Toyota Marketing Analysis Assignment

Toyota Marketing Analysis Assignment

Toyota Marketing Analysis Assignment: Products Range

Marketing Analysis AssignmentMarketing Analysis Assignment

Toyota Marketing Analysis Assignment discusses about Toyota Motors Corporation which is one of the leading car manufacturers in the world is mainly operates in the luxury car segment. It has wide range of products to offer to its target customer segment which are basically affluent people since they operate in high price range and cater to premium segments only. It has wide range of products catering to specified customer base across the world. The products range includes following:

  1. Toyota Innova
  2. Toyota Corola Altis
  3. Toyota Camery
  4. Toyota Land Cruiser Prado
  5. Toyota Prius hybrid
Marketing Analysis Assignment

The product range of Toyota contains the above mentioned products. It has various products into different segments like in super affluent segment its model Land cruiser Prado is there which cost around 42 lacs while in lower segment they have Toyota Innova which is offered at a price of apporx. 8 lacs. It has also launched its products into hybrid segment which is known for the fuel efficient vehicle (Morgan & Liker, 2006, pp 51). In this segment is the major playing after Honda which has its two hybrid model into the segment.

Size and Nature of market

A secondary research has been carried out to find out the size of the overall market for Toyota motors and also the nature of the market in which Toyota is currently operating into. Toyota motors have got 21% of the overall market share of the world automobile market and it is world’s 3rd largest automobile manufacturer in terms of unit sales according to recent data released in year 2010 (Edelhoff, 2009, pp7). The distribution of the total units distributed by Toyota region wise is as follows:

Geographic RegionSales revenue (in million yens)
North America8,771,495

The automobile market is very dynamic in nature as more and more players are entering into the market since the market has lot of potential and it is increasing at a very fast pace which attracts a lot of new players into the market. Since the market is very fragmented into automobile industry as there are several different markets for various kinds of products each catering to its niche target market, also the overall industry is growing at a rate of more than 15% year on year basis since the motor vehicles are becoming as a basic necessity in life. And the various market players are also tapping the untapped market segments by offering the innovative products like “Tata Nano” is one of the recent examples. The demand is also varying in automobile segment as the total production in year 2009 was 73 million units while it dropped down to 61 million units in year 2009. Among the major producers of the motor vehicles China, Japan, US, Germany and South Korea hold the major share of the overall market while in the manufacturing of the motor vehicle. While taking about the companies operating worldwide for the production of the motor vehicle includes Toyota, GM, Volkswagen, Ford and Hyundai share the major chunk of the overall automobile manufacturing market.

Market Segmentation and Target Segment

Segmentation is the process of identifying the customers with similar traits and identifies them on basis of different variable which makes them apart from other variables (Croft, 1994). There are several advantages of customer segmentation which are as follows:

  1. Target market selection
  2. Differentiation
  3. Tailored marketing mix
  4. Opportunities and threat

Consumer segmentation is done on basis of following three variables (Weinstein, 2004):

  1. Behavioral
  • Benefit sought
  • Purchase occasion
  • Purchase behaviour
  • Usage
  • Perception and beliefs
  1. Psychographic
  • Lifestyle
  • Personality
  1. Profile
  • Demographic
  • Socio-economic
  • Geographic

Market segmentation is the all kinds of segments possible in the market based on different parameters like demographics, monetary or geographic variables. In automobile market there can be different segments possible according to various variables (Dalgic, 2006). The variable for the segmentation of the car market are as follows:

  1. Age Groups 21-30, 30-45, 45-65, 65+
  2. Income level $35k, $60k and $60k+
  3. Current vehicle holder Yes, no
  4. Sensitive to gas price Yes, no
  5. Balance between environment and development Yes, no
  6. Importance of vehicle benefit Yes, no

Market segmentation in automobile industry has been done on the basis of size and price (Sandhusen, 2000). Some of the possible market segments can be as follows:

  1. Segment A: mini

 It is the smallest part of the overall automobile industry with price ranges as the entry level and most of the firms do not enter into this segment and bypass the segment and enters into either segment small or others.

  1. Segment B:small

It is one of the largest segments of the car along with the segment C i.e. lower medium segment. This segment in recent years has grown more than the total industry size and almost every automobile player has its product in this range. Some of the most attractive models in this segment are Toyota Corola, Fiat Punto, Fiesta and Corsa.  Due to the very large segment of this group has been sub divided further into 4 small groups (Sleight, 2004).

  1. Segment C: lower medium

            It is the largest segment of the car market and the most competitive one too. The   sector is growing at a rate of more than 7% which is more than the industry average of            6%. The main leader in this segment is VW due to its golf model. Other famous          models in this category are Toyota Cruiser prado, Opel astra and Ford escort etc       (Ries, 2003).

