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Marketing Strategy Of Toyota

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in fulfillment of BMKT490 Marketing Policies and strategies course

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Marketing Strategy Of Toyota

  1. 1. Marketing Policies & Strategies Project BMKT 490 Fall 2015/2016 Done By MohammadRayya 21330568 Natalia Mtawea 21330698 Supervised By Dr. Georges Karouni Lebanese International University Lebanon Bekaa Campus
  2. 2. 1 Contents History.........................................................................................................................................3 The Mission and Vision Statements ............................................................................................... 4 Vision:......................................................................................................................................4 Mission:...................................................................................................................................4 Analysis:............................................................................................................................... 4 Toyota Values............................................................................................................................... 5 Toyota’s Product Portfolio............................................................................................................. 5 Situational Analysis....................................................................................................................... 6 Core competencies................................................................................................................... 6 Distinctive Competency............................................................................................................. 6 SWOT Analysis.......................................................................................................................... 6 Strengths:............................................................................................................................. 6 Weaknesses:......................................................................................................................... 7 Opportunities:....................................................................................................................... 7 Threats:................................................................................................................................ 7 Segmentation:.............................................................................................................................. 8 Positioning...................................................................................................................................8 Differentiation.............................................................................................................................. 9 External Environment Analysis ......................................................................................................9  Political............................................................................................................................. 9  Economic.......................................................................................................................... 9  Social.............................................................................................................................. 10  Technology...................................................................................................................... 10 Competitors............................................................................................................................... 10 Toyota’s “Marketing Mix”........................................................................................................... 10 Products(Product Mix):........................................................................................................... 10 Price:...................................................................................................................................... 11 Place:..................................................................................................................................... 11 Promotion:............................................................................................................................. 12 Value ChainAnalysis................................................................................................................... 12 1. Inbound logistics.............................................................................................................. 12 2. Operation........................................................................................................................ 12 3. Outbound logistics........................................................................................................... 13
  3. 3. 2 4. Marketing & sales............................................................................................................ 13 5. Service............................................................................................................................ 13 Conclusion ................................................................................................................................. 13 Illustration sales graph................................................................................................................ 14 References................................................................................................................................. 15
