images and video about Toyota and publishes them on Toyota's own Twitter feed. Toyota can review this information and act accordingly. Figure 3.6: Toyota Conversations Furthermore, Toyota have utilised Digg to engage its customers regarding the recall. US Toyota president Jim Lentz took part in a consumer question and answer session. This approach allowed Toyota to engage its customer base and apologise to them for the recall. 9

YouTube has further been utilised by Toyota to combat the threat of the recall. Videos have been uploaded detailing the faults with the foot pedals offering an explanation to its customers. Turner (2010) states that: “Utilising videos broadens transparency to include practical advice delivered where the reported problem could be shown, or shown how to identify and guidance on how to deal with it or what steps to take.” Toyota customers ultimately want to know ‘is their car safe to drive?’ Failure to find a rapid and simple explanation to this question then their anxiety will intensify. Additionally, the YouTube channel has interviews with Toyota’s key staff who offer their explanations related to the recall, the channel has over 1000 comments from. Toyota has successfully adopted the social media approach and the conventional essentials of positioning messages, such as sympathy and honest explanation. Successfully linking these with sound search engine optimised website pages ensures that customer searching for key words such as “Toyota recall, pedal, help, crash” will arrive at Toyota’s explanation of events. Toyota also has several external community forums such as toyotaownersclub.com, forumtoyota.com and toyotanation.com these forums have been created by Toyota enthusiasts. The users participate in discussions regarding the company’s products, they also post and share videos of their cars and their life experiences using the products. Toyota does not appear to be involved on these forums with them being entirely user driven. The recall crisis underlines the importance of communication with consumers. Toyota’s initial communication was fragmented and information was not clear regarding the scale of the problem. Toyota’s adoption of a highly intensive social media campaign has been successful as it has created consumer brand dialogue. Toyota has announced that new car sales rose 15.4% year on year in March, representing an increase from over 15,000, to 18,000 suggesting that in the short term the social media strategy appears to be working. 10

4.0 Recommendations This section will discuss the key strategic recommendations that Toyota can utilise combat the opportunities and threats of web 2.0/social media. The first recommendation is related to the identification of Toyota’s customer segments on its main website. Figure 3.0 highlights that it is not initially clear who Toyota’s main customer segments are. Toyota has appeared to use the model of its cars to create customer segment. Figure 4.0: Toyota homepage It is recommended that Toyota identify clear consumer groups, this will significantly improve the navigation and ease of use of it website. This appraoch considers designing the website from the outside in appraoch where the key requirements of the customer are considered. Toyota will be better able to classify each groups needs and wants. If customer groups are clearly catergorised then it makes it easier to design a eMarketing strategy to engage and energise them. Table 3.0 represents how Toyota could more clearly segemt its customer groups. Table 3.0: Toyota Customer Segmentation Customer Groups Needs & Wants 1. New Cars Models available, prices, pictures videos, reviews, warranty 2. Approved Used Models available, where can they buy, reviews, warranty 3. Corporate Sales Cars available, options, tax bands of cars, pricing, CSR policies 4. Finance & Insurance Packages available 5. Ownership & Servicing Where, cost, other relevant information Detailed customer segmentation will develop Customer Profiles, Knowledge and Understanding. Additionally, Toyota will be able to identify its ‘most valuable’ and ‘growable’ customers. Secondly, it is recommended that Toyota should seek to enhance its commitment at each stage of Hamill’s (2010) four I’s of social media. If Toyota recruit third party it will help create and spread positive messages associated with the Toyota brand. The bloggers could reiterate Toyotas brand promise they could increase their effectiveness in 11

relation to ‘Interaction’, ‘Intimacy’ and ‘Influence’. Bloggers who promote the safety of Toyota cars such as government agencies, trade magazines and websites like Car & Driver and Automotive.com and public figures. If Toyota can earn this approval it will provide extra weight to the credibility of the public relations programme. To improve its ‘involvement’ with social media Toyota must look to comment more on the posts by customers. At present customers are engaging with each other on Toyota channel such as Facebook, Twitter and YouTube. Toyota may post the initial update and allow customers to discuss the update. However, Toyota can rarely be seen responding to additional comments from customers. To energise its customers into a deep discussion Toyota mist view social media as a two way conversation. If they do not respond to customer comments and let other customers answer on their behalf this could result in customers becoming disenchanted with the channel and the Toyota brand. Increasing involvement permits Toyota to better managed and measure ‘Community Vitality’ from Sheridan’s (2010) Social Media Balanced Scorecard. In particularly Toyota would be better positioned to measure: Sense of trust, Support from other members, Opportunity to contribute, Socialization between members and Sense of respect. 12

5.0 Conclusions In conclusion, this essay has utilised Toyota as a case study to and critically evaluated the opportunities and threats presented by Web 2.0/social media to the organisation. Toyota’s most prevailing threat has been a direct result of the mass worldwide recall of it cars. This threat endangers consumers’ perceptions of the brand and their purchase intentions. Toyota’s failure to tackle this threat will damage the company’s ability to create sustainable long term growth. Subsequently Toyota’s main opportunity is leveraging the positive brand associations that it has built up over thirty years of business and utilising the large network of brand advocates that it has at its reach. These brand advocates are engaged in social networking activities are can be easily reached by Toyota. This essay has also evaluated the progress made by Toyota in responding to these opportunities and threats. Firstly, the essay investigated Toyota’s pre recall social media strategy and concluded that although Toyota was ‘involved’ across three channels (Facebook, Twitter and YouTube) they did not spend much time providing rich content to invigorate customers. Toyota’s ‘interaction’ was almost non-existent and did not ignite discussion amongst the target audience. The ‘intimacy’ of the campaign was severely lacking and appeared to create brand aversion. Surprisingly the social media campaign did have ‘influence’, with Toyota successfully creating a negative groundswell regarding the competition. Moreover, this essay analysed Toyota’s post recall social media strategy and concluded that in a crisis, consumers need honest answers and they need them promptly. Toyota initially hesitated in appeasing the anxieties of its customers by not utilising social media to answer questions. Transparent engagements in the online communities, where your customers already live, provide a credible and direct channel for the answers they need. Toyota has put the brakes on the potential brand damage by creating a transparent marketing campaign underpinned by social media channels such as Facebook, Twitter and YouTube. This essay has concluded by make strategic recommendations that Toyota can utilise to create sustainable long term growth. Firstly, it is recommended that develop its customer profile groups on its website. This strategy will allow Toyota to clearly identify its customers and tailor a more specified eMarketing strategy. Furthermore, this will allow Toyota to gain a deeper insight f its customers and recognise the most appropriate methods to engage them. 13