  1. Segment D: upper medium

            It is the third largest segment of the market after B & C segment and contributes about     21% to the overall segment and the growth of the segment is near to 7% yearly. Ford is the market leader in this segment (Trout & Rivkin, 1997). The major players in   these segments are GM Vectra, Audi A4, Toyota Prius and VW Passat.

  1. Segment E: Executive

Executive segment is a small part of the overall part of the automobile segment with share about less than 10% and is growing at a very small pace of about 1 to 2% per annum (Sengupta, 2005). This segment includes major players like Mercedes Benz, Volvo and BMW, Mercedes being the market leader in the segment by having 40% of the overall  segment.

  1. Segment F: luxury

            This is one of the most profitable segments of the overall car market and though it constitutes the small part of the overall market but still it provides profitability to   players, since prices charged in this segment are premium (Luther, 2005). The  segment is growing at a rapid phase since the disposable income of the people is    increasing so the market is developing for this segment. It is rising up with 8% of the        growth per year. The major players in these segments are Toyota, Gm, BMW and      Mercedes Benz.

  1. Segment G: sports

            It forms very small portion of the overall car market with very few players operating  in the market. In this segment the major players are GM, Opel and Ford. GM Tigra model is the most selling model in this segment after that Opel calibre is dominant     (McDonald, 2002)

Target Market of Toyota

The target market for the Toyota is mainly two segments of the overall car markets (Weinstein, 2001). One being the segment C which is the biggest segment in the car market and also known as the lower medium segment which includes the car with economic range and small size and the target segment of customers for the company is luxury vehicles though they do not form a big part of the market but still they are considered to be the profitable market segment and every major player is fighting in this segment since it is very profitable (Dalgic, 2006). Toyota is the major player on the 3rd segment i.e. lower medium segment and it is the segment which provides huge number of units to the Toyota hence helps to achieve the considerable market share to Toyota in the car market.

Target Market Segment:

  • Segment C: Upper middle segment and Segment F: Luxury car
  • Age: 25-45 years
  • Income level: Business class or high level service executive, with income level more than $35k
  • Current vehicle holder: No
  • Sensitive to gas price: No
  • Importance of environmental benefit: Yes
  • Importance of vehicle benefit: Yes

Product Positioning

The brand positioning statement of the Toyota is as follows:

“Drive a Toyota car and enjoys the benefit of being a fashionable and dependable car that makes you part of the worlds energy and global warming solution (Kotler, 2010). Toyota is committed to exceeding customer expectations for style, performance, environmental responsibility, service and value”. Hence the company provides the car with fashionable look and solution to various environmental problems too.

The Figure below shows the positioning of the various models of the Toyota car with the help of the growth share matrix (Ding, 2005). As it is evident from the chart that the most of the models of the company are stars and so the market share of the products are high as it is also evident from the fact that the company is among one of the major car producer in the world in terms of number of units produced.

Marketing Analysis Assignment

Relative market share

As  shown in the growth share matrix all the products ranges falls into the star category hence the market share is high and as well as the growth rate is high (Kimmel, 2005). But the high growth rate comes along with the major cost to support that high growth rate hence company have to incur large amount of cost to sustain this large cost for growth of the segment. Company is trying to shift some of its well established models like Corola, Prius to the Cash Cow segment where in market share is high but the growth is not so high in that case the product behaves as the cash cow since the cost are less to grow that market segment and hence company can leverage on that product line and can use the cash generated from this segment for the development of other product lines (Smith & Taylor, 2004).

The positioning of its major product line like Toyota Corola and Prius has been done in the manner to showcase them as the global car (Copely, 2004). Though now the repositioning is required to change that from the global car to sporty car which can be used for the office purposes as well as for the fun and looks as well. The unique selling proposition for the Toyota is its fuel efficiency. Toyota is well known for its operational efficiency hence the cars are positioned as the fuel efficient luxury cars.

The current positioning of the company needs to be repositioned since there are changing dynamics in the market, contributed by many factors like demography, lifestyle, disposable income and competition. To improve the current positioning following ideas can be considered:

Improve the business:

  1. They should focus more on improving their problem areas like battery, charging and metering technology. Improvement in these areas for Toyota can create competitive advantage for the company.
  2. Toyota should try to experiment with utilize low weight, high efficiency material carbon and high performance plastic vehicle component.
  3. Designing of the cars should be implemented practically before launching the car so that designing issues do not arise into that.
  4. Company should invest into high performance solar equipment to allow for electricity generation and capture while cars are operated and parked mid day.