  4. 4. 3 History Toyota Motor Corporate is a Japanese automotive manufacturer headquartered in Toyota, Aichi, Japan. In 2013 the multinational corporation consisted of 333,498 employees worldwide and, as of January 2014, is the fourteenth-largest company in the world by revenue. Toyota was the largest automobile manufacturer in 2012 (by production). In July of that year, the company reported the production of its 200-million vehicles. Until the early 1980s, Toyota met foreign demand by exporting CBU1 and CKD2 vehicles. But as the sudden increase in exports led to increased trade friction and as economic conditions grew more volatile, Toyota started full-scale efforts to produce its products overseas. Sales overseas grew stagnant in the second half of the 1980s due to a sudden appreciation of the yen. By 2000, however, overseas production far exceeded CBU exports, and with the successful launch of a number of region-specific models, sales overseas expanded, hitting its peak at over 6.8 million units in 2007. Impacted by the global recession that started to unfold in autumn 2008, sales in 2009 dropped by over 900,000 units from the previous year to a total of 5.6 million units. Still, overseas sales in 2009 accounted for more than 80% of Toyota's total sales, a significant increase from the 50% levels of the late 1980s. (Toyota Global ) In 2011, Toyota, along with large parts of the Japanese automotive industry, suffered from a series of natural disasters. The 2011 Tōhoku earthquake and tsunami led to a severe disruption of the supplier base and a drop in production and exports. Severe flooding during the 2011 monsoon season in Thailand affected Japanese automakers that had chosen Thailand as a production base. Toyota estimated to have lost production of 150,000 units to the tsunami and production of 240,000 units to the floods. . . . 1 Completely Built Up 2 Completely Knocked Down
  5. 5. 4 . The Missionand Vision Statements Vision: “Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet our challenging goals by engaging the talent and passion of people, who believe there is always a better way.” (Toyota Global Vision) Mission: “Create vehicles that are popular with consumers.” (Toyota Mission for Technologies) Analysis: In the vision statement, Toyota includes major areas of its business. it states that the company aims to achieve leadership in the global market. It also shows that Toyota moves forward based on quality, innovation and environmental conservation. Thus, Toyota includes corporate social responsibility in its vision statement. In addition, the company emphasizes human resource development, as shown in the “talent and passion of people” component of the vision statement. Therefore, Toyota’s vision statement is holistic because it includes strategic goals for business leadership, product quality, human resources, and corporate social responsibility. Toyota’s mission statement focuses on products. The firm always considers the preferences and expectations of consumers; Toyota emphasizes quality of products, with reference to such criteria as safety and customer satisfaction. In addition, Toyota’s mission statement specifies employee education as a way of achieving the human resource development aim in its vision statement. Also, this mission statement shows that Toyota maintains its commitment to technological innovation. Innovation is seen as a way for the company to achieve its aims in product quality, customer satisfaction, and corporate social responsibility. Thus, Toyota’s mission statement is holistic and aligned to its vision statement.
  6. 6. 5 Toyota Values The "Five Main Principles of Toyoda" are a written statement of the teaching of Sakichi Toyoda the Founder of Toyota Group. (Toyota Global) - Always be faithful to your duties, thereby contributing to the Company and to the overall good. - Always be studious and creative, striving to stay ahead of the times. - Always be practical and avoid frivolousness. - Always strive to build a homelike atmosphere at work that is warm and friendly. - Always have respect for spiritual matters, and remember to be grateful at all times. Toyota’s Product Portfolio High Market Share Low Market Share High market growth Star Lexus- luxury sedans Prius hybrid Land Cruiser SUV Question mark Scion – for youth in USA Camry / Corolla – as hybrids Bio –fuel, Solar –powered , hydrogen gas Diesel engine cars for India, Southeast Asia Small cars for India / China More SUVs and MPVs : Fortuner Low market growth Cash cow Camry , Corolla sedans Innova , Venza –MPV Daihatsu -small cars Dog Celica , MR2 -for youth Tundra –pick-up Crown, Cressida, Corona, Quails: Withdrawn Declining markets in UK, Europe Petrol cars to be phased –out
  7. 7. 6 Situational Analysis Core competencies The core competence of Toyota Motor Corporation is its ability to produce automobiles of great quality at best prices, thereby providing a value for money to the customers. This core competence of quality can be attributed to its innovative production practices. The quality aspect of Toyota’s products have revolutionized the automobiles in the past and almost all the automobile companies had to try and better the quality of their products. It is a cornerstone of the cost leadership strategy that the company pursues. Distinctive Competency Toyota’s distinctive competence is its production system known as the “Toyota Production System” or TPS. TPS is based on the Lean Manufacturing concept. This concept also includes innovative practices like Just in Time, Kaizen, and Six Sigma and so on. Toyota has worked tirelessly over the years to establish this distinctive competence. No other automobile manufacturer can do it as well as Toyota does. This distinct competence has led to a competitive advantage that has given Toyota a sustainable brand name and a market leader position. (Toyota Production System) SWOT Analysis Strengths: The company is one of the world's best known brands with their experience which cannot be overemphasized in the terms of manufacturing. Strength is that their product list is diverse with wide variety of segments for the customers to choose from which could fit their lifestyle. They are the moving assembly line pioneers which made their production very affordable as well as faster and efficient. The company's international exposure makes the company the second largest automaker in the world. Toyota also uses low cost to try and gain a competitive advantage in the automotive industry. “Toyota is (or was at the time) the low cost producer in the industry. Toyota achieves its cost leadership strategy by adopting lean production, careful choice and control of suppliers, efficient distribution, and low servicing costs from a quality product.”(Michael E. Porter) This quote from Michael Porter sums up how Toyota achieves this low cost strategy