Secondly, this essay has recommended that Toyota utilise Hamill’s (2010) four I’s of social media to help tackle the threats associated with the recall. If Toyota recruit third- party backers would help or bloggers to spread positive messages regarding its brand promise they could increase their effectiveness in relation to ‘Interaction’, ‘Intimacy’ and ‘Influence’. This essay has highlighted that Toyota are a company that has utilised social media to engage with it customers and had varying success. Most significantly this essay has highlighted how important the social media paradigm is when looking to communicate with customers regarding a crisis. High levels of targeted engagement can help to maintain the trust that Toyotas customers have in the brand and ensure future sustainable growth. 14

References Brownsell, A. (2010a) “Toyota launches vehicle recall website as sales tumble” available online from: http://www.brandrepublic.com/DigitalAM/News/981338/Toyota-launches- vehicle-recall-website-sales-tumble/?DCMP=EMC-Digital-AM-Bulletin Site accessed 10/04/2010. Brownsell, A. (2010b) “Toyota sees sales rise as UK car market enjoys growth” available online from: http://www.marketingmagazine.co.uk/news/995563/Toyota-sees-sales- rise-UK-car-market-enjoys-growth/?DCMP=ILC-SEARCH Site accessed 10/04/2010. Constantinides, E., and Fountain, S.J. (2008), "Web 2.0: conceptual foundations and marketing issues" Journal of Direct, Data, and Digital Marketing Practice. Volume: 9 Number: 3 pp: 231-44. Engagement db (2010) “Toyota engagement db Rankings” Avaible online from: http://www.engagementdb.com/downloads/ENGAGEMENTdb_Report_2009.pdf Site accessed on 12/04/2010 Hamill, J. (2010) “‘Creating the Buzz’ Web 2.0/Social Media Strategies for Sustained Tourism Growth” available online from: http://www.slideshare.net/jimh7171/creating- the-buzz-session-1-march-2010 Site accessed 13/04/2010. Howsociable? (2010) available online from: http://www.howsociable.com/Toyota Site accessed on 12/04/2010. Jackson, S.E., (2010) “New media: debunking the myths” Journal of Business Strategy. Volume: 31 Number: 1 pp: 56-58. Lawrence, D. (2010) “3 Crisis Survival Lessons for the Social Media Age” available online from: http://mashable.com/2010/03/04/crisis-survival-social-media/ Site accessed 12/04/2010 Kaplan, R.S. and Norton, D.P. (1996) The Balanced Scorecard: Translating Strategy into Action. Harvard Business School Press, Boston. Mintel (2009) - Car Brands - UK - July 2009 Ostrow, A. (2009) “What are the Benefits of Social Media Marketing?” available online from: http://mashable.com/2008/12/29/benefits-of-social-media-marketing/ Site accessed 12/04/2010. Sheridan, J. (2010) “Social Media 404’s Balanced Scorecard Approach to ROI” available online from: http://www.slideshare.net/JohnSheridan/social-media-balanced-scorecard Site accessed 12/04/2010. Turner, C. (2010) “Lessons marketers can learn from the Toyota crisis” available online from: http://www.utalkmarketing.com/pages/Article.aspx?ArticleID=16780&title=Lessons%20 marketers%20can%20learn%20from%20the%20Toyota%20crisis Site accessed 12/04/2010. 15

Appendix i – Social Medias Balanced Scorecard Social Media Balanced Scorecard Aspects Details Social Relies upon monitoring, or listening tools, conﬁgured to trawl the vast amount of Health blogs, discussion areas, and social networks to obtain conversational data pertaining to the objectives at hand. This is the social commentary that exists outside the immediate world of an organization. The type of information you are looking for usually falls into two categories: (1) sentiment (positive, negative, or neutral), and (2) volume (the amount of conversation, if any at all). Community Is the key to understanding Community Experience (CX) and is best understood by Vitality doing primary research with an organisations community members using a survey tool. The SM-BSC looks for Community Vitality using these indicator areas: Sense of trust, Support from other members, Opportunity to contribute, Socialization between members, Sense of respect, Support from community owner(s) and Duration and frequency of visit. Integration Examines the internal aspects of the program, and will collect data depending upon the objective(s). For example, efficiency and productivity objectives will look for data using internal reporting, such as Time Management Systems. But employee engagement and retention objectives will use survey data to provide measures. Capital Measures are always looking to track the financial and human investments of any Social Media program. In the case where the objective(s) are related to the contribution of Social Media to financial gain, data from sales may also be examined. Conversely, where Social Media is contributing to cost reductions, related measures may be tracked, such as call centre expenses. Source: adapted from Sheridan (2010) 16

Social Media in a Crisis: Toyota Case Study

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