Increasing Value to the customers

  1. Toyota should actively support lobbying group so as to encourage lobbying of tax credits to encourage the public campaign.
  2. Company should operate into the gas models so as to cater to the price sensitive customers.

Marketing Communication Mix

The communication mix contains the mixture of all different kinds of media tools which can be implemented to promote the given product/offering of the company (Egan, 2007). It utilizes the every available media channel depending upon the budget and effectiveness of the sources and then uses the media which is cost effective and effective in terms of reach and impact onto the customers. The promotion mix of any product contains the following elements:

  1. Advertising: It is basically paid form source of publicity and very controlled source too. It is basically of two types: Print media and TV/Radio advertising (Bird, 2004). Advertising is though a costly medium of promotion but it has the power to reach to the masses and also it has high impact so in that sense it proved to be very cost effective and most of the promotion if the companies are done on the advertising medium only. Toyota can use the TV and print media for promotion of their products. TV can be proved very effective since it aware the customers about the features of the car in very lucrative manner and hence it creates interest among customers and reaches to large audience. Print media can also be used to provide specifications of the car and print media can be used in very specific manner like it advertisements can be given into the auto magazines or magazines which caters to affluent group of customers, while sometimes advertisement can be published in newspapers as well to create customer recall.
  2. Public relations: Public relation is the cumulative process in which media is used to maintain good image about the company’s offering in consumers mind. Public relation includes press releases, shows in relevant business shows and other such activities. Auto chow can be one of the very good options since the most of people which buys a car will prefer to go the auto shows if given a chance to choose the car they want to buy (Hughes, 2007). Also customer would be able to do the comparison of the car by different producers of car.
  3. Internet channel: It includes the efforts to promote product through internet by company’s website, social media websites and other blogs etc. In recent time it has become one of the important sources of promotion as social media is gaining popularity at very rapid pace (Schultz, 1993).

Budget allocation to the communication mix

The budget allocation can be done to different media vehicles in order to allocate the right budget to right channel to increase the effectiveness of media channel.

Media VehicleMedia Class BudgetMedia VehicleVehicle Budget
Auto Shows$900k1. Motor trend international show 2. Chicago international show 3. Los angles international show$400k   $270k   $230k
Print ads$1.2m1. GQ 2.Vanity Fair 3.Robb Report$300k $300k $180k
TV ads$2.4m1.HBO & Showtime 2.Major public network 3. Other cable channel$550k $1.25m   $600k
Public relations$800k1.Media relations 2.Lobby group 3.Publicity$400k $200k $200k
Internet and Social Media  $500k  1.Internet ads  
  1. Social platform development
$200k   $300k

The above table provides the different media channels and their specified media vehicles and their budget has been mentioned along with that. As shown in the table TV advertisements has been allotted maximum budget of $2.4m while other media such as Print, internet, auto shows and PR has been allotted budget of $1.2m, $500k, $900k and $800k.

Media Scheduling

The table below showcase the media scheduling of print media. Media scheduling defines the timeline in which the allocated budget would be allocated to specified media vehicle (Yeshin, 1998). Scheduling is done in a specified manner; mainly it is completed in 3 phases: pre-launch, launch and after launch. Pre launch activities are done in order to create the hype about the product or service which is going to be introduced by the company. Mainly pre launch activities of the companies mainly contain the teaser campaign. Teaser campaign are done in order to provoke the customer interest about product so that customer become interested about product then gain more information and hence this way come to the buying hierarchy. At the time of launch activities are done in order to show the product visibility and this time is very crucial for the promotion purposes and hence most of the budget allocated to the promotion is mainly this time since here aim of the advertiser is to gain all visibility.

Media Vehicle-3-2-1Launch+1+2+3Total expense
Vanity fair$30k$30k$30k$30k$30k$30k$30k$210K
Robb Report$20k$20k$20k$30k$30k$30k$30k$180k
High end magazines$50k$50k$50k$200k$100k$50k$100k$600k

 After launch activities are done by marketers in order to provoke the customer who has message in their mind. It sometimes also referred as the customer recall. Customer recall is very necessary since everyday customer come in contact with so many promotion activities and not able to remember all communications so to refresh customer memory after launch activities are required (Kitchen, 2004).

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  • Jeffrey K Liker, 2004, “The Toyota way: 14 Management principles from world’s greatest manufacturer”, pp141
  • Satoshi Hino, 2006, “Inside the mind of Toyota”, pp45
  • Jeffrey k Liker & Michael Hoseus, 2007, “Toyota culture”, pp75
  • Liker & David Meier, 2005, “The Toyota way Fieldbook”,pp35
  • James M Morgan & Jeffrey K Liker, 2006, “The Toyota product development system”, pp51