  8. 8. 7 Weaknesses: Toyota’s main weaknesses are as follows:  Hierarchical organizational structure  Secrecy in organizational culture  Effects of product recalls in recent years Toyota’s global hierarchical organizational structure prevents maximum flexibility of regional operations. Also, the company’s culture of secrecy is a weakness that reduces response times in addressing emerging problems. In addition, Toyota implemented massive product recalls starting in 2009. These recalls weaken the firm because the recall processes consume business capacity that could be used for product distribution instead. Through the interview with the Sales Manager of BMUC Company, he told us that one of their weaknesses was both of Toyota And Lexus cars has the same maintenance garage in Beirut Hazmieh Branch, but now they separated each one to its maintenance garage. Opportunities: Toyota Company according to their corporate responsibility to be environment friendly, made the opportunity to keep cleaner engine emissions. They further had a chance of create a great image in the public with the help of environmental group works in order to keep the environment clean. There is one great viable prospect for the company where they already started investing in solar power. The company has a chance to regionalize and specialize their worldwide operations which could enhance their transnational linkages. The company's existing innovations capabilities on automobiles will make them have an opportunity to make good scope in the market other than the competitors. Threats: Very tight competitive rivalry is being running in the automobile industry and so Toyota faces the same as any other organizations. The company is also affected by risks of prices change of the raw materials like fuel, rubber, glass and steel. The economies in the Pacific, Europe and US are also showing slowdowns. Analysis shows that these are active threats to the company financially. Foreign competitive activities have been largely been affected by the company due to the overall position in the industry worldwide.
  9. 9. 8 Segmentation: How do Toyota Choose its Customers “Target Market”? The STP3 of Toyota cars is based on the "care" of its users and it can be clearly seen in its variety of offers and product attributes. Currently Toyota is focusing on two segmentations:  Demographic Segmentation  Psychographic Segmentation In the first segment of Demographic, Toyota has targeted the family size and in this segment people of Upper Middle High Income group is kept in view by Toyota. Land Cruiser, Parado, Camry is some major cars of this segment which are designed for those who have the willpower and buying power to purchase these cars. In the second segment of Psychographic, Toyota has targeted the family size and in this segment people of the high class, a high income group who have sporty attitude, is kept in view by Toyota such as Toyota Altis Sport model and Toyota Fortuner. These sports cars that helps in improving and exhilarating their sense and passion for sports. SUV4, MUV5 and Sedan are its examples Positioning Toyota’s uses both differentiation and low cost as generic strategies to try and gain a competitive advantage over their competitors in the automotive industry. The market scope that Toyota uses is a broad one that encompasses nearly every type of customer that is in the market to purchase an automobile. Toyota is able to target such a large market because they have something for everyone. Toyota has four wheel drive trucks and SUVs for the outdoor types or those who live in areas that face severe weather conditions, hybrid models like the Prius for the eco-friendly customers that are interested in saving the environment, along with 3 Segmentation, Targeting, Positioning 4 Sport UtilityVehicle 5 Multi-UtilityVehicle
  10. 10. 9 the standard cars for general, everyday use. Additionally, Toyota provides vehicles for all price ranges. From the low price Toyota Corolla line of cars to the high priced luxury line of cars and SUVs with Lexus, Toyota has something for everyone. Differentiation Toyota differentiates on several levels form their competitors. First of all, Toyota has been very successful in differentiating on the basis of superior design and quality. This has led to Toyota being able to create a brand image that is very strong and one that brings to mind quality, long lasting cars when a potential customer sees it. The strength of Toyota’s brand image has been seen in recent years with the recalls and problems Toyota faced in dealing with these recalls. Toyota was able to survive these problems because they had such a long and proven track record of quality and superior. Another, area that Toyota differentiates is in technology. Toyota was the first successful mass produce the hybrid car on the market when it released the Prius in 2003. Being the first to get their hybrid on the market allowed Toyota to gain a large portion of the market share in the area of hybrid cars. External Environment Analysis There are many causes that affect the macro environment concern with automotive industry. Analyzing the external environment, the PEST framework is used as tools to consider major factors, which affect the business and to create key driver of change. This can identify influential effects in each area, which can consider key success factors of company.  Political This factor is most related government policy such as taxation policy and trade tariff. Because manufactures import some vehicles and parts from other countries, firms need to pay for the tariff for buying. Costs of products will be increase, if government increase import tariff. This is the challenge that company faces fluctuation of cost.  Economic Economic growth affects spending of people by changing buying power, for example, the economic crisis impact decrease of salary, increase of unemployment that people are difficult to buy products because they have less income.
  11. 11. 10  Social Some people select to buy products since they can reveal the social status of consumers and some people are still reputation in brands. Moreover, the trend of family structure has changed and customer needs will be different. Toyota has not only positioned itself in middle market by using the Toyota brand but also launched Lexus for luxury brand which firm has wide range of product.  Technology Technology is one of the important factors of environmental impact on organizations, technologies change quickly while companies have invested in research and development to respond needs. Innovative technology can provide more opportunities in particular energy conservation issues such as fuel consumption and alternative energy technology. Competitors Toyota faces strong competition from all angles, and is facing a very tough market from other Japanese, American, South Korean and German auto manufacturers. Toyota is working hard to set itself apart from the competition in more than one way, however. Since Toyota products have a reputation for reliability, the added value of their vehicles after sale tends to be much higher than many other producers. The most serious threat to Toyota is widely considered to be Honda Motor Company. However, Toyota has done some substantial work on their products and price points to stay competitive against Honda. Toyota’s “Marketing Mix” Products (Product Mix): Toyota has a diverse set of products. This element of the marketing mix identifies organizational outputs for the target customers. The following are the product lines in Toyota’s product mix:  Toyota automobiles  Lexus automobiles  Welcab series  Marine products
  12. 12. 11  Spare parts and accessories  Engines Toyota automobiles are the most popular in this product mix. Lexus automobiles are luxury products from the company. On the other hand, the Welcab series are Toyota automobiles modified for the elderly and people with disabilities. The company also manufactures yachts, engines, and spare parts and accessories for automobiles and marine products. This part of the marketing mix shows that Toyota reaches a wider market and reduces market-based risks through a diverse product mix. Price: Toyota’s prices vary widely, depending on the product line and the product type or model. This element of the marketing mix identifies how the firm sets the prices of its products. Toyota uses a combination of the following pricing strategies: “Market-oriented pricing, Value-based pricing”. Toyota uses the market-oriented pricing strategy to determine prices based on market conditions and the prices of competitors. This pricing strategy is notable in the vast majority of Toyota products, such as sedans and trucks. However, the firm also uses the value-based pricing strategy, which sets prices based on the actual and perceived value of the product. The company uses value-based pricing for high-end or more expensive products, such as the Prius and Lexus cars. This part of Toyota’s marketing mix shows that the company determines price levels based on market conditions and customers’ perceptions Place: Dealerships are Toyota’s main places for distributing its products. This element of the marketing mix determines the venues where customers can access the firm’s products. The following are the main places in Toyota’s distribution strategy: “Dealerships, Retailers” Toyota dealerships are where most sales transactions occur. However, some retailers like auto supply stores also sell the company’s products, such as spare parts and accessories. This part of the marketing mix shows that Toyota relies heavily on dealerships to sell its products to the target market.
  13. 13. 12 Promotion: Toyota’s promotion strategy covers all the tactics of marketing communications. This element of the marketing mix pertains to how the firm communicates with the target market. Toyota uses personal selling through dealerships’ sales personnel, who personally promote products to potential buyers. The company also uses advertising on various media, such as TV, newspapers, and websites. In addition, the firm promotes its products through public relations, such as the Toyota TogetherGreen program that supports environmental initiatives, and the Meal Per Hour program that donates food to Food Bank. These public relations activities create a positive brand image for Toyota. On the other hand, infrequent sales promotion is used through special deals. Also, the company sometimes uses direct selling for corporate clients. This part of Toyota’s marketing mix indicates that the company has a comprehensive strategy for promoting its business and products. Value Chain Analysis Porter Identifies five primary activities that add value to the final output of the company, the following is an analysis of Toyota’s Value chain: 1. Inbound logistics. This is where goods are received from a company's suppliers and stored until they are needed on the production/assembly line. When it comes to obtaining raw materials, Toyota doesn’t process their own, or create their own, they use a third party. They purchase their raw material from all around the world and in order to maximize their availability of raw material, they maintain good relationship with their suppliers. Toyota use JIT (Just in Time) approach for handling of raw material. 2. Operation. This is where goods are manufactured or assembled. Toyota uses various systems to be efficient and effective which is the Toyota Production System (TPS). The system includes JIT (Just-in-Time) Management that regulates the production process in accordance with customers' requirements and Jidoku system that automatically stops the production process if any defects and other operational problems appear. Operational Stability is also a part of TPS and consists of: Heijunka concept - the uniform distribution of work at any places of production process; Standard Work - organizing the work in the right order and with its description; TPM (Total Productive
  14. 14. 13 Maintenance) the overall check up of all equipment that is involved in the production of the products; and Value Chain which is a series of value-added processes. (Toyota Production System) 3. Outbound logistics. Where goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. The company makes sure that the products are delivered in the right place and at the right time. The cars are directly sent to the dealers or if distributed overseas, Toyota uses containers, waterway transportation. They also manage their own Showrooms in different countries. 4. Marketing & sales. Where the company's marketing department allocates the finished goods i.e. new products to the targeted group of customers. This area focuses strongly upon marketing communications and the promotions mix. Toyota Production System also makes it possible for the company to use indirect distribution channels, dealers and distributors. 5. Service. This includes all areas of service such as final checking, after-sales service, complaints handling, training and so on. Toyota always tries to meet the customer’s needs and requirement and try to continuously improve their services. The main factor for Toyota Company in providing services is their reliability. Services are provided by qualified personnel of the company. As a result, trained workers, good service and reliable products become a guarantor of Toyota’s success among its competitors and help to meet customers’ expectations. This activity can be reflected from their well- known philosophy ‘Customers First’. Conclusion Today Toyota is the largest carmaker in the world with about 9 million car sold around the world. The backbone of their success being their sharp well thought and excellently implemented strategies. It yielded excellent result over the years it brought them to the No. 1 position and if it maintained, there is no doubt about the fact that they’ll maintain their position for years to come.
  15. 15. 14 Illust ratio n sales grap h
  16. 16. 15 References Toyota. (n.d.).Retrievedfromhttp://www.toyota- global.com/company/history_of_toyota/75years/data/automotive_business/sales/sales_vol ume/overseas/index.html. ToyotaGlobal.(n.d.).Retrievedfromhttp://www.toyota- global.com/company/history_of_toyota/75years/data/conditions/precepts/index.html. ToyotaGlobal. (n.d.). ToyotaGlobal. (n.d.).Retrievedfromhttp://www.toyota- global.com/company/history_of_toyota/75years/data/automotive_business/sales/sales_vol ume/overseas/index.html. ToyotaGlobalVision.(n.d.). RetrievedfromToyotaGlobal:http://www.toyota- global.com/company/vision_philosophy/toyota_global_vision_2020.html ToyotaMission forTechnologies.(n.d.).RetrievedfromToyotaGlobal :http://www.toyota- global.com/innovation/vision/mission.html Toyota Production System.(n.d.).RetrievedfromToyotaglobal:http://www.toyota- global.com/company/vision_philosophy/toyota_production_system/
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